7 ms·

Benchmark is trying to cut their losses and limit their exposure to a complete Uber meltdown. If possible, they would probably offload the bulk of their shares

Benchmark is trying to cut their losses and limit their exposure to a complete Uber meltdown. If possible, they would probably offload the bulk of their shares to SoftBank at a loss just to wash their hands of the situation. - Uber cannot support its operational business without massive VC subsidies (without drastically raising prices and losing their primary competitive advantage) - It's too easy for small, local competitors to enter the market - Uber has been trounced in two of the largest non-US markets - Waymo legal mess - The sheer volume/scale of scandal engulfing the company may be impossible to recover from - Current valuation makes an IPO under less than perfect conditions very challenging. If this was a well organized, planned round of funding, Benchmark wouldn't have gone behind the backs of the other board members & major shareholders to try and strike some shady deal.

capkutay 9y ago
> Benchmark is trying to cut their losses Didn't Benchmark get in very early? If they got in Series A or B..there are no losses for them. They probably have at least a 10-20x payout already.
praneshp 9y ago
- Uber has been trounced in two of the largest non-US markets I assume one is China, which is the other one?
- toomuchtodo 9y ago
  Russia. (Forced Yandex merger at unfavorable terms)
  - furioussloth 9y ago
    Why are the terms unfavorable? Financially the terms look very favorable in one of politically toughest marker outside US.
  - lenley 9y ago
    It looks like Uber maybe pulling out of India as well: https://www.recode.net/2017/7/14/15964808/uber-global-domination-yandex-didi https://www.recode.net/2017/7/14/15964808/uber-global-domina...
    - praneshp 9y ago
      Ugh. That sucks. As much distaste I have for Uber, Ola knocks it out of the park in creepiness.
    - bruceb 9y ago
      That article has zero evidence of this. They are not leaving India.
    - throwaway34332 9y ago
      That article is pure speculation. There is no evidence whatsoever presented to support that
  - malandrew 9y ago
    toomuchtodo is a Tesla investor, so pay no attention to the naysaying as it's motivated by conflict of interest.
    - toomuchtodo 9y ago
      Malandrew is an Uber employee.
      - malandrew 9y ago
        Assuming that were true, what you've just done is doxxed an HN user, which is against site guidelines. The difference between what I did and what you did, is that my comment is based on your comment on Hacker News where you said you were a Tesla investor (https://news.ycombinator.com/item?id=13354703 https://news.ycombinator.com/item?id=13354703), whereas I've never made mention of why I'm supportive of Uber. You're right, I am, but I've never said why. I'm also supportive of Tesla too, for whatever that is worth. If you want to say someone is supportive of a company based on past previous comments and submissions on Hacker News, that's fine but doxxing someone based on content not on Hacker News is not kosher.
        toomuchtodo 9y ago
        I've identified your employer who you shill for, not your personal details. I haven't doxxed you, and I expect better from someone who considers themselves a professional.
        malandrew 9y ago
        Links to comments where I've shilled for them? I generally try to refrain on commenting on Uber except occasionally to add simple factual corrections, such as the one about Salle Yoo being promoted to CLO. What I am happy to comment on however is disclosing which of the commenters critical of Uber are critical because they have an undisclosed conflict of interest, such as yourself.
- deleted 9y ago
  [deleted]
xyzzy_plugh 9y ago
Look, I know HN loves to hate on Uber, but much of what you say feels more like FUD than a rational explanation. Let's break it down: > Uber cannot support its operational business without massive VC subsidies (without drastically raising prices and losing their primary competitive advantage) As they're not yet public, we have mostly speculation. We don't know this for sure. > It's too easy for small, local competitors to enter the market I completely agree, but are the small, local competitors not subsidized by investors like Uber? I don't understand how a competitor without backing could compete against an established super corp. > Uber has been trounced in two of the largest non-US markets From an investor's perspective, they came out ahead. > Waymo legal mess We'll have to wait and see, but I think everyone needs to take this with a grain of salt. Many, many large companies are in constant lawsuits with each other. Read the Amazon Investor's report, for example -- there are three pages of lawsuits, some of which have been ongoing for over a decade. > The sheer volume/scale of scandal engulfing the company may be impossible to recover from I think this is magnified by the Valley -- peers and friends outside of California seem to either not know, or not care deeply. I honestly don't think Uber's bottom line has been harmed. > Current valuation makes an IPO under less than perfect conditions very challenging. I think this was always the case. I don't see what's new now versus two years ago. I think Uber has just as hard a time as, say, AirBNB. > If this was a well organized, planned round of funding, Benchmark wouldn't have gone behind the backs of the other board members to try and strike some shady deal. At least in my circle, it's widely understood that Bill Gurley burned all his bridges to get Travis out. It's even been suggested he's been the leaker Mike Isaac of the New York Times has been getting his information from. I think Benchmark has destroyed their confidence with the rest of the board (which Travis is still on) and wants to rinse their hands -- I'm sure the feeling is mutual. What does it say if Softbank takes the deal? Softbank is a huge, successful megacorp. They bought ARM! I would think that if Softbank buys shares in Uber, it's because they see future profits -- which is different than Benchmark's games. Not to mention that Softbank may be a great addition to Uber's board. If Benchmark exits at even 60% of the current valuation, they're out waaaay ahead. This really seems like a win-win-win for all parties involved.
- deleted 9y ago
  [deleted]
deleted 9y ago
[deleted]
diebir 9y ago
I thought Waymo thing has essentially fizzled, no? http://www.mercurynews.com/2017/07/07/waymo-drops-most-patent-claims-in-autonomous-car-fight-with-uber/ http://www.mercurynews.com/2017/07/07/waymo-drops-most-paten...
- munchbunny 9y ago
  That didn't read like a fizzled case. It reads like Waymo opened up by throwing everything and the kitchen sink at Uber, and now as the case is progressing, the number of legal fronts being fought is getting reduced to a manageable number that Waymo was expecting in the first place. It's unsurprising that the patent parts are getting reduced, since the obvious allegation was theft of trade secrets anyway.
- ipsum2 9y ago
  Did you read the article you linked? First two paragraphs: > Waymo, Alphabet’s self-driving car division, dropped three of four patent infringement claims in its lawsuit against Uber Technologies over the startup’s autonomous vehicle program. > Waymo’s decision to include patent claims in its lawsuit against Uber was a surprise move for Google parent Alphabet, which normally prides itself on limiting patent fights. The bulk of Waymo’s case is not over patents, but trade secrets.
- deleted 9y ago
  [deleted]
flylib 9y ago
a loss? are you joking? Benchmark investment in Uber is tracking to be one of the best VC investments ever made, 11 million series A + whatever money they put in pro rata and their stake is currently worth anywhere from 5 billion to 14 billion, 20% of Uber (Series A) + dilution
- beager 9y ago
  Based on their current valuation, exercising pro rata could have turned out to be a lot of money, but certainly not 5-14BB. They may be looking to dump at a big discount to the current valuation though, which could put them near a wash or a loss.
njj023 9y ago
This has got to be one of the most surface-level analysis of Uber that I have come across (even by HN's standard of near consistent animosity towards Uber and any other pre-IPO startups including FB in its day). To illustrate: "Uber cannot support its operational business without massive VC subsidies (without drastically raising prices and losing their primary competitive advantage" - As another poster replied, this is pure speculation that is outdated by a couple of years at this point. The VC subsidy point is essentially moot in most mature markets. "It's too easy for small, local competitors to enter the market" - Read up on GETT, Via and their struggles. You need massive operational investments to enter this industry which reduces the field to one or two competitors in all regions. Uber just appears to have so much competition given the amount of markets they are in. "Uber has been trounced in two of the largest non-US markets" - 36% stake in one large competitor and 20% in another is your definition of "trounce"? This puts them at a better position than even Google or FB who are non-existent in the very markets you talk about -- and it could provide them with their Alibaba moments where these stakes themselves carry parts of their valuation (Didi was valued at 50B recently marking Uber's stake at 10B) "Waymo legal mess" - Plenty of news about potential settlement not to mention the severe weakening of Google's position post Anthony's firing "The sheer volume/scale of scandal engulfing the company may be impossible to recover from" - For the most part only applies to the bay area bubble most of us are in. They still continue to be in a highly dominant position in US. "Current valuation makes an IPO under less than perfect conditions very challenging." - Fair point.
- ams6110 9y ago
  Uber has: No CEO. No CFO. No COO. No General Counsel. Recent turnover at heads of business, policy and communications, engineering, and product. Amazon or Google or any other cloud provider could spin up a service that pairs drivers with ride-seekers. This kind of software is no longer a secret sauce and they have the infrastructure to scale instantly and the customer base to market it easily.
  - austenallred 9y ago
    > Amazon or Google or any other cloud provider could spin up a service that pairs drivers with ride-seekers I'm not sure I've ever seen the difficulty of starting a marketplace company with built-in network effects so vastly underestimated.
atishd 9y ago
by cut their losses, I assume you mean lock in a portion of gains. to have an idea of returns Benchmark and other investors experience at Uber's most recent valuation (which doesn't mean that's exactly what SoftBank would pay, if at all), see Uber's Path to IPO: https://equityzen.com/path-to-ipo/uber/ https://equityzen.com/path-to-ipo/uber/ These return estimates are net of liquidation preferences. Even if the transaction takes place and does so at a price slightly lower than the recent valuation, early investors are sitting on a healthy return on investment and internal rate of return. Disclaimer: I work at EquityZen, the preparer of the estimates in the info graphic linked above.
atishd 9y ago
by cut their losses, I assume you mean lock in a portion of gains. to have an idea of returns Benchmark and other investors experience at Uber's most recent valuation (which doesn't mean that's exactly what SoftBank would pay, if at all), see Uber's Path to IPO: https://equityzen.com/path-to-ipo/uber/ https://equityzen.com/path-to-ipo/uber/ These return estimates are net of liquidation preferences. Even if the transaction takes place and does so at a price slightly lower than the recent valuation, early investors are sitting on a healthy return on investment and internal rate of return. Disclaimer: I work at EquityZen, the preparer of the estimates in the info graphic linked above.
petraeus 9y ago
Leaving Russia was a pre-flop fold, you just don't do it unless you've already conceded your hand will can't win. Uber is dead in 5 years.

capkutay 9y ago

> Benchmark is trying to cut their losses Didn't Benchmark get in very early? If they got in Series A or B..there are no losses for them. They probably have at least a 10-20x payout already.

praneshp 9y ago

- Uber has been trounced in two of the largest non-US markets I assume one is China, which is the other one?

toomuchtodo 9y ago
Russia. (Forced Yandex merger at unfavorable terms)
- furioussloth 9y ago
  Why are the terms unfavorable? Financially the terms look very favorable in one of politically toughest marker outside US.
- lenley 9y ago
  It looks like Uber maybe pulling out of India as well: https://www.recode.net/2017/7/14/15964808/uber-global-domination-yandex-didi https://www.recode.net/2017/7/14/15964808/uber-global-domina...
  - praneshp 9y ago
    Ugh. That sucks. As much distaste I have for Uber, Ola knocks it out of the park in creepiness.
  - bruceb 9y ago
    That article has zero evidence of this. They are not leaving India.
  - throwaway34332 9y ago
    That article is pure speculation. There is no evidence whatsoever presented to support that
- malandrew 9y ago
  toomuchtodo is a Tesla investor, so pay no attention to the naysaying as it's motivated by conflict of interest.
  - toomuchtodo 9y ago
    Malandrew is an Uber employee.
    - malandrew 9y ago
      Assuming that were true, what you've just done is doxxed an HN user, which is against site guidelines. The difference between what I did and what you did, is that my comment is based on your comment on Hacker News where you said you were a Tesla investor (https://news.ycombinator.com/item?id=13354703 https://news.ycombinator.com/item?id=13354703), whereas I've never made mention of why I'm supportive of Uber. You're right, I am, but I've never said why. I'm also supportive of Tesla too, for whatever that is worth. If you want to say someone is supportive of a company based on past previous comments and submissions on Hacker News, that's fine but doxxing someone based on content not on Hacker News is not kosher.
      - toomuchtodo 9y ago
        I've identified your employer who you shill for, not your personal details. I haven't doxxed you, and I expect better from someone who considers themselves a professional.
        malandrew 9y ago
        Links to comments where I've shilled for them? I generally try to refrain on commenting on Uber except occasionally to add simple factual corrections, such as the one about Salle Yoo being promoted to CLO. What I am happy to comment on however is disclosing which of the commenters critical of Uber are critical because they have an undisclosed conflict of interest, such as yourself.
deleted 9y ago
[deleted]

xyzzy_plugh 9y ago

Look, I know HN loves to hate on Uber, but much of what you say feels more like FUD than a rational explanation. Let's break it down: > Uber cannot support its operational business without massive VC subsidies (without drastically raising prices and losing their primary competitive advantage) As they're not yet public, we have mostly speculation. We don't know this for sure. > It's too easy for small, local competitors to enter the market I completely agree, but are the small, local competitors not subsidized by investors like Uber? I don't understand how a competitor without backing could compete against an established super corp. > Uber has been trounced in two of the largest non-US markets From an investor's perspective, they came out ahead. > Waymo legal mess We'll have to wait and see, but I think everyone needs to take this with a grain of salt. Many, many large companies are in constant lawsuits with each other. Read the Amazon Investor's report, for example -- there are three pages of lawsuits, some of which have been ongoing for over a decade. > The sheer volume/scale of scandal engulfing the company may be impossible to recover from I think this is magnified by the Valley -- peers and friends outside of California seem to either not know, or not care deeply. I honestly don't think Uber's bottom line has been harmed. > Current valuation makes an IPO under less than perfect conditions very challenging. I think this was always the case. I don't see what's new now versus two years ago. I think Uber has just as hard a time as, say, AirBNB. > If this was a well organized, planned round of funding, Benchmark wouldn't have gone behind the backs of the other board members to try and strike some shady deal. At least in my circle, it's widely understood that Bill Gurley burned all his bridges to get Travis out. It's even been suggested he's been the leaker Mike Isaac of the New York Times has been getting his information from. I think Benchmark has destroyed their confidence with the rest of the board (which Travis is still on) and wants to rinse their hands -- I'm sure the feeling is mutual. What does it say if Softbank takes the deal? Softbank is a huge, successful megacorp. They bought ARM! I would think that if Softbank buys shares in Uber, it's because they see future profits -- which is different than Benchmark's games. Not to mention that Softbank may be a great addition to Uber's board. If Benchmark exits at even 60% of the current valuation, they're out waaaay ahead. This really seems like a win-win-win for all parties involved.

deleted 9y ago
[deleted]

deleted 9y ago

[deleted]

diebir 9y ago

I thought Waymo thing has essentially fizzled, no? http://www.mercurynews.com/2017/07/07/waymo-drops-most-patent-claims-in-autonomous-car-fight-with-uber/ http://www.mercurynews.com/2017/07/07/waymo-drops-most-paten...

munchbunny 9y ago
That didn't read like a fizzled case. It reads like Waymo opened up by throwing everything and the kitchen sink at Uber, and now as the case is progressing, the number of legal fronts being fought is getting reduced to a manageable number that Waymo was expecting in the first place. It's unsurprising that the patent parts are getting reduced, since the obvious allegation was theft of trade secrets anyway.
ipsum2 9y ago
Did you read the article you linked? First two paragraphs: > Waymo, Alphabet’s self-driving car division, dropped three of four patent infringement claims in its lawsuit against Uber Technologies over the startup’s autonomous vehicle program. > Waymo’s decision to include patent claims in its lawsuit against Uber was a surprise move for Google parent Alphabet, which normally prides itself on limiting patent fights. The bulk of Waymo’s case is not over patents, but trade secrets.
deleted 9y ago
[deleted]

flylib 9y ago

a loss? are you joking? Benchmark investment in Uber is tracking to be one of the best VC investments ever made, 11 million series A + whatever money they put in pro rata and their stake is currently worth anywhere from 5 billion to 14 billion, 20% of Uber (Series A) + dilution

beager 9y ago
Based on their current valuation, exercising pro rata could have turned out to be a lot of money, but certainly not 5-14BB. They may be looking to dump at a big discount to the current valuation though, which could put them near a wash or a loss.

njj023 9y ago

This has got to be one of the most surface-level analysis of Uber that I have come across (even by HN's standard of near consistent animosity towards Uber and any other pre-IPO startups including FB in its day). To illustrate: "Uber cannot support its operational business without massive VC subsidies (without drastically raising prices and losing their primary competitive advantage" - As another poster replied, this is pure speculation that is outdated by a couple of years at this point. The VC subsidy point is essentially moot in most mature markets. "It's too easy for small, local competitors to enter the market" - Read up on GETT, Via and their struggles. You need massive operational investments to enter this industry which reduces the field to one or two competitors in all regions. Uber just appears to have so much competition given the amount of markets they are in. "Uber has been trounced in two of the largest non-US markets" - 36% stake in one large competitor and 20% in another is your definition of "trounce"? This puts them at a better position than even Google or FB who are non-existent in the very markets you talk about -- and it could provide them with their Alibaba moments where these stakes themselves carry parts of their valuation (Didi was valued at 50B recently marking Uber's stake at 10B) "Waymo legal mess" - Plenty of news about potential settlement not to mention the severe weakening of Google's position post Anthony's firing "The sheer volume/scale of scandal engulfing the company may be impossible to recover from" - For the most part only applies to the bay area bubble most of us are in. They still continue to be in a highly dominant position in US. "Current valuation makes an IPO under less than perfect conditions very challenging." - Fair point.

ams6110 9y ago
Uber has: No CEO. No CFO. No COO. No General Counsel. Recent turnover at heads of business, policy and communications, engineering, and product. Amazon or Google or any other cloud provider could spin up a service that pairs drivers with ride-seekers. This kind of software is no longer a secret sauce and they have the infrastructure to scale instantly and the customer base to market it easily.
- austenallred 9y ago
  > Amazon or Google or any other cloud provider could spin up a service that pairs drivers with ride-seekers I'm not sure I've ever seen the difficulty of starting a marketplace company with built-in network effects so vastly underestimated.

atishd 9y ago

by cut their losses, I assume you mean lock in a portion of gains. to have an idea of returns Benchmark and other investors experience at Uber's most recent valuation (which doesn't mean that's exactly what SoftBank would pay, if at all), see Uber's Path to IPO: https://equityzen.com/path-to-ipo/uber/ https://equityzen.com/path-to-ipo/uber/ These return estimates are net of liquidation preferences. Even if the transaction takes place and does so at a price slightly lower than the recent valuation, early investors are sitting on a healthy return on investment and internal rate of return. Disclaimer: I work at EquityZen, the preparer of the estimates in the info graphic linked above.

atishd 9y ago

petraeus 9y ago

Leaving Russia was a pre-flop fold, you just don't do it unless you've already conceded your hand will can't win. Uber is dead in 5 years.