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Uber Backers Discuss Stock Sale to SoftBank, Others ( 25

Eric Newcomer, Olivia Zaleski, Dinesh Nair, and Alex Sherman, reporting for Bloomberg: Uber shareholders and its board, led by early backer Benchmark, have discussed selling some of their shares to Japan's SoftBank and other potential investors, people familiar with the matter said. The talks represent a major turning point for the company. It has amassed more than 500 investors who fought to own a piece of the world's most-valuable startup. The fact that some of the earliest backers now want to reduce their stakes suggests the scandals and other troubles this year have taken a toll. The deal could include an injection of new money into the ride-hailing startup, the people said. They asked not to be identified discussing private deliberations. It's unclear what valuation those shares would carry or how much may be sold. Any private share sale like this would need to be approved by San Francisco-based Uber's board. Uber's former Chief Executive Officer Travis Kalanick, who remains on the board, didn't learn about Benchmark's effort to sell early shares until recently, two people familiar with the matter said. Kalanick has often opposed allowing early shareholders to sell their stakes, though the board has allowed occasional exceptions. Even though Benchmark led an investor revolt against Kalanick, at least three major shareholders said they were unaware of Benchmark's effort to sell shares as of Friday morning, three people familiar with the matter said. SoftBank, which recently launched a $93 billion technology fund, has no plans to invest in Uber, a person close to the Japanese company said. SoftBank has backed Uber's primary rivals in India, Southeast Asia and China. Some of Uber's investors would like to see the startup cut deals with overseas competitors -- as it did with Didi Chuxing in China and Yandex NV in Russia. Grab, a leading ride-hailing startup in Asia, is raising as much as $2 billion from backers including SoftBank and Didi.
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Uber Backers Discuss Stock Sale to SoftBank, Others

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  • Exciting news. Rich people sell stuff to other rich people. Truly news that matters.
  • by wvmarle ( 1070040 ) on Saturday July 15, 2017 @12:28AM (#54812683)

    Uber was founded in 2009. Now we're eight years in, the company has thousands of employees and millions of drivers working for them, yet still called a "startup"?

    I think I have to amend my idea of what "startup" means.

    • by TWX ( 665546 ) on Saturday July 15, 2017 @01:04AM (#54812735)

      They've never been profitable. They have a revenue stream but their expenses dwarf it and exist solely to help soften the impact until their real intended model, self-driving cars with no human operators, are ready.

      Unfortunately for investors, it's looking like Uber will never achieve that intention because Google's parent company will sue the hell out of them if it ever looks like self-driving tech out of Uber was based on Google/Waymo developments. If Uber doesn't basically scrap the whole self-driving program entirely and basically fire all staff that worked on it and destroy all records then they're always going to have that cloud of industrial espionage over them.

      Either way I do not expect them to ultimately become profitable, and to fold at some point when it is demonstrated that true 100% self-drive cars are too many years out.

      • Eight years ago self-driving vehicles were so much science fiction that it can never have been part of a long term strategy.

        • by Anonymous Coward on Saturday July 15, 2017 @01:37AM (#54812803)

          And it'll take a lot longer than another 8 years before actual self driving cars are on the road.

          Uber's strategy was always:

          (1) Ignore local laws ('cos they're disruptive!), which
          (2) Enables exploitation of drivers for cheap, which
          (3) Grabs market share and gets their branding in every MBA's brain, which
          (4) Pumps up the share price ('cos they're disruptive, new, sharing economy, millennial buzzwords!), so they can
          (5) Sell out and
          (6) Profit!

          before the company collapses, because turning an actual profit on all that revenue is hard.

          • by Anonymous Coward

            > And it'll take a lot longer than another 8 years before actual self driving cars are on the road.

            We have a winner!!!

            There will be ZERO *ride share* vehicles that drive themselves in next decade unless they're FLYING under network control, or are connected to TRACKS under network control, or are in (tunnel) CARRIERS under network control, or are the only things on public streets ...and are under network control.

            It doesn't matter if they can "deep learn" to spot obstacles and modulate velocity as well as

        • I'm not sure if I'd really agree with this. The DARPA self driving car challenges were back in 2004-2007, and they had working prototypes that could finish the course by 2005.

          • by TWX ( 665546 )

            closed course does not count for a whole lot when considering self-driving on public roads.

            • Agreed, this is a prime example of why people don't understand why autonomous driving is so difficult. They equate driving in the real world to be the same as a closed course, where some child isn't going to be wandering into it idly.
      • I expect them to fail when it turns out that self driving cars are closer than you think, and Uber is not one of the companies that is actually first to market. That is, assuming they don't fail extremely soon.

  • The stock is probably slightly over valued and the major holders want to do what investors do, and move out of a stagnant market and find new places with higher returns. People like the services, but there is market saturation. We see the same exact scenario with other tech companies, like Facebook and LinkedIn. There are only so many people in the world, so many people that can use (or have interest in using) a service, or ads that can be displayed at any given time.

    • by gravewax ( 4772409 ) on Saturday July 15, 2017 @04:51AM (#54813071)
      slightly overvalued? that is like calling the titanic a slight accident. They have had 8 years of hemorrhaging money and while they have had massive growth their seems to be no indication or way for them anytime soon to actually become profitable. it is massively over valued and is still riding on the wave over hype and hot air.
    • SLIGHTY overvalued? American Airlines and Delta - the two largest air carriers in the world - have a lower market cap than Uber. Combined they do over $80 billion in revenue and over $11 billion in actual profit. Over $100 billion in actual hard assets.

      Uber? About 8% of that revenue. Losing over $2 billion a year (yes, they have a -133% return rate on revenue). And assets? Well - it does have a database and an app!

      In 10 years, Uber will be looked back upon like Webvan and - perfect example o

    • There isn't actually any stock. Uber isn't traded on the stock market. Investors have paid huge amounts of money for small percentages of the company. The valuation is just based on how much they managed to charge investors, not on any real value. I'd like to know how much the investors that are now selling are going to lose.
      • stock value is calculated on how much someone is willing to pay per percentage point of the company. So while it definitely isn't on the open market the valuation is based on what investors are paying to buy. Which at this point seems absolutely insane as the most likely scenario with such massive losses is that someone else will swoop in and take up their marketshare without all the legal and overhead costs that Uber have faced, amusingly what they did to the Taxi industry will probably be done to them by
  • Meanwhile Masa allegedly soliciting off loading some of its Sprint. Perhaps they can swap some Sprint for Uber;) []
  • by sphealey ( 2855 ) on Saturday July 15, 2017 @05:01AM (#54813091)

    = = = The fact that some of the earliest backers now want to reduce their stakes suggests the scandals and other troubles this year have taken a toll. = = =

    There's also the minor problem that no one can figure out how Uber could ever earn a return on the money invested. That might be a reason some of the early investors are looking for new suckers.

"Even if you're on the right track, you'll get run over if you just sit there." -- Will Rogers