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from the gotta-pay-for-those-Volvos-somehow dept.
SoftBank has finally secured a large stake in Uber that devalues the company and reduces former CEO Travis Kalanick's influence on the company:
Japanese tech giant SoftBank Group has bought a 20 percent stake in Uber, completing a months-long process, according to the Wall Street Journal. The move drops Uber's value by about 30 percent from around $70 billion to $48 billion — a reflection of the trouble that the ride-hailing company has experienced across 2017.
More important than the valuation change, though, could be the impact SoftBank's new stake will have on the influence former CEO Travis Kalanick still has on the company. Kalanick resigned from his post earlier this year after a number of scandals, but still maintains a seat on the company's board of directors, where he is surrounded by allies and controls 16 percent of the voting power.
The SoftBank deal triggers new governance terms at Uber that were approved by the company's board in October, though. The size of the board will expand from 11 to 17, which dilutes the power Kalanick wields. Two of those seats will go to SoftBank.
Also at Recode, CNBC, and Quartz.
Previously: SoftBank to Invest Billions in Uber
SoftBank Knew of Data Breach at Uber
SoftBank Devalues Uber by 30% With Latest Offer
(Score: 2) by TheRaven on Sunday December 31 2017, @08:30AM
You could be right, but then people said the same thing about Amazon: they were making a loss on each sale, but making it up in volume. Uber is similar to Amazon in this way, they may not be the best taxi service, but they're convenient and they work almost everywhere. They've basically been spending a few billion VC dollars to become the app that a huge number of people think is synonymous with taxi booking, just as Amazon spent a huge amount becoming the web site a huge number of people think is synonymous with buying stuff online. There are a couple of routes to profitability for them:
The first is if they can get self-driving taxis to work. This will remove their labour costs entirely, and they would be profitable already if they weren't paying drivers.
The second is to be in a position to raise prices and keep customers. They're already more expensive in some places. A colleague did an analysis a few years ago of public taxi data in New York and compared against the spot price for Uber and found that on average it was $1 more expensive to take Uber than a normal taxi. To do this, they either need their users to become so accustomed to the idea that Uber == taxi that they don't bother to compare prices, or they need to keep undercutting regulated taxis to the point that taxi companies go out of business.
The biggest danger to Uber is a bottom-up competitor, where existing taxi companies invest in a shared booking system that gives you the convenience of Uber and guarantees a regulated taxi ride.
sudo mod me up