Brad Stone: evaluation

Transcript context

…Yeah. So Uber, as we’ve been mentioning, they’re not blind to this too and actually, it turns out that Uber had had this kind of small sort of clandestine presence in China since 2013. There’s this story that 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. I need you guys to tweet the text so that we can like… like we’re going to go out here. Our executives signed up a few drivers and just like run some tests here in China.” So they started doing that in 2013 but they’re just sort of testing. Then when Didi and Kuaidi are in the midst of their merger, that’s when Travis decides, “Okay.” He’s going to put his foot on the gas and launch for real in China. And Uber does and pretty quickly while Didi and Kuaidi are consumed with the merger, Uber gets to a 30% market share kind of right off the bat. So it’s now sort of they’re a real player in the market. How did that happen so quickly? It’s funny. We’ll go back to the story of technology in China is always the story of the big three. One of the things that happened was Uber when they launched, the integration was very poor in China because they were using Google Maps and we all know Google is pretty much blocked in China, so the integration was poor. 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 Uber kind of tootles along for a year and a half and then makes the very kind of smart observation that Baidu has sort of missed this wave of mobile payment competition and needs to catch up. So they solicited an investment in Baidu, they start using Baidu maps which is much smarter about the transportation in China than Google and the product just gets much better. At the same time, at the beginning of 2014, Didi and Kuadi are merging and as with all mergers, it’s an awkward one and they kind of slow down. So I think Uber took advantage of sort of this opening and made up some ground. But as we’ll see, it was temporary. Yeah. So they come in swinging into the market with Baidu as a partner, get 30% market share, and Travis goes in over and he meets with Cheng, he meets with the newly merged Didi. And Travis, he sort of walks into the meeting, he thinks Uber is international, Didi’s not at this point. Uber is, Travis is convinced the better product, the better technology, they had Baidu maps which had the best maps in China. He essentially offers to acquire Didi. He frames it as an investment. He wants to invest in Didi but he wants a 40% stake. And this is really, 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 Cheng and Didi reject this offer. Brad, you learned a lot about this meeting. What happened there?…

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