SoftBank's uber-popular Uber bid, movie theater slammed for surge pricing, restaurant pods
|Ali Griswold||Jan 2, 2018|
Hello and welcome to Oversharing, a newsletter about the proverbial sharing economy.
Happy New Year! If you're returning from 2017, thanks! If you're new, nice to have you! (Over)share the love and tell your friends to sign up here. This is issue eighty-eight, published January 2, 2018.
SoftBank and a handful of other investors succeeded in their bid to buy a large piece of Uber at a roughly 30% discount, or a $48 billion valuation. Between that and a direct $1.25 billion investment SoftBank is making into Uber at its previous $68 billion valuation, they'll pick up about 17.5% of the company. They could have had even more!
We knew that a lot of Uber employees wanted to sell, despite the discount. Many have now spent years rich on paper but without much to show for it in real life. Uber prohibits the sale of its shares on secondary markets, and only employees who've been there for at least four years are eligible for its company buyback program, which also prices shares at a discount. There are also more extreme cases: former Uber employees who have gone into six-figure debt to hang onto shares that, until recently, they've been unable to sell.
In other words, there are plenty of practical reasons why Uber's shareholders would have wanted to tender their holdings to SoftBank. But the sheer volume of the response suggests something else, like a greater loss of faith in Uber. That's hardly surprising after Uber's year of grappling with a toxic culture, bleeding talent, fighting a trade secrets lawsuit, being subject to federal probes, owning up to a data breach, and ousting its own CEO.
All that means Uber probably isn't the world's most valuable startup anymore. That title likely belongs to Didi Chuxing, Uber's fiercest international competitor, also backed by SoftBank and last valued at about $56 billion. Uber gained a 17.7% stake in Didi from selling its China business in summer 2016, setting it up for a potential Yahoo-Alibaba situation where that holding is more valuable than its own business. Uber would have to fall a lot further before that were the case, but you never know.
Startup valuations are a somewhat murky matter of investor faith. Investors have historically had a lot of faith in Uber, anointing it one of the first unicorns as they pumped its valuation to $68 billion. Others have doubted Uber was ever worth that much, but what mattered was that Uber believed and acted like it was. Being the world's most valuable startup played into Uber's hand, giving it an outsize sense of importance and confidence as it battled politicians, regulators, and competitors. After SoftBank and 2017 as a whole, Uber is still very large, but it's no longer untouchable. Its problems may compound as more people figure that out.
As a general rule, I think year-end lists are kind of dumb, but it can be interesting to consider why list-makers choose to highlight certain things.
For instance, of the 12 "moments that made headlines" in 2017 selected by Postmates, four had to do with alcohol, one with the munchies, one with slurpees, and three with user stunts. "You laughed, you cried, you memed the dopest memes. And through it all you postmated," says Postmates, trying very hard to make itself a verb. The list says clearly what Postmates probably wouldn't: In 2016, it still pitched itself as the company that would make on-demand delivery accessible to everyone; in 2017, it dropped those pretenses, launched an alcohol category, and focused on a different crowd.
Or here is not a year-end list, but, in a similar spirit, a list of seven US New Year's Eve facts that Uber pulled for website PopSugar. These include: the city that used UberPool the most (New York), the most trips done by a driver (64, poor guy), and the most popular food ordered on UberEats (Craft Your Own Pizza in Georgetown). Uber has a tremendous amount of data but it chose to emphasize UberPool, the shared rides service it's been pushing, and UberEats, the food delivery business that it sees as a key growth engine. Also the hard work of its drivers, something the company historically hasn't paid much heed to.
Similarly, here is Airbnb on the "hottest country to ring in the New Year." The answer according to actual numbers of travelers being hosted by various countries is the US, followed by France, Brazil, Mexico, and Canada. The answer according to the headline of Airbnb's blog post and its list of "trending" destinations, a measure Airbnb defines as "based on booking increases over last year," is China. "Airbnb's commitment to, and phenomenal growth in China continues," the company reminds us. Airbnb could have made this post about any number of countries depending on the measure it chose; China suited its purposes best.
Elsewhere in year-end lists, Uber made Fortune's "The 10 Biggest Business Scandals of 2017" (alongside Equifax's data breach, Samsung's bribery charges, and the Harvey Weinstein sexual harassment allegations) and Travis Kalanick appeared on Business Insider's "9 Figures Who Left the World Stage in 2017" (he feels out of place on a list that also includes Obama, James Comey, Prince Philip, and Janet Yellen, but like I said, year-end lists are generally dumb).
Happy 2018! The future is full of Pods:
Faced with dwindling traffic and rising labor costs, a few nationwide chains including Outback Steakhouse and Red Robin Gourmet Burgers have begun rolling out what some call "restaurant pods"—kitchens that cook up orders for delivery only.
At the Red Robin Express on Chicago's bustling North Michigan Avenue, more than a few hungry diners have knocked on the door, only to walk away empty-handed and confused.
In concept this isn't much different from Maple or Munchery, the ill-fated startups that tried to do delivery-only restaurants, but something about the term "restaurant pods" is deeply unpleasant. It sort of sounds like a thing the humans in Disney's Wall-E would have invented to further minimize any movement or socialization. "Want to get dinner?" "Nah I ordered in from the Pod."
Nomenclature aside, the delivery-only format makes more sense for a chain restaurant like Red Robin or Outback, where the dining experience is already commoditized. One thing that was always weird about Maple, which was endorsed by celebrity chef David Chang, was the idea that people would rather order those meals to their office/home than go to a David Chang restaurant to have them. Yes, delivery-only in theory is higher capacity and more efficient, but part of the reason why people like restaurants like that is because they are small and charming and less efficient. The delivery-only format wrings a lot of the charm out of it. That's probably less big of a deal for a chain like Red Robin, which has less charm to lose.
People still hate surge pricing.
Uber gave surge pricing a household name, but it's not the first company to increase prices in response to demand. Airlines do it, public transit does it, movie theaters do it. The main difference with Uber was the frequency with which prices changed: instead of having "peak" windows during rush hour, for example, Uber varied its rates in real time.
That hasn't made things any better for Australian-based film chain Village Cinemas, which is reportedly being pilloried for hiking the prices of popcorn, water, and candy bars during weekend nights. The "Dynamic Pricing Trial" raises prices on concessions after 5pm on Fridays and Saturdays, according to details posted on Reddit by someone who claims to have spoken with Village Cinema staff. The increases range from $0.30 to $1:
It seems pretty reasonable for Village Cinemas or any cinema to raise prices during popular times. Theaters already do this with tickets—matinees are cheaper than evening showings—and no one is outraged by it. People just aren't used to the same logic applying to other stuff at the movie theater, like snacks.
The real mistake here was probably to make it so obvious that customers are being upcharged. Uber figured this out after a few years. It used to alert people when they were paying extra, with a message reading "demand is off the charts!" and electric blue text showing the current multiplier. Then at some point Uber realized that what people hated wasn't exactly surge pricing, but knowing that they were being surge priced. Thus in spring 2016 Uber quietly started to end surge pricing as we knew it, phasing out the alert text and the electric blue multipliers for "upfront" fares that quoted you a price when the ride was requested. Surge wasn't gone because those upfront fares were still dynamic, but the signaling around surge disappeared, and everyone was happier, even though the end result wasn't more transparent, but less.
The worst job in technology. Uber's Financials: An Inside Look. Florida Uber driver steals $250,000 Ferrari. Man stabs friend in fight over Uber fees. Same-sex couple says Uber driver kicked them out for kissing. Postmates delivery man allegedly stole packages from San Francisco apartment. Lyft thanks its drivers. Lyft thinks it's a "category leader" not "challenger brand." How Expedia alum Barney Harford became Uber's no. 2. Las Vegas monorail ridership plunges on competition from Uber. Vacasa CEO thinks a recession could be good for business. Expedia CEO unconcerned about Airbnb. Using the Airbnb Model to Protect the Environment. UberEats outgrowing Uber rides in some cities. UberEats testing subscriptions. Uber for hockey goalies. Uber for blood. Uber for finding someone to do your binge drinking. "If you want war, you will get war," Didi Chuxing co-founder says.
Thanks again for subscribing to Oversharing! If you, in the spirit of the sharing economy, would like to share this newsletter with a friend, you can suggest they sign up here. Send tips, comments, and restaurant pod reviews to firstname.lastname@example.org.