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Uber confirms SoftBank has agreed to invest
- foota 9y agoIs the share auction first come first serve? Or how is that done?
- raiyu 9y agoIt's an internally sponsored secondary which means that the buyer has already been determined which in this case is Softbank and Uber will put together some requirements around which share holders can sell and what amount of their stake. Something typical is if you have been at the company for X number of years, you can sell X% of your vested equity. They will have a large bank or some other third party as the underwriter for the deal to figure out the correct pricing and then offer it to the employees that are eligible to sell shares until they reach the buyer's total requested amount, which in this case is $9B.
- JumpCrisscross 9y ago> They will have a large bank or some other third party as the underwriter for the deal Secondaries aren’t underwritten; they’re brokered. Underwriters purchase the shares for their own account and then resell them. In a secondary, the buyer and seller negotiate directly.
- vikiomega9 9y agoSo it sounds like the deal was to get Travis Kalanick back onboard/Benchmark an exit?
- yeukhon 9y agoKalanick has always been on the board. He never left, but he has struggled to appoint two new board members, which results in Benchmark suing Kalanick. It is specualted SoftBank's investment is to reduce Kalanick's power on the board. Also, I don't think anyone in their right mind would want Kalanick back as CEO; perhaps in the future like Steve Jobs. But Kalanick has much to learn, despite I do feel bad for him for losing his beloved mother while he was ousted as the CEO, regardless of how he ran his company. He basically lost two things he has loved a lot, accordingly to him, which I can understand from my own experience. In anyway, SoftBank is known for very acute investment, so with SoftBank stepping in, the board won't allow any more fuck-ups. Though I am very surprised SB didn't invest in Uber early on...
- econner 9y agoThe secondary markets have Uber shares at an ~$50 billion valuation. So that speaks somewhat to what the lower valuation is going to be for the tender offer.
- RileyJames 9y agoCan anyone explain why $1B is being invested at a $70B valuation, while existing share holdings are being purchased at a lower/to be determined valuation?
- nostromo95 9y agoI imagine it’s literally as arbitrary/inane as you’d guess — they want to keep their official private valuation propped up.
- tomasien 9y agoGuess again
- raiyu 9y agoThe $1B that is being invested at the $70B valuation is direct from the company and Softbank will be purchasing preferred shares like any other VC. These preferred shares have extra rights, things like liquidation preference, board seats, voting rights, etc. What specifically they will receive is unknown, but at the very least they will have a 1x liquidation preference on that $1B invested, which means if the company sells for the total amount of money raised (well below $70B), the investors get all of their money back. So think of preferred shares like "insured" shares, which is why investors are willing to pay more, because the likelihood of entirely losing their investment is lowered significantly. However, Uber may not want to raise more capital, take on extra dilution, etc, so they are selling only $1B that will flow to their balance sheet. The other $9B will be purchased from common shares, or employee shares. These shares do not have these preferred rights and most significant they do not carry a liquidation preference. Which means if the company sells for the amount raised, or below that, you lose the entire $9B. Since there is no downside protection and there is no liquid market, this is usually used to negotiate a lower price than that of preferred shares. If there had been considerable time between when the last priced round happened and when secondary shares are purchased then the investor may have to buy them above the last round price because the company has made significant traction and the perceived value of the company is now higher. But since the last two priced rounds are at the $70B mark and these shares are unsecured, they will usually be bought at a discount. How much varies but you can expect a 10-30% lower price. However, since this is sponsored by the company early employees will most likely be allowed to sell shares at a very large valuation compared to what their strike price is.
- hatred 9y agoCouple of queries if anyone happens to know: - Would existing employees with stock options be allowed to sell or the ones with RSU's are also eligible? - Would ex employees be eligible too?
- vnchr 9y ago“SoftBank has been working with Morrison Foerster, known as MoFo.”
- theDoug 9y agoNo one wants the FOMO.
- JetSpiegel 9y agohttps://www.urbandictionary.com/define.php?term=mofo https://www.urbandictionary.com/define.php?term=mofo > A person who thinks they are the shit, dressed down with sagging pants, a high need for a belt, too much gold to make the national reserve jealous, and an attitude that stems from not having parents who knew how to refrain from the use of crack cocaine. Don't sue me for libel, I'm quoting "deez nutz"!
- indescions_2017 9y agoRecall, Apple is also principle investor in Softbank Vision Fund. As Google recently made its own $1B deal with Lyft. Feels like lines already drawn in the sand, are turning into trenches. Google’s Waymo passes milestone in driverless car race https://www.ft.com/content/dc281ed2-c425-11e7-b2bb-322b2cb39656 https://www.ft.com/content/dc281ed2-c425-11e7-b2bb-322b2cb39...
- tmh79 9y agoI somewhat disagree with your take on the "lines already drawn in the sand". The world is bigger than google and apple, lyft and uber. The ridesharing space in particular is fraught with seemingly strange investment partners. Here is a bloomberg article a week ago with more info: https://www.bloomberg.com/gadfly/articles/2016-08-16/ride-hailing-investments-make-strange-bedfellows https://www.bloomberg.com/gadfly/articles/2016-08-16/ride-ha....
- sidko 9y agoApple's contribution to the Vision Fund is only 1% of the total Vision Fund's raise [1]. [1] https://techcrunch.com/2017/01/04/apple-joins-softbanks-vision-fund-with-1-billion-investment/ https://techcrunch.com/2017/01/04/apple-joins-softbanks-visi...
- clusmore 9y agoSo how is Uber's runway looking now? This article [1] from August suggests they had just over three years of runway at the end of June ($6.6b burning at about $2b/yr). So this extends the runway by only six months? Are they going to survive long enough to see autonomous drivers? How will this deal affect future funding? [1] https://venturebeat.com/2017/08/23/uber-is-still-burning-cash-at-a-rate-of-2-billion-a-year/ https://venturebeat.com/2017/08/23/uber-is-still-burning-cas...
- ProAm 9y agoThey did just sign a contract with NASA to help fly taxi aeroplanes [1] [1] https://www.reuters.com/article/us-portugal-websummit-uber/uber-in-deal-with-nasa-to-build-flying-taxi-air-control-software-idUSKBN1D81AE https://www.reuters.com/article/us-portugal-websummit-uber/u...
- thatcherc 9y agoWhoa that's pretty crazy. 200 mph flying cars in LA in 3 years? Interesting that it's a NASA project. Hopefully that means we'll get the see how the system works even if it doesn't doesn't pan out.
- yeukhon 9y agoThey might spin off the autonomous program into another company to raise fund, prior to IPO, perhaps, just a thought. I think that's a better option financially.
- moxious 9y agoIf the autonomous stuff works (HUGE if) it would completely change the core business. I can't see why they'd spin it off. Why sell your future unless you think it won't work out.
- yeukhon 9y agoI am not really good at this stuff, but I see separating focus. Call it UberAuto, Uber would become UberAuto's parent company. UberAuto could receive new VC rounds and a new CEO appointed, focus on the autonomous development, while the parent company focuses on its core business and get ready for IPO. Waymo is a spinoff from Google (and Alphabet is Google's parent company). Ebay, HP all have its own spinoffs. Edit: In fact the new Uber CEO Khosrowshahi guided Expedia spinoff. See [3]. So a spinoff isn't unlikely. The spin-off could be just a research entity, but license to parent company later. [1]: https://www.nytimes.com/2016/12/13/technology/google-parent-company-spins-off-waymo-self-driving-car-business.html https://www.nytimes.com/2016/12/13/technology/google-parent-... [2]: https://dealbook.nytimes.com/2014/10/15/companies-seeing-the-advantages-in-spinoffs/ https://dealbook.nytimes.com/2014/10/15/companies-seeing-the... [3]: https://qz.com/1063313/new-uber-ceo-expedias-dara-khosrowshahi-was-the-highest-paid-ceo-in-the-sp-500-in-2015/ https://qz.com/1063313/new-uber-ceo-expedias-dara-khosrowsha...
- deleted 9y ago[deleted]
- rmahindra 9y agoAwesome, this startup is capable of anything!
- dreamdu5t 9y agoInvestors have lost the plot. Uber is nothing more than a taxi company using VC capital to undercut competitors. There are no self driving cars. That’s just a story to get money and make the brand bigger than its product. Come back to reality. There is no futuristic mars colony with Uber robots driving everyone around. It’s just a bunch of taxi drivers with dispatch replaced by an app.
- leggomylibro 9y agoFools and their money are soon parted. But then again, the market can stay irrational longer than any individual can stay solvent. Ah, screw it; things just happen, what the hell.
- abvdasker 9y agoPlease take your uninformed cynicism somewhere else. Uber's self-driving division is one of the 3-5 groups leading the pack right now (with Waymo obviously in front). It is anything but a scam, and even a basic attempt to Google Uber's self-driving program will show you videos of their very real results. Your premise that self-driving cars are just a publicity stunt for Uber doesn't even make sense given that the company has spent close to a billion dollars on the project. If Uber's self-driving program was really "just a story to get money and make the brand bigger than its product" they could have faked it for far less than that.
- fergie 9y agoIts fair to question just how far AI driving can possibly go at the moment. Most of the AI we have today is being used for classification and recommendation in fairly low-stakes environments (advertising, (search, social)). It _is_ a big jump from that to powering large metal boxes that move at high speed around built up areas. Yes, of course AI driving is coming, but in the next 3 years? Almost certainly not. And then there's the question of where the next advances in AI are likely to emerge from- Google and Amazon? MIT, Oxford or Stanford? A well capitalised startup?
- Lordarminius 9y agoThere are no self driving cars - yet. The time scale to realization is measured in decades - longer than is currently promised but the tech companies involved wont tell you that.... I agree with all you on all the other points.
- muzani 9y agoThat's interesting. SoftBank invested a similar amount into their rivals Grab to head up against Uber. https://techcrunch.com/2017/07/23/grab-raises-2b-from-didi-chuxing-and-softbank/ https://techcrunch.com/2017/07/23/grab-raises-2b-from-didi-c...
- Carioca 9y agoAlso in Brazil's "99", Uber's biggest competitor over here.
- rileymat2 9y agoIf Uber was only a world wide Taxi company with virtually no capital costs, wouldn’t this be incredibly profitable alone? I am not clear on the impetus everyone sees for Uber creating self driving cars. If developed by another company, can’t they just add them to the service? Do they really want to be responsible for that capital?
- timewarrior 9y agoUber is valuable only because it has solved a two party network problem at a city level. You need drivers and you need riders. If you don't have any drivers riders won't come and vice versa. Two party networks are much more difficult to solve than one party network problems. Because with two party networks you have a chicken and egg problem. Anyone who has solved self driving, has near unlimited scale on the driver side. Their cars can autonomously be present to respond to peak demand - e.g having thousands of cars at Burning Man. In the autonomous car world, Uber has no place if it doesn't have that tech. There is almost no reason for the company which has self driving tech to license it to Uber, when they are easily run it themselves. The only value Uber has right now is because it has crossed the critical mass on the two party network. And some people thought they could solve self driving cars. OTOH, a global two party network (e.g Airbnb) is exponentially tougher than a city level two party network. Which is why Airbnb has almost no competition (except some local players in China), while Uber has competition everywhere. In fact, Uber has already lost and conceded a few major markets (China, Russia). Can Uber - even sustain what they already have. I have my doubts and theories, but that's for another day.
- rileymat2 9y agoWouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? Additionally you need people maintaining them.
- timewarrior 9y agoMy understanding is that in a reasonably stable state, an autonomous car would run on battery, charge itself and cost 40k. If a car has a life time of 5 years and electricity costs 4k/yr + 2k maintenance (lower for electric cars), we are looking at operational cost of 14k/yr per vehicle. Right now an Uber driver who is probably online 60 hours a week, needs to support a car priced around 25k (amortized over 5 years), gas (which is more expensive than electricity), maintenance and 50k-70k/yr driver income. Assuming lower end we are looking at 5k car + 10k fuel + 5k maintenance + 50k driver income. So cost to support a driving car is 70k/yr for lower hours of operation. So we are looking at a 5x cost and lesser hours of operation with human driving vs autonomous driving. These are off the napkin numbers so please don't take them literally. It is meant to highlight that driver income is the biggest factor. Whoever has self driving tech, they can start undercutting Uber with the most profitable markets (NYC, SF, Boston, LA etc) and expand from there. I feel that we are at least 5-8 years away from main stream self driving. But I could be wrong.
- paulsutter 9y agoTunnels are more important than Uber or self driving cars “Without tunnels we’ll be in traffic hell forever” -Elon Musk
- thomasfoster96 9y ago> Tunnels are more important than Uber or self driving cars > “Without tunnels we’ll be in traffic hell forever” -Elon Musk Public transport solves all the problems tunnels solve as well. Tunnels don’t change the fact that cars (self-driving or not) are still an incredibly inefficient use of space when they’re all going in the same direction to the same place.
- paulsutter 9y agoThe Boring Company agrees with you. Tunnels are not just for cars. They will be 200kph subways where you never need to change trains: https://static1.squarespace.com/static/5915617137c58104451ac5fb/5915632303596e4ba92724de/59261f6cf7e0ab55ef3e5102/1509233545268/Skate_5_23_2017_001%5B4%5D.jpg?format=1500w https://static1.squarespace.com/static/5915617137c58104451ac... (Image of shared/public transport tunnel vehicle)
- onion2k 9y agoSelf-driving cars don't solve the traffic problem, but they do solve the "hell" problem.
- CamperBob2 9y agoThere's a word for a properly-networked ensemble of self-driving cars: "Train." People around here like trains, I've noticed.
- cjsuk 9y agoI love trains. As long as I don't have to get on one. Car trains is an idea I could buy.
- parito 9y agoIt's interesting to note that just recently we had an article about taking money from the countries with abysmal human rights record, especially when you don't really need that money to survive. Softbank is 50 % saudi arabia public funds money.
- timewarrior 9y agoIn this case, it probably doesn't matter. Saudi Arabia is trying to buy all these assets to secure their future. Returns will likely be reinvested or stashed abroad! However with the dismal future of oil based economies and the unstable situation in Middle East - only scenario their would be able to retain these assets would be if they are somehow able to transition into a functioning (hopefully democratic), educated and productive society - which would be awesome! It's better for them and the world. I would love it if they are able to use this money to achieve that! If not they would descend into chaos and all assets would likely be seized by whichever country hosts them. E.g. Gaddafi! [1] https://www.theguardian.com/world/2011/feb/28/us-treasury-blocks-libya-assets https://www.theguardian.com/world/2011/feb/28/us-treasury-bl... [2] https://www.theguardian.com/world/2012/mar/28/gaddafi-assets-seized-italy https://www.theguardian.com/world/2012/mar/28/gaddafi-assets... [3] https://www.theguardian.com/world/2011/feb/27/gaddafi-family-assets-frozen-queen https://www.theguardian.com/world/2011/feb/27/gaddafi-family...
- nopinsight 9y agoWhen I look at their runway and valuation going forward, IPO is the most probable path they will take. But it might imply some risks to the overall startup IPO scene in the future as well. Apparently Uber is bleeding about $2 billion a year and have only $6.6 billion in cash reserve. If this deal adds $1 billion more cash, then that would only last 4 years. Since full-scale self-driving cars launching across most major cities is unlikely to happen within 4 years, they will need to either: 1) Charge more and lose even more market share to Lyft. This is unlikely. 2) Raise more cash. IPO seems to be the easiest channel for them now. (Maybe SoftBank will provide it from their massive fund but they might also extract concessions from existing shareholders and buy at a very ‘attractive’ price (for SoftBank) but others will likely resist.) IPO sounds like a good plan for Uber. But if the price drops precipitously at some point afterward because it is outcompeted by other self-driving companies (e.g. Waymo + Lyft expands self-driving fleets to highly profitable market while Uber’s tech is still not ready) it may result in a chilling effect on the overall startup IPO scene as they are the largest unicorn in existence, and there are many startups that sell themselves as Uber for X. (Public investors may not be as astute as VCs in discerning differences in business models of similar sounding startups.)
- dump121 9y agoDara, the new CEO has said they are targeting a 2-3 year time frame for IPO.
- loceng 9y agoIPO is good for Uber - not for society though, who will be the ones to capture the losses. Also, Tesla often is brought up in this competition - usually mentioned between Uber and Lyft and Chinese companies - however Tesla is positioned to dominate here. I wouldn't doubt that they're working on the apps internally to create the shared vehicle system that Elon speaks of. How many vehicles could Tesla create AT COST spending the $2B / year that Uber is burning? Where Tesla has a fleet of assets on the road ...
- kogepathic 9y ago> How many vehicles could Tesla create AT COST spending the $2B / year that Uber is burning? While I don't disagree, I think the major question here is "how many vehicles can Tesla create" given their difficulties in scaling Model 3 production. Tesla could have the best self-driving tech, but if it is exclusive to their cars and they can't manufacture them fast enough, someone else will build their own fleet and win all the market share. Unfortunately I see Tesla's hurdle being manufacturing volume, and that's a lot harder to solve quickly than fitting sensors to existing cars.
- gourou 9y agoSaudi Arabia owns half of Softbank's Vision Fund and they already put $3.5 billion in Uber (5.6%), why would they want to double down? https://www.nytimes.com/2016/06/02/technology/uber-investment-saudi-arabia.html https://www.nytimes.com/2016/06/02/technology/uber-investmen... http://money.cnn.com/2017/09/20/technology/softbank-vision-fund-saudi-investments/ http://money.cnn.com/2017/09/20/technology/softbank-vision-f...
- loceng 9y agoIt's likely part of the exit strategy. They are confident they can get a maybe even a small return on billions of dollars, and Uber likely is hoping it looks like such a big 'positive signal' is a sign that Uber is a solid company to invest in..