Beijing Didi Chuxing Technology Co., Ltd.

So then at some point, maybe they can scale up, but then are we putting our eggs in lucid, scaling up the volumes that they need relative to Waymo's partner or what Tesla is doing? And in terms of the number of cars, assuming they don't also do the same thing that Waymo did and leave Uber.

Well, Baidu, WeRide, Pony, Didi...

So here's the difference.

Those companies, in order to build an actual network, will require about $100 to $300 per acquired customer.

We will accept the silver.

But if we're going to be bronze, we're selling and taking equity in the gold place winner.

Didi, they did that.

Grab, they did that.

It does send conflicting signals, but we are hoping that we make peace between them at some point, end quote.

Now, the reason why he said that was because the template that they were looking at was China, where Uber basically had gone into this long, drawn-out war against Didi, which was a local player, and eventually it exited by swapping its business for a stake in Didi.

And now, again, go back to Rajiv Mishra, quote, Instead of both losing a billion dollars fighting, Uber did end up exiting and taking a stake.

Now when the Uber investment closed, Mishra told the Financial Times that the company should focus on the US, Europe, Latin America and Australia.

Then we come to 2022, four years later.

Now, 2022 is a very interesting year because Uber, remember this was just after COVID and Uber in its first quarter lost nearly $6 billion.

And a lot of this money was because it started writing down its stakes in companies like Didi, Grab and other companies like this.

So, Kaushal Shahi turned the business towards generating free cash flow.

Look for the Centro Historico or La Floresta neighborhoods.

You can use Uber or Didi or registered taxis.

And again, I used a lot of taxis and I found that the same taxi driver was willing to come and pick me up on numerous occasions.

So I felt really comfortable by that time.

I'm thinking here about how they pulled the plug on Ant Financial's IPO back in 2021, when at that time it would have been the largest IPO in the world.

Or it hitting companies like Alibaba or Didi Chuxing with a billion dollars in fine.

And, you know, Sebastian Malaby, who wrote The Power Law, A History of Venture Capital, in that book, he documents that, you know, according to him, Chinese rise in... new technologies and the rise of these large companies in China is better attributed to the arrival of American-style risk capital in the Chinese context, as opposed to, you know, any sort of wisdom on the part of the state to do long-term planning.

And at the same time, if you look at the US, the model of the US being a purely market economy also tends to kind of like fall apart.

Time to delist from the U.S. and relist back home, ideally in Shanghai or Hong Kong.

And Didi was the big example of that pressure.

The most dramatic one, yes.

They list on the NYSE in June 2021 using a VIE.

That's the standard painful process.

You need massive amounts of cash to buy out your public investors and raising funds for a delisting is incredibly hard.

It puts companies like Didi in a really tough spot, potentially forced to buy back shares at low prices if they can manage it at all.

Is there an easier way?

Okay, let's hear it.

Because you're making it sound like the app itself didn't matter at all and the company was just a giant predatory slush fund.

Well, not exactly that it didn't matter, but...

But as a user back in 2012, tapping a button on my iPhone and watching a car glide to my exact location on a digital map, I mean, that was literal magic compared to calling a grumpy dispatcher and waiting 40 minutes for a cab that might never even show up.

No, it was highly strategic.

First, August 2016, they officially exit mainland China.

They were losing roughly $1 billion a year fighting a brutal, bloody price war with the local giant Didi.

Every time they lowered a fare, Didi just matched it.

I mean-

... their competition, Didi.

Mm.

They do pretty well.

Start crushing them.

They start crushing them, then the Chinese government subsidizes Didi to the utmost, stole their IP, and then, well, I think Uber China got bought by Didi in the end, technically, probably basically for assets.

Yeah.

Yep.

So you started

getting in this war with Didi.

Was there anybody else besides? Was there multiple competitors? We eventually rolled out.

So Uber Black was one thing, much smaller than like a Didi thing.

There was another company called Kuai Di.

And we were just in this corner sort of doing a niche thing, which is a super high-end thing in China, which is like...

Where we basically said, okay, we're going to do ride sharing in China.

Nobody had done that.

And that's the angle I want to dig into today.

Because if you look at the big food delivery and ride-hailing platforms, Meituan, Yele.me, Didi, they've absorbed millions of young workers.

And the pandemic kind of accelerated that.

But now it's persisting even as the economy recovers.

Let's talk about the platforms themselves.

MateOne is the biggest food delivery player and they've been reporting strong earnings, but also under pressure from regulators to improve working conditions.

Didi is similar in ride-hailing.

How are they adapting?