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Episode 31: The Uber - Didi Chuxing Merger with Brad Stone, author of The Upstarts & The Everything Store

Episode 31: The Uber - Didi Chuxing Merger with Brad Stone, author of The Upstarts & The Everything Store

Wed, 01 Mar 2017 07:45

Topics covered include:
  • The global surge in 2012 of entrepreneurs starting ridesharing companies, nowhere moreso than China
  • Didi CEO Cheng Wei and investor Wang Gang’s backgrounds at Alibaba, first entrepreneurial effort in Momo, and Momo’s pivot to Didi Dache
  • The culling of the ridesharing herd in China down to Didi Dache and Kuaidi Dache through brutal competition and involvement of the “big three” Chinese internet companies
  • Rise of the Chinese messaging apps and associated mobile payments, and their impact on ridesharing
  • The 2015 merger between Didi and Kuaidi, brokered in part by Russian VC Yuri Milner
  • Uber’s decision to enter the Chinese market, and early success with investment and support from Baidu
  • The first meeting between Uber CEO Travis Kalanick and Cheng Wei in 2015—which does not go well
  • Subsequent “scorched earth” competition between Didi and Uber throughout 2015-16
  • Negotiating an armistice: Uber’s agreement to sell its Chinese operations to Didi in late 2016
  • End of the war, or just the beginning? January 2017: Didi invests $100M in Brazilian Uber competitor 99
  • Sustainable growth, and building moats versus scorching earth
  • Stay tuned for real-time coverage of the Snap IPO coming here on Acquired!
The Carve Out:

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Any other way that we could phrase that would be great. Yeah. You guys want attention for this podcast with us. Welcome to episode 31 of acquired. The podcast where we talk about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. We have another guest episode today. And we are very, very, very excited to welcome Brad Stone. David will tell you about Brad before we dive in. But I wanted to do a little bit of administrative stuff before. Our presenting sponsor for this episode is not a sponsor, but another podcast that we love and want to recommend called the Founders podcast. We have seen dozens of tweets that say something like, my favorite podcast is acquired and Founders. So we knew there's a natural fit. We know the host of Founders. Well, David Senra, Hi, David. Hey, Ben. Hey, David. Thank you for joining us. Thank you for having me. I like how they group us together. And then they say it's like the best curriculum for Founders and Executives. It really is. We use your show for research a lot. I listened to your episode of the story of Achaomarita before we did our Sony episodes. This incredible primer. You know, he's actually a good example of why people listen to Founders until acquired, because all of history's greatest entrepreneurs and investors, they had deep historical knowledge about the work that came before them. So like the founder of Sony, who did he influence? Steve Jobs talked about him over and over again if you do the research to him. But I think this is one of the reasons why people love both of our shows. And there's such good compliments. It's not acquired. We focus on company histories. You tell the histories of the individual people. You're the people version of acquired and where the company version of Founders. Listeners, the other fun thing to note is David will hit a topic from a bunch of different angles. So I just listened to an episode on Edwin Land from a biography that David did. David, it was the third, fourth time you've done Polaroid. I've read five biographies of Edwin Land and I think I've made eight episodes of them. Because in my opinion, the greatest entrepreneur to ever do it, my favorite entrepreneur personally is Steve Jobs. And if you go back and listen to like a 20 year old Steve Jobs, he's talking about Edwin Land's My Hero. So the reason I did that is because I want to find out like I have my heroes. Who were their heroes? And the beauty of this is the people may die, but the ideas never do. And so Edwin Land had passed away way before the apex of Apple. But Steve was still able to use those ideas. And now he's gone and we can use those ideas. And so I think what acquired is doing what Founders trying to do as well is find the best ideas in history and push them down to generations. Make sure they're not lost history. I love that. Well, listeners, go check out the Founders podcast after this episode. You can search for it in any podcast player. Lots of companies that David covers that we have yet to dive into here on acquired. So for more indulgence on companies and Founders, go check it out. For those of you who are long time listeners of acquired, you know about the Slack. But if you're new to the show, join over 400 other listeners of acquired for real time discussion analysis and news as it's happening, whether it's the Snap IPO, Trello a few weeks ago, app dynamics, a lot of interesting conversation going on there about the M&A world. And lastly, before we dive in, a big thank you to KUOW, a radio station here in Seattle, who has generously let us record in their studio this morning. Now, David, over to you to introduce Brad. Yeah, we are super honored and excited to have Brad on the show today. He is the, actually our second guest from Blueburg after a great show with Alex Sherman in a couple months back. But Brad is the senior executive editor of Global Technology at Blueburg. And before that, he covered tech and Silicon Valley for nearly 20 years as a reporter at Blueburg Newsweek and the New York Times, most relevantly and fun for us. Brad is the author a few years back of the canonical history of Amazon, the Everything Store, which as listeners know, we have discussed a lot on this show. And it's had a big impact on Ben and my thinking. It's just a great book that we can't recommend enough. And Brad actually has now a new book out called The Upstarts, which covers the histories thus far of the kind of new generation of defining Internet companies, Airbnb and Uber. I've heard of this. We, Ben and I both read it. It's great. We highly recommend it. We're going to be talking about a lot of the content within it on this show. But definitely go out and pick up a copy. If you like this show and history and analysis of kind of waves of technology companies, you're going to love this book. So thank you, Brad. We're super excited to have you here. Thanks guys. Yeah. And for listeners in my kind of typical style, I knowing we were interviewing Brad this morning, just finished The Upstarts last night. And I loved it. I mean, it's truly, I talked a lot about the Everything Store on the episode with Tom Auburn, but really the spiritual successor to that Amazon book. And it's interesting how it really is the next generation of a lot of the sort of same mentality and tactics in Uber that, to a lesser extent, Airbnb. But in Uber that we saw on Amazon. Thank you. Yeah. It's hard to follow up the story of Amazon because there's really nothing like it. And you know, somewhere along the journey of trying to find what was next, they decided, okay, maybe there maybe there isn't a follow up. Maybe you can look at the kind of wave of companies and a defining moment in Silicon Valley. And that's kind of how I stumbled on this sort of dual profile. Very cool. Yeah. It's great. So today, we're going to talk about something that a story, a merger that probably a lot of our readers know happened recently, but hasn't gotten nearly, I think, enough press in the Western world at least. And what press there has been has really been thanks to Brad. He's been the foremost reporter on this. And that's the merger that happened last fall between Uber and DD Shusheng. And I hope I'm pronouncing that right. I may be butchering in China. This is a wild story. And there are so many lessons here that I think all of our listeners can take away. And we're really, really glad to have Brad here to tell it with us. So I'm going to tell the story along the way, but definitely want to credit Brad. It's his story that he did the reporting on. So with that, I'm going to dive in. So we pick up the story in 2012. Uber has kind of already become a pretty meaningful household world, household word, at least in the US. And it's starting to expand internationally. They've gotten word that there's this company in London called Halo, which started with the black cabs in London. Has had a lot of success there and is thinking of is planning plotting to come into US and threaten you were here. So in response and Brad talks a lot about this in the book, Uber mounts a really aggressive international expansion campaign. And at the same time, lift and sidecar have really pioneered true ride sharing in the US, not just the black car, tax limo and Liberty drivers that Uber started with, but true ride sharing where anyone can drive. Uber is responded with Uber X. And kind of the world is now realizing that the market for ride sharing is orders of magnitude bigger than anyone thought. Yeah. And David, it's worth it's worth kind of noting there that in today's world, we'll take Uber X's everywhere or that's the most common say when I'm going to take an Uber at the New Rx. Uber did not pioneer ride sharing. In fact, and they were reluctant to embrace it. Travis spent a lot of early 2013 trying to get lift and another company's sidecar shut down in California because he saw he saw as a disruption. And he thought it was illegal. And when the California PUC didn't do anything, that's when he embraced Uber X wholeheartedly. If you can't feed them in July now, I think that's kind of Uber's motto, right? I want to say one more thing about Halo though, because there's an interesting lesson in tactics. Halo in 2012 promoted the hack out of its international expansion. And that was a huge mistake because they mobilized, they not only mobilized Uber to grow more quickly in the US and then Uber got to markets like Chicago and other cities before Halo ever really moved on its promise to expand. But Halo also stirred all this entrepreneurship in China. And so, you know, what you have to understand these days is there entrepreneurs all over the world that are watching sites like TechCrunch religiously. And it was Halo and not really Uber or any of the other ride sharing companies that started stirring these companies in China to start competing. Yeah, and that's exactly the thanks for, thanks for tuning me up there. It's like you wrote this story or something. That's exactly what I was going to say, that all around the world people are starting to wake up to the potential of this market and know where more than China are entrepreneurs, sort of attuned to the size of this opportunity and ready to go after it with just kind of aggression that makes even a company like Uber look tame here in America. So there as Brad writes about there about 30 companies between 2012 and 2013 that get started in China all going after this ride sharing Uber opportunity. And one of those companies get started by a young entrepreneur named Chang Wei who at the time was a 29 year old salesman at Alibaba in Huangsau. And he had been kicking around some entrepreneurial ideas with his boss at Alibaba, a guy named Wang Gang, and actually earlier that year, it's kind of started this side project that they could an app that they call Momo. And Momo was essentially on iOS the sort of fine friends feature. It was essentially that. And so they're working on this app on the side of Alibaba. See the market opportunity in ride sharing and immediately pivot and rename the company DD dash which translated in English means Hong Kong call a taxi. And so when they pivot they decide to leave Alibaba go full time. Chang is the CEO and Wang invests the initial seat capital into the company. And they're kind of off to the races along with everyone else. So wanted to ask Brad here, I mean you spend a lot of time probably more than anybody interviewing these folks. What do they like, you know, kind of what drove them to start this company? Well, I mean, I just love Chang Wei. He was great. I should say, his English isn't so good and my Chinese is not existent. My partner in crime on this story was Lulu Chen, one of my Bloomberg colleagues in Beijing. And we went to visit Chang Wei at DD's headquarters. And I loved him because he presents his story as a series of small personal humiliations. So he, for example, he is a very important college entrance exams in high school. He leaves one page blank by accident and gets into a lesser school. And in college he gets a job selling life insurance and he doesn't sell a single policy. And then he signs up to work at a health care company only to find out that it's a chain of foot massage parlors. And he sort of finds him, he walks into an Ali Baba office in Shanghai, gets a job, meets Wang Gong, his mentor. And really they start on their entrepreneurship path because Wang Gong doesn't get a promotion. And they start kind of brainstorming ideas. You know, Momo actually, you know, it wasn't, it wasn't their idea. It was something that sort of a kind of hack that existed on the app store in China. And they sort of realized the power of GPS and the potential to do things like a halo in China taxi-hailing app. And yeah, and then they launch this company called DD only to find out that, you know, dozens upon dozens of other companies have had the exact same idea. So, you know, here you've got this young kind of whippersnapper in Chang Wei, Wang Gong, you know, we spoke to him on the phone. He's very rarely does interviews, but sort of flamboyant investor who, you know, has just by virtue of his small angel investment in DD, you know, has minted at least a billion dollars. And, you know, it was these guys were, they had nothing, you know, and it was 30 is the number of companies that launch, you know, there may have been hundreds that spun up to address this opportunity in Beijing at the beginning of 2012. So, you know, the odds were against them, but I think, you know, as well as well to talk about, there was, you know, they had some experience in the industry and knew what it took to succeed in China. And Brad, I think you put it on your book that it was roughly the American equivalent of 100K that he put into DD as his little angel investment. Kind of on par with Sequoia's 600K into Airbnb a few years earlier that you also cover in the book. I'm also struck by both the similarities between Travis Kalanick and Chang Wei, you know, in terms of their histories and their failures in the past. I mean, these were neither of them when they started these companies were household names, you know, far from it. But also, like, the complete opposite in terms of their outward personality is like, it must have been, you know, did that come through and as you were talking about them, like, you know, this, this, this sort of underlying sort of drive that they have that I suspect as in many ways been motivated by their past failures, but just contrasted with these wildly different services. I mean, I think that this is a cultural thing. It's funny because I was recently telling some of my colleagues in in Asia that we need to stop describing Internet in an CEOs and founders as humble. But I think like they're all trying to present the humble veneer that the, you know, there's just kind of cultural value in doing that. Whereas, you know, in the US, somebody like Travis is, you know, is doesn't hesitate to be presented or present himself as extremely aggressive. Right. Of course, Travis did that over the first few years. But behind the, behind the facade, they are very much alike. You know, I think one of the reasons, you know, D.D. succeeded and beat all these companies is that, you know, Chang Wei had a vision, which is that smartphones and technology could make the, you know, could make transportation more efficient in China. But along with that idealism, there was a ruthlessness to go and pursue that goal to kind of, you know, like like everywhere else in the world, right, hailing, you know, was, was quasi legal in China, you know, and yet nevertheless, he sent those early employees. You know, to, to cities to go and launch without permission in some places, they were shut down and then, you know, he never less kind of persevered and that's kind of what it took in this industry, a relentlessness in the approach. In thinking about that perseverance and that relentlessness, you know, as you meet with the founders of the founders of over founders of Amazon, do you get the sense that when you talk to these people in person, there's something about them that's just different than other people that this relentlessness and this kind of ruthlessness. That sort of thing could be predicted, like are they the inherent forces of nature that set them apart from other people or, you know, what is it about them? That's the big question. I mean, first of all, I wouldn't put anyone else in the category of Jeff Bezos, right, because he stands alone and had, you know, had the vision before anyone, you know, that the internet was going to change the world and bet so heavily on it and then had years of people thinking that, you know, Amazon was, was really just a boring retailer. I don't know that the ubers and the deities of the world have suffered the way that, you know, Amazon and its employees suffered for many years. I think in terms of Chang Wei, probably what marked him and his story is that, you know, he and I'm sure we'll get to this, like had great people around him and then was able, I mean, the dynamics of the Chinese market are so unique that the deities smartest move very early on was to hook into 10 cents. And when they did that, you know, everything was possible to pick up the story there. You know, I think what's striking reading the book and hearing about these the early days of the right hearing competition in China is it makes the, you know, the Uber lift fight that, you know, we think is so ugly and distasteful, you know, here in the States, you know, it makes it look like kids in the sandbox, right? These 30 companies were just brutal to each other. And, and in particular, you know, they all started raising large amounts of money. And then going, being willing to go deeply, deeply gross margin negative by paying drivers a lot more for each ride than, than the writers were paying the companies. And it kind of like, it kind of becomes that they're laying siege to each other's businesses in a way, you know, this is war. And one of the tools, one of the ways that they start raising money is from the large, the large, the big three internet companies in China. And, and, and DD dash is actually the second one they raise money from 10 cent. But before that their competitor, Quade raises money from Alibaba, which of course is Changwei and and Wang Gang's former employer. So, you know, I mean, Brad, you talked to all these guys like, what was going on? Right. Well, I think when Quade went and raised money from Alibaba, it was, it was definitely a blow to the DD guys because, you know, that's their, you know, that's their alma mater. And, and that's, you know, Alibaba, obviously the e-commerce giant in China. So, I think that there was a moment of almost panic, you know, that Alibaba had placed its bet. It was, it was on Quade. And, and as a result, you know, Wang Gang, the investor and and and Changwei's mentor, you know, his next call was to 10 cent. Now, as it happened, then it was probably difficult to see in 2012. But, you know, 10 cent has this social network slash messaging platform called WeChat. Yeah. And it was, of course, QQ before that. Right. And, on desktop. And, and this was like, you know, sometimes it's better to be lucky than good, right? I think that's right. And I think, you know, the big moment for this industry, you know, so quite the, and DD start to emerge by virtue of the investments of of 10 cent and Alibaba. By-do is still sitting on the sidelines. And what happens at the end of 2013, beginning of 2014. And again, almost sort of lucky is that over the Chinese New Year, WeChat integrates DD as a way, and there's a product called Red Envelope or Red Package. And it's basically a way for Chinese WeChat users to give each other small gifts. And the idea of giving somebody a gift on DD, the gift of a ride, kind of takes off. And both 10 cent and Alibaba, the sponsors of these ride sharing companies, realize, you know, that the next battlefield in this longstanding war between the Internet, giants, and China is going to be mobile payments. And that the taxi companies, the ride-hailing companies, are ways to spur payment value with mobile payments. And so they start to kind of use these two ride sharing companies as proxies and funnel money, you know, right off their balance sheet into these companies as a way to drive payment volume. And that is when DD and Quaidee start to just take off on steroids, not only growing very rapidly, but burning tremendous amounts of money. Because this siege is continuing, and both the Alibaba and 10 cent are pouring tons of money in. But other investors, you know, are also venture firms and private equity firms also pouring in lots of money. I mean, it gets to be billions of dollars that these companies are burning, just trying to subsidize rides to get kind of get big fast and beat the other one, right? That's right. And then you've got people like Yuri Milner at DST, you know, who all the big investors had missed on Uber and believe me, they berate themselves in on stop. And that's an interesting aspect of the story, you know, that these companies very early on did not look like the prototypical Internet companies. And so, you know, a Yuri Milner who prides himself on hitting all the big ones passed on Uber. And so bets big on on ride sharing or ride hailing in China. And so, you know, makes an investment in DD and then kind of sees this destructive war playing out between these two indigenous Chinese ride hailing companies. And gradually over over to the throughout 2014 starts to broker a piece not only because both companies are losing a lot of money and just, you know, and and siphoning cash off Alibaba, intense balance sheet because, you know, I think they also had the sort of a foresight to know that Uber was coming. And that the Chinese companies were probably better off together than they were apart. Yeah, it's interesting thinking about the big three in China, their investment firms, their own business. And in America, like, or the US, we tend to have, I mean, there's corporate venture, but you don't have like, oh, Facebook invested in them. So, you know, Google needs to go invest in someone else. Those corporations just buy companies, right? And then they, they subsume them into their offering. But we don't really have this like first tier of funding is kind of corporate venture. Like there is going to be a change. So, funny thing, we can make a interesting juxtaposition with Google and Uber because Google Ventures invests in Uber. It's their biggest investment ever. And then they start competing with Uber, right? They they roll out a ride sharing. Well, they start talking about the right sharing service, but they scare Uber into thinking that maybe Uber will be a competitor. And, you know, and relations between the two companies are strained. Whereas, you know, Tencent invests in D.B. And, you know, it doesn't, you know, doesn't ever compete with it. And, you know, and as a result, you know, it's so it's interesting. It's a different model. I mean, you know, I think I think maybe sort of smart, you know, that kind of Tencent knows that that is not in its core competency. Yeah, well, it also feels like to an outsider perspective, it feels like these these big three Chinese internet companies are willing to sort of more directly exercise their influence in the market there. You know, if if if that's the right way to put it, then. Then the internet companies are in the US. I mean, it's really hard to imagine Google or Facebook sort of giving preferential treatment to, you know, like if Facebook started giving preferential app installs to, you know, one ride sharing app over another or one, you know, other form of of company over another, you know, I can't imagine that going well. That's a great point. That's a great point. And, you know, not only and we'll get to this, but not only was Tencent prioritizing DD on WeChat, but when Uber comes into China, it starts blocking Uber from WeChat. Yeah. So I think I think that's a good point. I think that there would be some regulatory or anti-trust scrutiny if Google was to play favorites in the way that Tencent and Ali Paba did in China. Yeah. So Yuri Milner kind of comes in, brokers this piece between, between DD and Kuwaiti and they know Uber is coming. DD ends up, you know, quote unquote, winning the battle. They get 60% of the combined company. Chang Wei stays on as CEO of the company. And I just want to sort of step back for a minute here and talk about this is like two years after these companies were founded. So they go from getting started inspired by Halo, not Uber. You know, having this sort of wide playing field, and then a blood bath emerges. The big internet companies get involved. They raise and burn billions of dollars and like 700 days go by. You know, I mean, the pace is just like blistering. Well, and one funny one funny thing from from the book, you know, there were moments of like just technical meltdown for these companies and they, you know, they mythologized these periods within the company. I think they call one seven days seven nights where they worked so hard to prop up the infrastructure that one of the engineers had to go to the hospital because his contact lenses had become sealed as eyeballs. So that kind of tells you how hard and how fast they were moving it. Yeah, I mean, it's like, you know, when Mike Zuckerberg talks about Facebook going on quote unquote lockdown. Like I'm pretty sure the employees still go home at night, but in China, they don't. Well, and in crunching the numbers, it looks like it literally was about twice as fast. We can't we don't know exactly when Uber hit a one billion dollar valuation, but they did their series be on 300 million in December 2011 and their series C in August of 2013 on three and a half billion. So if you look back at their seed in August of 2009, they probably hit a billion dollars about four years after founding approximately twice as long as these. You know, their Chinese counterparts, so it really is a insane pace. And you just think about the size of the Chinese market and how, how, how car ownership is so much less developed in China. And so there was, you know, just more of a hunger for this kind of service. Yeah. So Uber, you know, as we've been mentioning, you know, they're not blind to this too. And actually it turns out that Uber had this kind of like small sort of clandestine presence in China. Since 2013, there's this story of Travis and a few other Uber executives go over to China and Travis sort of famously calls back to headquarters in San Francisco and says like, hey, like I need you to I need you guys to tweak the text so that like we can. Like we're going to go out here are executive sign up a few drivers and just like run some tests here in China. And so they start doing that in 2013, but they're just sort of testing. And then when when DD and Quattets start are in the midst of their merger, that's when Travis decides, OK, he's going to put his foot on the gas and launch for real in China. And Uber does and pretty quickly while DD and Quattets are consumed with the merger, Uber gets to a 30% market share kind of right off the bat. So it's now sort of a they're a real player in the market. How did that happen so quickly? Yeah, I mean, it's funny. We'll go back to like the story of technology in China is always the as always the story of the big three. And one of the things that happened was, you know, Uber. So when they launched, you know, the integration was very poor in China because they were using Google maps and you know, we all know Google is pretty much blocked in China. So the integration was poor. And also this idea of launching via the black car or limo market in China was always a limiting one because it's just not that big of a market. So we're kind of a tutors along for a year and a half. And then and then makes the various kind of smart observation that by do has sort of missed this wave of mobile payment competition and needs to catch up. So they solicit an investment in by do they start using by do maps, you know, which is much smarter about transportation in China than Google. And the product just gets much better at the same time at the beginning of 2014, DD and quite E are merging and you know, as with all mergers, it's an awkward one and they kind of slowed down. So I think, you know, Uber took advantage of sort of this opening and and and made up some ground. But you know, as as we'll see, it was it was temporary. Yeah, so they come in, you know, swinging into the market with by do as a partner get 30% market share and Travis goes over and he meets, he meets with Chang, he meets with the newly merged DD and Travis is he sort of walks into the meeting. He thinks Uber is international, DD is not at this point. Uber has Travis is convinced the better product, the better technology they have by do maps, which are the best maps in China. And he essentially offers to acquire DD. He frames it as an investment. He wants to invest in DD, but he wants a 40% stake. And this is really, you know, to my mind, at least seems like he's trying to say like, hey, I'm just going to take you guys out on the cheap and Chang and DD reject this offer. And Brad, you read a lot about this meeting. So what would happen there? Well, I mean, I think, you know, Travis kind of met a smatch. You know, one of the things that happens at this meeting is, you know, Qingway stands up and on a whiteboard kind of charts, Uber's growth since 2010. And then in another with another fever line charts, DD's growth since 2012 and the lines intersect and he projects a DD will be larger than Uber, primarily because the market in China is so much larger. And then the other there's all sorts of little funny little maneuverings here at this meeting. And one of the Uber executives were wondering whether the food that they had been served at the meeting was deliberately bad as a kind of strategic approach. And that strategic maneuver, but it was and I think I think it was actually just a bad lunch. But, you know, so there's a lot of taste test. It's like the middle ages here. All right. There's a lot of maneuverings here behind the scenes. But, you know, I think that the, you know, to their credit, the DD executives and at this point, Jean Lou, an executive from Goldman Sachs has, she's either advising DD at this time or as join really as as Changway's partner. And I think there's a belief that, you know, as with as with so many other markets in China, the local player will be able to prevail. You know, there's there's a lot of sort of kind of fierce pride, I think in the Chinese Internet market that, you know, that they can that they can hold their own. And it's funny because I contrast that with the attitude in Europe where we really don't see that. And so as a result, you know, Travis and his bid to acquire DD very early on was was rejected. And they resolved that they're going to fight it out in the marketplace. Yeah. And question on that. So, you know, Google doesn't operate in China. And many other large internet giants have been sort of kicked out of China and then, you know, not allowed with the great firewall to operate on the internet there. Why was it that Uber was able to get to 30% market penetration and didn't DD have on its side the ability to just say, hey, we're going to make a couple of calls and like you really need to do that. I mean, I think that the censorship challenges that companies like Facebook and Twitter and Google face are about information and sharing, you know, sharing information that the government in China just doesn't allow. And Uber is a transportation tool. So it was sort of kind of less clear that they were violating those rules. Now, I think, you know, there's an argument to be made. I don't happen to believe it was significant, but there's an argument to be made that maybe ultimately the Chinese government did tilt the playing field on behalf of DD and slow Uber down or that maybe in the future if Uber was going to stay in the market, they would have problems because obviously they do collect sensitive information about where people are and where they're going. But yeah, Uber, Uber, it was not facing those kinds of censorship challenges. And to the extent that all these companies had problems and do have problems, they're pretty universal in terms of who's allowed to drive for these services. Cool. Yeah. And you know, Chang, Chang and DD, you know, kind of essentially say to Travis, you know, after this meeting, like, you know, OK, you want to fight like, you know, we can do that. Welcome to China. And you know, like, we've been through this brawl with 30 other companies. We can take you on too. And this is where, you know, I know I keep saying this throughout this episode, but really just reading about this is so surprising to me, because we just don't see this in tech here in America. Things go like kind of nuclear at this point. So what happens is DD and Uber both start raising huge amounts of money to fight each other in China. DD first announces. And not from the usual suspects either. And not from the usual suspects. Yeah. You know, they already have the investment from the internet portals, but Uber raises $3.5 billion from Saudi Arabia's public investment fund. You know, and DD raises $7 billion of its own. So that's over $10 billion raised, you know, within a couple of months. And they just basically start giving this money away to subsidize rides. And then DD does something that I think I suspect even Travis and Uber is Maccuballion as they are in the US couldn't even imagine and see coming. DD starts investing in all of Uber's rivals around the world, including Lyft in the US and Ola and India and Grab Taxi in Southeast Asia. And they announced that they're going to literally it's like the allies fighting the Nazis here. They formed a they have this global alliance to fight Uber that they start building. You know, what were Brad what were when people investors and executives at Uber start seeing this happen like what was going through their heads? Well, I mean, I think they were dismissive of the global alliance, you know, because it was unclear what it really meant or whether there was much value and sort of integrating each other's apps or how smooth that would be. I think the more meaningful thing like, you know, Uber was bringing a couple of assumptions to its battle with China that I think are interesting to examine. You know, one obviously I think at the time Travis is pursuing a global network, but this is not really a network effects business or if it is it's very local. So it was sort of unclear that Uber's strength in the rest of the world would even translate into China. You know, the great contrast is with Airbnb where I think they do have more of a global network effect because they've got travelers going back and forth across across oceans. The other advantage I think Uber thought it had was a capital advantage and what we really started to see in 2015 and 2016 was this, you know, this unique capital market where, you know, there were all sorts of unique sources of capital that were willing to shower all these companies with money. And I think it was more, you know, the fact that D.D. goes in and gets money from Apple or, you know, that all of these in these sovereign wealth funds start to kind of provide capital that begins to convince all these companies that they are on a sort of unsustainable path. You know, so I don't, you know, the investment lift, the global alliance, I think the Uber guys as arrogant and confident as they are sort of shrugged, but it's when, you know, it's when a company like Apple or Foxconn gets into the fray and starts putting money into D.D. that I think, you know, Travis and Emil Michael, his deputy start to wonder can they really win this battle. Yeah, and so by the summer of 2016, D.D. is starting to pull away and whether that's because Chinese regulators sell their late, subtly tilting the field towards them or because of this capital or just better execution, hard to say, but D.D. claims by summer 2016 that they have 85% market share. So they've won back another 15% that Uber had taken and they're operating in 400 cities in China versus Uber, which is only in 100. And then apparently it's Uber's investors that start pressuring Uber to negotiate a truth and Uber reaches out to D.D. and says, you know, okay, let's begin peace negotiations. And pretty quickly from when they reach out, you know, Brad, I think he said it's two or three weeks. They come to a deal where Uber sells its China operations to D.D. and return for a 17% equity stake. And D.D. agrees to invest one billion in Uber, US dollars and get a board of server seed. How did that set of meetings, you know, come together and differ from that first meeting when Travis went over? Yeah, well, first of all, we should, you know, we should be clear that this is not a bad deal for Uber, right? It's a sort of a remarkable retreat and, you know, nearly 20% of what will be kind of their major international rival, you know, a billion dollars investment to kind of recoup some of the some of the massive losses. You know, I think I think at this point, this was a very respectful set of negotiations primarily between Jean Lou of D.D. and Emil Michael from Uber, you know, culminating in this as I depict in the book this kind of famous drinking session between Chen Wei and Travis in Beijing, over the over the summer of 2016 where they're drinking by Jew and Chen Wei was sort of hilariously dismissive Travis's drinking abilities. But of course, by Jew is not for the faint of heart. You know, I guess I don't have much illumination on how they they came to kind of 17 or 18% ownership stake. Other than that, this is what sort of the market was suggesting at this time. And, you know, and for D.D. it's a great deal too because they kind of win, you know, they win not just the Uber China brand and its customers and all those employees. But basically an open playing field to be the primary, you know, kind of transportation innovator in the world's largest transportation market. Yeah, and we'll, you know, we usually save this more for the end. We are evaluation criteria. I think we're going to look at Uber here and say, you know, was this usually we look at the M&A events. And so, was this a good use of funds with this, you know, impactful and multiplicative in the future to bring this company in. And so the lens, I think we should look at this through is, was it a good move for Uber to engage in all of this activity and then leave with the 17% stake in D.D. And if you just look at the raw dollar leverage, I mean, it's a very short period of time of blowing $2 billion to get almost $6 billion in value of, you know, present dollars. And, you know, the hope is is you make that investment that D.D. continues to grow in value in China. And you raise a great point. One of the best markets in the world with the best market in the world, the biggest market in the world should get remarkably bigger than Uber itself. So, I think it was a good deal for Uber and I'll give two reasons, but I'm curious to hear what you guys think. You know, one, the, Uber may not have known this, but the regulatory environment in China was about to change for all the right sharing companies. And a lot of the big cities have now said it is illegal to drive for these companies if you don't live in the city. And that has constrained the supply of D.D. and slow down its growth. So, I think Uber got out at probably the right time. If you've got a constrained supply being on a battle for the hearts and minds of drivers, it's not the position you want to be in if you're the foreign company. Yeah. And for listeners, Brad was telling us this earlier. I had no idea. I think this is super, super new, super interesting. And I hadn't fully thought through it. Brad, why do you think it's advantageous? Why would you think a city would would legislate that? It seems like it's only good for business to have people out of the city. Well, I think it's protectionism. I mean, I think that the yellow cab fleets are a major source of revenue for cities and the fees and taxes that they pay and perhaps the medallion fees. And so, I think that's one reason I think they've kind of tipped their fingers on the scale as like as the taxi companies have done all around the world. And then I think the second reason is there's a rational argument around traffic and congestion and obviously all the Chinese cities struggling with them mightily. That might be a little bit of a cover story for just protectionism. And of course, you know, the pendulum may shift. But I think for now, DDS kind of fighting that regulatory battle and they've reorganized restructured their company a little bit to put more emphasis on some of their license, their chauffeur offerings and their and their commuting alternatives like buses. I think the other thing that happened and the reason why this was a smart deal probably for both companies is it became very clear over over the last two years that this market was about to undergo a major pivot into into driverless card technology. And so it really doesn't make a lot of sense to go waging a war and spending a battle for a market that's going to be changing very quickly. And now both DDS and Uber are spending a lot of that money that they might have been spending on subsidies investigating the future. And I think that's a smart approach. Do you know if DDS also working on a self driving car offering there? Yeah, they're there they've been trying to hire some folks and they've got a team and and you know, and they've got some partners. I think by do is also exploring it in China. And yeah, as as everyone now, and it's so it's of course very fashionable to say you're looking into it. It's unclear to be now whether you know whether DDS has made the progress of say Uber, which is testing cars now in Pittsburgh and a few other cities. Yeah, and one thing I learned from from your book, Brad is how fast or how recent Uber is to this this sort of area of self driving cars that they really weren't tipped off to it until Travis God in one of the self driving Google cars when he went to meet with Larry Page or actually that's right. It was Larry Page. But even then remember that that's my times are messed up, but I think that's 2013 even then he believes that Google will be Uber's partner in that effort. And it was only at the recode conference in in late 2014 where Sergey Bryn is talking about it in a little bit of a dismissive way toward Uber. And Travis had gotten wind that Syria was going to have talk and maybe announce its own sort of Uber competitor that I think Travis starts starts to realize that Uber is not that Google is not a partner in self driving cars, but but a competitor. And that is when he begins to invest very seriously in in self driving cars. Gotcha. And there's well, we'll move on let's move on to acquisition category and then come back to greeting, but before I do, I just want to say, you know, we're recording this episode here in the middle of February in 2017. You know, because the deal has happened, but the story is is kind of far from over just last month, DD announced that they were going to invest $100 million in a company called 99, which is the primary Uber competitor in Brazil. So they sort of, you know, all is quiet on the on the Eastern front of the battle in China, but but I think this is a, you know, the war has not yet over an armistice may be signed, but, you know, I think I think I predict that we will see more Uber and DD going head to head throughout the world in the years to come. Yeah, the interesting analogy is that it's the battle for China is settled, but at the end of the day, these are both global companies. Yeah, if not now, then that's the aspiration in the future. And their global companies in a market where it's really not clear that being global gives you that much of an advantage. Yeah, to your tier point about network effects, it seems like with Airbnb, it's, you know, it's highly advantageous to have people everywhere on a single network since they travel a lot. Or you could imagine like an eBay or Amazon where it's even stronger of a network effect because it literally it's all shipping. It doesn't matter where you are, but with Uber, you know, shy of having to download a new app when you go to a new place, it really doesn't seem that strong. It seems like these pockets of network effects that better describe the service. Yeah, and there's a belief at Uber that kind of technology will make a difference in that they can move kind of learnings around the world. But it's just not clear to me like the continued strength of lift in a lot of US cities, I think is indicative of like, you know, maybe as long as you pick somebody up within three minutes, maybe nothing else matters. And you know, like, Ola in India, you know, knowing that market, knowing the cash habits of those people, you know, knowing just how, how to press the buttons of city governments. Or, or, you know, what, what to do in streets that are just utterly congested. I mean, that's an advantage. Not to say that Uber doesn't have that because they have local offices and very smart general managers. But, you know, I think there's a reason that Uber hasn't run the table yet. Right. And to your point, it's not that they are great at those things. It's that they don't have a structural advantage by gaining the position that they're in to necessarily make that N plus one market any easier than the N market. And I think that they thought that capital would be the ultimate advantage. But all these other companies have been able to fund themselves just fine. Yeah. Yeah. So much good stuff for tech themes. Let's do category real quick. Ben, what's what's your take? So for new listeners to the show, we normally assign a category of people, technology, product, business line, asset or other. And asset, we added a few episodes back when we were talking about purchasing a data asset. And in this episode, I am going to go with other and possibly create another one too. This was a takeout. I mean, this was a Uber was not buying something here that they couldn't otherwise get by, you know, making a talent acquisition or buying an interesting new technology company. This was literally you are a massive competitor and we is massively disadventages for our business for us both to be fighting here. It's like geopolitically. It was a piece of tree. It was it was yalta. Yeah. We will see this country to you and and and be puted of allies. And of course, they took seats on each other's board. And yet it's an uneasy piece. Yeah. Yeah. The category I was going to go with was sort of like, you know, marketplace consolidation sort of like we talked about with Kathleen Phillips in the Zillow truly an episode. But the twist I was going to add is, you know, it's incomplete. Right? Like it's it's a marketplace consolidation in one part of the world. But the fight continues elsewhere as we've been talking about. Yeah. We should make bets on how long we think they'll be on each other's board. Yeah. And who knows for all we know they're not even or that was a little a looser to begin with. I mean, they those were not voting seats as far as I understood it. So and that's a heck of a long way to travel for a board meeting. Yeah. So, you know, that may have been optics. Yeah. Yeah. What, uh, so what would happen otherwise? I mean, Brad, I'm curious for you like if they kept fighting like how long could this have gone on? You know, I think I think it could it could have gone on for a long time. But it would have been destructive to Uber and other parts of its business, you know, it it was, you know, it was fighting a multi front war. Instead of fighting in China, they they kind of reinvested in their India operations. So that wouldn't have happened. And I think they would have moved less aggressively into into driverless cars and trucks. So they recently acquired auto a driverless car driverless truck company. And you know, and so perhaps we would we would be we would continue to see this war in China, but less activity and other parts of Uber's business. So I don't know that they were constrained with capital. They phrase, you know, 12 13 billion plus they could have kept fighting. But in the end for what, you know, for points of market share. And another another thing to factor in here is if they hadn't gone and spent a couple billion dollars in China kind of waging that war. Could they have focused on earlier IPO? I mean, it's been eight years now that Uber's been around and you know, they they've gotten these capital they they went aggressively race capital from all sorts of different places to wage this war. Like I don't know that they're mutually exclusive, but should they have IPO by now? What would have been the advantages of that? Well, I mean, they weren't they haven't been constrained in raising money, right? So if if anything that would that would be embracing a whole set of challenges and obligations towards transparency. That clearly, particularly with every you know with all the troubles that Uber has had recently in the press. You know, the company sort of not ready for so. You know, I don't know I don't know. I think it's probably valuable that they haven't gone public so they can kind of get their house in order. Yeah, but the flip side though is like, you know, I think at least in terms of public perception and honestly as like a user of the product too. Like, you know, like one story that like just sort of to me as a total outsider but totally characterizes Uber to me is. I was in San Francisco. This was probably a year or two ago. I was going to meet a friend who's an Uber employee at dinner and I ordered an Uber to take me there. And the driver just started driving in the other direction like clearly didn't want to pick me up. And so I waited a couple minutes to see the way I ended up canceling the ride then had to get another one. It was rush hour. I was like 30 minutes late to dinner. I showed up. I apologize. You know, to my friend, he works at Uber and he said, oh yeah, it happens all the time. And I was like, what you work at Uber? You know, and I just wonder if without like, and I don't say that to be to castigate Uber but like they've been fighting on so many fronts for so long. If they'd had if they'd had the space and time to focus a little more internally. I wonder if some of these problems that we hear so much about there wouldn't have popped up or would be taken care of by now. It's perhaps. I mean, it's a company that, you know, who's founder and CEO, you know, had a kind of manifest destiny to be the global transportation innovator. And you know, kind of moved in one mode, aggression. And I think like, you know, all these guys are disciples of Bezos, right? And they're kind of following that blueprint of boldness. And but I think it's true. I mean, like, you know, Uber is not infallible. To some extent, you know, it's still very much dependent on the limits of GPS. And you know, I was just in DC and took was taking Uber's and lifts all around the city. And every single time there was a phone call between me and the driver, where are you? What's street? You know, what's the deal on? There's a lot. There's lots of aspects of the transaction that Uber just can't control because it doesn't, you know, can't. It doesn't control GPS and you know, is operating on a smartphone smartphone platform that it doesn't it doesn't own. So there's lots of rooms for room for improvement for sure. Let's I feel like we've been touching on it as we often do throughout the show. Let's jump into tech themes. Then what what do you have? A big one that I really want to talk about is company culture and its impact on business trajectory. I think that Uber is one that has been a win at all costs company. And Brad, you mentioned in your book that Airbnb defined its mission and values very early. And Uber didn't really their mission values were just keep going in win. And I think you're the more eloquent way eloquent way of phrasing it. But it's really something where they're massively leaving a scorched earth behind them. They've won so far through incredible, you know, boldness and strong head and this. And they're leaving like everybody has a different reason to be pissed off at it. It seems very true particularly recently. Yeah. And I mean drivers are are feeling like they're getting the short end of the stick. Uber claims that they're their customer, but they're changing the take rates of the drivers get last with riders. They're feeling like they're getting the short end of the stick on un surge pricing too. And this this will probably last week by the time we release this episode. There'll be new news since then, but just a horrible news coming out of the Uber engineering organization yesterday with the you know, misogynistic sexist behavior that. Uber is moved incredibly fast everything in the name of winning and there's a lot of problems there and I think that I'm not totally sure this is a tech theme that applies to every other company, but we're certainly seeing another company's to where as everyone is a you know, either a disciple of baseless or let's just call it a disciple of boldness. We're really seeing a lot of this churn in the wake and I think as a lot of these mega unicorns get ready to start going public that's going to be a major issue for them. Yeah, no doubt. I think I did think it was interesting that Uber kind of came late to developing its its values and when it did when Travis did present them to the company in 2015, they they very much mirror Amazon's in fact, some of them are quite similar. And I think it's a company that's some extent that it's still searching for its identity. And you know, and like I don't you know, first of all, I don't jump to conclusions about the about the broad say I don't jump to broad conclusions about the engineer who blogged about her time at Uber, I think it's it's deplorable what she went through, but it's hard to reach broad conclusions about a company culture from an anecdote. And you know, we will see if others kind of follow in their wake and how well Uber does in a dress, you know, investigating and addressing her claims, but I mean, I think it's true that you know, this is a company that as they all are in rapidly growing internet world, that was marked by a lot of chaos early on. And yeah, I talked a lot of Uber employees and there be employees in my in my book whose experiences kind of mirrored, you know, the folks at Amazon early on just chaos. You know, the busiest year, two years of their life kind of traumatized when they get in when they leave. But you know, I mean, I certainly don't want to make excuses for Uber on the on that with that sexual harassment, those allegations, but I think you know, we're going to have to we're going to have to watch and I think, you know, call her heads, hopefully will prevail before we kind of reach broad conclusions. Let me put it this way, I think it's unfair to the many accomplished women who work at Uber and have leadership positions to just dismiss it as a frat boy culture. Yeah, yeah. And and totally, I mean, it's where the beginning of the new cycle on this and you know, there's lots of you know, that's why in tech as well as in politics, that's why the role of, you know, an independent, inquisitive press is so important. And you know, the story remains to be told, but I think there is no question that you know, and I suspect even people who work at Uber and listeners, if you do work at Uber, you know, reach out to us and would love to hear your perspectives. But I think it's uncontroversial to say, like you said, Brad, there are a lot of challenges and chaos there that needs to be solved. That seems, that at least seems clear. And I think it's a sort of a hopeful sign that Travis last year hired an executive from Target named Jeff Jones to be his, his right hand. I think his, his title is president. And one of Jeff's goals for 2017 was to address the writer community. You know, we all know from being in this industry that that two sided marketplaces are hard, you know, and from the very earliest days of eBay, you had sellers complaining or buyers complaining. It's just hard to balance the balance the two. I mean, Airbnb's approach is clear, like they are kind of a host driven community. And they started as hosts and they cater to their hosts. Uber is really a writer driven community. The founders started out wanting classy rides around San Francisco. And so, you know, they've, you kind of have to pick where you start. And so Uber now is sort of focusing on the driver community and has a lot of work to do. I think to quail some of the dissatisfaction, particularly among full time drivers. And you know, if we all, when we get into these cards and talk to our drivers, we know that dissatisfaction is there. Yeah. And partly, you know, David, as you said, because of the sort of relentless lowering of the fairs to try to position Uber as an alternative to car ownership. And you touch on another thing that's been a tech theme for us before and couldn't ring true here is founder DNA. When you when you describe the culture and values and character of a company, not even through like the internal workings, but in the way that the product experience feels when you use it, it's almost indistinguishable from the founders personality. And very rarely does a company even when it goes through multiple CEO significantly deviate from that that founder DNA. I think we talked about it within the next episode, David. We talked about it definitely in the Amazon episode. And it just companies take the the shoes of their founders and stay that way kind of forever. Yeah. Go ahead, Brad. Well, I was going to say, you know, Garrett Camp is really the inventor of Uber. And he's on the board, but it's an enlarged presence in the company. And the idea, you know, every, every company I like to say has to sort of combine idealism and ruthlessness. And the idealism of Uber almost comes from lift. You know, it's funny because Logan and John from lift are talking about replacing car ownership and solving traffic on on the highways of LA far before Travis ever was at Uber. I think that he drew a lot of their idealism and kind of borrowed it. And I think it's authentic. And it's now a mission to do as well. But, you know, if, you know, if that does make a difference and we'll see, I think the genuineness, the idealism is more genuine at lift than it is at Uber. And I certainly don't mean that that founder DNA is a negative side. I think for kind of for better or for worse here. You know, you're stuck with it. It's your personality. The, the tech theme that I wanted to talk about is I think in many ways just a slightly different perspective on the culture question, you know, and the founder DNA from an investor view as opposed to an internal company view. And that's what this story of both Uber and DD really highlights for me is the difference between building a moat and scorching the earth. And these are companies, all of them in ride sharing really, you know, I mean, I think lift has, you know, gotten dragged into it too and probably all the other companies around the world. Like they've taken this scorched earth approach and they've gotten huge, you know, probably, you know, I don't know, but I would suspect that just in terms of net revenue to the company, Uber is probably larger than Airbnb at this point. And, and DD perhaps as well. They've gotten big quickly, but you have to ask how sustainable is what they're doing. And I think at points along the way, you know, it's clear through this story that Uber and others thought perhaps capital raising was going to be a sustainable advantage and a moat that they could build. And I thought that driver density was going to be sustainable. Well, turns out it's really easy for drivers to multi home and they do all the time. You know, and I think about that versus versus as you just opposed in the book Brad, you know, kind of Airbnb. And while it's while what they're doing and what they're what their the market they're attacking looks very similar, you know, I do think they've taken a much smarter approach to building a mode and that's around focusing on the community, you know, things like a host could multi home, but, you know, by making reviews and trust and interaction between the community, the kind of focal point of the network. You know, once you have 50 positive reviews on Airbnb, you know, you're not going to spend much time on home, because you're going to get so many more bookings. And that's I think something that the right sharing companies haven't and I don't know if it's possible to create something like that or if the dynamics of the market are just such that it's not, you know, something where you can build a moat like that. But an investor makes me think about, you know, those dynamics. That David is really interesting to think about how could Uber lift DD how good right sharing in general be better at building their fly wheels for defensibility. I love that point that it's just not as the networks of extras are not as strong as Airbnb or other businesses like at least in a global sense. What could they do to bolster that? I think there's a belief particularly among some Uber investors that maybe there is a mode we just don't see it right now that when the capital environment changes and these companies have to get profitable we're going to we're going to separate the men from the boys so to speak. And so we don't yet know because none of these companies have had to get real rationalize rationalize their balance statements. You know, lift clearly still loses a lot of money, you know, and they they they discount there's still an expansion mode they don't have the scale that Uber has so. In some respects it almost might be too early to make kind of judgment on the value of these businesses and there's ambiguity around driverless cars. There's still some regulatory question to me the there's I would say that there's there's still a lot of regulatory ambiguity around Airbnb it's a separate topic but almost like cities are waking up now to the potential and the disruptive power of Airbnb and are beginning to wonder if they want residential communities to have a little hotel sprinkled throughout and all the problems and economic opportunities that brains and so that's Airbnb's challenge I mean Uber I think has to hope that we move into a different capital environment and. All these companies like lift but also like Juno this New York start up that's giving its drivers equity that all that stuff starts to look you know very unsustainable in an environment where companies have to go public and they have to show profits you know right now Juno is winning this battle for hearts and minds in New York of drivers because you know drivers can feel a part of it and we have no idea whether any of that is sustainable so it's still we're still that you know 2017 we are still kind of high on the. On the on the drug that is internet stock right and this amazing opportunity it's see I agree David it seems to me like the moat is a lot shallower in the ride sharing market but I think that there's a belief and it may be a sort of a bit of a lot of that time will anoint Uber as the king and we'll see Brad thank you for bringing your your season journalistic take to this and you're right the Jersey metaphor is cool well you want to run to the conclusion yeah well I'm I mean I think we discussed earlier you know my grade on this it is probably I think I give it well I think I'm going to give it a B plus for both sides because it was clearly the right thing to do and in that it was just going to be unsustainable going forward but also sort of you know I don't get into a territory I guess a little bit punitively like I'm scratching my head a little bit as like if I were a board member of one of these companies how would I let the situation get to this point and but Brad you make the great point that like you know hey this was a good investment for Uber you know despite all that distraction but I just keep coming back to thinking about what are they building here at these companies and what is going to be sustainable and 10 years from now you know if you're if you really don't know you know 10 years into the company you're close to 10 years into the company in Uber's case if you don't know what the mode is you're building that would make me really scared so B plus for me. I you know it's interesting to think about I phrased in the raw dollar perspective earlier that they got you know 2 to 3x on the dollars that they they poured into China in terms of the highly ill liquid stock that they have in indeed and that's sort of the like private equity approach it's like if Uber wanted to be a conglomerate then like her they they put in some dollars and got you know three times those dollars out I don't know that it actually gives them it doesn't if the machine that they're building is Uber technologies proper then what did they really get out of you know investing in indeed doesn't actually help the Uber business to have a large value in D and so I think with Uber you know to me it was like it was their best option and it was the best record to pull at this point and a highly profitable one but David I sort of agree that like I don't I don't know that it was that strategically interesting other than kind of competitive truce and then from the D. D. side you know you got to wonder is there any way they could have gotten away with this without giving up 70 17 to 20% of their company so that's a little rough to so you know I think I think I think I'm going to go a minus for for Uber because there there might have been a lot more interesting things I could have done with that capital over those years and I'm going to go with B minus for for D. Brad we think well I don't know that I want to get into the business of the grading but I'll the only point I would add is that both of these companies and their investors in their founding teams took enormous amounts of dilution to wage this battle and I wonder if you're let's say a Changway right now a D. D. and you you know you you had a certain percentage of your company and then you merged with quite the and then you merge with uber china and you know and you're sitting there probably with your low single digit ownership percentage and still extraordinary you know stake but but like what did you know what did you gain for all that dilution you know was there I guess I guess the question is was there a way to win in the marketplace and what we've been saying is is that perhaps that right perhaps I was it was I mean D. D. always had the high grounded China because it had the integration with Tencent so the question is was there a way to just kind of leverage that position and and circumnavigate all these awkward mergers I don't know maybe there wasn't because it's just too easy for other competitors to come in with alliances with the big three so I don't know I think we have to give Changway and particular credit for you know moving very quickly from being an anonymous middle manager at all about to really joining the ranks of the upstarts and it's why I included him in the book and why I was very impressed with his journey. Ben you want to really quickly mention our yeah hot takes follow up and hot take yeah so we just have one dimension listeners. The Snapchat IPO will price on the evening of March 1st go out on the second for the first day of trading David and I are going to be recording a an episode on the third in the morning and then hopefully producing that and getting it out over the weekend on the fourth so we'll let you know when that's here and stay tuned for far too early to tell speculation and lots of you know lots of fun analysis on Snapchat. We haven't really covered the IPO yet or I'm sorry the S1 yet and no matter what happens the first day of trading there is some gold to talk about in there. Absolutely. Carve out. Yeah I'll do mine real quick so I think our carvots collectively between us David have been wait but why like five times so far on this show but I was recently out of flight back from London and had just like way too much time and read a whole bunch of wait but why and the this one from 2014 that I really wanted to talk about. And I really love is why you should stop caring what other people think taming the mammoth and he does or he brings up a really great idea that you know you shouldn't care what other people think but it's it's deeper than just like this this thing that we always talk about like we frequently talk about how we're people pleasers or you know we overweight our perception of what other people are talking about or thinking of us. And really they're just not thinking that much about us they're consumed in their own lives their heads probably in their smart phone but then links it to this evolutionary track that I never really thought about before that was it was evolutionarily advantageous for other people to like you for you to be a member of the tribe and have other people like you and want to look out for you and feel sameness so that they would protect you in events. And so you can sort of trace that that every every splashy article that we read is you know don't care what other people think about you and here's some new research to show that you really need to be your own person and underweight the that influence in your life and like as it turns out that that's really really grained into us or you know it's possibly the result of natural selection of that being a highly advantageous thing in the fact and we're really fighting biology there and so it's a really cool way to tie those two things together. Yeah, you know who probably doesn't have that trade is Travis or maybe he cultivates it through Zen practice but mine real quick is a podcast conversations with Tyler by Tyler Cowan who we've talked about on the show before co author of the marginal revolution blog really good his first one is with Peter teal and that I certainly don't agree with all of Peter's statements. It's a fascinating conversation. He has another great one with Kareem Abdul-Jabbar well worth listening to Brad do you want to do you want to close it out with with your recommendation for our listeners to listen to or perhaps read it. Sure, sure aside from my own touting my own book which naturally needs to be you're welcome to recommend. Well thank you so I'll I will not do that but I will say and this is an easy one to recommend but you know the book sapiens by you've all know Harari was a sample for too many people and he's got a new book out that I'm just starting but enjoying very much homo homo doose I think is how you pronounce it a brief history of tomorrow which you know is him. Kind of looking at the future and automation and the future of humanity and I just find his writing to be mesmerizing I listen to the first book on on audible I'm reading this one but I might actually get the audible and he's just brilliant you know he puts everything in perspective we can be so consumed with the you know the daily ebb and flow of the tech industry so to be able to step back and look at humanity in an ethical time frame is why I just love his his work so he's got a name. I love it love it love it love it. Well that's it for us. It's closed down I just want to say if you want to join the slack we're there join us 400 strong and and would love to bring into the conversation share the show if you liked it on Twitter or Facebook. Read us on iTunes wherever you feel that would be something you want to do go read the up starts it's fantastic and thanks so much to Brad for joining us and we will see you for the next one.