Ben Gilbert: evaluation

Transcript context

…Yeah. Well, I mean, I think we discussed earlier my grade on this is probably… I think I’m going to give it a B+ 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 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. But Brad, you make the great point that hey, this was a good investment for Uber 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, if you really don’t know 10 years into the company or close to 10 years into the company in Uber’s case, if you don’t know what the moat is you’re building, that would make me really scared. So, a B+ for me. It’s interesting to think about, I phrased in the raw dollar perspective earlier that they got 2x to 3x on the dollars that they poured into China, in terms of the highly illiquid stock that they have in Didi. That’s sort of like the private equity approach. It’s like if Uber wanted to be a conglomerate, then like hurray, they put in some dollars and got three times those dollars out. I don’t know that it actually gives them… if the machine that they’re building is Uber technology’s proper, then what do they really get out of investing in Didi? Does it actually help the Uber business to have a large value in Didi. So I think with Uber, to me it was their best option and it was the best cord to pull at this point, and a highly profitable one. But David, I sort of agree that like I don’t know that it was that strategically interesting other than kind of competitive truce. Then from the Didi side, you got to wonder is there any way they could have gotten away with this without giving up 17% to 20% of their company. That’s a little rough too. So you know, I think I’m going to go A- for Uber because there might have been a lot more interesting things they could have done with that capital over those years, and I’m going to go with B- for Didi. Brad, what do you think? Well, I don’t know. I don’t want to get into the business of grading. But the only point I would add is that both of these companies and their investors and their founding teams took enormous amounts of dilution to wage this battle. I wonder if you’re let’s say a Cheng Wei right now with Didi and you had a certain percentage of your company and then you merge with Kuaidi and then you merge with Uber-China, and you’re sitting there probably with your low single digit ownership percentage, and still extraordinary stake, but like what did you gain for all that dilution. I guess the question is was there a way to win on the marketplace and what we’ve been saying is that perhaps it was – I mean, Didi always had the high ground in China because it had the integration with Tencent, so the question is was there a way to just kind of leverage that position and circumnavigate all these awkward mergers. I don’t know. Maybe there wasn’t because it’s just too easy for other competitors that come in with alliances with the big three. I don’t know. I think we have to give Cheng Wei in particular credit for moving very quickly from being an anonymous middle manager at Alibaba to really joining the ranks of the upstarts, and that’s why I included him on the book and why I was very impressed with his journey.…

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