Uber Price-Gouges Millennial Passenger $14,000 For 5-Mile Ride

One Millennial in Toronto got the shock of his life last Thursday evening when Uber charged him C$18,518.50 (around US$14,398) for a 5-mile trip from 12 Widmer, ST to 30 The Queensway in Toronto, that should have cost C$12 to C$40.

According to Votethehish’s friend, Emily Kennard took to Twitter and said, “My friend was charged 18K for a 20 Min ride (!), and they are sticking to it. What in the world??? This is insane! @Uber_Support @badassboz @Uber”

My friend was charged 18K for a 20 Min ride (!), and they are sticking to it. What in the world??? This is insane! @Uber_Support @badassboz @Uber pic.twitter.com/RjFihVLKIC

— Emily Kennard (@emilykennard) December 9, 2017

While combing through the dozen of replies to the initial tweet. We stumbled across an interesting interaction where Kennard said, “Uber is not backing down at the moment” from charging C$18,8158.

Uber appears to be shaking up more than the Taxi market in Toronto with its dynamic pricing model. One Twitter user replies, “surge pricing must have been 10,000% that day.”

Frustrated Twitter users voice their concerns for Uber, and even delete the app.

According to the Inquirer.Net, Uber issued a statement saying there was an error in the dynamic pricing model and it has been resolved.

“We have provided a full refund to this rider and apologized to him for this experience. We have safeguards in place to help prevent something like this from happening, and we are working to understand how this occurred,” the statement read.

Less than two weeks ago, we reported on a rather embarrassing moment for Uber, where a trifecta of events including investors drop out of the latest financing round, hackers steal 57 million customer profiles, and another massive quarterly loss are adding to speculation that Uber is a “Dead Unicorn Walking”… (see: Uber Reports Massive $1.5 Billion 3Q Loss As Two Investors Drop Out Of New Financing Round.)

Considering Uber’s statement reads, “we have safeguards in place to help prevent something like this from happening,” in Mr. Votethehish’s case, where were the safe guards?

Unicorn-holed: Softbank Coalition To Buy Uber Shares At A 30% Discount

And the hits keep coming for the unicornest unicorn in all of unicorn-land...

Back in the summer, we suggested - for numerous reasons - that Uber"s next round of financing may come at a significant discount to its current $69 billion valuation.

Overnight, headlines hit that SoftBank was said to have learned of last year"s hidden-to-the-public security breach about a month ago, and may have changed SoftBank’s evaluation of Uber’s shares, WSJ reports, citing people familiar with the matter. As a reminder, in addition to failing to notify users and the public about the information that was exposed, the company paid the hackers $100,000 to delete the data and subsequently had them sign nondisclosure agreements.

Furthermore, ReCode reports today that the city of Chicago is suing Uber for failing to disclose the 2016 breach of 57 million users’ data.

SoftBank was expected to proceed with an offer to buy billions of dollars worth of shares from Uber stakeholders as soon as this week, with a SoftBank-led investors group planning to start to buy at least 14% of Uber from existing shareholders through tender offer "at a steep discount."

Well tonight we find out just how steep that discount is...

Bloomberg reports that SoftBank and a coalition of investors will offer to buy shares in Uber at a price that would value the ride-hailing company at 30 percent less than its most recent $69 billion valuation, according to two people familiar with the matter.

 

The deal isn’t done, however. Shareholders will need to sell at the $48 billion price.

 

While it’s 30 percent less than the current valuation, the offer would represent a significant windfall for many early investors.

 

If shareholders don’t agree to sell in sufficient numbers, SoftBank could raise the price or walk away.

We suspect shareholders will be more than willing to dump their shares to monetize some of their rapidly declining investment or face being truly unicorn-holed.

Cash-Hemorrhaging Uber Announces Plans To Drop $1 Billion On Driverless Volvos

Earlier this summer we noted Uber"s staggering 2Q cash burn of $600 million which equates to roughly $7 million in net cash outflows every single day.  The staggering, and consistently growing, cash burn figures resulted in several mutual funds announcing they would slash their valuations of the struggling rideshare company by up to 15%. 

Of course, if cash burn was a concern before for Uber investors before then they should probably take note of the company"s newly announced decision to drop roughly $1 billion on driverless Volvos.  According to Bloomberg, Uber has just penned a deal to pick up 24,000 brand new Volvo XC90"s in their push to flood the U.S. market with self-driving taxis.

Uber Technologies Inc. agreed to buy 24,000 sport utility vehicles from Sweden’s Volvo Cars to form a fleet of driverless autos, Bloomberg News reports.

 

The XC90s, priced from $46,900 at U.S. dealers, will be delivered between 2019 and 2021 in the first commercial purchase by a ride-hailing provider, Volvo said in a statement Monday. San Francisco-based Uber will add its own sensors and software to permit pilot-less driving.

 

“This new agreement puts us on a path toward mass-produced, self-driving vehicles at scale,” Jeff Miller, Uber’s head of auto alliances, told Bloomberg News. “The more people working on the problem, we’ll get there faster and with better, safer, more reliable systems.”

 

“The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption,” Chief Executive Officer Hakan Samuelsson said. “It’s a new market that’s emerging and we’re the first to be delivering into that segment.”

Of course, as we"ve pointed out multiple times before, to the extent the technology works consistently, avoiding the nasty consequences of death and mayhem in the event of failure, autonomous vehicles are worth big money to Uber and consumers...though not so much for the automotive OEMs (see "Ford Announces Plans To Self-Destruct Starting In 2021").  As we"ve pointed out, the cost of paying drivers is a substantial portion of the roughly $1.00 per mile charge paid by Uber riders.  To the extent that cost can be removed from the equation then fares charged by companies like Uber will decline materially.

Unfortunately, for the auto OEMs the story is the exact opposite.  In theory, truly autonomous cars could result in substantial increases in passenger car utilization rates and, therefore, declines in annual car sales.  But apparently, Volvo CEO Hakan Samuelsson isn"t worried (yes, we can sense the pure optimism in the quote below):

“That could be seen as a threat,” says Volvo Cars CEO Hakan Samuelsson. “We see it as an opportunity.”

But still, even if the technology works, the question remains how quickly consumers will adopt it, if at all. Certainly there certainly has been no shortage of videos hitting Youtube lately of driverless cars plowing through red lights and getting into accidents...which seems less than ideal.

Half Naked Woman Who Stole Uber Driver"s Tips Complains Of Harassment After Video Goes Viral

Content originally published at iBankCoin.com

A half-naked woman whose theft of an Uber driver’s tips was caught on video is complaining of online harassment after footage of the brazen incident went viral.

Scantily clad 18 year old Gabrielle Canales – a horrible human being, was caught on surveillance video reaching into the Uber driver’s tip jar after she and two other passengers reached their destination in Brooklyn, New York.

After posting a now-deleted Instagram response in which Canales showed little remorse, the Crown Heights woman finally admitted she was “completely wrong” for stealing the money – $5.00 by her count – which she says she paid back.

“I understand I’m completely wrong and I’m not denying it,” Canales told BuzzFeed. “The lesson was learned that same day. That’s why the gentleman was paid back.”

Watch:

 

After the video went viral, Canales told Buzzfeed she’s been subject to harassment and mocking.

“I didn’t need this video to go viral to teach me a lesson. I learned the lesson that same day. Before the video went viral, the man was paid back,” Canales said. “I apologize on the matter once again.”

Canales then doubled down on her self-righteous half apology and played the woman card, saying “I’m wrong for taking $5, and according to the world, I need to die,” she said. “I understand I’m going to get hate from a lot of people and that’s something I accepted, but I don’t think it’s okay to disrespect me as female.”

Uber bans woman, ignores driver

Following the incident, Uber banned the woman from the platform, stating “What’s been shown has no place on our app and the rider’s access to the app has been removed.” The driver, meanwhile, told the Daily Mail that he was “too busy working to file a police report after the video was filmed.”

When he reached out to Uber, they sent him a canned response:

We understand your frustration with this experience. We’ve attempted to contact the rider by phone and email, but haven’t been able to resolve this issue. The rider responded to us and advised us that she didn’t steal your cash from the tip jar. If you believe the rider has your cash as captured from your dash cam and is refusing to return it, you may want to initiate a formal investigation via the police.

Uber drivers raping passengers, passengers robbing Uber drivers – some of whom were then shortchanged by the company … I bet the ridesharing behemoth can’t wait to replace those pesky human drivers with self-driving cars.

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Brits Have Suddenly Stopped Buying Cars

 Unless the press or Robert Mueller come up with a smoking gun, a dead body, and a cache of rubles, we can assume Donald Trump will be our president for a full four-year term. But Trump as President continues to sabotage himself. He risks becoming irrelevant because no one will take him seriously. Which might be a good thing.

The United States Of Unicorns

The United States is home to 105 unicorn companies valued at $1B+.

As of 7/25/2017, CBInsights.com reports that six private US companies are worth over $10B. The two most valuable unicorns in the US are Uber ($68B) and Airbnb ($29.3B). Palantir Technologies and WeWork, both valued at $20B, are tied for third.

Of the top four highest valued, only WeWork (which is based in NYC) is headquartered outside California.

California has the highest unicorn “population” of any US state by far, with 62 billion-dollar startups inside its borders. New York ranks second with 15, followed by Massachusetts and Illinois with five each. Eight other states and the District of Columbia are also home to at least one company worth $1B+.

click image for huge legible version

Key insights about the companies in this map:

• Collectively, US unicorns are worth approximately $360B.


• Combined, these companies have raised just over $73B.


• After California, New York, Massachusetts, and Illinois, the next-highest unicorn populations are found in Utah (with four) and Florida (with three).


• The top five most well-funded US unicorns are: Uber ($15.1B raised), Airbnb ($4.4B), WeWork ($2.76), Infor ($2.63B), and Lyft ($2.46B).


• The oldest unicorn in the US is the greentech company Bloom Energy, which reached a valuation above $1B in 2009.


• The newest unicorn in the US is 3D printing startup Desktop Metal, which became a unicorn in July 2017 after raising a $115M Series D.


• The three most active investors in US-based unicorns, by total number of deals to these companies, are the VC firms Sequoia Capital, Andreessen Horowitz, and Tiger Global Management.   – CBINSIGHTS

Meet DiDi: China's Answer To Uber

For better or worse, just about everybody has heard of Uber. Over the last few years, the ride-haling company has grown to dominate the market in the U.S. and beyond, currently operating in over 400 cities around the globe - despite significant resistance and outright bans in some places. DiDi, on the other hand, is unlikely to be on your radar. Having bought out Uber"s operations in China last year, the company currently enjoys 95 percent market share in its home country.

As Statista"s Martin Armstrong notes, the infographic below shows if it were to come to a game of Top Trumps, DiDi wouldn"t be such a bad card to hold.

You will find more statistics at Statista

Founded in 2012, and working on the basis of almost $16 billion worth of funding, it has amassed 38.5 million monthly users (compared to Uber"s 40), is active in around 400 cities and is valued at $50 billion.

As illustrated in the Statista report "The Chinese Passenger Car Market Outlook", revenue from ride sharing in China is projected to see a CAGR of 32 percent from 2016 to 2021. Likewise, the number of users is expected to grow by 15 percent.

As Uber begins to falter and face stiffer competition from alternatives like Lyft, it might not be long before DiDi is the biggest ride hailing company in the world.

Gauging The Economic Impact Of Uber

Authored by Andrew Zatlin via MoneyballEconomics.com,

Uber has been in the headlines for all the wrong reasons over these past couple months.

I’m sure you’ve seen or heard the headlines.

From sexual harassment, to discrimination, to “Greyball” – software that helped Uber drivers evade law enforcement.

Everything seems to be imploding for Uber. Amidst all the controversy, CEO Travis Kalanick resigned yesterday.

Yet we should not overlook the major economic impact of Uber (and its main competitor Lyft).

According to Uber and Lyft, there are over 400,000(K) registered active drivers in the US.  

An active driver is someone who has provided at least 4 rides per month.

The number of taxi and limo drivers reached 77K in 2013 – an increase of 18% from 2010. Taxi and limo driver payrolls hit 8K in 2015 and 2016. But dropped to 76K this year… essentially leaving payrolls flat for the last 4 years.

You could even argue the 5% decline in payrolls this year were taxi and limo drivers jumping ship to Uber.

But looking from an even higher view,  we now have 400K part-time contractors.

These part-time contractors are not included in the non-farm payrolls numbers.  So any employment upside is being missed in the government data.

Who Wins, Who Loses?

Uber & Lyft will generate $8 billion (bn) in revenue in 2017.  

The U.S. Taxi industry generates $19B annually (per IBIS World).

This hasn’t changed much even with the advent of the ride-sharing economy.  Which means that Uber is not replacing the taxi industry as much as it is augmenting it by releasing pent-up demand.

Understand that the taxi industry is a local monopoly.  New York, LA, Las Vegas, San Francisco – the taxi rights are owned by individual companies.

The origins of the U.S. regulated taxi industry goes back to the Depression.  

To make ends meet… car owners offered ride-sharing. But supply overwhelmed demand and prices plunged.  

To prop up workers, cities began to regulate the industry in order to limit the number of drivers. They created a limited number of licenses (aka medallions) which they sold.  

Eventually a market emerged for those medallions and some smart business people began to scoop them up. Some became billionaires by doing this.

(The fight against Uber is really a fight between billionaire monopolists and a monopoly-busting service. Banks also have a heavy interest in keeping the taxi industry alive because they borrowed a ton of money to buy up the medallions.)

But limiting the number of licensed taxis also capped the number of rides.

If you’ve been to San Francisco, you know hailing a cab is pointless. There aren’t very many.  

As Uber is showing, massive pent-up demand has existed and is generating $8bn of incremental economic activity that is being distributed across hundreds of thousands of workers.

Is Uber Cyclical (part of a booming economy), Counter-cyclical (part of trying to make ends meet), or a bit of both?

There are full-time Uber drivers but most are part-time drivers trying to supplement their income.

An active economy creates the demand for drivers. But when the economy turns down, we’ll likely see even more drivers but less demand. Unlike the Depression, price regulation will be in place because Uber has to make a profit somehow.

KEY TAKEAWAY: Uber has disrupted the ride-sharing economy. However, the government, banks, and taxi monopolists won’t allow Uber to completely put them out of business… at least for the foreseeable future.

When the economy turns, more people will take up driving (increasing supply) as consumers pull back their wallets (decreasing demand). Prices will drop.

Eventually more regulation will be put in place for companies like Uber and Lyft.

How Much Do People Actually Make From "Gigs" Like Uber And Airbnb

Via Priceonomics.com,

Coined shortly after the financial crisis in 2009, the so-called “gig economy” or “sharing economy” refers to the growing cadre of companies like Airbnb, Lyft, and TaskRabbit—platforms that employ temporary workers who provide a wide variety of services: delivery, ridesharing, rentals, and odd jobs. A recent Pew study estimated that nearly a quarter of all Americans earn some money through these platforms.

But how much money are the service providers in the sharing economy actually making from their "side-gigs"?

We analyzed anonymized data from Priceonomics customer Earnest, a loan provider, and examined tens of thousands of loan applicants to see how much people are earning on side-gig platforms and how these platforms stack up against each other.

We looked at a span of data accounting for just over two years, and for each worker, we analyzed a pay period of between one and 27 months. We do not know how many hours of work the income represents for each platform, as each one has a unique pricing and commission structure. 

Furthermore, this data is just reflective of the Earnest user base, who are typically refinancing college loans and therefore may be more likely to be treating these services as a “side-gig” than the typical service provider who may be more likely to treat it as a fulltime job and have different earning levels.

We found that 85% of side-gig workers make less than $500 a month. And of all the side-gig platforms we examined, Airbnb hosts earn the most by far.

In our data, on all but Lyft and Uber, we excluded any worker who made a total $10 or less from a platform to eliminate data points that could simply represent a refund from the company. For Lyft and Uber, we excluded anyone with a total income of $50 or less. Then we tallied the average monthly incomes made by workers at each company.

Data source: Earnest

Making an average of $924 off their platform each month, Airbnb hosts make nearly three times as much as other workers. Workers at the general task-service platform, TaskRabbit, rank second at $380 per month. Overall, Lyft and Uber drivers make roughly the same average per month at $377 and $364 respectively. We also observed that nearly a quarter of Lyft drivers also earned income from Uber—and of that subset, we saw that the average income was actually higher for Uber ($481 vs $396.)

Of course, on all of these platforms, there is a wide range of earners. Several Airbnb hosts in our records, for instance, made over $10,000 per month, while others made less than $200.

To really understand these averages above, we took a deeper look at these ranges. Below, we’ve charted out the income distribution for each company. The figures represent the percentage of workers who fall into each month income bracket.

Data source: Earnest

Airbnb hosts enjoy the highest average monthly earnings because there is a much wider range of income distribution on that platform than at other companies: Nearly half of all hosts make more than $500 per month.

Conversely, the majority of workers at some other companies (Etsy, Uber, Fiverr) fall into the $100 or under per month bracket.

Tallying all of these companies up, the overall distribution tilts strongly toward the lower end.

Data source: Earnest

Some 84% of all gig economy workers make less than $500 per month—but in particular, workers at Getaround (98.3% under $500 per month), Fiverr (96.3%), and Etsy (95%) have especially high percentages of low-earners.

Reasons for the low income could vary—some workers may be simply trying the platform, or put in very few hours.

Lyft, Taskrabbit, and Airbnb seem to beat this “84% under $500” average.

Data source: Earnest

It might be easy to look at this data and assume that gig economy workers are working at below market rates. After all, $500 per month is hardly a livable wage. For the industry, the key question is how many of these workers are utilizing these platforms to make a little extra cash as a side-gig versus trying to forage a full-time living.

Uber Suffers Major Setback In Efforts To Conquer European Market

For years Uber has been battling with Barcelona taxi drivers who have argued that UberPOP engages in unfair competition by using unlicensed drivers that are not subject of the same regulatory hurdles as a regular "transport company."  And while Uber has historically taken the approach of just entering new markets and sorting out the regulatory hurdles later, it looks like those hurdles are finally catching up with them in the European Union...which we suspect will not be well received by Uber"s private investors that recently dumped money into the company at a modest $68 billion valuation.

As Reuters noted today, the Court of Justice of the European Union"s (ECJ) Advocate General Maciej Szpunar has just issued a preliminary opinion that Uber is actually a "transport service" and not just an app.  Of course, the ruling is significant because, if it stands, it would require Uber to operate effectively as a taxi company and thus provide insurance to drivers and guarantee that they are properly licensed and complying with all safety regulations.  Per Reuters:

Although the opinion of the Court of Justice of the European Union"s (ECJ) Advocate General Maciej Szpunar is non-binding, its judges usually follow such advice and are likely to reach a final ruling in the landmark case in the coming months.

If the ECJ does rule that Uber is a transport service, this is likely to have an impact on the Silicon Valley firm"s operations in Estonia, Poland, Czech Republic, and Finland where it still runs UberPOP, using amateur drivers to pick up riders.

The ECJ"s final ruling cannot be appealed by Uber

While Uber has repeatedly argued in similar cases that they are merely a "market maker" matching taxi demand with supply, the ECJ"s Szpunar saw it differently finding that Uber "does much more than link supply and demand: it created this demand itself" adding that "Uber can thus be required to obtain the necessary licenses and authorizations under national law."

However, the ECJ"s Szpunar said that Uber"s argument that it merely matches supply and demand between drivers and passengers was a "simplistic view of its role."

"The Uber electronic platform, whilst innovative, falls within the field of transport: Uber can thus be required to obtain the necessary licenses and authorizations under national law,"

"In effect, Uber does much more than link supply and demand: it created this demand itself," Szpunar wrote.

The service provided by Uber amounts to the "organization and management of a comprehensive system for on-demand urban transport," the ECJ said.

Regulating the software company as a "new economy" information service meant treating Uber as if it was simply an air traffic controller or market maker connecting drivers to passengers.

Instead, by forcing Uber to comply with myriad local transportation regulations – some dating back as long as a century – it must take more responsibility for certifying, insuring and paying its drivers, as taxi firms now do.

Meanwhile, Uber representatives were dismissive of the initial ruling saying that such decisions only serve to "undermine the much needed reform of outdated laws..."

A spokeswoman for Uber said it would await the ECJ"s final ruling, but added it "would not change the way we are regulated in most EU countries as that is already the situation today".

And a ruling against it would "undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button," she added.

Of course, the real question is just how long the negative news can continue to pile up for Uber before all those investors who just added nearly $13 billion to company coffers at a $68 billion valuation start to get a little nervous that the company is still burning a couple billion dollars a year.  Do we smell a dreaded "down round" coming up?

Uber President Quits After Allegedly Deciding Series Of Scandals Were Just Too Much

Jeff Jones, the former Target CMO who joined Uber less than a year ago as President of Silicon Valley"s priciest "decacorn", is leaving the company, according to Recode.  Jones is reportedly exiting as the company deals with a flurry of recent controversies, including allegations of sexual harassment and an embarrassing video that surfaced last month of Uber CEO Travis Kalanick berating an Uber driver.  Kalanick also recently announced a search for a COO to help him better steer the ship, though it"s unclear whether the layering of the executive management team affected Jones" decision to leave.  Per Recode:

Jeff Jones, the president of Uber, is quitting the car-hailing company after less than a year. The move by the No. 2 exec, said sources, is directly related to the multiple controversies there, including explosive charges of sexism and sexual harassment.

Jones, said sources, determined that this was not the situation he signed on for, especially after Uber CEO Travis Kalanick announced a search for a new COO to help him right the very troubled ship.

That was not the reason for Jones’ departure, sources said, even though it meant that Kalanick was bringing in a new exec who could outrank him. Instead, these sources said, Jones determined that the situation at the company was more problematic than he realized.

Jones spent much of the beginning of his tenure as president meeting with drivers and attempting to address the concerns of the people that serve as the face of the company.  In the earlier months of his tenure he penned a letter to drivers saying, "It’s clear that there’s much we can be doing better. Listening is where we get our best ideas, because they come from you, the people using Uber every day."

Of course, any goodwill that was potentially built with drivers through Jones efforts was likely quickly erased by a 3:50 video posted last month by one driver who captured his heated exchange with Uber CEO Travis Kalanick on video and subsequently shared it with Bloomberg.  The conversation started off with the driver complaining that Uber was "raising the standards, and dropping the prices" and culminated with Kalanick storming out of the car after condescendingly telling the driver to "take responsibility for his own shit."

 “Bullshit.  Some people don"t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!”

Of course that latest mishap, just added to what has already been a relatively rough couple of months for Uber which has included everything from patent infringement lawsuits to sexual harassment charges to Kalanick being forced to resign from Trump"s business advisory council.  Per Bloomberg:

In December, Uber pulled its self-driving cars off the road in San Francisco after the California Department of Motor Vehicles said they were operating illegally without an autonomous vehicle license. In January, more than 200,000 people uninstalled their accounts, and #DeleteUber trended on Twitter, after the company was accused of undermining a New York taxi union strike protesting President Donald Trump’s refugee ban. On Feb. 2, Kalanick reluctantly left his spot on Trump’s business advisory council to appease the company’s liberal-leaning employees and users—not to mention its many immigrant drivers. On Feb. 19, a former software engineer at Uber wrote a blog post alleging that she had been propositioned for sex by her manager and that when she’d taken the issue to human resources, an HR rep had said that he wouldn’t be punished, in part, because he was a “high performer.” On Feb. 23, Alphabet’s autonomous car company Waymo sued Uber and its self-driving car company Otto, accusing an Uber employee of stealing trade secrets by downloading 14,000 files onto an external hard drive. On Monday, Uber’s head of engineering resigned after the company said it learned that he had faced a sexual harassment complaint at Alphabet, his former employer. He denied the allegations.

Uber has not yet confirmed Jones" departure.

These Guys Are Destroying Uber (Yet Few Westerners Have Ever Heard Of Them)

Via Peter K of SovereignMan.com,

I’m visiting my brother in Indonesia right now.

Being a good host, he was fixing us vodka martinis, when he realized he ran out of olives.

Both of his drivers had finished for the day so I was expecting him to compromise on the olives.

No need.

He loaded up a mobile phone app and ordered a jar of olives.

Fifteen minutes later there was a knock on the door and a guy was there with a jar of olives… at the regular retail price, with zero additional charge for delivery.

Later that evening we went out to a bar and needed transportation.

Again, Tony jumped on his app, and within seconds we had an awaiting vehicle outside his house.

It cost 75 CENTS to be driven in style to the bar, and another 75 cents to be driven back again.

In the downstairs office of his house, I noticed a massage table and asked his wife about it. “We occasionally order a massage from time to time from the app. It costs almost nothing.”

By “almost nothing” she meant $7 an hour for a professional massage – in your home.

The app is called “Go-Jek”, and it offers everything you could want: car, motor bike (faster in Jakarta traffic, and even cheaper), food delivery, shopping, tickets, payments (and electronic wallet), manicure and beauty treatment, pharmaceuticals, cleaning services, auto repair services and more.

Out on the street, about a third of the bikes wear the green livery of Go-Jek. Occasionally you’ll see an Uber as well.

Seeing this buzz on the ground is precisely why we travel around the world looking for business opportunities to invest in.

You can’t get a sense of a country from Google or from CNN.

Being on the ground opens your eyes to the lightning-fast change that occurs when a developing country adapts new technology.

This sort of rapid transition economy creates gaping opportunities that simply don’t exist in North America, Europe, and other mature markets.

And in the rare instance when a business is actually able to make a significant and lasting impact in a major developed market like the US, the company’s valuation will be insane.

Snapchat is expected to IPO at around $20 billion later this week.

AirBnB is still private and raised money several months ago at a $30 billion valuation.

Uber is currently worth nearly $70 billion.

(All of those companies lose money, by the way…)

Indonesia’s Go-Jek, meanwhile, raised capital last year at a pre-money valuation of $750 million, 98% less than what Uber is worth.

The reason for this massive disparity is simple: many investors can’t be bothered to look beyond their own backyards.

It’s as if anything worth investing in is exclusively in the United States.

This classic herd mentality means that there’s too much money chasing around too few opportunities.

As a result, investors buy over-valued stocks, bonds that yield nothing, or private companies that are worth tens of billions of dollars despite racking up massive losses.

They’re completely unaware what incredible opportunities lie overseas.

The rest of the world has the opposite problem: there are too many great businesses and not enough capital.

Some of the biggest, most exciting markets in the world are totally overlooked by the investing public.

Go-Jek is a great example; only a handful of foreign funds have invested, and most people have never heard of it.

I’ve been finding amazing companies here which are already profitable. And yet, they can’t raise capital to fund their expansion.

And Indonesia is far from alone.

We’re looking at investments in Eastern Europe, South America and Asia which most funds can’t touch because they are too small and not in America — no matter how profitable they are, and how compelling their potential.

I was in Georgia recently (the country, not the state) and was shocked at how many profitable companies were in need of capital.

(Special note to Total Access and SMPI members: we’ve completed due diligence on our next deal in Georgia and will have the report to you soon, followed by my findings in Indonesia. Stay tuned.)

Bottom line, the world is a big place and there are compelling opportunities everywhere… as long as you have the intellectual independence to look beyond your own borders.

Do you have a Plan B?

Uber's CEO Wants You To Know He's "Ashamed" Of Leaked Video Footage; Says He Needs To "Grow Up"

Last night, following the video leak of a combative exchange between Uber CEO Travis Kalanick and his driver over Uber"s fare structure, which culminated with Kalanick suggesting that his driver should "take responsibility for his own shit", we asked: "So, where should we set the over/under on Kalanick"s remaining tenure with Uber?"

Fast forward less than 24 hours and it"s clear that Kalanick is feeling the pressure after sending an apology email to Uber staff saying that he"s "ashamed" of his comments and clearly needs to "grow up" and seek "leadership help." Per the Financial Times:

“To say that I am ashamed is an extreme understatement,” Mr Kalanick said in an email to Uber staff.

“My job as your leader is to lead . . . and that starts with behaving in a way that makes us all proud. That is not what I did, and it cannot be explained away.”

He added: “It’s clear this video is a reflection of me and the criticism we’ve received is a stark reminder that I must fundamentally change as a leader and grow up. This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.”

Mr Kalanick apologised to “the driver and rider community, and to the Uber team”.

Sure, because the best place to "grow up" and learn how to be a good "leader" is at the helm of a $60 billion company.

* * *

For those who missed it, here is what we wrote about Kalanick"s leaked video:

Earlier this month, on Superbowl Sunday, in fact, Uber CEO Travis Kalanick hopped into an Uber Black Car with two female companions for what he thought would be just another easy trip to the destination of his choice.  Unfortunately, this particular ride got a little more complicated than he had hoped when his driver, 37-year-old Fawzi Kamel, decided to confront him on Uber"s falling fares, which he alleged had cost him a total of $97,000 and forced him into bankruptcy.  After the ride, Kamel rated Kalanick at 1-star and submitted his recorded conversation with the confrontational CEO to Bloomberg. 

The first 3 minutes and 50 seconds of the video is nothing more than a series of awkward exchanges between Kalanick and his special lady friends along with a series of random body gyrations to the tune of Maroon 5"s "Don"t Wanna Know". 

That said, things start to heat up when one of the young ladies implies that Uber is having a rough year financially (she must be a reader).  Of course, Kalanick responds by implying that burning hundreds of millions of dollars annually is all part of his master plan:

“I make sure every year is a hard year.  That’s kind of how I roll. I make sure every year is a hard year. If it’s easy I’m not pushing hard enough.”

But things really get interesting when Kalanick"s driver decides to confront him on falling Uber fares:

Kamel: “You’re raising the standards, and you’re dropping the prices.”

Kalanick: “We’re not dropping the prices on black.”

Kamel: “But in general the whole price is—”

Kalanick: “We have to; we have competitors; otherwise, we’d go out of business.”

Kamel: “Competitors? Man, you had the business model in your hands. You could have the prices you want, but you choose to buy everybody a ride.”

Kalanick: “No, no no. You misunderstand me. We started high-end. We didn’t go low-end because we wanted to. We went low-end because we had to because we’d be out of business.”

Kamel: “What? Lyft? It’s a piece of cake right there.”

Kalanick: “It seems like a piece of cake because I’ve beaten them. But if I didn’t do the things I did, we would have been beaten, I promise.”

Kamel: “But people are not trusting you anymore. … I lost $97,000 because of you. I"m bankrupt because of you. Yes, yes, yes. You keep changing every day. You keep changing every day.”

Kalanick: “Hold on a second, what have I changed about Black? What have I changed?”

Kamel: “You changed the whole business. You dropped the prices.”

Kalanick:  “Bullshit.  Some people don"t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!”

We must admit that we"re somewhat perplexed by Kamel"s argument as Uber fares, now and in the future, are clearly headed in precisely one direction, irrespective of who"s sitting in the CEO"s chair, and that is, well, down...but it makes for good entertainment anyway.

Fast forward to the 3:50 mark for the fireworks:

As Bloomberg points out, this incident just adds to what has already been a relatively rough couple of months for Uber which has included everything from patent infringement lawsuits to sexual harassment charges to Kalanick being forced to resign from Trump"s business advisory council.

In December, Uber pulled its self-driving cars off the road in San Francisco after the California Department of Motor Vehicles said they were operating illegally without an autonomous vehicle license. In January, more than 200,000 people uninstalled their accounts, and #DeleteUber trended on Twitter, after the company was accused of undermining a New York taxi union strike protesting President Donald Trump’s refugee ban. On Feb. 2, Kalanick reluctantly left his spot on Trump’s business advisory council to appease the company’s liberal-leaning employees and users—not to mention its many immigrant drivers. On Feb. 19, a former software engineer at Uber wrote a blog post alleging that she had been propositioned for sex by her manager and that when she’d taken the issue to human resources, an HR rep had said that he wouldn’t be punished, in part, because he was a “high performer.” On Feb. 23, Alphabet’s autonomous car company Waymo sued Uber and its self-driving car company Otto, accusing an Uber employee of stealing trade secrets by downloading 14,000 files onto an external hard drive. On Monday, Uber’s head of engineering resigned after the company said it learned that he had faced a sexual harassment complaint at Alphabet, his former employer. He denied the allegations.

So, where should we set the over/under on Kalanick"s remaining tenure with Uber?

Caught On Tape: Uber CEO Argues With Driver Over Declining Fares - "Take Responsibility For Your Own Shit"

Earlier this month, on Superbowl Sunday, in fact, Uber CEO Travis Kalanick hopped into an Uber Black Car with two female companions for what he thought would be just another easy trip to the destination of his choice.  Unfortunately, this particular ride got a little more complicated than he had hoped when his driver, 37-year-old Fawzi Kamel, decided to confront him on Uber"s falling fares, which he alleged had cost him a total of $97,000 and forced him into bankruptcy.  After the ride, Kamel rated Kalanick at 1-star and submitted his recorded conversation with the confrontational CEO to Bloomberg. 

The first 3 minutes and 50 seconds of the video is nothing more than a series of awkward exchanges between Kalanick and his special lady friends along with a series of random body gyrations to the tune of Maroon 5"s "Don"t Wanna Know". 

That said, things start to heat up when one of the young ladies implies that Uber is having a rough year financially (she must be a reader).  Of course, Kalanick responds by implying that burning hundreds of millions of dollars annually is all part of his master plan:

“I make sure every year is a hard year.  That’s kind of how I roll. I make sure every year is a hard year. If it’s easy I’m not pushing hard enough.”

But things really get interesting when Kalanick"s driver decides to confront him on falling Uber fares:

Kamel: “You’re raising the standards, and you’re dropping the prices.”

Kalanick: “We’re not dropping the prices on black.”

Kamel: “But in general the whole price is—”

Kalanick: “We have to; we have competitors; otherwise, we’d go out of business.”

Kamel: “Competitors? Man, you had the business model in your hands. You could have the prices you want, but you choose to buy everybody a ride.”

Kalanick: “No, no no. You misunderstand me. We started high-end. We didn’t go low-end because we wanted to. We went low-end because we had to because we’d be out of business.”

Kamel: “What? Lyft? It’s a piece of cake right there.”

Kalanick: “It seems like a piece of cake because I’ve beaten them. But if I didn’t do the things I did, we would have been beaten, I promise.”

Kamel: “But people are not trusting you anymore. … I lost $97,000 because of you. I"m bankrupt because of you. Yes, yes, yes. You keep changing every day. You keep changing every day.”

Kalanick: “Hold on a second, what have I changed about Black? What have I changed?”

Kamel: “You changed the whole business. You dropped the prices.”

Kalanick:  “Bullshit.  Some people don"t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!”

We must admit that we"re somewhat perplexed by Kamel"s argument as Uber fares, now and in the future, are clearly headed in precisely one direction, irrespective of who"s sitting in the CEO"s chair, and that is, well, down...but it makes for good entertainment anyway.

Fast forward to the 3:50 mark for the fireworks:

As Bloomberg points out, this incident just adds to what has already been a relatively rough couple of months for Uber which has included everything from patent infringement lawsuits to sexual harassment charges to Kalanick being forced to resign from Trump"s business advisory council.

In December, Uber pulled its self-driving cars off the road in San Francisco after the California Department of Motor Vehicles said they were operating illegally without an autonomous vehicle license. In January, more than 200,000 people uninstalled their accounts, and #DeleteUber trended on Twitter, after the company was accused of undermining a New York taxi union strike protesting President Donald Trump’s refugee ban. On Feb. 2, Kalanick reluctantly left his spot on Trump’s business advisory council to appease the company’s liberal-leaning employees and users—not to mention its many immigrant drivers. On Feb. 19, a former software engineer at Uber wrote a blog post alleging that she had been propositioned for sex by her manager and that when she’d taken the issue to human resources, an HR rep had said that he wouldn’t be punished, in part, because he was a “high performer.” On Feb. 23, Alphabet’s autonomous car company Waymo sued Uber and its self-driving car company Otto, accusing an Uber employee of stealing trade secrets by downloading 14,000 files onto an external hard drive. On Monday, Uber’s head of engineering resigned after the company said it learned that he had faced a sexual harassment complaint at Alphabet, his former employer. He denied the allegations.

So where should we set the over/under on Kalanick"s remaining tenure with Uber?

Cab Industry On Verge Of Collapse? Capital One's Taxi NPL Rate Soars Above 50%

Having abandoned its venture to lend out roughly $1 billion to legacy Taxi "Medallion" drivers and businesses some two years ago, and shifting its backing over to Uber resulting in many unhappy drivers as well as a handful of lawsuits, Capital One has nonetheless provided a useful spotlight into the troubled state of the traditional "yellow cab" industry by breaking out the details of its runoff commercial taxi medallion loan portfolio in its quarterly reports.

And according to the latest, just released report (in which COF incidentally missed both the top and the bottom line, reported EPS and revenue of $1.45 and $6.60 billion, both below expectations), the US taxicab industry must be on the verge of collapse, because in COF"s Q4 report, the company reported that while the size of its runoff Medallion "held for investment" loans tumbled by $83 million from $773MM to $690MM, it was the surge in the nonperforming loan rate that was the stunner: surging from 38.8% in Q3 to a whopping 51.5% in Q4, it suggests that legacy cab drivers in the US are not only barely making money, but are in financial dire straits.

Of course, the irony is that the Medallion industry"s biggest nemesis, Uber, is likewise burning through billions in venture capital cash every year in hopes of putting its legacy competitor out of business. And, if these Capital One numbers are any indication, it may soon succeed.

Uber Has Too Much Debt For IPO (Video)

By EconMatters

We discuss Uber`s massive debt which we estimate around 4 to 4.5 Billion in aggregate, with a total capital raise of 11 Billion. The total debt number is astounding to say the least, but it is the rate of change of the debt number that is mindboggling. I don`t believe Uber has the Financials to go public, and investors risk losing everything at this rate of cash burn over the next three years. Uber may be the biggest high profile startup to file for bankruptcy before they make it to the IPO exit for the payoff for investors.

Uber has a spending problem, reminds me of Napster, quite a disruptor but not a profitable business model, flawed wasted energy, that becomes totally irrelevant and obsolete in five years anyway. Uber is essentially a glorified Ponzi scheme if you really get right down to the crux of the finances of this company. There are going to be sizable losses for all the investors valuing this company at a 62.5 Billion Valuation. That number will mean diddly squat in bankruptcy court!  

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle   

Uber Accuses NYC Of Snooping On Its Passengers: "They Want Full Details Of Every Trip You Ever Take"

One month ago, the highest-valued private company in the world, with a valuation of $68 billion, Uber got in trouble with privacy advocate when it was revealed that the ride-hailing company can now track its passengers" locations after they are dropped off and even when their app has been closed. As revealed in a new update to Uber"s app, the global taxi service could collect passenger data up to five minutes after a journey has finished.

On its website Uber said: "Uber collects your location data from the time of trip request through five minutes after the trip ends, including when the app is in the background.

The firm defended itself by saying that the data will cut down on the frustrating back-and-forth often experienced by customers, as drivers try to ascertain exactly where their passengers are.

And while mobile apps tracking every habit of its users is hardly new, a new twist emerged this morning, when Uber sent out a notification to its users, accusing none other than New York City of demanding that it hand over all its "sensitive" passenger info data, including "where you’re dropped off, as well" in an attempt to "to piece together the full details of every trip you ever take," a move which creates "serious privacy risks."

From the email sent to clients:

Today, New York City requires Uber and other companies to hand over a lot of sensitive personal passenger data, including where you"re picked up on every trip. Now, New York City wants more. They"re trying to force companies to tell them where you’re dropped off, as well.

In other words, they want to piece together the full details of every trip you ever take. Several independent privacy experts have said this policy creates "serious privacy risks." And that it would give the government "and anyone else who accesses this information a comprehensive, 360-degree view into the movements and habits of individual New Yorkers." Click below to send a clear message that enough is enough.

https://twitter.com/intent/tweet?&text=.@nyctaxi%20I%20don%27t%20want%20my%20private%20Uber%20trip%20data%20in%20a%20government%20database.&hashtags=TLCDontTrackMe

Yours is the most powerful voice in this debate. We need your help. New York City doesn’t need this data and they’ve shown in the past that they cannot prevent it from becoming public.

Considering that the government is already in the process of launching it own "Ministry of Truth" to crack down on opposing media viewpoints, we don"t find this latest attempt of government and municipal overreach surprising at all.

Uber's Massive Cash Burn Problem: 2016 Loss Set To Hit A Record $3 Billion

With a valuation of $68 billion as of December 2016 - more than GM and Twitter combined - Uber is, according to the WSJ"s Unicorn Database, the most valuable private company in the world.

And yet, despite its eye-popping valuation courtesy of a growth curve which until recently was truly unprecedented (at least until the company"s sudden withdrawals from China), Uber has a big problem: an unprecedented cash burn, which if not getting worse with every passing quarter, is certainly not getting better.

Back in August, Bloomberg reported that Uber"s first half loss was roughly $1.4 billion ($580MM in Q1 and well over $800MM in Q2) on just over $2 billion in revenue ($960MM in Q1 and $1.1BN in Q2): it was burning approximately $1.6 dollars in costs and overhead (mostly in the form of an ongoing attempt to price the competition out of business by subsidizing drivers using VC cash).

This follows a loss of $2 billion in 2015, and had, as of Q2, lost at least $4 billion in the history of the company. Of this, however, Uber reportedly lost at least $2 billion in China as a result of a failed attempt to penetrate the local market which it abandoned later in the summer, which while sapping growth potential in China, also supposedly stem losses associated with the Chinese market.

Furthermore, the H1 loss came at a time when its fortunes in the US were said to be changing, and the company vowed it was turning a profit in Q1, only to revert back to its money losing ways in Q2 and onward.

As Bloomberg said at the time, "It"s hard to find much of a precedent for Uber"s losses. Webvan and Kozmo.com—two now-defunct phantoms of the original dot-com boom—lost just over $1 billion combined in their short lifetimes. Amazon.com Inc. is famous for losing money while increasing its market value, but its biggest loss ever totaled $1.4 billion in 2000. Uber exceeded that number in 2015 and is on pace to do it again this year."

Fast forward three months, when overnight Bloomberg reported that Uber"s cash burn problems continued, and in the third quarter, Uber lost another $800 million, bringing its total loss for the first nine months of the year to "significantly more" than $2.2 billion. The good (and bad) news is that even as its cash burn grew, so did Uber"s revenue which rose even leaving the world"s most populous country, and is said to have generated about $3.76 billion in net revenue in the first nine months of 2016, or about $1.7 billion in Q3 revenue and, according to Bloomberg, is on track to exceed $5.5 billion this year. The problem - if only from a cash burn basis - is that when 2016 closes in ten days, Uber is also expected to have burned a record $3 billion.

Another problem, one which comes as less of a surprise, is that growth in Uber"s bookings - the total combined value of the fares that riders pay - is slowing down: these came in at $5.4 billion in the third quarter, an increase from $5 billion in the second quarter and $3.8 billion in the first. The slowdown in Uber"s bookings growth can at least partially be explained by the company"s decision to leave China. Uber said on Aug. 1 that it came to an agreement with Didi Chuxing to exit China in exchange for 17.5 percent of the Chinese company. As part of the deal, Didi invested $1 billion in Uber. Uber"s third-quarter financials don"t include the business in China, which were part of the previous quarterly results.

But the biggest problem is that despite the growth in revenues, Uber"s losses continue to gross in a proportional manner, suggesting that the company has little if any control over its bottom line: as noted above, in Q1 the loss was about $580 million and by Q2 it significantly exceeded $800 million, including China. That number is likely far higher.

Even in the U.S., Uber"s home market, the company continues to lose money. After turning a slight profit in the in the first quarter of this year, Uber lost $100 million in the U.S. in the second quarter. The loss increased in the third quarter, the person said. Lyft, Uber"s largest U.S. competitor, has promised investors that it will keep its losses below $150 million a quarter.

What does all of the above mean? During Uber"s Q2 presentation with investors, the company"s head of finance, Gautam Gupta said that subsidies for Uber"s drivers are responsible for the majority of the company"s losses globally. Which means that Uber continues to cut prices in an aggressive attempt to gain market share. While for now this plan has worked, and Uber has become a dominant player in most venues in which it operates (except, perhaps, the most important one of all China), this strategy only works as long as Uber has has to, literally, burn to capture market share (something which in the end backfired dramatically on Saudi Arabia in a similar experiment over the past two years), and as long as its investors are willing to keep writing equity checks to the company at ever higher valuations - a down round for Uber would be the beginning of the end.

For now, however, the company"s main competition - established taxi and transportation companies - are proving resilient, and despite the aggressive cost pressures from Uber, few have been bankrupted, and while the price of a Yellow Cab medallion has plunged from $1.3 million in 2014 to just $250,000 recently, New York City is still not only dominated by taxis, Uber still has a long way to go before it can get even close to catching up to its competition in terms of volume.

Meanwhile, Uber"s success will go on only as long as the company has blow billions in hopes it puts its competitors in bankruptcy before its cash runs out. Alas, a few more years like 2015, in which the company burned a whopping $3 billion despite a rising top-line, and Uber"s prospects are suddenly starting to look rather shaky. Meanwhile, the winner in this massive "deflationary" battle to the bottom is the consumer, for whom transportation prices have rarely been lower. So dear Venture Capitalists, please continue to fund Uber and subsidize deflation for consumers in at least this part of the economy: it"s clear that between the Fed and Trumpflation, there aren"t many such deflationary hiding spots left.