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How DiDi took on Uber and left it in the dust

How DiDi took on Uber and left it in the dust

Good morning! This Wednesday, DiDi's expected $67 billion valuation could send Uber spiraling, the Biden administration cares a lot about AI and data, BTS danced with some robots, and an exosuit that can help you lift heavy objects? Yes, please.

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The Big Story

Can Uber outrun DiDi?

DiDi Chuxing, China's ride-hailing giant, is set to start trading on the New York Stock Exchange today. If it hits its expected $67 billion valuation, it will be in shooting range of Uber's pandemic-battered value, currently $96 billion. It wouldn't take much of a run-up for DiDi to beat its longtime rival. Uber entered China in 2014, set on winning the ride-hailing market in the world's second-largest economy too.

China became the graveyard for Uber's ambitions of becoming a globe-spanning tech company like Amazon, Google or Facebook after the company ran into DiDi.

  • First, DiDi merged with a rival, Kuaidi, in early 2015. Later that year, DiDi, Lyft, India's Ola and Grab in Southeast Asia announced a grand alliance to counter Uber. DiDi invested in Lyft.
  • In August 2016, Uber, bleeding billions in China, cried uncle. DiDi acquired Uber China and the companies swapped stakes. (Lyft got shafted in this deal, but DiDi kept a stake in the company, which it described as an "important" holding in its prospectus.)
  • Uber made a profit on its DiDi shares. But it can't compete with DiDi in China until 2023, while DiDi has no such restrictions. Already, DiDi is challenging Uber in Latin America, where it had recently gained about 30% market share. That's on top of DiDi's 90% share in China — the quasi-monopoly Uber has only dreamed of.

So what went wrong? The game plan for Uber was always to crush Lyft in the U.S., rake in profits at home and pour those into expansion. That ... didn't happen.

  • Instead, Uber co-founder Travis Kalanick led it through a tech-bro implosion. From cozying up to the Trump administration — a move hated by its mostly liberal customer base on the coasts that helped fuel the #DeleteUber movement — to allowing unchecked sexual harassment at work, as documented by Uber engineer Susan Fowler in the heat of #MeToo, Kalanick made a series of unforced errors that led to his ouster.
  • His replacement, Dara Khosrowshahi, managed to right the ship and take Uber public. He then shut down or spun off costly experiments like Uber's self-driving car effort, and ended ride-hailing and food delivery in several overseas markets.
  • Second Measure, which analyzes online consumer spending, found that Uber and Lyft's U.S. market share has been relatively stable, with Uber at 68% and Lyft at 32%. As you'd expect with a duopoly, both have been raising prices.

But the pandemic transformed Uber: Its Eats business is now ever more crucial. That's why Khosrowshahi bought Postmates and Cornershop.

  • The CEO even spent a few hours over the weekend making Uber Eats deliveries in San Francisco. His takings: a little under $150. Twitter comedians compared that to his annual pay package of $12 million, but it was a clever way of sending a message about the company's priorities.
  • Even so, the reality is that Uber has a weaker position in food delivery than it does in ride-hailing, thanks to DoorDash and Instacart's early start. And guess who's expanding in food? DiDi, of course.

It's hard to replay history. Could Uber have used the money it wasted in China on crushing Lyft instead? Maybe. But Uber's global possibilities were what inspired investors — including SoftBank. If there's a villain of this history, it may be the Japanese tech conglomerate, which funded both DiDi and Uber, and played them off each other. After SoftBank sold $2 billion in Uber shares in January, DiDi is now its biggest bet in ride-hailing. And perhaps its best.

— Owen Thomas (email | twitter)

A MESSAGE FROM TRELLO

Trello Enterprise is where large teams complete their best work: secure, easy to manage at scale, with powerful integrations and automations at your fingertips. Learn how Trello has sustained hybrid work over the past decade with tips and best practices from its founding leadership team.

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People Are Talking

The Biden administration doesn't have a position on banning facial recognition, Alondra Nelson said, but it cares deeply about AI and data:

  • "What I think we still need to address as a nation are questions about the provenance of data analyzed with AI tools and questions about who gets to make decisions about what variables are used and what questions are posed of scientific and technical research."

Elizabeth Warren wants Lina Khan to look into Amazon's MGM acquisition:

  • "Amazon's tactic to operate at a financial loss and use low prices to lure in customers and capture the market has worked before, and the FTC must determine whether this vertical acquisition is truly an entertainment strategy or merely another step towards unfettered monopolization."

There's big growth ahead for Starlink, Elon Musk said:

  • "We recently passed the strategically notable number of 69,420 active users. We're I think on our way to having a few hundred thousand users, possibly over 500,000 users within 12 months."
Coinbase wants to be the App Store for crypto apps, Brian Armstrong said:
  • "Apple didn't attempt to build every app for the iPhone, it empowered developers and gave mobile users an easy way to access new innovative apps. We need to do the same in crypto. There is now 10s of billions of dollars of economic activity running on dApps, and a new trend coming out every three months."

Making Moves

Nundu Janakiram is the new VP of product at Cameo, joining from Uber.

Shiva Kumar is the new CFO at Ridecell, where he'd been an EVP since 2019.

Sony acquired Housemarque, bringing the Returnal and Super Stardust HD developer into the PlayStation fold.

Sarah Personette is Twitter's new chief customer officer. She's taking over for Matthew Derella, who ran revenue and partnerships and announced he's leaving Twitter after almost a decade.

In Other News

  • Shopify announced a bunch of new features, including much more customizable shops and new payment options. It's also removing all revenue share for a developer's first $1 million in annual sales through the Shopify app store.
  • On Protocol | Policy: The FTC's fight with Facebook isn't over. And actually, some members of Congress are saying that Facebook's win is proof that antitrust laws need to be strengthened, and fast.
  • Apple will spend about $300 million on Google Cloud storage this year, a 50% increase over last year. It's such a big customer, The Information reported, that it's known as Bigfoot inside Google.
  • Tough times continue at Intel. The company is delaying its new server CPUs to improve performance, and won't start producing them until early next year.
  • Microsoft and Google's lobbying truce is over. Bloomberg reported that the five-year old deal expired in April, allowing the companies to start lobbying against each other once again.
  • On Protocol: BTS and Boston Dynamics did a dance-off ad together, and, well, that's pretty much all you need to know? Go watch it. Trust us.
  • Facebook launched Bulletin, its answer to Substack. The approach? Get high-profile writers like Malcolm Gladwell to launch publications.
  • Amazon is forcing suppliers to give it equity. That's what The Wall Street Journal reported, citing dozens of deals that give Amazon the right to buy cheap shares in its vendors' companies in exchange for a deal with the retail giant.
  • On Protocol | Workplace: Uber will require most employees to spend 50% of their time in the office, rather than mandating days per week. Some employees will also be allowed to go fully remote. Meanwhile, Apple's sticking with its hybrid plan even after it faced some backlash from employees.
  • Your new coin of the day: Worldcoin, a project advised and funded by Sam Altman, which is also building an "orb-shaped device that would scan a person's iris to construct a unique personal identifier."
  • On Protocol | China: The Chinese government is eyeing podcasts. They've long been a place for vibrant social and political conversation outside the government's watchful eye, but now Beijing is taking an interest. And Party-affiliated podcasts are suddenly everywhere.

One More Thing

Don't forget your exoskeleton

Workers at Koninklijke Ahold Delhaize N.V.'s warehouses are about to get some help, courtesy of a new exosuit that can detect how they move, help them with heavy loads and try to keep them from getting tired or injured. This is a big and encouraging trend, even if safety experts don't think it's a replacement for better training workers or not holding them to such intense guidelines.

It also raises an interesting question: When do the desk-sitters among us get something similar? An exoskeleton that corrects that horrible hunched posture, reminds you when you've been sitting too long and maybe even helps you adapt to the standing-desk lifestyle. That, right there, is the home-office accessory we've been waiting for.

A MESSAGE FROM TRELLO

Company culture has changed overnight. With a mass shift to home offices, many businesses are asking: What does our future look like when people can work from anywhere? In this first-ever roundtable with Trello's leadership team, learn how Trello has scaled a successful hybrid work model over the past decade.

Learn more

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