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Uber’s shrinking ambitions

Dara Khosrowshahi

Good morning! This Wednesday, Uber's getting rid of its most ambitious projects, tech IPOs continue to boom and the FCC hits a stalemate.

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The Big Story

What's left of Uber

Uber never wanted to be just a rideshare company. To hear the company tell it, revolutionizing the taxi market was only the beginning. Travis Kalanick always thought the future had to look like cities full of self-driving Ubers. He said in 2016 that, "If we weren't part of the autonomy thing? Then the future passes us by, basically, in a very expeditious and efficient way."

  • The more-than-a-taxi feeling didn't go away, even under new leadership. "What began as a 'tap a button and get a ride,'" Dara Khosrowshahi wrote in the company's S-1, "has become something much more profound: ridesharing and carpooling; meal delivery and freight; electric bikes and scooters; and self-driving cars and urban aviation."

But Uber's ambitions are now shrinking as it goes from "ultra-ambitious startup" to "company that actually needs to make money."

  • Uber handed off its Elevate flying-car project to Joby Aviation yesterday, a day after offloading its Advanced Technology Group, which was trying to crack self-driving cars, to Aurora.
  • It sold its Jump bike-and-scooter arm earlier this year, and sold a chunk of Uber Freight in October as well.

So what is Uber now? Well, in 2020 it's been mostly a food delivery company, with delivery revenue up 125% as of the most recent quarter. (Mobility revenue was down 53%, because everyone was staying home.) It completed its $2.65 billion Postmates acquisition last week, too, pushing even further into that space.

  • It's investing in the companies taking over its ambitious projects, too, buying into companies like Lime.
  • And it's also increasingly a logistics company, putting more services inside the Uber app rather than trying to build them from scratch. Amazon of transportation, remember?
  • "What we want to make sure is as that technology is developed, it's developed for Uber network and is available for the Uber network at scale," Khosrowshahi told CNBC.

Truth is, moonshots are an exclusive affair. When air taxis and autonomous cars will become a mainstream reality is still hard to know, but it won't be next quarter, or the one after that, and the list of companies that can afford to keep throwing billions of dollars at these far-out transportation projects continues to shrink. It's increasingly just two names: Amazon and Alphabet.

But Khosrowshahi is still claiming to be ambitious, at least in front of his employees:

  • "I know there are questions about whether Uber has any 'big, bold' bets left," he wrote to staff, per The New York Times. "I understand that question, but I think it misses the big, bold bets right in front of us: to become the undisputed global leaders in both Mobility and Delivery."

IPOs

Big debuts and bigger debuts

The good news for Uber: There's a heck of a lot of money in delivery. DoorDash is reportedly pricing its IPO at $102 a share, which is more than a 36% increase from the company's initial target. That means DoorDash is likely to go public at about a $32 billion valuation, which is roughly double its last private figure. Not bad!

  • DoorDash is trading on the same thing Uber does: ubiquity. It controls about half the U.S. food delivery market, and both the company and its investors are betting that even when we're allowed outside again, we'll still be using DoorDash.
  • There are certainly reasons to be bullish on DoorDash, but it really seems like investors are willing to bet on literally any tech company going public right now. Airbnb has raised its share target ahead of its IPO tomorrow, and Wish is also planning to list well above its last private valuation.

Why the optimism? A lot of strong recent performances. Snowflake's a good example: Its stock has more than tripled since the company went public in September. DataDog's has almost tripled. Even most of the relative "failures" have been successes, with Asana up over its IPO price and Palantir rising despite a lot of people's early worries.

  • Tech-IPO lows aren't very low, and the highs are really, really high. As long as that's the case, it's going to be a lovely world in which to take your company public. (Unless you're WeWork. There's always WeWork.)

In related news: A number of former Airbnb employees have pledged to give some of their IPO proceeds to charity, Biz Carson reported, as part of a group called Equity for Impact. It's a smart idea for lots of reasons, tax upsides among them. And Equity for Impact hopes this becomes a staple of every ambitious startup.

People Are Talking

On Protocol: A number of companies are trying to build TV-style networks for gaming, but Geoff Keighley said they'll have to think big:

  • "I think a lot of people now just consume individual creators and surf around. That's the challenge there. But the opportunity for them is this business is so global now. I think the first one that can really be a truly global network has the biggest opportunity."

Apple's Craig Federighi said the company is doubling down on app privacy, and took a shot at Facebook in the process:

  • "When invasive tracking is your business model, you tend not to welcome transparency and customer choice."

On Protocol: Dozens of civil liberties groups sent a letter to Sundar Pichai asking him for more information about geofence warrants:

  • "These blanket warrants circumvent constitutional checks on police surveillance, creating a virtual dragnet of our religious practices, political affiliations, sexual orientation, and more."

Europe needs more tech giants, Emmanuel Macron said, in order to maintain "digital sovereignty":

  • "We need European financing, European solutions, European talents, European regulations. We have regulation ... but we don't have the equivalent of these very, very large caps."

A MESSAGE FROM SYNCHRONY

SYNCHRONY

Contactless payments are no longer a nice to have.

At Synchrony, we understand the challenges of running a business. Our financial and technology solutions, like touchless payment tools, help you offer your customers more tailored experiences, so they keep coming back.

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Making Moves

Nathan Simington was confirmed to the FCC. His appointment deadlocks the commission, and everyone seems to assume that a GOP-controlled Senate will block the Biden administration from appointing any new commissioner.

Sarah Kirshbaum Levy is the new CEO of Betterment. She joins from Viacom, where she was most recently COO. Founder Jon Stein will still be on the company's board.

Elon Musk moved to Texas. As did pretty much everyone else in tech, it seems, which means Musk may not find the non-Silicon Valley vibe he's looking for. Tax breaks are nice, though.

John Giannandrea is now leading Apple's self-driving car team. Bob Mansfield is retiring (again), and Giannandrea will still be in charge of Siri.

The Chan Zuckerberg Initiative plans to spend more than $500 million on racial-equality issues over the next five years, working with "a broad set of partners."

In Other News

  • The Facebook antitrust lawsuits are expected today, according to The Washington Post. The two lawsuits, from a group of state AGs and the FTC, will reportedly focus on the Instagram and WhatsApp acquisitions, and could push for a forced asset sale.
  • On Protocol: Tech is shrugging off Trump's Section 230 veto threat. Though the president is pushing forward in his efforts to veto the NDAA unless it includes a Section 230 repeal, lobbyists aren't concerned.
  • There's a global chip shortage looming. Nikkei Asia reports that most of TSMC and UMC's capacity is fully booked until the third quarter of next year, and says Intel, MediaTek and Realtek are all requesting more capacity.
  • FireEye said it was hacked by a nation-state, thought to be Russia. The FBI is investigating the hackers, who stole FireEye's vulnerability-spotting Red Team tools.
  • Pornhub will no longer accept unverified uploads, and will block all downloads. It's a major change in policy, prompted by a New York Times article from last week that led to Visa and Mastercard investigating the company.
  • The U.K.'s new Digital Markets Unit should be able to fine Big Tech companies up to 10% of their global revenue, the government proposed. It also suggested that Facebook and Google could be subject to specific rules. Meanwhile, it was revealed that in 2018 Mark Zuckerberg threatened to stop investing in the U.K., calling it "anti-tech."
  • GitHub's Sponsors program now lets companies fund open-source projects. Amazon, Stripe, American Express and Microsoft are joining the scheme.
  • Snakes stopped Tesla's German factory construction. The company was told to stop clearing a pine forest until it can show that doing so won't harm the hibernating snakes that live there.

One More Thing

Like AirPods, only humongous

Look, I'm sure the new AirPods Max sound fantastic. And $550 for a pair of high-quality headphones isn't crazy. Hey, it's cheaper than the Mac Pro Wheels! But I cannot, and will not, defend Apple's deeply strange, bra-like case design. Somewhere, that big, humped, battery-toting iPhone case is thrilled to lose the title of "ugliest Apple case ever."

A MESSAGE FROM SYNCHRONY

SYNCHRONY

Contactless payments are no longer a nice to have.

At Synchrony, we understand the challenges of running a business. Our financial and technology solutions, like touchless payment tools, help you offer your customers more tailored experiences, so they keep coming back.

Learn more about our solutions.

Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day; see you tomorrow.

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