China's Didi Raises Over $5.5B in Record Tech Funding | Hacker News Reader

China's Didi Raises Over $5.5B in Record Tech Funding

bloomberg.com

72 pointssinak56 comments

It is not a coincidence that Uber's competitors are all raising money at this point in time. It was hard a year ago. Uber's struggles have not only boosted the metrics for competitors [1], but there is increasingly a plausible story about how Uber could fail.

1: http://www.thedrive.com/tech/9739/lyft-bookings-ridership-so...

The increasingly plausible story of Uber failing is Google or other big players beating them by a large margin to self-driving cars (including for the kind of taxi-service Uber provides). None of these smaller players (aside from Didi which appears to be quite large and backed by internal Chinese interests) give the semblance of having even a minutia of a chance vs. Google.

Even with $5B in capital?

I know building a self-driving car is hard, I don't think it's that hard though.

Well.. it's been a long-sought dream

https://en.wikipedia.org/wiki/History_of_autonomous_cars

Self-driving is not going to be solved by throwing money at it. If it was, Google would have "solved" it already and Apple wouldn't have abandoned their effort.

The obvious shortage is engineering talent. This is more debatable (many people, like Elon Musk, don't believe this to be the case), but the field also needs one or more research breakthroughs, especially in the realm of planning and reasoning. Most of the machine learning in self-driving cars goes towards perception / detection / mapping. The actual decision-making is still heuristics and hard-coded rules.

> The actual decision-making is still heuristics and hard-coded rules.

The planning system always be hard coded rules. Perception, fine, throw the latest CNN at it. Planning and control, better stick to the DMV/NHTSA traffic book.

Network and data infrastructure is also a challenge for self driving cars and has a ways to go. The data produced by a single self driving car can be pretty staggering (I've heard estimates as high as 5 TB/minute). Now think about transferring that much data around a fleet of cars over current LTE wireless data connections.

Even if someone gets it working in a small area, it will take years of investment in network infra to make it truly ubiquitious.

Barring some major technical breakthroughs, I just don't see the current tech that these companies are testing being scalable at the same level as GPS, cellular data, etc.

Self-driving cars are going to produce >$100B/year in value (probably at least $1T/year worldwide). They are going to cost a lot more than $5B to develop. Google has >$80B of cash on hand and Apple has >$230B. Those companies would spend $5B to develop self-driving cars in a heartbeat if they could, but they can't.

What a self driving car has to do with a taxi company?

Perhaps Didi can ally themselves with Baidu.

Not sure how Baidu's self-driving program compares to its western rivals, but it's definitely the most advanced out of the Chinese tech giants.

Uber China (which Didi acquired) already was.

I recently listened to the Acuired podcast about the history of Didi/Uber in China and found it incredibly interesting: https://itunes.apple.com/us/podcast/acquired-a-podcast-about...

In China, it's Google who doesn't have a chance. Their search, email, and app store are all blocked. There's no reason to think they'd have any more success as a car company.

This meme that transportation network companies are waiting for self-driving cars to eliminate drivers has been promulgated for years, but does anyone really know what will happen when self-driving cars are widely deployed? It's pure speculation.

As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.

It's pure speculation as to how quickly it will even happen. I can imagine a forum similar to this one back in the 60's, 70's or 80's talking about how cold fusion will revolutionize the world. Uber's problems are in the immediate term, the idea that they will even exist when true self-driving cars actually make it to market is far-fetched already.

Didi is not Uber's competitor any more. Didi acquired Uber China, is an investor in Uber, and owns Uber shares. So does Uber in Didi. They don't compete directly in any major market at this moment.

That actually makes perfect sense. Both of them realized they couldn't make any money without becoming a cartel and colluding.

> they don't compete directly in any major market at this moment

Emphasis on "at this moment".

Could you confirm/cite a source that didi owns shares in uber? My understanding was that uber got ~20% of didi shares in exchange for ceding the Chinese market.

When Didi acquired Uber China, Didi also invested $1B in Uber and got some Uber shares in return. Here is the link to WSJ: https://www.wsj.com/articles/china-s-didi-chuxing-to-acquire...

Hm. When Uber runs out of cash next year, is Didi the likely buyer?

They do compete by proxy, like in Brazil, where Didi invested $100m in "99".

I guess we can say that Didi owns everything then...

Their pitch is probably "we will become the WeChat (transaction platform) for all transportation and freight related needs"?

Would make sense considering their user base has already been trained to expect a one stop shop ecosystem from an app, as opposed to Western markets which expect siloed special purpose experiences.

except Didi is already incorporated in Wechat plus they have monopoly in online car/taxi ordering, i don't think they can do anything about public transport, air or train tickets, only other realistic thing would be buying one of the bike sharing companies

> The round was said to have raised the four-year-old startup’s valuation to about $50 billion, up from a previous $34 billion after its acquisition of Uber’s China business.

Uber's valuation is ~$70 billion while Lyft's valuation is less than $10 billion. Therefore it seems like the two main players in ride-sharing will be Uber and Didi for the next while.

I can see Didi branching towards other markets (outside of China) and directly competing with Uber and Lyft. This will be interesting in the next while.

To be honest this is just speculation of what investors believe future value to be.

Basically whoever gets a self driving fleet in production will win it big. This could be a startup that may not even be born yet.

But it's bizzare how people are throwing a lot of money at some companies. It feels like Uber has a fuck ton of money and because of that there is a ton of politics and pressure. So much that their engineers resort to suicide.

I imagine a shit storm in didi too. Too much funding is a curse.

Chinese companies can't success abroad, because they win Chinese market with help of government protecting them from competition

name one Chinese service/software company which would be major player outside China

only partly successful companies are hardware companies like Huawei, Lenovo, xiaomi or DJI thanks to their prices with some of them growing to different segments over time

I'm seeing something right now. It's really, really difficult to figure out what kind of crazy valuations people will put on companies. It's reinforced my desire to own indexes all the more. I'll let buy a little of everything and let the money managers battle it out.

Can anybody in China comment on how popular Didi is? Is it as universal (young to old people) and popular as Uber (don't want to hear the political commentary). What about average ride price per KM (Renminbi or dollars)?

Seems like Apple's $1 billion investment last year (May) in Didi might pay off huge.

This is going to vary massively city to city, just as it does for Uber/Lyft/Grab in other countries.

Sure but there are reports and research. Here is a site that aggregates this data.

http://uberestimate.com/prices/San-Francisco/

Prior to this new fundraising round Uber took a 17.7% stake in Didi in exchange for handing it's China assets over to Didi, which was worth something like $6 billion. So even though Uber lost in China, they actually kind of won, unless, I guess, they decide to start fighting again in some other market.

https://www.bloomberg.com/features/2016-didi-cheng-wei/

Didi is pretty popular, you can get it in most cities, though it really depends on how the regulations are being enforced at the time (didi in Beijing and SH can go away for a few days when there are crackdowns on black cabs). As for rates, check out:

https://ride.guru/estimate/Zhongguancun,%20Haidian,%20Beijin...

That is my standard trip from work to home when I lived in BJ. Didi was just 1.3X more than a taxi, though I usually just took a taxi because wepay wasn't friendly to foreigners at the time.

Yes, Didi is universal across the country. You can order Didi through WeChat and actually what you get is a regular taxi car, not a Uber-type freelance driver.

you can choose if you want regular taxi or black car, it's up to you, you can even choose shared car with other passengers

it doesn't have competition, they control more than 90% of their market, similar with Wechat having monopoly on IM, so it's not like you have choice no matter what's your age

my personal experience with didi was very inconsistent, half rides were ok, half rides were horrible experiences, so next time i would just call straight taxi company to get regular taxi (yes i am aware you can order regular taxi through Didi, lived in China for years)

I just wondered for the first time: do these sorts of raises vacuum money away into one large basket, instead of bets on many smaller startups? Could it be zero-sum in a way?

The VC market expands and contracts like any other following the principles of economics. Therefore, the fact that the production possibilities frontier (is there a better term for a money market?) can move outward shows it is not zero-sum. In simple terms, as time goes forward, more and more resources can be created and injected into the market unlike a truly scare resource.

He said "zero-sum in a way" and that is true. At any given point in time it is zero sum, and for practical purposes you can approximate it as zero sum.

To say that if i robbed all of silicon valley investors of their money and claim it won't affect the funding prospects of new startups would be a lie.

Everything is zero-sum at an instant of time... I figured that was obvious enough that I didn't have to say it.

If you want to approximate it as zero-sum, be my guest. It's a functionally useless approximation.

Wow, the CEO is only 33.

You can google who her father is. It's a capital and guanxi/connection game, less about technology. Leveraging the direct/indirect capital resources they own and copycatting SV unicorn tech fashion in a walled huge market make them feel good. And they are really rich. It's their age now.

edit: added guanxi/connection

My failed attempt to find ANY information about his father somewhat proves your theory, or google doesn't wanna tell me?

The President's father is Lenovo's founder. I don't know if the CEOs father is a big shot.

I have to say it's a typical pattern for rich and connected kids in China to gain success. Top local college => top us college => join GS or whatever similar => trendy founder/CXO/etc. => Now it's their turn to have someone write articles to let ordinary people know they are not just rich, pretty/handsome, well-connected, but also they are super hard working, smart/intelligent, wise to earn their crowns all by themselves. We all know for well-connected in China, there are way more gates open to them. And the stake-holders in the western world can help them open other gates. As I said there is a long history of them doing all this kind of thing. Most people in China with enough experience in that society know that.

It's just a capital-intensive pretend play. They are the players and you have to watch them show off how good they played through mass media and your news feed. If there was an earthquake in that circle, new batch of players would show up.

Is that any different than how the USA works?

Maybe USA has 45%, while China has 95%. If so, the 50% here is the difference.

I forgot to mention the difference leaves different room for how much impact other factors can contribute to the final outcome, which, in my opinion, is more important.

You are correct.

I think you meant the president, Jean Liu, the president of Didi.

Yes. I did not know her age. All I know was one young female member of their top management team is Lenovo founder's daughter. I have little knowledge about Didi.

Zuckerberg is 32. His company is worth $400 billion.

That is massive. That is even more than the 3.5B Uber raised in the last round.

Does this signal that Didi will likely enter an existing Uber market?

WTF! Who raises $5.5B at one go?

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