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Trinity's Chopra on Uber: I Would Sell Some Shares Now (Audio) · Bloomberg Intelligence

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  Speaker 1: forty eight nine. Apparel a drop of point one I'm
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  Speaker 1: Charlie Peloton. That's a Bloomberg business flash. You're listening to
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  Speaker 1: taking stock with bim box and Kathleen Hayes on Bloomberg Radio.
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  Speaker 1: Uber in the news on two very big front fronts. Uh,
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  Speaker 1: there's a big settlement being considered that would leave Uber
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  Speaker 1: and lift drivers as independent contractors. And of course these
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  Speaker 1: are two the biggest names in the on demand economy.
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  Speaker 1: And uh, it might avoid policy changes that would have
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  Speaker 1: would force them to rethink their business models. Okay, so
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  Speaker 1: there you go, this whole question of you know, how
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  Speaker 1: you treat Uber workers right the demand economy. Ah, Saudi
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  Speaker 1: Arabia isn't paying any attention because it looks like the
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  Speaker 1: Saudi Arabian public Investment Fund, their big sovereign wealth fund,
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  Speaker 1: is going to be investing over three billion dollars in Uber.
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  Speaker 1: Uber joining us now is a Ja Chopra general partner
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  Speaker 1: Trinity Ventures, joining us from San Francisco. He's a long
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  Speaker 1: time Silicon Valley BCNE. He's got lots to say about this.
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  Speaker 1: Welcome and Ji, thanks for joining me. Glad to be here.
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  Speaker 1: So let's start on the settlement because that is something
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  Speaker 1: that has been going on for a while. It's it's
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  Speaker 1: already controversial because there's been some settlements and the companies
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  Speaker 1: are changing the way they hire their workers. And the
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  Speaker 1: kind of contracts they make, So maybe those previous constraints
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  Speaker 1: won't apply. Now, what's important to you as a VC,
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  Speaker 1: as a potential investor? Yeah, so I think, UM, this
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  Speaker 1: issue about ten workers whore contractors versus doubly two employees
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  Speaker 1: who are hourly um, you know, full time employees for
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  Speaker 1: the company. UM, is you know, going to not be
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  Speaker 1: resolved with this settlement. I believe that this will be
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  Speaker 1: just a stepping stone in that direction, and we will
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  Speaker 1: continue to see UM more and more legal issues around
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  Speaker 1: this over the next several years. UM. Still, eventually perhaps
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  Speaker 1: regulations might might change, UM so that you know, all
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  Speaker 1: of the Uber drivers and other on demand workers you
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  Speaker 1: get a fair play. UM. I don't think this issue
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  Speaker 1: is going to be resolve. It just one settlement that's
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  Speaker 1: going on right now. If you were an investor in Uber,
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  Speaker 1: would you sell now? Would you say, oh, if they're
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  Speaker 1: going to start changing the rules of the game in
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  Speaker 1: terms of government regulations and the way we can pay
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  Speaker 1: and higher workers, it won't be as profitable. Or would
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  Speaker 1: you say, hey, look, especially if I'm in Uber, there
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  Speaker 1: there are the name in the in this whole, this
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  Speaker 1: whole area now and they're going to continue to grow
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  Speaker 1: and they'll they won't make that much difference. I would
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  Speaker 1: sell some of my shares. I think the company has
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  Speaker 1: got pretty good prospects, but also a lot of challenges.
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  Speaker 1: They have a big battle that they're fighting in China,
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  Speaker 1: which with the company called d D which is a
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  Speaker 1: local competitor there that just you know, strengthened itself by
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  Speaker 1: a billion dollar investment from Apple, So they are now
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  Speaker 1: more formidable competitors. So they've got that challenge. They've got
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  Speaker 1: the issue that they're not profitable in that market, They're
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  Speaker 1: not profitable in Europe, and they may be ostable in
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  Speaker 1: certain cities in the US, so they've got an overall
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  Speaker 1: profitability problem. And then they have this looming issue of
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  Speaker 1: autonomous cars. Because when autonomous vehicles become more prominent than
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  Speaker 1: all of a sudden, one of the main advantages that
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  Speaker 1: Uber has, which is that the drivers are bearing all
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  Speaker 1: the burden of the automobile, including the cost of the automobile,
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  Speaker 1: the insurance, the maintenance, and so forth, sort of goes away.
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  Speaker 1: And now Uber's model shifts from being asset light, in
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  Speaker 1: other words, they don't have any assets. The drivers have
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  Speaker 1: to worry about that to asset heavy where they have
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  Speaker 1: to actually own or leave cars, and so that transition
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  Speaker 1: could be a pretty tricky one for them. So I
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  Speaker 1: would sell some, but I would hold quite a bit
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  Speaker 1: of it. And for sure, you know, we're at the
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  Speaker 1: the Internet in the North American International Auto Show in
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  Speaker 1: Detroit a few months ago, and four GM, all these
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  Speaker 1: they're they're rushing into this space. So they're going to
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  Speaker 1: have definitely also a lot of competition there. So the
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  Speaker 1: Saudi so three billion dollars. The Saudis are trying to
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  Speaker 1: diversify their economy right in their going to end up
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  Speaker 1: with you know, a very big, big amount of global investment.
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  Speaker 1: Are they making a mistake to put their money in Uber? Now?
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  Speaker 1: I think they're looking at it primarily as a financial investment. UM.
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  Speaker 1: This is something that you know, UM sovereign funds do
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  Speaker 1: from time to time. They do so very selectively. They
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  Speaker 1: do so in companies where the outcome is fairly certain
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  Speaker 1: to be successful. It's just a magnitude of success that
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  Speaker 1: is not clear. I think that's certainly true for Uber.
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  Speaker 1: They are going to be a successful company, it's just
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  Speaker 1: are they going to be Facebook size or they're going
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  Speaker 1: to be smaller. That's the question in terms of evaluation
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  Speaker 1: a few years out. So they're making a financial bet
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  Speaker 1: and and I think that's that's how they have They
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  Speaker 1: probably thought about it and figured that they can buy
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  Speaker 1: five percent at this point in time. It also implies
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  Speaker 1: that Uber is probably not thinking of going public in
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  Speaker 1: the new future. They'll probably take this capital and deal
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  Speaker 1: with some of the problems that I talked about earlier,
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  Speaker 1: the challenge in China, the profitability, the issue with autonomous vehicles.
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  Speaker 1: So I think this is a good thing for Uber
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  Speaker 1: from that standpoint. So Jay Training Training Ventures in the
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  Speaker 1: Bay Area, very big prestigious VC firm fed Reserve. We
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  Speaker 1: don't know when they're gonna start raising rates, but they're
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  Speaker 1: gradually making this turn. Right, there's going to be less liquidity,
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  Speaker 1: certainly a lot of the activity less several years in
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  Speaker 1: Silicon Valley people reaching for Yale that's kind of been
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  Speaker 1: supported by that. Is this gonna affect you? And and
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  Speaker 1: I guess even more broadly, what are you where are
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  Speaker 1: you looking now for VC for investment opportunities? I think
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  Speaker 1: that if you look at the major transformations that are
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  Speaker 1: going on in our industry and the technology front, which
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  Speaker 1: is the mobile device and its implications UM and the
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  Speaker 1: core transformation from on premise deployment of technology to in cloud.
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  Speaker 1: We are just in the middle of a major industries
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  Speaker 1: are still in the earliest stages of being transformed. If
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  Speaker 1: you look at transportation, for example, we are in the
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  Speaker 1: first innings of autonomous cars. I mean it's just the
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  Speaker 1: beginning with people like Tesla and others that are giving
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  Speaker 1: some capability to drivers which are automated. I think there's
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  Speaker 1: a lot more that's going to happen. If you look
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  Speaker 1: at the entire medical sector, the way the records are kept,
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  Speaker 1: the way delivery of medical services, particularly developing countries, there's
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  Speaker 1: so many opportunities in this sector. If you look at education,
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  Speaker 1: we're probably even before the first inning. So I think
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  Speaker 1: there are huge opportunities because of these major transformations with
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  Speaker 1: a powerful computer and everybody's profit called the mobile phone
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  Speaker 1: and the cloud computing. J. H. Oprah, thank you so
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  Speaker 1: very much joining us from Trinity Ventures in San Francisco.
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  Speaker 1: This is taking Stock. Thanks for joining us today on
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