Uber just closed a $1B round of funding for its China branch | Hacker News Reader

Uber just closed a $1B round of funding for its China branch

businessinsider.com

35 pointsdoppp49 comments

An interesting possibility for Uber in China, assuming they "win," is that the timing could work for leapfrogging car ownership.

The timing is right for that in china. They're just entering where more centre of the curve people can afford cars, but most don't yet. It's not ingrained in the culture yet, so they will be more open to alternatives.

Also, with driver salaries are lower in China that US & Europe and that will reflect in uber prices. This means that the uber/private car equation is more weighted in Uber's favor.

Between those two things, it gives uber a decent shot at becoming a top tier mode of transport.

The crazy thing about the market Uber is biting is that it is a massive, massive market. Once you start talking about about market share in transport, you are in crazy territory.

Side note: It's pretty wild how much money is available in the "private" markets these days.

So, I agree with other commentors that (1) the scale of money coming in is confusing the definition of "startup" stage and (2) I agree that the risks are pretty substantial. That said, (A) the potential reward is pretty hefty too and (B) they seem to be actually operating as an enormously oversized startup. They're taking startup-ey risks and developing the product-market in a startup-ey way. IE, it seems that their current form is not their medium term goal.

Say what you will about Uber, they have balls.

That is a hell of a risky investment given the approach the Chinese competitors are using in China is to block Uber's access to the devices most people book rides on...

see https://pando.com/2015/08/24/wechat-blocks-uber-its-step-one...

Check out the list of investors.

>Investors in Uber's Chinese unit include Hillhouse Capital, Asia's biggest hedge fund, Chinese Internet giant Baidu Inc, China CITIC Bank Corp Ltd, China Life Insurance Co Ltd, Ping An Insurance Group Co of China among others, said one of the people.

I completely agree! Sounds like sufficient local power there to thwart any untoward action from the competition.

It seems that it will indeed allow to push things forward. Now to see what and who the concurrents have in their pockets.

Isn't the larger risk a true p2p solution that cuts out the middlemen (Uber and its investors)?

And not just them. In China you always need political support to succeed. I don't think they have spent the last 10 years making Guanxi there. And the current leadership is also not very pro America.

Even then, if the service is popular it'll be cloned by s national service and Uber will be removed.

I'm on the ground here in China. Uber's used their tactic of going head-on against government and regulation when they started out here, and it didn't work. I think they underestimated the speed and ferocity of local competitors, and didn't put enough emphasis on the political savvy needed to get popular and government support. They've recently made some well-connected hires and partnered with some powerful allies like their investors here, but they are now playing catchup. I'd also be concerned that their connections are of the mercenary type, and would be less likely to take up Uber's cause at the expense of heightened political risk, if it came down to it.

Edit: grammar

Yeah, political mismanagement can even end in your employees getting hit by Chinese gangsters, your company losing their rent contract and webserver without reasons etc. On the other side, if you have government backing your competitors are no problem because they experience these "accidents".

This is a big setback, yes, but if Baidu can properly push Uber, the two together should be able to hold a significant part of the market. In the Baidu Maps app now, you can order an Uber- so that's already there. But yes, not having access to WeChat is indeed pretty tough.

In Baidu maps? Awesome, I will check it out. Do you know when it was added?

It's been at least a few months.

Uber may be the one company that is so ethically bankrupt that foreign copycats actually have the moral high ground. Hilarious that Emil guy still works there. And they're in bed with DoD now too? Bring on the Chinese clones ...

How are they 'ethically bankrupt'?

If you look at their wikipedia page, the section 'criticism' [1] lists a variety of issues. You'd expect criticism from incumbent taxi companies, and perhaps you also expect sketchy labor practices, and a few fatal accidents and rapes. But the problems also include user privacy issues, threats to journalists, and attempts to sabotage their competitors.

[1] https://en.wikipedia.org/w/index.php?title=Uber_%28company%2...

Wait til they deploy their self driving cars and sell all that data to the relevant government.

They've done some moronic things, yes. But 'ethically bankrupt' is a big stretch. All in all, Uber has created 50bn of market value. They've done that by making drivers and riders lives better than it was before.

Saying "Is Uber morally bankrupt?" is just the same as saying "Is the Pope Catholic?" by now.

Rides of glory?

From the article you linked: "Back in March, WeChat banned Uber, a significant channel for how Uber communicates with customers."

The most that WeChat could do is (i) stop Uber from sending messages/promotions to people subscribed to Uber's WeChat account, and (ii) stop uber.com URLs from being displayed in the built-in browser.

Neither of these would affect customers' ability to (i) download the Uber app, (ii) book Uber rides.

According to [0], while Google Play seems to be usable in China, Chinese internet companies own the app store market. So that's another potential battleground maybe? Tencent and Baidu seem to be significant players there, Tencent being bigger but neither being the biggest.

[0] http://www.newzoo.com/free/rankings/top-10-android-app-store...

Apple's app store is still in its hands. And because of the fragmentation of the app store, people are more inclined to download app from the website of the maker instead of some "store" that injects "non-kosher" stuff in the app

I confirm we can not download the app through Google Play. It also does not work for my device (Android Nexus 5) in Shanghai due to the connectivity with Google Maps. It is a pain I must say, but most people find workaround.

Are you sure about the second point? I use Uber on a Nexus 5 and it works fine in Shanghai, without requiring VPN. IIRC Uber now uses Baidu maps in China.

China has had non-Uber, Uber-like services for years. I've never heard of anyone using Uber here, then again I don't spend time in the megacities.

The main service I am aware of is dididache or 嘀嘀打车 in Chinese which was apparently launched in 2012 (same as Uber).

My observation is that a lot of people just call their preferred driver, too. In the event that the driver is busy, they generally forward the business to a trusted friend. It's pretty hard to compete with free, personally reputation-audited referrals and 24 hour service.

Further, only certain cities have functional traffic: Chengdu being a prime example. Many Chinese cities' road networks have been so oversubscribed by the millions of new cars that have appeared in the last half decade or so that calling someone to pick you up is a physically impossible model during large portions of the day.

Yet another source of competition are e-bike or e-trike taxis, which have a few hundred dollar entry cost, hang around on many city corners, are totally unregulated and generally faster and cheaper (5-15元 = $1-3) than regular taxis (due to lack of road space).

I am skeptical Uber can generate any profits whatsoever in this market.

Addison Lee in London had been going strong (and still is very strong, with significant advantages over Uber) and that hasn't stopped Uber getting a significant presence.

Think the key difference is that Addison Lee provides the vehicles for their drivers, and their drivers have little leeway to refuse certain rides.

But Uber drivers provide their own vehicles, and can choose rides as desired.

"I am skeptical Uber can generate any revenues whatsoever in this market."

Uber has _already_ generated non-zero revenues in China. I know because I have paid them money myself.

You are right that services like didi dache are head-on competitors.

You are wrong about calling a preferred driver. Sure, I do this when I want to pre-book an out-of-town journey or trip to the great wall.

But, if I want a car in 5 minutes, from a random part of town, there's no way I can achieve that reliably by calling a guy, even he has a 1st degree connection who happens to be 5 minutes away from my current location.

Apologies for poor word choice. I meant to indicate profits rather than EBITDA.

While you may be in the tiny-to-irrelevant minority of people in Beijing that use Uber and find it useful (probably mostly foreigners?), Beijing is not a normal Chinese city and in the scale of the Chinese market foreigners are statistically insignificant. I remain deeply skeptical "a car in five minutes" is reliably available in Beijing from Uber in many locations outside of the center of the city.

Uber-like services will make money in China. I don't know whether didi dache or Uber or <insert specific company here> will still be around when they stop funding growth with investors' money.

However, car-hailing apps make more efficient use of passengers' time, drivers' time, and cars themselves, compared with passengers calling a guy. Taxis make good use of drivers and cars, but waste passengers' time as they are hard to hail in many places in large cities.

Car-hailing apps are here to stay and, in the long run, some company will make money. Whether any single company will make monopoly-type rents due to being the only game in town, though, ...

I completely back this up.

I've also never heard of anyone using Uber, though it is an option and I'm sure a few do.

Didi and Kuaidi are by-far the leaders, completely entrenched. I think first-mover advantage will be the case here. The big thing these services are now competing on however is not hailing a ride, it is providing financial services through the app. They're no longer ride-hailing apps, they're finance apps with the option to hail.

[Perhaps a big difference with Uber compared to the US, is the use of it by taxis. Almost all taxis are on Didi/Kuaidi (indeed, these were taxi-only services at the start) and taxis are inexpensive.]

"I've also never heard of anyone using Uber" - well they wouldn't be raising a billion dollars if everyone already used it, would they?

I'm in Beijing I have to agree. No one uses UBER and the statistics that they presented must be totally made up. dididache is the main app for calling drivers here.

I've taken >35 trips with Uber in Beijing.

Except for foreigners. But really among local people I think it is less than 1% using UBER. Which is my definition of "nobody".

I would be _extremely_ happy if I had a business with 1% of mainland Chinese as customers.

When a company raises so much in "start up" mode wouldn't it be harder to turn it into a profitable public company?

Reminds me of the episode of Silicon Valley mentioned in this Techcrunch article: http://techcrunch.com/2015/06/03/when-silicon-valley-is-too-...

Uber probably isn't going public anytime soon. They've got at least 6+bn in the bank and will do 5bn gross in 2016.

Rumors are an IPO coming in 18-24 months, so they're definitely not itching to have to do quarterly updates.

http://recode.net/2015/08/21/leaked-doc-uber-nears-2-billion...

$5B in 2016. And one can see Uber growing 10 times bigger.

Well, that's 5bn on 25bn in bookings. Once there's no driver it'll immediately be 5x higher gross. By the time that comes, I have no idea, Uber will be far larger. Easily see them doing 100bn/year

Uber seems to have big plans, they are investing in driver less cars too. Imagine every car being driven by AI in 2025 and uber/google being at the center of it. Profit has to come.

goober

Funnily, in Hindi that literally means "cow dung" :)

Just curious--I believe that you can use WeChat to book a ride using some of Uber's competitors. Can you book an Uber using WeChat?

Sorry for my laziness. A bit of googling reveals: http://economictimes.indiatimes.com/small-biz/startups/ubers...

and

http://venturebeat.com/2015/08/24/ubers-wechat-drama-exposes...

Apparently they've been blocked from WeChat...

No you can not, only Dididache (滴滴打车) through the WeChat wallet.

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