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UBER SETS ITS COURSE TOWARD IPO: Uber's board agreed to several new resolutions this week to steer the world's most highly valued startup towards its much-anticipated IPO:
- Uber's board resolved to go public by 2019. Last month, new CEO Dara Khosrowshahi said that he would aim to go public in the "next 18 to 36 months," but the board's new decision provides a more concrete target. Khosrowshahi also said that Uber must cut its losses before going public, so it will need to significantly improve its finances in the next year to meet its 2019 target for an initial public offering (IPO).
- The board also cleared the way for a massive investment by Japanese tech conglomerate SoftBank. The previously reported investment could be worth more than $10 billion, according to media outlets. That will include a direct investment of around $1 billion by SoftBank and partner Dragoneer Investment Group, Business Insider reported. Beyond the direct investment, SoftBank and Dragoneer will purchase shares from existing investors and employees to up their total stake in Uber to about 15%.
- The board also made significant changes to the company's governance. Those changes included expanding the existing number of board seats from 11 to 17. Additionally, the board annulled the special voting privileges associated with the "supervoting" shares belonging to the company's earliest employees, including controversial former CEO Travis Kalanick. That move diminishes Kalanick's control at the company, where he and his close associates still held major sway after he stepped down from the CEO role thanks to their supervoting shares and board seats.
The announcements come just a week after Reuters reported that rival Lyft is exploring hiring an advisory firm to help with its own IPO. Uber likely does not want to IPO much after its competitor at the risk of driving up interest in Lyft among investors seeking to get an early jump in the expanding ride-hailing industry.
The SoftBank-Dragoneer investment and governance changes should help the company move towards its IPO goal. One early investor announced plans to launch a class action lawsuit against the company for stripping the privileges around supervoting shares. However, decreasing Kalanick's influence was likely necessary to convince potential investors that Uber is turning the chapter on its past controversies and making serious changes to its much-criticized culture. Meanwhile, the new investment gives Uber some extra funds to invest in defending its declining market share in the US while it fills vacant executive positions and formulates a strategy to balance its finances before its IPO.
BI Intelligence
AMAZON TESTING NEW DELIVERY SERVICE: Amazon is trialing a new service on the West Coast called Seller Flex, which provides deliveries for third-party merchants that sell goods on its platform, according to Bloomberg. The e-commerce giant, which started testing the program in India two years ago, plans to expand the trials throughout the rest of the US next year.
Seller Flex takes delivery decisions out of the hands of third-party merchants and puts them into the hands of the e-commerce giant. Amazon already operates its own logistics network for third-party sellers, known as Fulfillment by Amazon, which allows sellers to store their goods in Amazon warehouses and choose between different logistics providers - including UPS and FedEx - to get their goods to customers. With Seller Flex, Amazon picks up the goods from sellers' warehouses, and then decides the best way to route the goods to the customer. Amazon could route the goods through its own logistics network, which includes 16 planes, 76 warehouses and thousands of delivery trucks, or to turn the deliveries over to FedEx or UPS.
While Amazon has denied that it wants to build a full-scale logistics business that could rival UPS or FedEx, taking more control of its sellers' deliveries is certainly a step in that direction.
- It'll help the company deliver more of the goods sold on its platform faster. The primary purpose of Seller Flex is to allow third-party sellers on Amazon to deliver their goods to customers as quickly as possible. Gaining a greater expertise in quickly delivering greater package volumes would be essential if Amazon wanted to rival UPS or FedEx.
- Amazon will start taking ownership of more of the delivery process. The company will be picking up goods from sellers' warehouses, an important first step of the delivery process. Expanding its control over that part of process is a natural step towards becoming a full-fledged logistics provider, as Amazon could theoretically provide deliveries for other businesses then that don't sell on its marketplace.
- Additionally, Amazon will be able to analyze vast amounts of information related to Seller Flex deliveries that can help it optimize the scheduling, routing, and costs for its own logistics network. That could also help Amazon become less reliant on its existing logistics partners like UPS or USPS - the data could be used to identify more opportunities where it makes sense for Amazon to handle fulfillment using its own service.
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HOW MOOVEL'S APP FITS INTO DAIMLER'S MOBILITY STRATEGY: German auto giant Daimler is positioning itself for the disruption of car ownership by turning its Moovel app into a one-stop shop for urbanites' transportation needs, Business Insider reports. Moovel, Daimler's mobility services subsidiary, originally launched in the US in April 2016 after Daimler merged the subsidiary's RideScout route planning services business, with a Portland, Oregon-based mobile ticketing service called GlobeSherpa. It also houses Daimler's Car2Go car-sharing service.
Since that launch, Daimler has grown the Moovel app's utility by incorporating an increasing variety of transportation options, including public transportation, ride-hailing, and car- and bike-sharing services. That allows users to combine these different options - taking a Lyft part of the way then taking a subway train, for example - to get to their destinations quicker. Users can plan their trip and pay for all of these different options within the Moovel app, and Moovel takes a cut of ticket sales. Additionally, Daimler can offer its own urban mobility services like Car2Go and its MyTaxi ride-hailing service within the app.
Moovel's app still has a small user base though - numbering 3 million across the US and Germany - and it faces significant challenges to growing that base. Right now the service has 16 public transportation partners across 11 cities, and growing those partnerships to expand the service to new cities has proven challenging, according to Moovel CEO Nat Parker. Many public transit agencies are starting to see ride-hailing and other mobility services as a threat to their own business, as some startups, including Lyft, launch shuttle services for transporting larger numbers of riders. Moovel, however, offers its public transit partners important data around its users' trips, helping those partners see popular locations for pickups and drop-offs.
Building its mobility strategy around offering a useful and competitive app is a smart move though for Daimler. Many automakers, including Ford and GM, have launched mobility services to attract urban consumers. These services are dwarfed though by popular ride-hailing services like Uber and Lyft. As automakers grow their mobility services, those services will come into more direct competition with those ride-hailing companies, which have millions of monthly active users. In order to gain mainstream adoption for their mobility services, automakers will need to offer apps that differentiate themselves from ride-hailing apps and entice people to download and use them. Turning its Moovel app into a one-stop shop where users can access many different transportation options - including the popular ride-hailing and public transportation services they already use - is a clever way for Daimler to wedge itself into the future of urban mobility.
In other news…
- The Senate Transportation Committee sent a bill regulating self-driving cars to the Senate floor for a vote, according to Engadget. The bill is very similar to legislation recently passed by the House of Representatives. If passed and signed by President Donald Trump, it would make the guidelines issued last month by the Department of Transportation legally enforceable regulations. The Senate has yet to schedule a vote on the bill.
- Cruise Automation, GM's self-driving car division, has more than doubled the total number of self-driving cars it's testing over the past three months, according to Fortune. Many of these new vehicles are being deployed in San Francisco through a trial ride-hailing service for Cruise employees, where the sloping, windy roads can be a challenge for the cars' self-driving systems. However, mastering this challenging environment can accelerate technological progress, and could help GM become one of the first companies to deploy self-driving cars in a commercial capacity, as Deutsche Bank predicted last month.
- Voyage, a self-driving car startup founded earlier this year by several former employees of computer science education firm Udacity, is testing its self-driving cars in a retirement community in San Jose, California, according to TechCrunch. The company could be targeting the community for an eventual commercial launch of a self-driving taxi service, as a number of residents can't drive and might be willing to pay for self-driving taxis for mobility purposes. Additionally, smaller deployments in limited, specialized settings like college and retirement campuses are a natural first step for deploying autonomous mobility services before expanding them to serve the general population.