Tech Brew Ride Home - Fri. 05/10 - The Uber IPO

Episode Date: May 10, 2019

Uber’s big IPO had some issues, smartphone shipments are at a 5 year low, do you need an app for unsubscribing to things and of course, the weekend longreads suggestions. Sponsors: MacStadium.com/ridehome Metalab.co Links: Uber Jackpot: Inside One of the Greatest Startup Investments of All Time (WSJ) Americans Have So Many Subscriptions They Need Apps to Track and Cancel Them (Bloomberg) Blue Origin: Bezos company aims to take people to moon by 2024 (The Guardian) Weekend Longreads Suggestions: How Much Is an Idea Worth? In Uber’s Case, $3.7 Billion (Bloomberg) The VC Who Engineered the 2017 Uber CEO Coup Just Got Very Rich (Bloomberg) The dangers of in-game data collection (Polygon) How Unions Are Pushing Back Against the Rise of Workplace Technology (Fortune) Three years in, Google’s hardware honcho is just getting started (FastCompany) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Techmeme ride home for Friday, May 10th, 2019. I'm Brian McCullough. Today, Uber's big IPO had some issues.

Smartphone shipments are at a five-year low. Do you need an app just for unsubscribing to things? And, of course, the weekend long-read suggestions. Here's what you miss today in the world of tech. So the big cahuna of the unicorns, Uber, had its IPO today, and things did not go swimmingly. Uber priced its offering at $45 a share, which was at the low end of its expected range.

And when shares finally began trading on the New York Stock Exchange, they came out at $42 a share. So down from even the offer price. Forget about it first day pop. This is the opposite of that. Now, this has been a bad week. for the stock market generally, so that might have been a factor. And some people have been saying that the poor performance of Lyft has been affecting the outlook for Uber's shares. And at the time of

this writing, Uber is inching back towards $45 a share or at least near that level, but obviously this is not what you want to see from an IPO on IPO day. And then add in the fact that Uber's valuation is around $73 billion when just months ago the company was looking to come public at $120 billion in valuation. So not good. And yet Uber did raise $8 billion. So that's super important for a company that needs cash reserves to make up for a lot of red ink. And look, there's no getting around the fact that Uber is the highest profile tech IPO since Facebook. And actually, I think that might be a lot of what's going on here. I'm old enough to remember when people were skeptical of Facebook's business model.

When Microsoft invested in Facebook at a $15 billion valuation, people were like, yeah, they have a ton of page views, but you can have all the page views in the world and throw all the ads on them in the world. But will that ever amount to a meaningful business? I mean, that's already what Yahoo's doing, right? well, what people didn't intuit was that Facebook had already cracked the next great advertising nut, which was surveillance capitalism, as Shoshana Zuboff calls it. The point is Facebook had actually built a truly great business.

It's just that people didn't quite know it at the beginning. But when Facebook IPOed in 2012, the company was already solidly profitable. Thus, Facebook could price its offering at the top of its offer. its range, valuing it at over $90 billion, though it too notably didn't have a first-day pop to crow about. But here's the key difference. Facebook was already a proven business model. The only question was how big and how successful that model would turn out to be. Uber and Lyft as well, by the way, fundamentally people aren't yet 100% sure that these businesses can work profitably for the long term. Now, it's not unheard of for a young tech company or even young

companies full stop to go public when their business model is not yet proved. Sometimes an IPO is just that, a very necessary stage in a company's evolution in its growth cycle. But it is quite unusual for a company this big to IPO with its fundamental viability as a company still almost completely unproven. Still, congrats to all involved. And in celebration, let's play the Silicon Valley Parlor game real quick. Who made Bank Today? The Wall Street Journal focused on the investors who, in 2010, put a total of $1.6 million

into the seed round of a company that at that point was still known as Uber Cab. If the folks involved held on to all of their shares, which after dilution and stock splits, they would have effectively paid nine one hundredths of a cent per share, even with today's hiccup, those folks have seen their original seed dollars appreciate by 5,000x, making this one of the greatest venture investments of all time. Among the winners in that seed round, first round capital turned $500,000 into $2.5 billion. Chris Saka's lowercase ventures turned $300,000 into $1.1.1 billion. Universal Music, of all people, turned $100,000 into $500 million. Jason Calacanus turned $25,000 into $120,000. And as I noted once before, Napster founder Sean Fanning turned $25,000 into $120 million as well.

Travis Kalanick's stake today, around $5 billion. Co-founder Garrett Camp's stake. 3.7 billion. More on Garrett Camp later in the show. As I did yesterday, let me throw a grab-bag segment in here to catch a few things that might not be worth a full segment or I might have to cut for time. Otherwise, first, it's not just China. Research firm Canales says that smartphone shipments in North America dropped 18% year-over-year and quarter one of 2019 to 36.4 million units which represents a five-year low. So now we have further proof of motivation for the pivot to services and subscriptions, right? Although, that same report says that Apple held on to its approximately 40% market share in North America,

shipping 14.6 million iPhones. Next, Netflix has published its first ever top 10 list of most watched content on its platform and says it will start posting lists like this every week. Only catch is, for now at least, the list is only covering the most watch content in Great Britain. No word on if other countries will get such lists anytime soon, but this does continue. Netflix has moved towards greater transparency in terms of viewership behavior. Number one, for April in Britain, was the David Attenborough narrated Our Planet show, followed by the perfect date, and the highwaymen in second and third place, respectively.

And finally for this segment, this was inevitable, right? Bloomberg Business Week says Americans are now juggling so many subscriptions that a whole suite of apps and services are rising up to help you keep track of what you've subscribed to and help you cancel. Quote, the applications including those from Goldman Sachs, Wells Fargo, and Discover, financial services, assist users in finding recurring fees and in some cases cancel them or renegotiate their costs. gym memberships, food of the month club dues, cable commitments as well as video streaming services such as Netflix and Hulu are all vulnerable to impulsive house cleaning. The apps, which sometimes take a cut from the money they save, can also alert subscribers when services hike prices. That's ironic considering that Apple, Walt Disney, AT&T, and Comcast are all planning new streaming services. Hulu reported last month that cancellation rates hit an all-time low, and Netflix, with a 35% revenue. jump last year from 2017 has raised prices. So the new banking tools may not be taking a noticeable

bite out of business just yet. But there are signs they might. At Clarity Money, an app owned by Goldman Sachs with 2 million subscribers, two of the three most canceled expenses are video services, according to Kelly Newton, Vice President of Marketing, end quote. In case you missed it, In his capacity as CEO of Blue Origin, Jeff Bezos yesterday unveiled a moon lander. Here's a new deadline for us to start tracking. Using the Blue Moon lander, an unmanned spacecraft that can carry 6.5 metric tons of cargo to the moon, Bezos wants to take people to the moon by 2024. Quoting The Guardian,

during his hour-long presentation at Washington, D.C.'s convention center, Bezos waved his arm and a black drape behind him dropped to reveal the two-story tall unmanned lander mock-up, which he said can deploy up to four smaller rovers and shoot out satellites to orbit the moon. We have been given a gift. This nearby body called the moon, Bezos said, listing factors that make the moon a good target for space travel, including its proximity to Earth, low gravity, and ice content. In March, the vice president, Mike Pence, called on NASA to build a space platform in lunar orbit and put American astronauts on the moon's South Pole by 2024, quote, by any means necessary, four years earlier than previously planned. I love this, Bezos said of Pence's timeline. We can help meet that timeline, but only because

we started three years ago. It's time to go back to the moon, this time to stay, end quote. Time for the weekend long reads suggestions. And since this is Uber's big day, let's start with two suggestions about them. One of the Uber Insiders, who I said got very wealthy today, was original co-founder Garrett Camp. Who is Garrett Camp? You might not even know the name. Well, he was the dude that actually came up with the idea for Uber. Camp was previously the founder of StumbleUpon, which he sold to eBay. As a profile in Bloomberg notes, he was quick and eager to hand off the running of the company to Kalanick, which obviously could be hugely second guest at this point. Quote, Camp is a factory of ideas with a preternatural aversion to

confrontation. Some of his former colleagues at Uber say his most severe lapse was allowing Kalinick's power to go unchecked. At pivotal moments in the boardroom, camp was indecisive or unreachable. When the board met in 2017 to discuss whether Kalinik should take a leave of absence, camp was traveling abroad. Camp described it as a, quote, stressful time, but declined to discuss the events in detail. Representatives for Uber and Kalinick declined to comment, end quote. And also from Bloomberg. Another early investor, who is likely sitting pretty today, is Benchmarks Bill Gurley,

whose personal take from Benchmark's investment in Uber could be around $600 million. But Gurley was also instrumental in pushing Kalinick out of the company, quoting Bloomberg's profile of him. Gurley doesn't speak about the dramatic episode publicly, but Frank Quatron said he was forthcoming during a private gathering of tech executives last fall. Quote, he was incredibly candid about his experience there, warts and all, displaying a humility and ability to learn from his mistakes, Quatron, told Bloomberg. In an environment where some leading VCs defer to founders to a fault, he was willing to stand up for the values he believed were right, even if it risked his relationship with founders more broadly, end quote. Next, my thanks to KV underscore 87 for flagging this for me on the show's subreddit, our slash ride home. So in all the talk of data collection, it never occurred to me that data collection would logically be a thing in gaming. Obviously, Netflix knows what you like to watch because they watch what you watch.

And now that games are mostly connected, of course game developers can and would want to watch how you game so that they can, collect data on your preferences and behaviors so that they can develop better games accordingly. But like everything else when it comes to data collection, using it to improve a product is one thing. But can you resist the temptation to do other things? Things like quoting Polygon, that information can be used to make better games, and it can also be combined with other types of information to build robust personal profiles. Those personal profiles are typically used to target advertising but privacy experts warn that in the future that information may be used in sinister ways we can't expect. Sometimes infrastructure of data collection is built up for one purpose,

then people start to think of other uses for it, says Jay Stanley, a senior policy analyst at the American Civil Liberties Union. And if that ends up being the case, they say, developers should start building games in ways that stop that manipulation before it occurs, end quote. And before you think this is just a case of maybe someday you'll be chased around by annoying ads, again, you're not being paranoid enough. Think of what is revealed by your behavior in game. Think of actual personality profiles based on the way you play, the decisions you make, the ability to get a sketch of who you are. I mean, if you're gaming on your phone, imagine how that could be triangulated, but as Sam Barlow, the writer of Silent Hill Shattered Memories,

is quoted as saying in the piece, What happens if in 10 years you don't get a job because the game reveals you're not a team player? End quote. Quick note that the piece I did yesterday about Uber and arbitration, Uber apparently just yesterday settled the, quote, vast majority of those cases around the time that I was posting that segment. But researching that sent me down a rabbit hole of modern labor relations

and turned me on to this piece from Fortune about how long. labor unions are increasingly pushing back against tech in the workplace, especially all that tech that is being deployed to monitor workers, things like apps that housekeepers and hotels are forced to use to track their progress from room to room or automated checkout machines in retail, or even just software programs intended to reduce inefficiencies in scheduling, but end up having the effect of actively preventing workers from earning overtime or even getting the full complement of hours that they want in a week. quote, the AFL-CIO has met with experts from Carnegie Mellon University, Case Western University,

and business consulting giant McKinsey to discuss technology's potential disruption to workers. It's a far cry from the caricature of unions as being behind the times. The point is not to stop technological progress, the unions say, but rather to understand what workers and businesses can do to avoid major disruption caused by technology. To be sure, unions have negotiated over technology and automation for years. just look at the auto industry, but now the fight is increasingly over software rather than industrial robots, a big job killer for decades, end quote. I did not know this, but even the Players Union in the NBA recently pushed for rules to prohibit teams from using player health and performance data like heart rates collected from fitness trackers when evaluating players for contracts. And finally, Google made a lot of news this week, of course.

So let's end with Fast Company and a profile of Rick Osterlo, who heads up Google's Devices and Services Group. Quote, Google's foray into hardware has never been solely about turning a profit on gadget sales. Even if it remains at heart, a cloud computing company, one whose services are used by virtually everybody on devices of all sorts, it concluded that it sometimes needed to build what Steve Jobs used to call the whole widget. A lot of the new innovations are going to require development of a service, and oftentimes, a new hardware product, says Osterlo. Sometimes, even Silicon developed in conjunction to achieve an end result. And you can see that in our work in data centers.

You can see that in our work in consumer electronics. It's a very new time, end quote. That is all for today. Enjoy your weekend, everyone. Quick plug that the weekend bonus episodes are returning again this weekend. Both of them will be timely, I think you'll find. one by one our unicorn IPO parade is passing us by and by the end of the summer we might not have this particular narrative to kick around much anymore we'll have to wait another what five to eight years before we see a unicorn cohort like this rise up again so enjoy the excitement while it lasts i guess talk to you on monday