SoftBank looks to finalize Uber investment today

After months of talks, SoftBank Group is close to finalizing its investment in Uber. Multiple sources tell TechCrunch that the deal is expected to be signed later in the day on Sunday.

SoftBank plans to lead a $1 billion investment directly in the company alongside Dragoneer Investment Group. The joint venture will also buy up to $9 billion of shares from eligible existing shareholders in a tender offer. Private equity firm General Atlantic is also participating.

Bloomberg, which first reported the news, said that venture capital firm Benchmark Capital will be dropping its lawsuit against former CEO Travis Kalanick, as a condition of the deal.

One source close to the situation tells TechCrunch that Benchmark could technically invest more money in Uber through the tender offer, but is mostly expected to sell shares.

The investment in Uber is expected to be the same valuation of Uber’s last private round, at nearly $70 billion. We’re told that the documents label this deal as an extension of the Series G round.

But the tender offer is supposed to be a lower price per share. It is expected to be the largest secondary transaction in history.

At least one source with direct knowledge of the situation said that the tender is slated to launch on November 28 and last until the end of the year. This source claims that the end-of-the-year put pressure on finalizing the deal so that shareholders could sell shares in time for the holidays.

At one point, the deal was expected to launch in September. But there have since been a series of delays, partly related to valuation and partly related to negotiating Kalanick’s role.

We’re also told that Uber is having a tough time identifying and tracking down all of its existing shareholders. Uber plans to run newspaper ads as an attempt at notifying them about the tender off.

Uber’s new Asia chief wants to work with governments and taxi firms not against them

New CEO Dara Khosrowshahi has been vocal in pledging to reform Uber’s toxic culture to take the business to the next level — and ultimately an IPO — but, over in Asia, another recent arrival is presiding over a revamped approach which includes turning those who were once enemies into friends.

Brooks Entwistle, a former Chairman of Goldman Sachs Southeast Asia, joined the firm in August to lead its business in Asia Pacific, minus China — where it sold to rival Didi — and India, where the firm is run by a dedicated country president.

At the time of his arrival I joked that Entwistle, who has lived across Asia for over two decades, may need to dip into his experience of scaling Mount Everest such is the challenge of handling Uber’s business in Asia. This year alone, it has been rocked by scandals that include using unsafe cars in Singapore, bribery allegations in at least five countries, not to mention ongoing skirmishes with regulators in countries that include Korea, Taiwan, Hong Kong, Thailand and Indonesia.

Then there’s the competition.

Singapore-based rival Grab seems to have taken the lead regionally, and it recently refueled with $2 billion in fresh capital. In Indonesia, Southeast Asia’s largest economy, local firm Go-Jek leads and it has raised more than $1 billion with support from Chinese giant Tencent.

Uber seems a little off the pace in Southeast Asia, a region of over 600 million consumers where the ride-sharing economy is tipped to grow five-fold to reach $13.1 billion and 29 million customers over the next decade.

Go-Jek and Grab have expanded their services beyond cars — moving into areas like mobile payments to grow engagement and even bike-sharing — and invested heavily in local R&D and developer talent to build platforms that are more significant than merely hailing a ride.

Uber hasn’t followed suit, but the competition — while never named directly — appears to have been watched. Indeed, if Entwistle has his way, the U.S. firm will modernize its business accordingly, too, and branch out into new areas it would likely never have considered in order to remain competitive and relevant.

Beyond private cars

In an interview with TechCrunch, U.S.-born Entwistle — Uber’s Chief Business Officer for Asia Pacific — confirmed that the firm is looking into opportunities within adjacent that include payments and bike-sharing.

“Already we’re thinking about technologies and solutions across the region that will ease any transaction friction. We try to find whatever the best way to get people on to our app riding or driving… [that] could take number of different forms,” Entwistle said when asked about whether Uber might do deals with payment companies.

Brooks Entwistle joined Uber as its Chief Business Officer for Asia Pacific in August 2017

In China, Didi Chuxing — often a bellwether for where the industry is headed — first invested in bike sharing startup Ofo more than a year ago and, sensing the potential of the travel option, it integrated the service into its app to offer an alternative for commuters.

That deal appears to be an astute one. Not only has Ofo raised more money at a valuation of over $1 billion, but bike-sharing has begun to take a bite out of the on-demand ride business in China where it offers an alternative for short trips.

There’s plenty of uncertainty as to whether these businesses can thrive outside of China, which is known for its affinity for bikes, but that hasn’t stopped them from venturing overseas alongside a glut of international clones.

Grab, which counts Didi as an investor, isn’t taking a chance and it quietly backed one Ofo clone, a Singapore startup called oBike, as TechCrunch recently reported.

While Grab and oBike haven’t worked together yet, it is almost certain to be on the cards sooner or later. At that point Grab might find that its two-wheeled ambition is matched by Uber.

“It’s something we’re looking at [because] we know it’s an important way of getting around,” Entwistle told TechCrunch. “We have a team focused [on investigating bike-sharing options] from a business development standpoint.”

From enemy to partner

Bicycles might be an unexpected move for Uber — which has autonomous vehicles in the U.S. and is even working with NASA to look into flying taxis — but the company has become open to new concepts when it comes to transportation across Asia since it entered via Singapore in February 2013.

For one thing, it supports cash-based payments across much of Southeast Asia, in addition to India and parts of Africa. That was once unthinkable since Uber existed to rid the world of a need for cash. Beyond that, even the type of rides it covers have changed.

Uber has even struck deals with local taxi companies.

Once the enemy, a combination of factors — which primarily include driver supply constraints and tight regulations — have led to Uber taxi services sprouting up in Korea, Taiwan, Myanmar, Indonesia among other places.

Unlike previous Uber’s regimes — which rivaled traditional taxis by being cheaper and easier to hail — Entwistle said that doing deals with the former foe is now “a big focus.”

“We are actively looking to partner with taxi companies,” he said. “In Taipei [where Uber recently began working with taxi partners], taxis are at 30 percent utilization, we can drive that [figure] up.”

Working with Uber — which has been the target of taxi driver rage across Asia — may represent an opportunity, but doing deals is not straightforward as a recent example in Singapore shows.

When Comfortdelgro, the city’s largest taxi operator with over 15,000 vehicles, announced in August that it was in talks with Uber over a “potential strategic alliance” that could double Uber’s driver network, rival Grab began aggressively poaching the taxi firm’s drivers to water down the impact of a potential alliance, one source told TechCrunch.

No deal has been announced and it is unclear whether it will come to fruition. If so it would mark a very clear step into Grab’s territory. The company began life as a platform for licensed taxis before expanding into Uber-style private vehicles, and it still enjoys relationships with Singapore’s other taxi operators.

Uber returned to Taiwan in partnership with local taxi operators [Image via: SAM YEH/AFP/Getty Images]

Governments as allies

Uber has also run into challenges with its adoption of motorbike taxis, a popular mode of transport for quickly getting from A to B in the congested streets of Southeast Asia’s megacities.

Its UberMoto service was ended in Bangkok just three months despite representatives of capital city Bangkok’s police force taking part in the launch event. Grab relaunched its competing motorbike service through a partnership with local government-approved bike taxi drivers, but Uber did not. It continues to offer motorbike taxis in Indonesia, India and Vietnam, however.

Learning from that episode and others like it, regulators and governments have become a key stakeholder for Uber. In recent years, the U.S. firm has shifted from an aggressive strategy in its homeland where it has little regard for “antiquated” regulations, to a more conciliatory approach in Asia.

Under Entwistle that focus is about to get a whole lot more sharper.

“I visit one or two countries a week to meet regulators and governments,” he said. “We talk solutions and are coming at this from a collaboration/partnership approach. The conversation feels like it is really changing.”

Recent launches in Yangon in Myanmar and Phnom Penh in Cambodia — two relatively over-looked countries — best epitomize this new-found strategy of working with governments. In the case of both market expansions, Uber sought (and heavily publicized) endorsements from government officials and the U.S. ambassadors of the respective countries.

That’s a huge departure on its previous playbook of bootstrapped and secretive launches which often flew in the face of local government or regulators. The new approach seems to be an inevitable reaction to the fact that the old method simply doesn’t work in this part of the world, especially when Grab is prepared to work with regulators.

“We launched fully in [Cambodia] in cooperation with the government,” Entwistle, who was speaking from Uber’s Vietnam office following a meeting with regulators, told TechCrunch.

“Transportation officials were on stage and it is very much a partnership. I do think we have to work with them to provide solutions, and we are asking them in many cases what they need,” he added.

Uber received a mention on the (very active) Facebook Page for Cambodia’s Ministry of Public Works and Transportation after an initial agreement to launch was struck.

That’s exactly the aim on Uber’s new campaign around easing urban congestion across the region, and particularly Southeast Asia. The company is positioning itself as an ally that can help governments, regulators and city planning teams tackle urban congestion and reduce the amount of cars on the road across Southeast Asia.

“It’s about unlocking cities,” said Entwistle.


Catching up in Southeast Asia

The creative video in support of Uber’s big push came out the very day that Grab announced its foray into mobile payments. The move will allow users, initially in Singapore, to buy items from physical retail stores using the Grab app and QR codes in the same style as Alipay, WeChat and others.

The initial 26 participating merchants are all street food vendors, but Grab hopes to grow the number to 1,000 and branch out into other types of commerce. The company added that it will expand the initiative to more of its six other markets in 2018.

The disparity between the news issued that day — a video versus a fintech platform — illustrates that Uber is playing catch-up.

The good news for Uber is that, despite reports that some shareholders would consider a deal with Grab, its business and brand is still healthy in the region. Its marketshare is likely closer than many believe — accurate data is at a premium — but it does appear to be trailing in the ideas and execution department. An injection of fresh perspective might make things interesting as it looks to up the ante with Grab — and potentially in other parts of the world for its business.

“There are things we are doing here that we believe are relevant and will be adopted elsewhere,” Entwistle explained.

That might give some leeway for experimentation.

The immediate future for Southeast Asia could be better for Uber, however. While TechCrunch understands that some country offices have been operationally profitable for more than a year, CEO Khosrowshahi indicated that it is losing money across the Southeast Asian region as a whole.

“The economics of that market are not what we want them to be,” he told an audience at the New York Times DealBook conference. “I think it’s over-capitalized at this point. We’re going in, and we’re leaning forward. But I‘m not optimistic that market is going to be profitable any time soon.”

With an IPO coming tentatively slated for 2019, developing the business through this revised approach under Entwistle is essential to ensuring that Uber still has enough reason to care about remaining in Southeast Asia and other parts of Asia. Otherwise, if Lyft continues to gain in the U.S., the management may opt to deploy its resources in other areas, a move that would be much to the detriment of Southeast Asia as a whole.

Featured Image: ROSLAN RAHMAN/AFP/Getty Images/Getty Images (IMAGE HAS BEEN MODIFIED)

Uber loses UK tribunal appeal over driver employment rights

Another blow for Uber’s UK business: The company has lost its appeal against an employment tribunal ruling which last year judged that the two Uber drivers who brought the case should be classified as workers, rather than self-employed contractors — meaning they are entitled to benefits such as holiday pay and the UK’s National Minimum Wage.

Uber’s appeal against the ruling was heard in September. But the Employment Appeal Tribunal has now upheld the original verdict — denying a first appeal.

And while the original employment tribunal ruling only applies to the two individuals who brought the case it sets a legal precedent for other Uber drivers to mount challenges over their own employment status.

The company has previously said that if it had to provide all the ~50,000 ‘self-employed’ Uber drivers on its platform in the UK with workers’ rights it would cost the company “tens of millions” of pounds.

In its appeal Uber had sought to argue that it just acts as an agent on the driver’s behalf — likening its operation to that of a traditional minicab operator. But clearly the tribunal was not swayed.

Commenting on losing the appeal in a statement, Uber UK’s acting general manager, Tom Elvidge, said: “Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed. The main reason why drivers use Uber is because they value the freedom to choose if, when and where they drive and so we intend to appeal.

“The tribunal relies on the assertion that drivers are required to take 80% of trips sent to them when logged into the app. As drivers who use Uber know, this has never been the case in the UK.”

“Over the last year we have made a number of changes to our app to give drivers even more control. We’ve also invested in things like access to illness and injury cover and we’ll keep introducing changes to make driving with Uber even better,” he added.

One of the (now ex-) Uber drivers who brought the employment rights challenge, Yaseen Aslam, had this statement on the result: “I am glad that the judge today confirmed what I and thousands of drivers have known all along: that Uber is not only exploiting drivers, but also acting unlawfully. We will carry on fighting until this exploitation stops and workers’ rights are respected.”

The second co-claimant and former Uber driver, James Farrar, added: “Uber cannot go on flouting UK law with impunity and depriving people of their minimum wage rights. We have done everything we can, now it is time for the Mayor of London, Transport for London and the Transport Secretary to step up and use their leverage to defend worker rights rather than turn a blind eye to sweatshop conditions.”

Uber’s decision to appeal the judgement means it’s not the end of the story. And there are two further avenues open to it at this point: The UK’s Court of Appeal and, if that fails, the Supreme Court.

But, at the same time, the direction of travel for legal opinion over gig economy employment rights is not looking good for the sustainability of Uber’s current business structure in the UK.

Add to that, the company is also fighting an appeal against London’s transport regulator which in September shocked Uber by declining to renew its license to operator — citing concerns over its behavior and safety issues, including criticism of how Uber operates from London’s Met Police.

(In public comments on its situation in London yesterday, Uber CEO Dara Khosrowshahi said the company had been “guilty of not communicating”, adding: “I think we were generally immature in how we deal and dealt with regulators.”)

The tribunal judgement also adds more fuel to the debate in the UK over gig economy rights in general, ramping up pressure to accelerate reform of employment law to take account of business models that have sought to circumvent traditional employment structures and thus avoided having to be liable for paying worker benefits.

Last year the UK government commissioned an independent review of gig economy working practices, which came up with a series of recommendations — including suggesting creating a new classification for workers on tech platforms. Although the government has yet to signal which recommendations it might adopt and how it generally intends to move forward.

MPs continue to take soundings. Last month, for example, a parliamentary committee grilled representatives for Uber and Deliveroo on their working practices — including asking about approaches to sick pay; attitudes to safety; and whether they can be sure they always pay workers on their platforms the minimum wage.

Uber losing another employment tribunal over workers rights will clearly also feed politicians’ thinking as they work to reshape UK law to accommodate the business models that sought to disrupt it.

Featured Image: Carl Court/Getty Images

Do cities still want a sharing economy?

Much has been said in recent months about Uber and its travails as a company, with big leadership changes, and then an outright ban in London. Even so, Ubers (and Lyfts) are rolling down city streets, and the 40 million monthly active riders indicate that this is an incredibly popular transportation option.

Many people love using AirBnB as well, as the company cites 150 million global users. However, concerns continue to arise coast to coast over its impact on neighborhoods and existing services. These companies—representative of much of the public conception of the ‘sharing economy’—have, together with others in the on-demand space, upended traditional business models and ushered in vast innovation to our cities.

The relationships between cities and sharing economy companies have grown and morphed in recent years — in many cases, positively. But, challenges surrounding core municipal issues remain, and many established companies are still grappling with how to adjust to a new business environment. The result is a paradigm shift in the way we think about everything from market demand and utilization to regulation.

To dig deeper into these issues, the National League of Cities (NLC) surveyed city leaders nationwide in Cities and the Innovation Economy: Perceptions of Local Leaders on their views toward the sharing economy and other innovations that include drones and smart city technology. This report is a follow-up to a similar survey conducted in 2015.

Broadly speaking, mayors and council members welcome the innovation and improved services that new technologies provide to constituents, but the operating environment presents both opportunities and challenges to their cities. To better understand the current state of the sharing economy in cities, NLC posed questions about cities’ relationships with sharing economy companies, their level of support for these businesses and the formal partnerships that have been formed since their inception.

When it comes to local officials and their relationship with companies like Uber, Lyft, and Airbnb, attitudes first exhibited in our early research have solidified in recent years. More than half of cities (51 percent) describe their relationships with sharing economy companies as good, while 33 percent say they are very poor, with very little variation in between.

While we have seen a hardening of viewpoints on relationships with these companies, the results indicate a growing interest by cities to partner with them. Some cities have already made that leap by developing tax collection arrangements with home-sharing companies or establishing first and last mile ride programs with ride-hailing companies.

Currently, 16 percent of cities have entered into some type of partnerships with a sharing economy platform, but of the 84 percent of cities that are not currently partnering in some way — 79 percent expressed an openness to heading in this direction.

Partnerships that bridge the public and private sector will become even more critical as these companies continue to mature, and as new opportunities with innovations like autonomous vehicles become ubiquitous.

A willingness to partner will be paramount as cities work to shape what this future environment looks like, how new mobility technologies intersect with transit, and how to uphold equity as an ultimate priority in the midst of all of these changes.

Buttressing the directional focus on partnerships, the survey results showed that 62 percent of cities support the overall sharing economy — this is much in line with what we saw in 2015 –providing a solid baseline for scaling innovation in our cities within this sector. What we first saw in terms of support of ride hailing versus home-sharing in 2015 was relatively consistent with our findings in 2017 — with markedly fewer cities supporting home-sharing versus ride hailing.

As sharing economy platforms and other new technologies evolve and continue to impact city governance, cities should expect that their relationships with the private sector will change as well.

We expect that much of this dichotomy stems from the nature of the models themselves –specifically the ways in which home-sharing platforms directly impact neighborhood composition and land-use decisions on one hand versus the nearly immediate impacts ride hailing has on expanding the transportation options in a given city.

The two models tend to elicit very different responses from different members of the affected communities.

As sharing economy platforms and other new technologies evolve and continue to impact city governance, cities should expect that their relationships with the private sector will change as well. As cities transition from being purely the sales target to being the consumers and users of these platforms, there is opportunity for policymakers to make these relationships more reflexive — to be true stakeholders — and influence the way this technology develops for their cities.

After all, no one knows better what cities need and want more than the mayors and local leaders immersed in the community and on the front lines of government. New technology platforms are blurring the lines between public and private realms — cities are best suited to channel the power of these new partnerships and opportunities — creating a shared, dynamic, innovative economy for all.

Featured Image: chombosan/Getty Images

Uber brings five-star rating system to UberEATS app

UberEATS, Uber’s standalone app for on-demand food delivery, has added in-app restaurant reviews in order to help people make more informed decisions about what to eat.

“We had heard from our consumers for a long time that they were interested in more information in general to help them make a decision of which restaurant to eat at,” UberEATS Product Manager Ambika Krishnamachar told me at Uber’s SF headquarters earlier this week. “In particular, users are looking for a vote of confidence, given what other people in their community think. We saw it was effective on the rides side, so we wanted to bring it over to EATS as well.”

Now, in addition to being able to rate their delivery person, consumers can also rate the restaurant on a scale from one to five stars and the particular menu items they received from that restaurant on thumbs up/thumbs down basis. For those browsing through the app for places to eat, the restaurant rating reflected will be based on the last 90 days of data.

“Ratings as a concept through the transparency it provides is not only just good for the consumer it also benefits the marketplace as a whole,” Krishnamachar said.

With ratings, restaurants can have a better idea of what their consumers like, what they dislike and how the restaurant can improve.

Unlike Uber’s rating system for drivers, there is no particular rating restaurants need to maintain in order to remain on the platform. However, restaurants do need to meet certain standards around quality, inappropriate behavior, not complying with food regulations and other elements laid out in Uber’s community guidelines.

Uber is also launching personalized menu recommendations for each restaurant and an easier way to see the restaurants you’ve favorited.

“Through this type of work and exploration of this data, we’ve started to gather really interesting insights on consumer demand patterns — what are people looking for, what are the elements that are going into this decision-making and choice,” Krishnamachar said. “We started to think about how we can use this information to sort of shape the marketplace and improve selection and quality overall for people.”

This is where the idea of virtual restaurants comes in. Virtual restaurants, which UberEATS has been testing for a little while, are restaurants that exist only within the UberEATS app. UberEATS does this by first looking at specific neighborhoods within cities and analyzing what people are searching for. Imagine, Krishnamachar said, that there’s a neighborhood where people are frequently searching for mexican food, but there’s no restaurant nearby that offers that.

“We can take that demand insight and go to restaurants in that area who maybe don’t serve Mexican good but have similar ingredients or equipment that might work,” Krishnamachar said. If the restaurant is interested, they could put up another business on UberEATS and brand it separately.

The virtual restaurants concept is still in its early days, but there are some restaurants already doing this with UberEATS. One is Chicago pizzeria Si-Pie Pizzeria. UberEATS realized people were searching for chicken nearby Si-Pie Pizzeria but there wasn’t much available. So the owner of Si-Pie Pizzeria, who already had a fryer on hand, decided he could also make fried-chicken. But instead of adding that to his pizza menu, he branded it as Si’s Chicken Kitchen, which is only available via UberEATS.

It turns out that move was good for business. In October, after running the virtual kitchen for about year, the owner’s sales of chicken surpassed delivery sales of pizza.

“It’s an opportunity to increase selection overall for consumers but also an opportunity to really optimize and maximize the potential of each restaurant,” Krishnamachar said.

Lyft is testing a new rider experience with a small percentage of users

Lyft is giving around 1 percent of its riders access to a different, beta user experience in its mobile app, starting today. The new look for passengers offers the same essential functionality, but is definitely a departure in terms of how the interface works for riders.

Lyft says via a spokesperson that the new look and feel is “an exercise to learn more about our users” but notes that there’s currently “no timeline for a broad rollout.” Instead, it’s seeking to gain insight which could make its way into “future app updates,” the company says.

Based on these screens, it looks like the focus is on making key information bold and easier to scan, along with simplifying the interface and making sure the most important UI element is the most prominent at every juncture in the ride hailing process.

Again, this is going to be available only to a very small number of Lyft’s users, so if you find yourself in the beta test, don’t freak out and consider yourself lucky.

  1. 1 Home

  2. 4 Driver here

  3. 3 Driver approaching

  4. 2 Mode Selector

Ole Harms joins us at Disrupt Berlin to talk about Moia’s first year of exploring mobility

Volkswagen Group’s Moia sub-brand launched last year at TechCrunch Disrupt, with a focus on helping connect the dots between VW’s existing automotive business and a future where city-dwellers also rely heavily on ride pooling and ride hailing services. Moia CEO Ole Harms will join us this year to recap how Moia’s first year in existence has gone, what he company, and Volkswagen Group have learned about mobility services, and what comes next.

Moia has been upfront about seeking out technology partners for its mobility efforts, and it kicked that off with a $300 million investment in Gett last year, the Uber competitor based in Europe. We’ll find out what Harms and Moia think of the competitive landscape now that things have shifted, with a number of partnerships formed between automakers, startups, tier one supplier and more with a specific focus on mobility services.

Get your Disrupt tickets right now to save 30 percent off of your tickets and see Ole Harms and hear about the future of mobility — prices will go up in a couple of days. You’ll also see the Startup Battlefield competition, in which a handful of startups pitch our judges with the hopes of winning the coveted Disrupt Cup and a cash prize.

You’ll get to chat with plenty of promising startups in Startup Alley, see amazing talks on the main stage, and unwind after a long day at the show with a cocktail and some new friends at the Disrupt after party.

Do you run a startup? The Startup Alley Exhibitor Package is your best bet to get the greatest exposure by exhibiting your company or product directly on the Disrupt Berlin show floor.