The California DMV has granted Uber a permit to test its vehicles on California roads, according to The Mercury News.
Self-driving cars are increasingly seen as a way for Uber to deal with regulation that threatens how it does business. In Germany, the company was recently banned from transporting customers using rental vehicles after previously being blocked from matching riders with drivers using their own vehicles. In California, Uber is facing additional challenges as a result of Assembly Bill 5 (AB5) that changes the status of contractors to that of employees, requiring companies like Uber to offer additional benefits and thereby driving up costs.
Self-driving cars would solve these and other problems and potentially streamline long-term costs for Uber. The company has previously tested self-driving vehicles, with a car the company was testing notoriously striking and killing a pedestrian in Arizona.
The Mercury News is reporting that “the DMV said that it granted the permit to Uber’s Advanced Technologies Group after the company ‘fulfilled all the requirements to receive a permit to test autonomous vehicles in California with a safety driver behind the wheel.’ The DMV also said that Uber presented documentation that showed changes it made to its autonomous vehicle testing program and testing guidelines.”
There is no timetable for the cars to see widespread use, with Uber indicating it is in no hurry to deploy the vehicles.
In an effort to comply with a new California law that would make “gig-economy” workers employees, Uber is experimenting with letting drivers raise prices, according to The Wall Street Journal.
California’s gig-economy law, Assembly Bill 5 (AB5), went into effect on January 1 and has had profound impacts on Uber, Postmates, Lyft and others. Workers who were previously classified as contractors are now considered employees, requiring companies to provide them with benefits.
The pricing change is just the latest Uber is making in an effort to comply with AB5 and keeps its workers classified as employees. For a worker to be an independent contractor, they need a measure of independence, including the freedom to set their own prices rather than have them dictated by the company they work for.
According to the WSJ, “starting Tuesday morning, drivers who ferry passengers from airports in Santa Barbara, Palm Springs and Sacramento can charge up to five times the fare Uber sets on a ride.”
The move is not without challenges, however, as it could lead to price extremes. On the one hand, drivers may raise prices too high and hurt business. On the other hand, with freedom to change prices, drivers may engage in price wars with each other, driving the price down to the point that no one profits.
Whatever the outcome, Uber will no doubt do whatever is necessary to keep its drivers as contractors. Otherwise, especially if other states follow suit with similar laws, it could forever change the ride-sharing business.
CNN is reporting that investors are growing increasingly restless with IBM’s cloud strategy and are anxious to see results.
IBM may be one of the most trusted names in the tech industry, with a history going back decades, but that hasn’t prevented it from losing investors’ confidence. Recent years have seen it fall behind in the move to the cloud, surpassed by Amazon, Microsoft and Google.
According to CNN, Morgan Stanley analyst Katy Huberty cut her price target on IBM and commented: “Despite significant investments, IBM remains challenged as workloads shift to cloud.” She also said that “views of IBM’s positioning in cloud haven’t improved materially and in some cases deteriorated over the past year.”
Some analysts believe a change at the top could help, along with a major cloud strategy announcement. Red Hat CEO Jim Whitehurst is considered a prime candidate. Whitehurst was brought into the company when IBM acquired Red Hat in 2018. Several years prior, in 2014, he announced Red Hat’s own shift to a cloud-based strategy, and his leadership could be a valuable asset in the top role at IBM.
There has even been talk of activist investors buying a stake in the company in an effort to force a shakeup of the status quo. With Microsoft, Amazon and Google getting the lion’s share of the cloud market and news, IBM will need to do something to keep investors happy.
Hyundai and Uber made a splash at CES 2020 with a partnership to develop and deploy Uber Air Taxies, according to a press release.
Hyundai made news in late 2019 when it created its Urban Air Mobility (UAM) division. UAM is focused on creating flying cars and other aerial vehicles, and landed NASA aeronautics director Dr. Jaiwon Shin as the division head. Unlike the many startups that have tried to tackle this field, Hyundai brings vast experience mass-manufacturing complex vehicles.
Image Source: Uber
Under the partnership, “Hyundai will produce and deploy the air vehicles, and Uber will provide airspace support services, connections to ground transportation, and customer interfaces through an aerial ride share network. Both parties are collaborating on infrastructure concepts to support take-off and landing for this new class of vehicles.”
As part of their announcement, the two companies unveiled concepts for their first jointly developed personal air vehicle (PAV), the SA-1. The PAV is a 100 percent electric vehicle, with vertical takeoff and landing, cruising altitude of 1,000 to 2,000 feet and a cruising speed of up to 180 miles per hour.
“Our vision of Urban Air Mobility will transform the concept of urban transportation,” said Jaiwon Shin, Executive Vice President and Head of Hyundai’s Urban Air Mobility (UAM) Division. “We expect UAM to vitalize urban communities and provide more quality time to people. We are confident that Uber Elevate is the right partner to make this innovative product readily available to as many customers as possible.”
“Hyundai is our first vehicle partner with experience of manufacturing passenger cars on a global scale. We believe Hyundai has the potential to build Uber Air vehicles at rates unseen in the current aerospace industry, producing high quality, reliable aircraft at high volumes to drive down passenger costs per trip. Combining Hyundai’s manufacturing muscle with Uber’s technology platform represents a giant leap forward for launching a vibrant air taxi network in the coming years,” said Eric Allison, head of Uber Elevate.
Reuters is reporting that Uber and Postmates have filed a lawsuit in an attempt to block a California law that would have severe ramifications for both companies.
California’s Governor Gavin Newsom signed a law that makes it more difficult for companies to classify gig workers as independent contractors. Keeping workers classified as contractors saves companies money in both taxes and benefits. Labor groups, however, have argued the law was necessary to properly protect workers’ rights.
Uber and Postmates’ lawsuit alleges that the law “compromises the flexibility prized by their workforce, and that fewer workers would be hired were they considered employees.” They also argue that the law violates the equal protection guaranteed by the U.S. and California constitutions, by singling out app-based workers.
“It irreparably harms network companies and app-based independent service providers by denying their constitutional rights to be treated the same as others to whom they are similarly situated,” the lawsuit alleges.
Given the size of California’s economy, other states with similar concerns will be closely watching to see if the law holds up or is ultimately overturned.
Business Insider is reporting Uber has purchased 596 acres near Pittsburg to establish a test track for self-driving cars.
Uber has been in the news a lot lately, and not all of it good. The company recently released a safety report detailing nine murders and thousands of sexual assaults that have occurred in Uber rides. In addition, the company was banned in Germany last week due to it not having the necessary license to transport customers in rental vehicles. The use of rental vehicles was already a modification of its business model the company was using to get around German restrictions preventing it from “matching customers with drivers using their own vehicles, as it does in the U.S.”
In addition to these problems, the company is facing increasing challenges regarding the legal definition of employees. California is just one example where laws could potentially alter Uber’s business model by classifying its drivers as employees, rather than contractors.
In view of these challenges, it’s little wonder the company is looking at self-driving cars as the answer moving forward. Self-driving cars could eliminate the need for driver background checks, employee vs contractor debates and could be the ultimate answer to bans like Germany has imposed—provided self-driving cars become widely accepted.
One of the biggest obstacles to adoption is ensuring the safety of self-driving cars. The new testing area will employ approximately 200 people and have an observation deck. Pittsburg is the center of Uber’s self-driving research and development, with the company also creating a fake city there—complete with roaming mannequins that jump out without warning—for testing the technology.
The new testing ground should give Uber plenty of room to test a variety of scenarios.
According to Reuters, a judge has struck down a NYC rule “limiting how much time drivers for ride-hailing services can spend cruising streets in busy areas of Manhattan without passengers.”
Uber and Lyft filed separate lawsuits challenging a NYC rule that was designed to ease congestion. With ride-sharing vehicles making up nearly a third of peak traffic, the city was attempting to prevent ride-sharing drivers from cruising the streets while waiting for new passengers.
New York State Supreme Court Judge Lyle Frank issued his ruling in the case Uber brought, although he made it clear his ruling covered Lyft’s case as well, calling NYC’s cruising cap rule “arbitrary and capricious.”
The mayor’s office indicated it may fight the ruling however, with a spokeswoman for the mayor saying: “We put these rules in place to protect hardworking drivers and New Yorkers—and we’ll fight to keep them.”
Reuters is reporting that a German court has banned Uber from providing its ride-hailing services in Germany, saying it lacks the license necessary to transport passengers in rental vehicles.
Uber currently operates in seven German cities, including Berlin, Frankfurt and Munich. The issues stem from the fact that Uber works exclusively with rental car agencies and their drivers in Germany.
While the ban goes into immediate effect, it is still open to appeal, and the company has not ruled out a legal challenge to the decision. In the meantime, Reuters reports that Uber is looking at other options for how it operates in Germany. What that would look like is anyone’s guess at this point, as a previous court ruling in 2015 prohibited the company from matching customers with drivers using their own vehicles, as it does in the U.S. That ruling is what originally prompted Uber to use rental car companies and their drivers to provide their service.
Uber is facing increasing challenges and bans around the world. Just last month, the city of London denied Uber a license, citing safety concerns. In the wake of a recent report that thousands of sexual assaults and nine murders have occurred during rides, it’s a safe bet Uber will continue to meet with opposition.
Each day, the world makes 250 million terabytes of new data – every second 946 Instagram photos are taken, 8,690 tweets are posted, 77,783 things are searched on Google, and 2,845,459 emails are sent and received all over the world. With all of this new data, keeping your data private and away from prying eyes that will exploit any information about you is becoming more difficult by the day. Most people have no idea who owns their data, let alone what they are doing with it.
Google tracks a lot more than what websites you visit and your email – it can track what apps you use and when, if you signed in with your Google account, what type of device you are using, and what you watch read and search, including YouTube, News, Books, and Google Search. It can track where you go and where you plan to go and when with Google Maps and Calendar, where you parked your car, where your home is, where your work is, and more. It can also track and record what you say after you say “OK Google”- in one case, the file containing all Google’s data on a single person was 20 gigabytes, equal to a 12 million page text file. But why do ad companies and Google even bother recording seemingly useless data about little things in your life that can’t seemingly affect anyone?
Developers can use the data they collect from you to show ads that they think would appeal more to you, thus generating profit by trying to sell you things that it thinks you will like. On most devices, you will have an “Advertising ID” and this is locked to your phone’s permanent hardware identifiers, such as your MAC address, IMEI and Android ID. This user data can be worth about $182 for a Google user’s Advertising ID – for Facebook, it’s $158. Law enforcement can use this data to track your every move.
Using this kind of data, in one experiment, researchers could predict what someone would post on social media with an astounding 95% accuracy – even if prior they didn’t even have an account. In 2013, Facebook admitted to accidentally leaking information gathered on users – including phone numbers and email addresses that users hadn’t even shared. 270,000 people used the “This Is Your Digital Life” App for Facebook – but the app was able to gather data on 87 million people on behalf of Cambridge Analytics. Also in 2013, the developers of “Brightest Flashlight Free” settled with the FTC after allegations that the app failed to inform its users that the app shared their location data and identifiers. In 2015, Apple CEO Tim Cook threatened to remove Uber from the App Store after learning that Uber’s app was collecting iOS users’ hardware identifiers. In 2019, the state of New Mexico sued Tiny Lab Productions and ad companies owned by both Google and Twitter, alleging that their games compromised children’s right to privacy.
It’s time to check the settings on your phone and apps to take back your privacy Find out how to stay away from apps that can steal your data and find more online security tips here.
At its Ignite 2019 conference, Microsoft announced the release of Azure Arc, a tool designed to allow developers to deploy Azure programs to Amazon and Google clouds.
Since Satya Nadella took over as CEO in 2014, Microsoft has taken a completely different approach to competitors. Rather than viewing other companies as the enemy and doing everything possible to keep users locked into the Windows ecosystem, the company has focused on making the best software possible and deploying it as widely as possible.
This approach has led to a renewed focus on Office for the Mac, industry-leading versions of the productivity suite for iOS and Android, not to mention the company reaching out to Linux developers for help in porting Edge. Now, as the cloud wars heat up, it appears Microsoft is taking that same all-embracing approach to competing cloud platforms. Azure Arc will not only help companies deploy their Azure programs, but also help them manage them regardless of where they are run from.
“Azure Arc enables Azure services anywhere and extends Azure management to any infrastructure for unified management, governance and control across clouds, datacenters and edge. They look and feel just like Azure resources, and they provide unified auditing, compliance, and role-based access control across multiple environments and at scale.
“As a result, customers can modernize any infrastructure with cloud management and security protection. With cloud practices that work anywhere, Microsoft is delivering these resources, from cloud to datacenter to edge, and enabling cloud security anywhere.
“Millions of Azure resources are managed, governed, and secured daily by thousands of customers. With Azure Arc, customers can now take advantage of Azure’s robust cloud management experience for their own servers (Linux and Windows Server) and Kubernetes clusters by extending Azure management across environments. Customers can seamlessly inventory, organize, and govern their own resources at-scale through a consistent and unified experience through the Azure Portal.”
On the heels of news that Microsoft beat out Amazon for a lucrative defense contract, the Azure Arc announcement is further evidence the company is firing on all cylinders in its execution of Nadella’s strategy.
According to a report by The Verge, Uber has said it will not share real-time electric scooter data with the Los Angeles Department of Transportation (LADOT) and is filing a lawsuit against the department.
The suit revolves around LA’s use of Mobility Data Specification (MDS), a program LADOT developed to monitor dockless scooters that are becoming commonplace in many cities. The data provided by MDS can be used by city planners to evaluate traffic patterns, add needed bike lanes and more. The promise of data that has previously been unavailable has led cities across the country to adopt and contribute to MDS. LA, as well as Austin, Chattanooga, Columbus, Louisville, Omaha, San Jose and Seattle are all making MDS participation a condition for companies to receive the necessary permits to operate.
Privacy advocates, however, are concerned that MDS gives cities unprecedented insight into people’s activity, since every part of a scooter’s route is tracked and recorded. Uber—who acquired scooter company Jump—along with Lyft and Bird have objected to MDS from the beginning and vowed to challenge the legality of the software. In particular, the company is hoping the California Electronic Communications Privacy Act (CalECPA), which became law in 2015, will provide it the legal teeth necessary to challenge LA’s position.
The state’s Legislative Council has ruled that MDS may run afoul of CalECPA, specifically as the law prohibits local governments from requiring real-time data in exchange for an operating permit. The only exception is if a specific rider waves their right to privacy, although it must be waved by the rider, not by the ride-sharing company acting as an intermediary.
Uber and Lyft are trying to get a temporary restraining order prohibiting LA from revoking their licenses. In the long-term, however, the legal battle over MDS will have far-reaching repercussions for privacy-minded individuals and corporations.
“Fundamentally, we have a bigger plan for security,” says VMware COO Sanjay Poonen. “We felt it was the perfect time for us to come up with a disruptive play that was based on big data, was AI, and was cloud-based. There were only two companies doing it, CrowdStrike and Carbon Black. We felt Carbon Black was better integrated to us, had as good a product or better. We have a plan to integrate Carbon Black and make it intrinsic in a way that nobody else will do. We think this will transform the security industry that’s been broken today.”
Sanjay Poonen, COO of VMware, elaborates on how they plan to transform security and lead the containers movement currently going on in digital transformation. Poonen was interviewed by Jim Cramer on CNBC:
Containers Are A Movement Going On In Digital Transformation
When you look at these types of transformational moments going on in digital transformation, these happen once every 10 to 20 years. VMware is the company that invented the virtual machine and for the last 20 years, we’ve created a million jobs in that part of infrastructure. There is a movement going on in digital transformation right now called containers. We believe it’s our birthright to own that movement. There will be potentially tens of millions of jobs among developers created on top of this virtual machine.
Think of the virtual machine sort of like the ship and containers like the things on top of it. In the 1950s containers completely transformed ships and VMware created the ship. These containers are going to allow apps to be fundamentally transformed. We found as we thought about this that this was the right time to do it and it was our birthright to do it better than anybody else. Why not take those three thousand people in Pivotal and $750 million in revenue and turbocharge the next ten years of VMware, not just in virtual machines and virtualization in the path to the cloud, which is the first C, but the other C is containers. We think that’s a big part.
We’re A Go-To-Market Machine
Pivotal (is more valuable than the market initially believed) for two reasons. They’ve refactored their product which now sits completely on Kubernetes. If you don’t know what it is, it’s a sort of the big open-source container movement. And their go-to-market engine probably stuttered a little bit. But that’s what VMware does well. We’re a go-to-market machine. We’ll bring them in and accelerate this to our 500,000 customers. We feel good when we get a good product in the hands of our good go-to-market machine. I think we can accelerate it.
At VMware, no one person does it, it takes a village but also our partners like Dell and the ecosystem also. VMware has 75,000 partners who love us. We’re going to take this to those ecosystem partners. We have a big tent of system integrators and they’re excited about this. We branded the entire thing, that’s the other thing we’ve done pretty well. Tenzo, which is the Japanese word for containers, we’re doing big ads in New York, San Francisco, and London Airports. This is a play on the word VMware that says ContainerWare. We’re not changing the name of the company but we’re going big in containers and that’s the key message.
We Have a Bigger Plan For Security
Fundamentally, we have a bigger plan for security. Let me just walk you through a quick understanding of the strategy. There are a lot of parallels with security and healthcare. My mom’s a doctor. Imagine you went to a doctor and you asked her how do you get well and she said you have to eat 5,000 tablets. Eating one every 30 seconds would take you a couple of weeks to do. That’s what the security industry is today. It’s 5,000 vendors, broken, with lots of different agents bloated on people’s laptops, lots of alerts showing up, and manual labor.
We look at this and say there’s a fundamentally new way to do it, which is to make security intrinsic to your diet. You eat your vegetables, your fruit, you drink your water, brush your teeth, and that’s what we’re doing with security. We are making it part of our platform.
A Disruptive Play Based On Big Data, AI, and Cloud-Based
We’ve been doing very well in network security around the NSX product but endpoint security and workload security we didn’t have much there. We had Workspace ONE, our AirWatch related product, and we found that many of these endpoint security players were kind of in a little internal turmoil. Symantec got bought by Broadcom. McAfee got bought by Intel and then was spun out again. We felt it was the perfect time for us to come up with a disruptive play that was based on big data, was AI, and was cloud-based.
There were only two companies doing it, CrowdStrike and Carbon Black. We felt Carbon Black was better integrated to us, had as good a product or better, and we intend to acquire them. The acquisition hasn’t yet closed. We have a plan to integrate this and make it intrinsic in a way that nobody else will do. We laid that out at VMworld. We think this will transform the security industry that’s been broken today.
VMware COO Sanjay Poonen: We Have a Bigger Plan For Security
“The We Company’s business model effectively is pretty simple,” says EquityZen CEO Atish Davda. “It leases buildings and then rents it out in smaller pieces. That’s not a new business model, that’s a real estate company. What’s new about The We Company is that it’s pitching itself as a technology firm. The way it says it’s going to do that is by using machine learning and a lot of other software. It’s going to help folks optimize how they build and operate offices. They’re trying to turn our offices into an Amazon warehouse in order to get the tech valuation.”
Atish Davda, founder and CEO Of EquityZen, says that WeWork is just a real estate company positioning itself as a technology company in order to get a tech valuation, in an interview on CNBC:
Turning Offices Into An Amazon Warehouse To Get Tech Valuation
The We Company’s business model effectively is pretty simple. It leases buildings and then rents it out in smaller pieces. That’s not a new business model, that’s a real estate company. What’s new about The We Company is that it’s pitching itself as a technology firm. The way it says it’s going to do that is by using machine learning and a lot of other software. It’s going to help folks optimize how they build and operate offices.
The worst-case scenario is that it gets pegged as a real estate company in which case it would be about 20 times overvalued than its last private round of $47 billion. The best-case scenario, the way I at least hear what they’re saying, is we’re going to put all these gadgets and sensors and we’re going to track what everyone’s doing. It sounds to me like an Amazon warehouse. They’re trying to turn our offices into an Amazon warehouse in order to get the tech valuation. That’s the best-case scenario. I just I don’t buy it.
Founders Have Already Taken $500 Million Off the Table
Their valuation in the private markets has continued to go up. What’s interesting about this is something we hear about with WeWork that we didn’t hear about with Uber and Lyft is the amount of capital that the founders have allegedly taken off the table in secondary sales. With every one of these rounds, the founders can take a few chips off the table. This happened when Snap went public also.
The founders of Snap had taken tens of million dollars off the table. We’re talking about an order of magnitude more that has already gone in the pockets of the founders here, which is over $500 million dollars. That’s a lot of money that they are effectively just holding on to risk-free because they sold it on the ride up.
I Don’t See How WeWork Can Turn Itself Into a Tech Firm
I think they’re going to at least try and match that $47 million valuation in the IPO. We’ll see what the analysts today and Wall Street over the next three months actually decides to accept. You take a look at all of WeWork’s competitors, their price-to-sales multiples are between 0.5 and 1.3. The trailing 12-month multiple for the We Company is 26 times. You’re talking about something where its peers are being valued one way and this company is being valued 20 times greater.
For the sake of all the people I know that I’ve worked at WeWork in the past and still work there, I hope I’m wrong. I just don’t see how WeWork by acquiring a few tech companies here and there turn itself from what’s effectively is a real estate firm into a tech firm.
Is WeWork Really a Tech Company? – EquityZen CEO Atish Davda Says No.
“The Instagram effort is one that we predicted for a long time,” says Button CEO Michael Jaconi. “I wasn’t the most popular guy in the venture capital pitch room saying hey, the world is moving to commerce. They said advertising makes so much money. In reality, what I think Facebook is doing is very smart. They’re trying to habituate consumers around driving transactions from their platform. For the future of advertising, especially in mobile, the way that you’re going to be able to make money and build durability into your business model is to give consumers what they want.”
Michael Jaconi, CEO of Button, discusses how mobile commerce is rapidly replacing ads as the primary revenue source for publishers and social platforms such as Facebook and Instagram in an interview on Bloomberg Technology.
We’re Trying To Build an Internet Built on Actions, Not Ads
The Button platform really sits above the stack. Where we sit is really in this place where publishers integrate with Button to connect their consumers to their next step. What we’re trying to build is an internet that we think is going to be better, and an internet built on actions, not ads. What the publisher technology that we built does is it sits inside of an application, renders an actual button, and then connects them to the place of intent that their users ultimately may want to go. Whether that’s a mapping app going to Uber or an app like rewardStyle that is powering an influencer network to drive sales at ASOS.
There’s a lot of change happening and Button is trying to invest in that ourselves. You’re seeing the platform’s, Apple and Google, do a lot to make this easier with Facebook’s recent launch of Instagram Checkout. You’re obviously seeing that they’re investing a ton in making the checkout process more seamless. What we fundamentally believe when we started the company was that if we could build a method that would make consumers have a delightful experience, giving from that moment of intent to the moment of fulfillment, saying hey, I want a ride or I want to book a reservation, and having that be as few taps as possible, we would win and the companies that we’re building on top of our platform would win.
You’re seeing innovation happen with sign-on and the actual account credentials being passed more easily between experiences. Apple Pay, of course, the Google Checkout experiences and PayPal is making this easier. You’re seeing strides being made but there’s still a long way to go. It’s still a lot easier to purchase on your PC unfortunately.
Facebook Trying To Habituate Consumers Around Driving Transactions
In our judgment, we think that the Instagram effort is one that we predicted for a long time. I wasn’t the most popular guy in the venture capital pitch room saying hey, the world is moving to commerce. They said advertising makes so much money. In reality, what I think Facebook is doing is very smart. They’re trying to habituate consumers around driving transactions from their platform. Everyone is looking at Amazon with a little bit of fear and a little bit of jealousy. What you’re seeing is that they’re looking at Amazon’s power as being the habituated source of transactions. They are saying look at how Amazon is growing its ad business.
If you look at Amazon’s business, the fastest growing channel it’s had in terms of revenue growth has been its advertising business for the past eight quarters in a row. What’s fascinating about that is that every company wants to grow and be a part of that puzzle or that story. That’s the thing that we’re seeing grow most quickly. For the future of advertising, especially in mobile, when display and all types of advertising are under fire, the way that you’re going to be able to make money and build durability into your business model is to give consumers what they want. For us, we’re trying to give that power to every publisher that exists and to every company that has intent.
Facebook Trying To Habituate Consumers Around Driving Transactions, Says Button CEO Michael Jaconi
“Scale is the primary driver toward profitability,” says Uber CEO Dara Khosrowshahi. “It’s getting big. We’ve got over a billion rides per quarter and we’ve got trips growing at 35 percent on a year on year basis. It’s a combination of growing top-line over 35 percent, technology innovation to delight the customer and take costs down at the same time, and then good old fashioned efficiency, making sure that our corporate costs don’t grow as fast as our revenue. All of those together give you a formula to get to profitability.”
Dara Khosrowshahi, CEO of Uber Technologies Inc., discusses how Uber can continue to be transformational and ultimately be profitable in an interview on Bloomberg Technology:
Uber Can Continue To Be Transformational
We have resolved all of the governance conflicts that the company had. There were many legal issues that the company was involved with. We have SoftBank as a partner and you want SoftBank to be behind you and a big partner and a big investor. We have a great investor base. We’ve taken the company public and company’s revenue, gross bookings, have grown 75 percent since I joined. We now have a path to profitability. So while we’ve had bumps on the road, and every adventure has bumps on the road, I like where we are. I especially like the position we are in now for the next two years.
I think Uber (can continue to be transformational over the next decade). Really what Uber has done is brought transportation and opportunity at this point to what we believe is just a small segment of the population. We’ve got over four million driver-partners all over the world which is a huge number. It is unparalleled. But we want Uber to be available to everybody. What we are doing now is going into the next step of introducing other transportation choices to Uber. We’ve always gone with pool, but for example, we are testing busses in Cairo now to even bring the price of Uber down to the next level, a dollar or a buck fifty, etc.
The Rideshare Business Itself Is Turning Quite Profitable
We are introducing bikes and scooters for personal electric mobility. Essentially, anyway that you want to get around your city we are going to be there for you. It will be mostly Uber goods but we will also have other third parties such as transit, such as one of our partners Lime as well. Any way that you want to get around we want Uber to be there. And if you want food, if you want even local commerce which I think we will power or even Uber Eats or some of our other services will be there for you as well.
If you look at our rideshare business, it covered our overhead less than about $100 million. The rideshare business itself is turning quite profitable. We believe that the profits in the rideshare business are not only going to grow top-line but we believe we are going to grow the bottom-line as well. Then there are other businesses, Eats, autonomous, freight, etc. These are extraordinary opportunities that we are funding. I do believe that we are going to prove to our investors that we can take on a serial basis big parts of our business, turn them profitable, and use those parts of our business to fund investments in other areas.
Our Formula To Profitability
I’m very confident that Uber can be profitable. I think the losses that we reported, it was a $5 billion loss from an accounting perspective. If you live in an accounting world that’s a big loss. I live in the real world. Actually, in the real world or EBITDA losses of $656 million were lower than Q1 and were on a good path in terms of our EBITDA losses as well. None of this is going to be easy. All of this is going to take great execution from all of our teams, marketing, technology, etc. We are going to be demanding our employees to be doing even more with less and to execute incredibly effectively in order for us to grow the top-line and the bottom-line as well.
Scale (is the primary driver toward profitability). It’s getting big. We’ve got over a billion rides per quarter and we’ve got trips growing at 35 percent on a year on year basis. We think we can use technology to be much more efficient. For example, instead of you now having to email a call center agent or call a call center agent if you have issues, you can just do it in the app. These are technology innovations that allow customers to have a better experience and at the same time they bring down costs. It’s a combination of growing top-line over 35 percent, technology innovation to delight the customer and take costs down at the same time, and then good old fashioned efficiency, making sure that our corporate costs don’t grow as fast as our revenue. All of those together give you a formula to get to profitability.
Uber CEO Dara Khosrowshahi: Our Formula To Profitability
“Not only do we expect to hit cashflow break-even, but we expect this business to be very profitable at maturity,” says Uber CEO Dara Khosrowshahi. “I think that going forward our spending declines as a percent of revenue. So when you’re growing trips 35 percent year on year your spending is going to increase. But we’re going to get leverage on the marketing line and we’re definitely going to get fixed cost leverage going forward.”
Dara Khosrowshahi, CEO of Uber, discusses the company’s latest quarterly results and predicts that Uber will ultimately be very profitable in an interview on CNBC:
Uber Is Much More Than a Rideshare Company Now
The IPO for us is a once in a lifetime moment. It was a really important moment for the company. Some of what we did like the driver appreciation award, almost $300 million that we put in the hands of over a million drivers globally were really important for us to do. It created a messy P&L from an accounting standpoint. I think it is hiding underlying trends that are actually very healthy for the company. If you look at trends for the company which is going to matter long-term, you have got gross bookings over $16 billion growing 37 percent on a year on year basis. You’ve got trip volume, and trips are units, growing 35 percent year on year. You’ve got audience, monthly active platform customers, now over 100 million, growing 30 percent. The actual revenue growth excluding the driver appreciation award was up 26 percent.
What I did tell our investors is to expect that to accelerate into the back half of the year. The back half of the year you are going to see if trends stay the same, revenue growth in excess of 30 percent. When you look at profitability, we beat our own internal targets and we beat Street targets as well. We came in at a loss of $656 million. It’s still a big loss but the losses are improving and the take rates are improving. If you back out some of those one-time expenses, we went from a loss of $800 million to a loss of $656 million. We got much more efficient on the marketing front. We actually took marketing as a percentage down while we were still growing the top line over 30 percent as well. This is much more than a rideshare company now, it’s a transportation company.
We Expect This Business To Be Very Profitable At Maturity
We are in a situation as far as the network effect of the company where we don’t need to increase the marketing and incentives. We can go in with loyalty plans both for riders and drivers that are going to add to leverage and ultimately profitability of the company. This is a marketplace company that has over 20 percent revenue margins and revenue margins are increasing year on year. Not only do we expect to hit cashflow break-even, but we expect this business to be very profitable at maturity.
I think that going forward our spending declines as a percent of revenue. So when you’re growing trips 35 percent year on year your spending is going to increase. But we’re going to get leverage on the marketing line and we’re definitely going to get fixed cost leverage going forward. I think that this quarter proved that out and we have to keep hitting our marks in the next couple of quarters. It’s a super-competitive marketplace but we are confident. We like what we saw operationally this quarter.
Uber CEO Dara Khosrowshahi: We Expect This Business To Be Very Profitable at Maturity
“What we’re going to see here in the near term is that there’s so much investor subsidy into that (delivery) business model right now,” says Domino’s CEO Ritch Allison. “We’re not really sure where it’s going to shake out long term. There’s substantial discounting and over-investment in advertising right now to drive consumer demand. We don’t know how that’s going to shake out once consumers actually have to pay the full cost of that delivery because those fees are quite substantial relative to the cost of the underlying food.”
Ritch Allison, CEO of Domino’s, discusses how investor subsidies of delivery companies like Grubhub and Uber Eats are impacting Domino’s in an interview with Jim Cramer on CNBC:
There’s So Much Investor Subsidy In The Delivery Business Model
What we’re going to see here in the near term is that there’s so much investor subsidy into that (delivery) business model right now. We’re not really sure where it’s going to shake out long term. There’s substantial discounting and over-investment in advertising right now to drive consumer demand. We don’t know how that’s going to shake out once consumers actually have to pay the full cost of that delivery because those fees are quite substantial relative to the cost of the underlying food.
We also have not yet seen what’s going to happen with the supply of restaurants on these platforms as well. Over time it’ll be proven out whether or not that business is truly incremental and whether or not that business is actually accretive from a margin standpoint to the operators that are offering that service through the third-party aggregators. So long-term still a lot of questions but short term certainly some pressure.
We’re not going to do foolish things in the short term in reaction. We’re still very focused on our franchisees’ profitability. That’s first and foremost in our minds and we’re still very focused on generating great returns and free cash flow for our investors. We’re generating cash flow now at a pace of about a million dollars a day in the Domino’s business. So some near-term activity here that’s creating some turbulence in the marketplace but we’re going to remain focused on our long-term strategy, great profitability for our franchisees and strong operating cash flow and returns for our investors.
We Still Gained a Significant Amount of Market Share In Q2
When you take a look at our business we still gained a significant amount of market share in the pizza category during the second quarter. Our retail sales were up 6.8 percent which is significantly higher than the growth in the category and frankly much higher than the growth in the restaurant industry in general. So while same-store sales at three percent were at the lower end of our long-term outlook, the overall retail sales growth driven by the combination of that same-store sales and really strong unit growth was still quite positive.
It is a tougher operating environment than it has been in years past. We do have new competition in the marketplace that we’re fighting against every day. There are also labor pressures in the marketplace, certainly, the tight employment environment and some of the rising minimum wages across the country are putting some pressure on. But we are really in a position of strength as we enter into this more turbulent period.
Bringing Data-Driven Decision Making To International Markets
In 2018 our average store in the US had operating cash flow as measured by EBITA of $141,000. Our franchisees are very healthy. Cash on cash returns in the business are really strong. That’s why when you take a look at what’s going on with units, we opened 45 units in the second quarter in the US and only closed three, it’s still a very healthy business model. We’re positioned quite well as we look forward relative to the rest of the restaurant industry to continue to be successful.
We are we’re working hand-in-hand with our master franchisees around the world. As you look from market to market the issues in markets can be different depending upon those specific circumstances. What we’re trying to do is work with the markets to bring some of the same terrific data-driven decision-making that we’ve used to grow the business in the US over a number of years now and help our international markets in that regard.
Broadly, when you take a look at the international business, retail sales were up 9.8 percent in the second quarter. We are gaining share at a significant pace in the international markets as well as having great growth in the international markets this past quarter with a 158 net store openings. It remains a very healthy business despite the comps over the last few quarters being on the lower end.
There’s So Much Investor Subsidy In The Delivery Business Model, Says Domino’s CEO Ritch Allison
“Virtual restaurants is a very interesting initiative,” says Uber Eats EMEA head Rodrigo Arevalo. “Basically by leveraging the data on our platform, we can partner with other restaurants in order to cuisine types that only exist on food delivery platforms. If there is not a restaurant in a certain neighborhood we will partner with restaurants to make that happen. In the UK we are already doing 200 virtual restaurants and we are expanding throughout Europe, the Middle East, and Africa.”
Rodrigo Arevalo, head of EMEA at Uber Eats, discusses how virtual restaurants are helping power Uber Eats Growth in an interview on Bloomberg:
Virtual Restaurants Helping Power Uber Eats Growth
Virtual restaurants is a very interesting initiative. Basically, by leveraging the data on our platform we can partner with other restaurants in order to cuisine types that only exist on food delivery platforms. That has two benefits. The first one is that it helps restaurants utilize their kitchens a lot more. The second one is that it increases their revenue on their top line. It’s a very interesting initiative to provide more choice and to increase business for restaurants.
If there is not a restaurant in a certain neighborhood we will partner with restaurants to make that happen. In the UK we are already doing 200 virtual restaurants and we are expanding throughout Europe, the Middle East, and Africa. It’s a type of local exercise that we are trying to tack on. It’s going really well and we’re excited about that.
Uber East Demonstrates the Potential of Uber’s Logistics Platform
Uber Eats fits into Uber’s overall strategy and portfolio in the way that it demonstrates the potential of Uber’s logistics platform. Just in three and a half years, we’ve been able to build a multi-billion dollar business and today we are already the biggest food delivery app outside of China. It’s all about the logistics network that we have built and how we can leverage the potential of that platform.
It’s about focus for us. We want to make sure that we deliver on the plan, deliver on the vision that (Uber CEO) Dara Khosrowshahi has set for the company. Focus is basically three pillars for Uber Eats. The first one is restaurant selection, providing consumers choice. The second one is customer experience for eaters, for restaurants, and for delivery partners. The third one is underpinning that with great technology and a great product that people would love to use every single day.
Uber Eats Partners With 220,000 Restaurants Globally
We partner today with 220,000 restaurants globally and there is a vast variety of selection from every kind of meal that you would like; comfort food to the healthiest options such as vegan, salads, etc. We believe selection. We believe in consumer choice. We want to make sure that we provide all of those options to them. We very much focus on providing that information, providing those options, and making sure that consumers make an informed choice.
When it comes to packaging we already partner with several companies that provide sustainable packaging. Given our platform, particularly in the UK, we already look for ways to facilitate sustainable packaging for restaurant partners, making sure we do our part in that sense.
Virtual Restaurants Helping Power Uber Eats Growth – Uber Eats EMEA head Rodrigo Arevalo
“We are now gearing up to take the person completely out of the cab on public roads in the state of Florida,” says Starsky Robotics CEO Stefan Seltz-Axmacher. “We’ve been testing on Florida roads with people in the cabs for a couple of years. We are starting off in the easiest conditions, in good weather, and with good lighting. In time, we will start driving in light rain and at night. But to start off we will be focusing on the daytime.”
Actual Driverless Truck — With No Passenger — Recently On the Road in Florida Test
Stefan Seltz-Axmacher, CEO of Starsky Robotics, discusses their imminent plans to launch fully autonomous driverless long-haul trucks in Florida in an interview on Fox Business:
Gearing Up To Take the Person Completely Out Of the Cab
We’ve been testing on Florida roads with people in the cabs for a couple of years. We are now gearing up to take the person completely out of the cab on public roads in the state of Florida. We are starting off in the easiest conditions, in good weather, and with good lighting. In time, we will start driving in light rain and at night. All of these conditions are within our operational design domains. We see different areas, different things that are hard, and things that are easy. But to start off we will be focusing on the daytime.
What’s interesting about long-haul trucks is frequently they just drive between different distribution centers which themselves are in industrial areas. That’s where we are focusing on. We are not driving in downtown Miami or mid-town Manhatten. We are driving in places that are slightly more rural between warehouses that are immediately next to the highway. We will be doing broader rollouts next year but we will start doing initial road unmanned tests later this year. We will make sure the local authorities know (which roads we will be driving on) and then we will let the public know afterward.
Starsky Robotics Speed Record For Unmanned Truck in Florida
We Are Building Uber Drivers
We actually operate as a carrier ourselves. If you think about Uber, we are not building Uber or Lyft and we are not building Toyota Priuses. We are building Uber drivers. On the Uber and Lyft side, we are working with companies like C.H. Robinson and Schneider who are then selling our capacities to shippers. So if you can think of a large CPG we’ve probably hauled freight for them. We are building the software but we are also operating the trucks themselves.
Warning other drivers that a truck is self-driving is actually kind of an open question. The issue is, and this is a thing that we’ve seen in regular tests with a person in the cab, that we will have a lot of people driving next to us and see that there is a bunch of cameras (that get distracted). It seems like that if we had signs (saying that the truck is self-driving) that in itself may cause an issue.
Starsky Robotics Launching Fully Autonomous Long-Haul Truck in Florida
“Fiverr is the everything store for digital services,” says Fiverr CEO Micha Kaufman. “The way people usually find freelancers is they post on Facebook asking if someone knows a good graphics designer. What we’re doing is we’re making it a one-click experience. There’s no bidding, betting, negotiating. There’s browse, search, buy. It’s an Amazon experience to buy a digital service.”
Micha Kaufman, CEO of Fiverr, discusses today’s IPO and how Fiverr has become the Amazon for digital services in an interview on CNBC:
Fiverr Is The Everything Store For Digital Services
Fiverr connects freelancers with businesses of all sizes. Really, the uniqueness of the platform is that the experience of buying a digital service on Fiverr is very similar to shopping on Amazon. You browse, you search, you find something, you click order, and it’s done. Graphic design is one of our most popular services on the platform. Also popular are content marketing, videography, animation, music services, and marketing and advertising. Anything you can imagine.
It’s the everything store for digital services. The system helps you productize your offering. You can define what you’re offering, how much time it’s going to take you to deliver, and the asking price. All the buyers have to do is screen through the offerings, find something they like, click order and pay, and they are done.
It’s An Amazon Experience To Buy a Digital Product
In the categories in which we operate there is a volume of activity of $100 billion in the US alone. It’s still only a single digit percentage online. It’s a very old-school business. The way people usually find freelancers is they post on Facebook asking if someone knows a good graphics designer. What we’re doing is we’re making it a one-click experience. There’s no bidding, betting, negotiating. There’s browse, search, buy. It’s an Amazon experience to buy a digital service. Nobody has done it before. The average time to make an order on Fiverr is 15 minutes. this is unbeatable. It’s unmatched.
We take a take out of every transaction. It’s one of the industry-leading take rates of over 26 percent. If you look at the EBITDA margins, you see that they’re shrinking. The way we actually structured the business is that we continue to grow aggressively while shrinking our negative EBITDA. There is a clear path to profitability. We are operating in over 160 countries. Our growth is coming globally from the adoption of freelancing online.
Our Primary Competitor is Definitely the Offline Market
Our primary competitor is definitely the offline market. I don’t know if it’s 96 or 97 percent of the activity offline, but we don’t need to eat anyone’s lunch to grow. We just need to move offline activity to the online. The offline freelancing market is massive. we’ve estimated that market to be a hundred billion dollars in the US alone. Europe is 1.5 times bigger than the US. There are over 162 million freelancers between the EU and the US. The opportunity is massive and it’s just starting to come online. This is like 1995 for ecommerce. This is so exciting.
Fiverr doesn’t hire its freelancers. It’s just the market that connects freelancers with businesses that have their digital needs. The way the marketplace is structured is such where we don’t have any employee-employer relationships. We are not relying on freelancers. We’re just connecting that supply with a demand that comes forward. We’re the platform on top of which they actually conduct their transaction. We just provide the platform to make that happen. It is very different than Uber and Lyft.
Fiverr Is The Everything Store For Digital Services, Says Fiverr CEO Micha Kaufman
“We definitely help companies provide great customer experiences,” says Zendesk CEO Mikkel Svane. “That is the new currency of today. You can have the greatest product in the world and you can have the greatest service in the world, but if you don’t provide a great customer experience you’re not going to survive. I think we are in a magical place really being part of this revolution that is empowering customers and empowering businesses to provide a much better customer experience.”
Mikkel Svane, CEO of Zendesk, discusses how the company has helped change the world of customer expectations in an interview on CNBC:
Setting a New Bar For Customer Expectations
We are a software company. We build software solutions for better customer engagement, better customer service, and better customer experiences. We have more than 100,000 brands using our software. We are 3,000 people headquartered here in San Francisco. My broken English is because of my background from Denmark, but we’ve been in San Francisco for ten years and it’s been amazing. What we’ve seen over the last 10 years is that customer expectations have changed like crazy.
We’ve had the opportunity to work and have had the privilege to work with a lot of the companies here in San Francisco and Silicon Valley that have changed the world and changed the world of customer expectations. Companies like Uber, Airbnb, Pinterest, all these companies completely changed how we use services. We have worked with all of these guys and it has helped shape us as a company. It has set a new bar for how people are expecting the customer service and the customer engagements from the products and the services they’re using today.
If You Don’t Provide a Great Customer Experience You Won’t Survive
We definitely help companies provide great customer experiences. That is the new currency of today. You can have the greatest product in the world and you can have the greatest service in the world, but if you don’t provide a great customer experience you’re not going to survive. We started very much in the world of traditional inbound customer service. But in the world of CRM (customer relationship management) all the disciplines within that touches the customer whether that be on the sales side, the shopping side, the service side, the marketing side, all of these things seamlessly flow together.
From the customer perspective, it’s just one big experience. You don’t want to know if you are talking to sales or marketing or support, you just want to have one experience. That’s why it’s important for us to help power all of these experiences and bring them together.
Competition is great. Customers go with Zendesk and customers come to us because they want to keep up with customer expectations. That’s not just about digital transformation. It’s really about staying agile, staying quick, and keeping up with the constant change of customer expectations. That’s the world we are in today. What is working today, what is fantastic today, is going to be mundane tomorrow. It’s a generational thing too. Different generations have different expectations. My kids are going to be ruthless.
Empowering Businesses To Provide a Much Better Customer Experience
What we have done most recently is that we’ve launched a new platform concept that is built on AWS called Zendesk Sunshine. It’s open, it’s super scalable. and it’s very developer friendly. It allows you as a business to tie all the different things together. Amazon Web Services is a huge free platform. Every business is moving more and more of the infrastructure to AWS. It’s because it’s an architectural change. It’s a new way of being able to tie everything together without necessarily having to rely on formal partnerships between these businesses. That’s very much what we believe in.
Our customers are serving about a billion consumers and customers every single year. It’s really like helping our customers in keeping up with the massive demand and the massive expectations of businesses today. I think we are in a magical place really being part of this revolution that is empowering customers and empowering businesses to provide a much better customer experience. We really enjoy it.
If You Don’t Provide a Great Customer Experience You Won’t Survive, Says Zendesk CEO
