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Uber sells self-driving unit in deal that will push Aurora’s valuation to $10B
- maybeiambatman 6y agoGenuinely wondering - - How a 600 person company will determine who among the 1200 at ATG gets acquihired? - How will the Uber employee unvested stocks get paid out (or not) in an almost no cash deal?
- fastball 6y agoWhy would Uber selling a portion of its business be relevant to Uber employee unvested stocks? Do you mean Uber ATG employees? Were they getting stock packages for ATG or for Uber?
- maybeiambatman 6y agoI meant the ATG employees. And they were getting Uber stock as part of their compensation. Source: me, a former Uber ATG employee.
- fastball 6y agoRight, so if you are getting Uber stock, presumably nothing happens? Or I'd assume it's the same as if you'd been fired. This is not a liquidity event for Uber. Uber is selling a portion of its business, not being sold.
- mike_d 6y ago> How will the Uber employee unvested stocks get paid out (or not) in an almost no cash deal? There are two types of sales that are beneficial to a companies bottom line: selling something of value for cash, and selling a liability for little to no cash. Uber did the latter of the two. Effectively taking a business unit that was 5-10 years behind Waymo and Cruise and dumping it off on someone who might be able to turn it in to something in exchange for a piece of the future upside. But the real win for Uber shareholders here is that it isn't costing Uber R&D dollars anymore.
- wmf 6y agoSo Uber is throwing in $6.2B in ATG equity plus $400M in cash and getting $2.6B in Aurora equity? Sounds like a massively down round.
- arthurcolle 6y agoYeah this looks terrible for $UBER. Why did you write this as ATG equity? Wouldn't it still be their class A/B shares? Or is it structured as a separate entity?
- wmf 6y agoThe article says ATG is a separate company. I'm not very knowledgeable about this kind of stuff so I could be wrong.
- keyanp 6y agoExcept, is ATG equity actually worth real money? Seems to me this is a clear attempt to get ATG off the books (16% of net loss in Q3 was due to ATG https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Third-Quarter-2020/ https://investor.uber.com/news-events/news/press-release-det...). If Uber felt that ATG would actually deliver eventually, I doubt they'd be doing this deal to rid themselves of the department.
- tylerhou 6y agowmf was referring to last year's valuation of Uber's stake in ATG, hence "down round." Uber ATG was reportedly worth $7.5 billion April 2019 (giving Uber an ~$6 billion stake). [https://www.businessinsider.com/uber-atg-raises-1-billion-for-self-driving-from-softbank-toyota-valued-at-7-billion-valuation-2019-4 https://www.businessinsider.com/uber-atg-raises-1-billion-fo...]
- femto113 6y agoHelluva down round (the $400M in cash is the most telling in my opinion and reminds me of the kickback that IBM had to pay to "sell" its chip foundries [1]). If Uber's new stake is worth $2.5B, then the equity is worth only ~$2B. Last year Toyota+Denso+SoftBank paid $1BN for 13% of ATG, so by the new valuation their stake is now worth only about about $280M, or an over 70% loss in value in just one year. [1] https://www.extremetech.com/computing/192430-ibm-dumps-chip-unit-pays-globalfoundries-1-5-billion-to-take-the-business-off-its-hands#:~:text=IBM%20is%20paying%20GlobalFoundries%20around,making%20unit%20off%20its%20hands https://www.extremetech.com/computing/192430-ibm-dumps-chip-....
- Ericson2314 6y ago"Uber sells" "Uber takes stake" I....cannot put +/- signs on the balance sheet for this transaction.
- thesimon 6y agoWasn't Uber's whole money losing strategy based on the vision that one day they'll use their self-driving cars to get the driving done for cheaper?
- ghaff 6y agoWas there anyone who actually still believed that story? I mean, it should have been pretty obvious for at least a few years but did someone still believe it? (Less snarkily, they do still have a financial interest but yeah.)
- redis_mlc 6y agoIt was an investor narrative, similar to most of the stuff you read about WeWork. Companies need a topic to write PR stories about periodically.
- lhorie 6y agoWithin Uber, it was categorized as a "big bet", as opposed to a core vertical, like ride share/eats. Having now shed new mobility, elevate and now SDV, It looks like Dara is really set on focusing on the core verticals now.
- papito 6y agoAnd Uber stock in after-hours trading is not even flinching. Wasn't this like, THE whole strategy?
- AlexandrB 6y agoI think it was the publicly stated strategy because saying "we want to monopolize taxi service, then raise prices" doesn't sound great to regulators.
- thunkshift1 6y agomakes sense.. they can do that now with the new bill they got passed after massive campaign
- majani 6y agoWhen has monopolizing a sector then jacking up the prices ever worked as a strategy?
- petra 6y agoIt worked for WalMart.
- cwkoss 6y agoWhat does walmart have a monopoly on? Are they no longer cheaply priced?
- Judgmentality 6y agoRailroads, telecommunications, aerospace, integrated circuits, electric power... I think a better question is when has it not worked?
- astrange 6y agoAerospace doesn’t have a monopoly except that strictly regulated industries prefer having one passenger plane manufacturer because they’re easier to watch. Nor do ICs (there’s at least four big fabs and three big CPU producers). The ones that work own moats like land or government licenses. But Uber doesn’t have that.
- vmception 6y agoNice move for everyone around F for Uber’s optics but it is clear how this is good for them nearterm
- deleted 6y ago[deleted]
- tuyguntn 6y agowhat happens to Uber now when Waymo releases self-driving taxi? Will they lose all competitive advantage?
- admax88q 6y agoAssuming that ever happens, they will likely just license it from Waymo. I don't think Waymo intends to run a full stack taxi service, easier to just sell the self driving tech itself and let other's doing the work on real world applications. Uber's competitive advantage now is their mindshare, app experience, and subsidized pricing. With or without self driving doesn't really change that.
- oivey 6y agoMaybe. The amount of work to make a taxi service is much, much smaller than that to make a self driving car. I could see Waymo entering lots of industries like that to capture easy profits.
- chairmanwow1 6y agoTechnical work is relatively easy to copy. But what Uber has and what the market reliably undervalues is how expensive it is to acquire customers. Furthermore they have an actually competent customer support team to deal with problems encountered while providing the service.
- tuyguntn 6y agoif you really have self-driving taxi and it is cheap, I don't think it is difficult to acquire customers, since customers are not loyal to taxi brands, they are loyal to price
- chairmanwow1 6y agoIt’s quite a delicate balance between supply (cars) and demand (riders). If you have too much supply, you aren’t making money because you have to subsidize all the cars without riders in them. If you have too much demand and not enough supply, then wait times shoot up, and people return to your competitors. Plus demand is non-uniformly distributed across time. If you have enough cars to handle peak demand, then they’ll be sitting idle the remainder of the day/week. Most people think that trains are busy, because most people ride trains in high-demand times of year. If the same is true of a TNC, then it’s much better to list your cars with a bigger network and let them keep your cars busy more than you can. It’s much more expensive to properly balance the marketplace than you think.
- ljlolel 6y agohttps://jperla.medium.com/tesla-saves-lives-waymo-gambles-passenger-lives-3ee2d0e55f5f https://jperla.medium.com/tesla-saves-lives-waymo-gambles-pa...
- lucasmullens 6y agoPlease don't spam your own medium posts.
- DonnyV 6y agoI'd be shocked if Uber is around in the next 5 years.
- ghaff 6y agoI'm not sure why they wouldn't necessarily be around. They increasingly raise prices to sustainable levels and maintain some share of the gig economy taxi and delivery business with pretty good brand recognition. Becomes a much more mature, lower margin, steady-state business--presumably with a whole lot less SV engineering.
- kfarr 6y ago> much more mature, lower margin, steady-state business--presumably with a whole lot less SV engineering. sure reminds me of a taxi company (without the fleet management of course)
- fastball 6y agoTime to buy shorts then.
- dboreham 6y agoTaxis have been around for thousands of years. Taxis that you get with a nice app seem like a thing that will always exist.
- asdff 6y agoTaxis haven't been losing billions a quarter for thousands of years...
- cblconfederate 6y agoWhy would they need Uber? There are hundreds of similar taxi apps
- lucasmullens 6y agoHundreds? With Uber there's a car maybe 5-10 minutes away at all times, that's certainly not true with most of their competition.
- jpm_sd 6y agoThey also are selling their "flying taxi" group to Joby. https://www.theverge.com/2020/12/2/22086597/uber-sells-flying-taxi-elevate-joby-aviation https://www.theverge.com/2020/12/2/22086597/uber-sells-flyin... Time for Uber to actually try and make a profit off of their core business, perhaps?? Good luck!
- mkoryak 6y agoI don't understand the current state of self driving cars. First we have tesla which already has a self driving car. They were the first to build one and now everyone is playing catch up, or are they? Waymo has been building something for a really long time too but I have no idea how close they are to an actual product. Now there is this new company that gets a bunch of money to build something. It feels to me like the self driving car market will go to the first player who can make a self driving car -- which is tesla. Or maybe no one is close to making a really good self driving car yet, and even if they did, they would have to convince people like me that I can sleep at the wheel while surrounded by massholes.
- dboreham 6y agoPut down the kool aid. There are no self-driving cars.
- ZephyrBlu 6y agoTo be fair, the levels of self-driving are almost never discussed so it's no wonder people say things like "Tesla already has self-driving cars". For those unaware: - Level 0: No automation - Level 1: Driver assistance (Assisting steering or braking) - Level 2: Partial automation (Assisting steering AND braking) - Level 3: Conditional automation (Human supervised autonomy) - Level 4: High automation (Full automation in ideal environments) - Level 5: Full automation I believe we're currently at Level 2-3. More details here: https://www.howtogeek.com/401759/WHAT-ARE-THE-DIFFERENT-SELF-DRIVING-CAR-LEVELS-OF-AUTONOMY/ https://www.howtogeek.com/401759/WHAT-ARE-THE-DIFFERENT-SELF... If someone with more knowledge wants to correct me on the levels, feel free.
- nl 6y agoThere's nothing "to be fair" about this. The levels are technical distinctions in a roadmap towards "self driving cars", which by any reasonable definition are Level 4 and 5. Below that it is marketing for advanced cruise control features (level 1 and 2), or dangerous (level 3).
- 6y ago
- ubertaxi 6y agoAnd in talks to sell air taxi service. Uber Elevate tested helicopter flights to JFK with limited service. It seemed like they were betting big on eVTOL.
- dboreham 6y agoSignals the end of the self driving delusion, at least for 10-20 years.
- aabhay 6y agoI wish! The self driving delusion is more than alive and kicking. It’s just that the hype is moving from the vertically integrated options (Waymo) to the disaggregated ‘stack’ players (Luminar, Scale, Aurora)
- techelite 6y agoNah, companies on the brink of collapse will keep saying cruise control is self driving. Companies with a foundation keep calling it cruise control. All about risk.
- deleted 6y ago[deleted]
- justapassenger 6y agoElon is waiting on the line 1 with some promises.
- tachyonbeam 6y agoYou can see lots of videos filmed by Tesla car owners (not by Tesla) showcasing exactly how the Tesla full self driving beta is doing: https://www.youtube.com/watch?v=G8IQFb3JeEo https://www.youtube.com/watch?v=G8IQFb3JeEo It's not perfect, but it keeps better with every release. They are ahead of everyone else by a long shot.
- sorenjan 6y agoCar companies doesn't make their own airbags, they buy them from Autoliv. They don't make their own brakes, they buy them from Brembo. They buy transmissions from ZF, tires from Michelin, ECUs from Bosch, etc. Why should car manufacturers develop their own self driving technology instead of letting others, like Bosch [1] or Veoneer [2], do that and buy it from them? Spread the investment over more cars, it makes sense. [1] https://www.bosch-mobility-solutions.com/ https://www.bosch-mobility-solutions.com/ [2] https://www.veoneer.com/ https://www.veoneer.com/
- ghayes 6y agoTo answer your question: presumably it's easier for a self-driving car company to offer "ride sharing" than a ride sharing company to offer self-driving cars. The power imbalance could be an existential threat to Uber or Lyft if it were realized.
- cyrux004 6y agoExactly, if a OEM or partner figured out how to solve self-driving; they would go to market first. I know people like to say its hard to build a market for drivers and passengers like Uber and Lyft; but if you solved self driving, then you should have a good price advantage to build a new market like Waymo is doing
- ghayes 6y agoPlus the market would no longer be two-sided, which significantly reduces Uber, et al.’s moat.
- bgee 6y agoAnother angle for car companies to develop their own tech might be (claimed) competitive edge. Not many car manufacturer would market the airbags, breaks or tires as superior. However, car makers that develop their own engine constantly brag about how efficient or powerful their cars are compared to their competitors (e.g. Mazda and their Skyactiv, Toyota and their Hybrid).
- 6y ago
- silentsea90 6y agoIs Lyft going to follow suit with Lyft L5?
- chairmanwow1 6y agoIf they can get a better deal than Uber did. Almost certainly.
- silentsea90 6y agoAt this point, any deal would be good for them
- LatteLazy 6y agoAnother nail in the coffin of "self driving cars will be here very soon!"...
- yalogin 6y agoHa! I have been saying this for at least 2 years. I see no reason for them to be in the self driving space. That is not their forte. In fact not burning cash there will make them more flexible.
- disown 6y agoUber seems to be selling bits and pieces of itself every year. Perhaps it is wise to raise cash and focus on its core business.
- deleted 6y ago[deleted]
- boh 6y agoIs it possible that just having an app doesn't make you a tech company? Anyone else ready to think Uber might just be an overvalued taxi company?
- ProAm 6y agoThey are a logistics and pricing company. If they would license this tech they'd be rich beyond belief. They companies could really be Uber-for-X.
- boh 6y agoMost companies prefer logistics/pricing models to be profitable. Being a pump-and-dump for VCs isn't something they can license out.
- umeshunni 6y agoThat's an interesting thought experiment. At the high level, Amazon is also primarily a logistics and pricing company. They could also license their tech (or white label it a la Shopify) and make a lot of money, but they realized at some point that owning the user relationship was key to unlocking more value than just owning the tech.
- adadsd 6y agoqa
- thinkloop 6y agoSounds a lot more like a merger than sale: > Uber is handing over its equity in ATG and investing $400 million into Aurora, which will give it a 26% stake in the combined company
- mikesabbagh 6y agoThis self-driving system promise keeps getting delayed! It looks to me this is a case of a donkey led by a carrot on a stick (investors are the donkey here). What I never understand is what happens when a new situation that the system did not previously train for happen? what if this situation is deadly? Will all the Uber cars decide to jump off a cliff because of a wrong signalization or bad weather? What will the Teslas decide? Nature is very capable of creating 1 thing and multiply it, but it does not. The reason is it is more secure to have variation. If a problem happens, it will not affect every member (same what is happening with COVID by the way) Creating a mono-brain will soon prove disastrous. You just need a previously not seen situation or a crazy guy that gets imaginative and that will induce the death of hundreds
- holoduke 6y agoI am convinced that it takes another 100 to 200 years before we really have smart self driving cars. Maybe it will never happen as I think it will be much more likely that we have self flying drones before long before. Airspace being regulated heavily and thus much more predictable for a machine.
- drcross 6y agoWhat? 30 years ago we didn't have the internet. 100 years ago there was barely any electricity. Are you insane?
- sillysaurusx 6y agoNo need for the personal swipe!
- officehero 6y agoThere is a push to upgrade road infrastructure with sensors so might be sooner. You're totally right about regulation though - engineers are only solving a "technical" problem, but what about the non-technical ones? Where is the brigade of lobbyists needed to get something like this through legal?
- 6y ago
- balozi 6y agoWith Prop 22 in place the drivers are robots now.
- cercatrova 6y agoI was approached by Uber's self driving division a few months ago and I asked about the layoffs and changes there. They said not to worry about it. Turns out I was right in the end to worry about it and not work there.
- tachyonbeam 6y agoThe COVID situation is negatively affecting their revenue streams, which puts pressure on them to cut losses fast. You made the right choice indeed.
- rStar 6y agohow is this a sale, exactly? uber seems to be giving away their self driving division and $400 for the right to be a privileged Aurora customer in the future.
- hijklmno 6y agoWhen will investors learn to separate hype from what's possible - Augmented reality, blockchain, self-driving cars, AI? The reality on the ground is a lot different than all these startup peddlers have you believe. This makes it a lot difficult for people who are actually building useful things raise money.