Johana Bhuiyan | Vox

Emily Weiss wants Glossier to own the online beauty conversation

2018-09-18T17:49:48-04:00

Glossier CEO Emily Weiss | Keith MacDonald for Vox Media

When people are deciding which mascara to buy online, they’re not looking at how fast the mascara will be delivered, according to Glossier CEO Emily Weiss. Cracking the online beauty business isn’t as simple as “building tools that cross-sell, upsell and get things to you faster,” she said.

“The shopping experience is even more broken and lacking for beauty products than what we initially believed,” Weiss said at Recode’s Code Commerce conference today in New York. “You have e-commerce — as a definition, pretty much synonymous with Amazon, since it’s 50 percent of U.S. e-commerce. It’s all about the breadth of product. What you don’t have is an e-commerce experience that’s focused on depth of connection.”

That’s why Glossier focuses on customer engagement rather than simply selling makeup.

“It’s an emotional category,” she said, where “simply seeing a picture of … a fashion product isn’t enough.”

To that end, the company is exploring ways for its customers to engage directly with Glossier. “It’s about listening to users and the direct relationships we can have with every single person.”

“We’re trying to own that conversation of beauty online,” she said.

In lieu of a Glossier-owned social network, users reach out to the company through Instagram DM; Weiss said the company receives five DMs a minute.

“We spent four years cultivating this direct-to-consumer relationship that’s enabled us to … respond to customers very fast,” Weiss continued. “Yet we still outsource our engagement to other platforms. We don’t outsource our distribution, but we do outsource our engagement.”

And there’s still a great deal of room to grow.

“This is a massive industry,” Weiss said. “This is a $450 billion global market set to be $750 billion in six years. So it’s growing 7 percent faster than the developed world’s GDP. It’s not chump change.”

Watch the full interview here:

This article originally appeared on Recode.net.

Here’s why Amazon rival Flipkart still wants to IPO even though Walmart bought it for $16 billion

2018-09-17T17:21:22-04:00

Flipkart Group CEO Binny Bansal at Code Commerce | Keith MacDonald for Vox Media

As Flipkart co-founder Binny Bansal would have it, Walmart would have to acquire a majority stake in Flipkart if it wanted to compete with Amazon in a must-win global e-commerce market.

When Walmart agreed to buy 77 percent of India’s homegrown e-commerce player for $16 billion, the company said that it would still support Flipkart’s goal of eventually going public. And Bansal said the company still plans to go public in the future.

Why?

“We believe you can be way more competitive with the right partners around,” Bansal said at Recode’s Code Commerce conference at Industria in New York City. “The other partner we have is Tencent, we also have Microsoft as an investor. Bringing the right partners on board is crucial, we believe, for success in the future.”

But it’s also about being able to attract talent with the promise of equity.

“We want the talent to be motivated by the venture sort of backed company,” he said.

Flipkart, Bansal said, is the logistics pioneers in India and thus has significant advantages over Amazon in the country.

“From a logistics perspective, the kind of reach we have in the country, especially in the tier 2, tier 3 areas, is unparalleled,” he said. “We reached 400 cities … 90 percent of deliveries are done by our own network.”

That’s because the company had to start its own logistics company back in 2011.

“When we started e-commerce in India there were really no big logistics companies to work with,” he said. “In the U.S., Amazon could hook up with UPS and FedEx and get their deliveries going from zero to like millions of deliveries per day. But in India, once we reached 20 to 30,000 deliveries per day, our delivery partners started breaking down. So we had to start our own last-mile delivery way back in 2011, built from scratch, which has scaled to almost 50 to 60,000 people working with us delivering hundreds of thousands of orders everyday.”

Here’s the full interview:

This article originally appeared on Recode.net.

Uber’s sleek new product? Your safety.

2018-09-07T11:36:28-04:00

Uber CEO Dara Khosrowshahi | Michele Tantussi / Getty

In a swanky warehouse in Chelsea, New York City — soon to be overrun by models and designers in town for Fashion Week — a less fashionable crowd showcased an entirely different trend du jour: Rideshare safety.

This past Tuesday, just days after Uber CEO Dara Khosrowshahi marked one year in his job, the company showed off its newest suite of features in what was perhaps most appropriately compared to an Apple iPhone launch — except the product Uber was selling was security.

The portfolio of updates — including a feature called RideCheck, which uses motion-sensor data from your phone to detect if your Uber car has crashed — were geared toward ensuring both riders and drivers are safe and protected during and after rides, and will roll out over the next few months.

It was a product showcase unlike any other Uber has done. And it’s one that is not often put on by any company when it comes to something as fundamental as safety.

In place of the runways or art exhibits typically set up in the Skylight Modern, Uber set up a giant phone screen showing off its emergency alert system in one corner. In another corner, the company let reporters press a button to hear what an emergency call dispatched through Uber sounded like. Waiters serving up mini hors d’oeuvres, such as bite-sized avocado toast, walked around as people “experienced” Uber’s new safety features in much the same way a reporter might “experience” a new phone.

It’s all part of an effort to make Uber’s brand synonymous with safety, Khosrowshahi said onstage. “We want the product to be the headline,” he later told Recode. “We’re incredibly excited about the innovations that we’re bringing to the forefront as it relates to safety.”

The headline, as Khosrowshahi might have it, isn’t just that Uber is innovating on safety — but that it’s something that few of its competitors have done.

“[It’s] just unrivaled in the industry,” he continued. “You’re not going to get this in a taxi you’re not going to get this in a bus. You’re not gonna get it any of our competitors … and ultimately I think everyone wants to be safe. It’s table stakes, and we think that the table stakes should be raised.”

When asked if by “competitors” Khosrowshahi meant Lyft, he responded, “Listen, you said it, not me.”

The company is pitching this new focus on safety as a competitive advantage. And it’s not the first time Uber has tried that. In its early days, the company referred to its service as the “safest ride on the road.” That turned out not to be entirely true and Uber was sued for false advertising, a suit which it later settled.

It’s also not the first time Khosrowshahi and his team has used the concept of safety, something he said he’s made a priority during his time at Uber, to call out competitors like Lyft. After giving in to pressure to allow alleged victims of harassment and assault to sue Uber in open court, the company announced that it was also committing to publishing a report on the sexual harassment complaints it receives on its platform and called on Lyft to do the same. Lyft eventually agreed.

Competing on safety is an increasingly common concept in the world of new transportation companies and innovations like self-driving, for instance. But it’s one that regulators have rebuked in the past. At a 2016 industry conference, then commissioner of the National Highway Traffic Safety Administration Mark Rosekind said automakers should focus on standardizing safety features instead of leveraging them for profit.

“In the airline industry, they do not compete on safety,” he said.

That’s not to say it’s not a real effort on Uber’s part to create and make safety features more readily available to both riders and drivers. And we’ve seen Uber’s commitment to things like the sexual harassment report pressure Lyft to do the same.

While Khosrowshahi wouldn’t disclose how much money the company is investing in safety features, he said, “Believe me, we’re putting real effort and priority behind it. I mean, I think it shows if you look at all the features that we’ve shipped in under a year.”

Those safety features include an expansion of an emergency button, in partnership with a company called Rapid SOS, which sends your location and other information directly to your local police agency. Another feature, called RideCheck, uses motion sensors and GPS in drivers’* phones to detect if your Uber car has crashed. If it senses a potential crash, the Uber app will prompt both driver and rider with a safety toolkit, including the emergency button.

Similar technology will allow the system to detect what Uber called “trip irregularities,” like a long stop in the middle of a ride, after which the company will send a notification asking both the rider and driver if they are okay.

Have more information or any tips? Johana Bhuiyan is the senior transportation editor at Recode and can be reached at johana@recode.net or on Signal, Confide, WeChat or Telegram at 516-233-8877. You can also find her on Twitter at @JmBooyah.

These features do indeed provide access to a level of safety technology unforeseen in the ride-hail as well as private-car industry. But Khosrowshahi himself said ensuring the safety of users is and should continue to be seen as table stakes. It isn’t a product to sell to consumers.

These new features also raise some important questions, especially if it’s pitched as a competitive advantage.

For instance, Uber’s access to a driver’s smartphone motion sensor — which will also be used to monitor speed — and gyroscope to monitor driving could be a means through which Uber controls its drivers. At the very least, it creates an opportunity for the company to exert more control over how the independent contractors perform their job, which is only legally allowed for employees.

Khosrowshahi says Uber worked with drivers and its legal team in developing the features.

“There are some standards that we can put forward on the platform and I think that we will be relatively forceful as it relates to safety,” he continued. “That’s a very important fundamental standard, but we also want to be very conscientious of making sure that driver partners use our platform in whatever way they want to.”

As for its relationships with local law enforcement agencies, Khosrowshahi said ensuring the company was still protecting customer data and information in the face of inquiries from law enforcement while still helping in investigations was a balance. The company said it has a due process in place and requires a subpoena before it turns over any information.

“These are the judgment calls that are difficult,” Khosrowshahi said. “But we are being more open to law enforcement than we have been in the past because ultimately we think that safety is just something that every single city, every single government really believes is paramount. And we will do everything at the same time that we can to protect your personal data.”

*Correction: Uber only accesses the sensors in drivers’ phones to enable features like ride check. A previous version of this article stated Uber used the sensors in riders’ and drivers’ phones.

This article originally appeared on Recode.net.

The bare-knuckle tactics Uber used to get its way with regulators are not going to work for scooter startups

2018-08-30T13:40:03-04:00

Earlier this year, in a handful of cities along America’s West Coast, droves of electric scooters descended on busy streets with little to no warning.

It wasn’t only consumers who were surprised — some pleasantly so, others not so much. Local governments, too, were forced to scramble to understand and regulate this yet-unseen form of shared transportation.

The startups that put them there, Bird and Lime, employed a tried-and-true playbook, written a few years back by fast-growing ride-hail firms Uber and Lyft, as well as Airbnb: Launch your service in a city without permission, become wildly popular with consumers and then ask for forgiveness when regulators try to throw you out. When that doesn’t work, send in your adoring customers to fight for it. Oh, and a handful of lobbyists. Don’t forget the lobbyists.

In Santa Monica, Calif., the scooter companies are in the midst of one of the first real tests of this strategy. The city is expected to announce today, Aug. 30, which companies will receive a permit to operate scooter-sharing services there. The others will not be allowed to operate for 16 months.

San Francisco, too, is expected to finally announce this week which companies will be awarded permits to operate during a 12-month pilot, after a similar situation there with Bird and Lime.

In Santa Monica, at least, early results look bad for Bird and Lime, the “pioneer” startups that spattered the seaside city and neighboring Venice with hundreds of scooters without permission.

After considering permit applications from 18 companies, the city government recommended that two rivals — Uber and Lyft — become the sole providers of scooter- and bike-sharing there. Neither operates scooters in any market yet.

Bird’s and Lime’s immediate reaction was to shut down their scooters in protest and call on their users to rally outside City Hall. (Complicating the situation, Bird is a local startup that says it will soon employ 1,000 people at its Santa Monica headquarters. The year-and-a-half-old company has used its early success to raise more than $400 million in financing.) Users sent in 10,000 pre-written emails asking council members not to “ban” Bird and Lime scooters. Bird even bought Facebook advertisements attempting to activate its most loyal users.

Elsewhere, as Bird expands across the country — working with Uber’s former external policy shop, Tusk Ventures — part of its calculus includes the risks of regulatory blowback. In places like Milwaukee, for example, the company launched its scooters without permission but later began working with the city to find ways to legally introduce the service.

It’s a bare-knuckles move straight from the Uber playbook. But it may prove to be the wrong one this time.

Both Bird and Lime seem to be wising up to the limitations of the scorch-the-earth strategy. After throwing what some city staffers reportedly described as a tantrum, the companies are now emphasizing commitments to collaborate with Santa Monica.

Bird, for example, submitted a more than 130-page document that put a spotlight on the purported environmental benefits of electric scooters and a commitment to safety and increasing economic opportunity. The company also added additional plans to incorporate low-income riders, as well as proposals to reduce fares that begin or end at public transit.

“The best partner for Santa Monica’s Shared Mobility Pilot Program is a company headquartered here in the community, whose employees live, shop, and raise families here — a company whose leaders you can call and they will walk down the street to attend meetings with you,” it reads.

Lime committed $1.5 million to improving Santa Monica infrastructure, like bike lanes.

Planning Director David Martin will be left to consider the city council’s recommendation — and to decide whether Bird and Lime will be allowed to continue to operate there or be left out — in the context of these late-in-the-game commitments.

Why are things different now? What has changed since the Uber land grab? Why do cities have the upper hand this time around?

For one, many cities are better equipped to deal with invasive tech species like scooters, given this is their second go-around with free-wheeling tech companies. Within weeks, cities like San Francisco and Santa Monica responded methodically to the unregulated launches of scooter-sharing services. They delivered cease-and-desist orders and launched extensive permitting processes, requiring in-depth but practical plans for companies to deliver on their many pitches.

It also helps that many cities have already been through some of this with bike sharing, which has mostly emerged in the U.S. through exclusive partnerships with an operating company called Motivate, recently acquired by Lyft.

But scooter-sharing companies also just don’t have as much leverage as Uber and Lyft did.

The ride-hail companies pitched themselves as saviors, taking on the so-called villainous, monopolistic taxi companies, which overcharged for their services, drove dirty cars and were inconvenient or impossible to use in many locations.

Uber and Lyft provided a service that, in some places, profoundly changed the urban experience. This made it easier to activate consumer evangelists. The companies also pitched themselves as a viable and easy-to-access source of income for drivers. There are some jobs for the scooter companies, but they’re different.

Scooters, on the other hand, have been polarizing from the get-go. Though the companies have pleased many micro-transit enthusiasts, others see them as toys or trash strewn on sidewalks. They also don’t provide the same level of convenience at the scale that ride-hail did. You can’t take a Bird scooter to the airport or across town in a snowstorm.

Cities are also not instating an outright ban on scooters — regulators are simply being selective about which companies will operate those scooters. And governments, like Santa Monica’s, are using their power to demand compliance, collaboration and a commitment to equitable access to transportation — not just in their cities, but everywhere.

Having watched Uber and Airbnb grow around the world, these lawmakers are under no illusions that a noncompliant company in one city will magically be compliant in theirs. Santa Monica’s scooter permit process, for example, included a scorecard, where companies were judged on how well they comply with local, federal and other laws.

Bird scored among the lowest.

This article originally appeared on Recode.net.

Uber has finally hired a CFO — who has his work cut out for him

2018-08-21T12:28:24-04:00

When Uber CFO Brent Callinicos left the company in 2015, he created a vacancy that has cast a shadow over the company for the past three years.

Now, after a series of fits and starts in the search for a viable candidate, the company has finally hired a CFO. Nelson Chai, most recently the CEO of insurance firm The Warranty Group, will be tasked with stewarding the company’s initial public offering Uber executives have slated for late 2019.

Finding someone to take on the coveted albeit demanding role over the last year or so has been challenging. Under Uber CEO Dara Khosrowshahi, the company has gotten close to securing a candidate at least twice, several sources told Recode. Most recently, the company had made an offer to VMware CFO Zane Rowe but Rowe declined the offer, Recode confirmed. The Wall Street Journal first reported the talks. The reasons Rowe declined are not clear.

That struggle is not a new one, however. Both board members and top staffers have called former CEO Travis Kalanick’s inability, often described as outright hesitance, to replace Callinicos into question, sources have told Recode. Former Uber board member and Benchmark partner Bill Gurley, for instance, has been the most vocal about the need for companies to go public.

Chai’s selection serves as an unofficial kickoff for the battle on Wall Street to take Uber public. Top-tier banks are preparing to spend 2019 competing with one another to win the Uber IPO deal. They have been watching the Uber CFO search closely, and it’s little surprise that at least some bankers got an advance heads-up about Chai’s appointment, one source told Recode.

Before The Warranty Group, Chai served as the president and CEO of CIT Bank and EVP and CFO of Merrill Lynch. His lack of any clear ties to Goldman Sachs, Morgan Stanley or JPMorgan Chase removes any consideration that a new CFO could bring a favorite son and create an unlevel playing field among the big three banks.

Reeling in Uber’s financials is no small task. The company’s sales growth is slowing and CEO Dara Khosrowshahi is investing the profits Uber does make off its rides and food-delivery businesses into expanding new and existing businesses like scooters, bikes and international operations in places like India and the Middle East. That investment amounted to close to $900 million in losses, though that’s down 16 percent from a $1.1 billion loss in the same period a year ago.

While Uber is privately held, the company provides detailed financial information. In that same period, Uber reported that it generated $2.8 billion in revenue, a nearly $1.1 billion increase over the same period a year ago, representing 63 percent growth. (That’s down from 70 percent year-over-year growth in the first quarter.)

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It’s not exactly a surprise that the company continues to lose cash. Uber executives have been vocal about their plans to pour funds into new viable growth opportunities while continuing to build out existing revenue streams.

Hiring a CFO may have been challenging for the close-to-$70 billion company but Chai has his work cut out for him.

Chai has a year to take Uber’s money-losing rides business and turn it into a profitable company ready to trade on the public markets. But the company is facing pressure on a number of fronts. In addition to facing off against strong competitors in most of its major markets — including the U.S., India and the Middle East — Uber continues to face regulatory issues in a number of countries while being forced to re-litigate regulatory battles in cities the company has thus far been free to operate in, such as New York.

Additional reporting by Theodore Schleifer.

This article originally appeared on Recode.net.

Uber is investing its growth into its next chapter — including scooters and bikes

2018-08-16T13:22:06-04:00

Uber CEO Dara Khosrowshahi, left, with a Jump bike. | Michele Tantussi / Getty Images

Uber isn’t expanding the global footprint of its ride-hail service at breakneck speed anymore. It also isn’t close to being profitable yet. That’s in large part because the company, under CEO Dara Khosrowshahi, is spending a lot of its money building out its next chapter, which goes far beyond ordering car rides with your phone.

The Uber of tomorrow includes food delivery, scooter- and bike-sharing, car rental, flying cars, partnerships with transit networks, plus expanding its rides business in key global markets such as India, the Middle East and Latin America.

“Cars are to us what books are to Amazon,” Khosrowshahi has said. Just the beginning.

Fortunately for Uber, its business is still growing rapidly — though a bit slower these days — putting it in a position to invest in these newer areas.

According to financial documents supplied by Uber, the company generated $2.8 billion in revenue last quarter, a nearly $1.1 billion increase over the same period a year ago, representing 63 percent growth. (That’s down from 70 percent year-over-year growth in the first quarter.)

But Uber still lost close to $900 million last quarter, down 16 percent from a $1.1 billion loss in the same period a year ago.

“Going forward, we’re deliberately investing in the future of our platform: Big bets like Uber Eats; congestion and environmentally friendly modes of transport like Express Pool, e-bikes and scooters; emerging businesses like Freight; and high-potential markets in the Middle East and India where we are cementing our leadership position,” Khosrowshahi said in a statement.

It’s not exactly a surprise that the company continues to lose cash. Uber executives have been vocal about their plans to pour funds into growing the surprisingly successful Uber Eats food-delivery business while strengthening their position in the Middle East and India.

Uber Eats, for its part, is already in more than 290 cities. At Recode’s Code Conference in late May, Khosrowshahi said Eats is growing 200 percent at a $6 billion bookings run rate. The company doesn’t break out how much it spends on specific businesses, but a recent report from The Information indicates that losses are “low single digits as a percentage of gross bookings.”

As for its global footprint, winning in the international markets it hasn’t already exited remains especially important. (Uber’s most recent exits include deals with Southeast Asian rival Grab and Russian competitor Yandex, which combined to generate a nearly $3 billion gain for Uber in early 2018.) While the Grab deal was in part an admission that Uber couldn’t compete with its homegrown rival, it was also a sort of call to arms in markets like India, Latin America and the Middle East.

On top of that, Uber has invested in becoming, as Khosrowshahi put it, the Amazon for transportation — a platform that riders can use to access several different modes of transport. It’s a critical part of creating a viable alternative to personal car ownership — and thus more of a reliance on Uber.

To that end, in addition to acquiring Jump Bikes for about $200 million, Uber has also participated in a $335 million financing round for scooter-sharing company Lime. Under that partnership, Uber will let its users rent Lime scooters in its app.

This is all in the lead-up to a potential public offering, which Khosrowshahi said will happen by the end of 2019. It’s critical that the company is able to show that there are new viable growth opportunities while continuing to build out existing revenue streams.

“I think being able to demonstrate [to investors] that we are a company that is able to deliver multiple growth engines and is able to incubate and execute upon a few different opportunities; I think that’s a really important story,” Uber COO Barney Harford previously told Recode.

This article originally appeared on Recode.net.

Elon Musk’s Tesla funding wasn’t quite ‘secured’ after all

2018-08-13T18:32:38-04:00

Tesla CEO Elon Musk | Paul Warner / Getty

In a new blog post today, Tesla CEO Elon Musk attempted to clarify some very pertinent points about what taking the electric car company private would look like. But the unpredictable executive has prompted more questions than he answered.

Specifically, Musk said that when he tweeted his intentions to take the company private last week — and said he had “funding secured” — he said this because a member of the Saudi Arabian sovereign wealth fund “strongly expressed his support for funding a going-private transaction.”

Musk wrote that given the enthusiasm for taking Tesla private and given that the fund has “more than enough capital” to bankroll this sort of a transaction, he left the meeting “with no question” that a deal could be closed, and it would only be a matter of getting the process going.

But that doesn’t exactly mean that the capital needed to take Tesla private — which Musk says wouldn’t be a straightforward leveraged buyout, because it would be funded by equity, not debt — has been “secured.”

Tesla is still a public company, which means it’s subject to the rules and regulations of the U.S. Securities and Exchange Commission. That means words do matter.

While the SEC may not take issue with Musk using Twitter to announce he was considering taking Tesla private, former SEC chairman Harvey Pitt has said that it would be a violation if Musk’s tweet wasn’t entirely accurate. So it matters — greatly — if funding was in fact secured before Musk tweeted that it was.

The SEC declined to comment on whether Musk’s new blog post was a sufficient explanation for his tweet.

But Musk went on to say that it was “premature” to provide a full report of the plan to an independent board committee, as is typical, because he is having more discussions with the Saudi fund, as well as with other investors. This, again, implies that funding hasn’t been entirely secured.

“Another critical point to emphasize is that before anyone is asked to decide on going private, full details of the plan will be provided, including the proposed nature and source of the funding to be used. However, it would be premature to do so now. I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base.”

While the SEC may not have much to say publicly, recent reports indicate the Commission was already looking into Musk’s public announcements of things like manufacturing and sales goals before the take-private tweet. The Commission is also said to have broadened the scope of that inquiry to include whether the “funding secured” statement was intended to be factual, according to Bloomberg.

But it’s not just the SEC that’s looking into the factual nature of Musk’s tweets. Already, two class-action lawsuits have been filed by investors against Tesla and Musk, both of which alleged Musk “materially misled investors” with his tweet last week. These lawsuits, both filed in the Northern District of California, accuse Musk of manipulating the market with false statements that caused investors “to purchase or sell Tesla securities at artificially high or low prices.”

A few hours after Musk’s tweet, the stock jumped to $371 from $358. Trading was halted shortly after. Today, it’s trading around $352 — far short of the $420 mark.

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While inquiries into whether Musk misrepresented where the company is in this process continue, this situation is actually a perfect example of why he wants to take Tesla private. Musk has long lamented the pressure of operating a company publicly and last week wrote that taking it private would allow Tesla to focus on meeting its goals instead of meeting Musk’s self-imposed and publicly stated deadlines.

It also means there may be less weight placed on Musk’s tweets.

This article originally appeared on Recode.net.

Uber lost in NYC. But here’s the real problem.

2018-08-09T10:42:27-04:00

Uber and Lyft took on New York City once again, and this time they lost. The New York City Council voted today to pass a package of bills that would, among other things, instate a 12-month pause on adding new ride-hail cars while the city studies the companies’ effects on congestion and driver wages.

Uber and Lyft have warned users that this may lead to higher prices and longer wait times for rides. “These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs,” Lyft VP of Public Policy Joseph Okpaku said in a statement.

This is hardly the end of the world for either company, or for their local competitor, Via; the bills leave a reasonable amount of wiggle room for each to continue to grow. For example, they can apply for more vehicle licenses if they can show that service in underserved areas has been diminished. They can also add more wheelchair-accessible vehicles, which aren’t part of the cap — the issue is that wheelchair-accessible cars are typically much more expensive.

“We take the Speaker at his word that the pause is not intended to reduce service for New Yorkers and we trust that he will hold the TLC accountable, ensuring that no New Yorker is left stranded,” Uber spokesperson Matt Wing said in a statement.

But the real trouble is that this may set a precedent for other cities looking to regulate Uber. While Uber and Lyft may be able to stomach a pause in what is Uber’s largest market in the U.S., attempts to replicate these bills in other places may prove to be much more overbearing or sweeping than those passed today in New York.

And with both companies eyeing an IPO in the next two years, regulation that dictates how much these companies can grow across several top markets could pose a more serious risk to their forecasts.

While Uber won its last battle with New York City, its efforts to counter were weaker this time around. For one, both Uber and Lyft had less time to activate their most loyal riders and community leaders. The last time New York City Mayor Bill de Blasio tried to impose a temporary cap on Uber, the company had about a month to fight it. This time, Uber and Lyft only had around two weeks.

More importantly, it wasn’t just a cap that Uber and Lyft were fighting. The New York City Council rather strategically packaged the cap proposal with bills that would regulate minimum wages for drivers — which the companies didn’t oppose — in the aftermath of a string of driver suicides. Both companies simply had less ground in opposing this package of bills.

Over the next year, New York’s Taxi and Limousine Commission will study the ride-share companies’ effects on congestion, how often their cars have passengers and driver wages, among other things.

The findings will then be used to determine decisions like whether there should be a permanent cap on ride-hail licenses, minimum livable wages for drivers and a potential minimum fare for each ride. (Worth noting: Both Uber and Lyft have had often-contentious relationships with the New York TLC.)

But today, drivers — taxi and ride-hail alike — are rejoicing.

“Workers and New York leaders made history today,” said Ryan Price, executive director of the Independent Driver Guild, a pseudo-union created out of a settlement with Uber. “It’s not easy taking on Silicon Valley behemoths, but we kept on fighting for what we know is right and today the workers prevailed.”

This article originally appeared on Recode.net.

Tesla has halted trading after Elon Musk tweeted that he wants to take the company private

2018-08-08T11:01:26-04:00

Tesla CEO Elon Musk | David McNew / Getty

Tesla may not be a public company for long if Elon Musk follows through on his most recent tweets. The overly outspoken CEO tweeted that he is considering taking Tesla private at $420 a share.

A few hours later, Tesla trading was halted, but not before the stock jumped to $371 from $358.

The initially scantily detailed tweet was not paired with a formal Securities and Exchange Commission filing. The SEC declined to comment on whether that violated disclosure rules. However, in 2013 the SEC said social media was a “perfectly suitable“ way to disseminate information, as long as investors knew to look at that platform for information.

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According to that caveat, Musk may be in the clear. The Tesla CEO often uses his Twitter to make announcements about the company. And it certainly wouldn’t be the first time his tweets or words moved Tesla’s stock price — for better or worse.

The CEO has several weeks of inflammatory tweets under his belt — ranging from confusing to downright bizarre — and a first-quarter earnings call that sent Tesla’s stock plummeting. In fact, Musk spent the last earnings call apologizing to analysts for calling their questions “boneheaded.”

Going private would, at the very least, alleviate some of the weight being put on Musk’s tweets. But, broadly speaking, it would mean Tesla would no longer be subject to many public disclosure rules. That would make it easier for the electric car manufacturer to operate without the pressure of meeting publicly set deadlines for production and profitability.

Going private may be a welcome change for the company, which is the most-shorted stock on Wall Street — particularly as Tesla attempts to make the critical move from a luxury automaker to a mass-market one while also becoming profitable.

The series of tweets also comes just after the Financial Times revealed that the Kingdom of Saudi Arabia’s sovereign wealth fund has a $2 billion stake in Tesla.

Musk continued tweeting about taking the company private, saying that he would not sell the company and planned to remain as the CEO. Musk also said that long-term investors will be able to remain invested in the company through a special-purpose fund. He later said that current shareholders could choose to sell at the $420 a share price or hold on to their shares and go private.

Though the company posted another record-high loss of $717.5 million in the second quarter, Musk says he has secured the funding to take the company private if he decides to do so.

We’ve reached out to Tesla for comment. Musk sent this email to Tesla employees today.

This article originally appeared on Recode.net.

Uber and Lyft are fighting a critical battle against New York City — and this time, they might not win

2018-08-02T11:25:49-04:00

New York City Council Member Brad Lander at a taxi rally outside of City Hall | Johana Bhuiyan

A familiar scene played out in New York City this week. While Uber and Lyft users’ inboxes were flooded with urgent pleas to speak up against new rules proposed by the City Council (“Arriving now: Higher prices,” the Uber app warned), drivers organized by the New York Taxi Workers Alliance stood outside City Hall demanding more regulation of the ride-hail companies that have undermined the city’s iconic yellow cabs.

The proposed rules give the New York City Taxi and Limousine Commission the authority to regulate minimum wages for drivers and the number of cars allowed to drive for ride-hail companies, among other things. The bill also proposes a 12-month freeze on new ride-hail cars while the Commission conducts a study on how Uber, Lyft and their local competitors affect traffic congestion and livable wages.

Both Uber and Lyft have launched campaigns to fight parts of the bills. While the new-car freeze has taken center stage, it’s what happens after that has become a major cause for concern. Specifically, that the TLC — an agency with which both Uber and Lyft have had a sometimes contentious relationship — will have the wide-ranging authority to do things like impose a permanent cap on the number of ride-hail licenses and set a standard utilization rate for cars. But that depends on what the study finds.

One deadline to make changes to the bills has already come and gone. The companies had until midnight on Tuesday to convince New York City Council members to make amendments to their bills, and few substantive changes have been made. The Council, which seems to be motivated to get these bills passed, will vote next week.

New York City can set a precedent

While New York City has always been one of the most regulated markets for Uber and Lyft in the U.S., it’s Uber’s largest U.S. market by far. So any battle in New York City is a critical one for both companies. And as both Uber and Lyft plan to go public in the next two years, a 12-month pause on growth here could be particularly undesirable.

Even worse, this may set a precedent for other cities to impose a cap on Uber and Lyft vehicles in an attempt to regulate the companies’ growth.

So both companies are hoping advocacy from its most loyal riders — as well as community and civil rights leaders — will convince New York’s City Council members to vote against the bill.

It’s a playbook as old as, well, Uber in New York. The city would try to impose regulations on the ride-hail companies and Uber and Lyft would fight back using the most powerful tools in their arsenal: Their customers.

The city, on occasion, would have the support of Uber and Lyft drivers, but fairly often had the backing of taxi drivers. This time, the city has both.

And as they’ve done before, both sides claim the other is being a tad disingenuous on some points.

At the City Hall rally on Tuesday, drivers held up signs that said “80,000 cars. 42 percent empty at all times. Cap now.” Meanwhile, Uber users received an email that read, “Tell the City Council: a cap on Uber is not the answer.” For every sign that lamented the six recent taxi-driver suicides and called for regulation of Uber, there were tens of thousands of emails sent out by Uber with the subject line: “URGENT: Your ride is at risk.”

The proliferation of ride-hail companies in the city has taken a toll on the existing taxi industry — as well as some of its own drivers.

As the number of ride-hail vehicles on the road rocketed to more than 80,000, the price of a taxi medallion — issued by the TLC — has plummeted from $1.3 million in 2013 to between $160,000 and $250,000. That has reportedly led to a string of apparent suicides by drivers who could not pay off their debts. It also has led to what council members and drivers have called a “race to the bottom,” with low fares for drivers who were once promised $90,000 a year — earnings Uber no longer pretends drivers can make.

To that end, Lyft, Uber and Via, a local competitor, proposed a $100 million fund — paid for by the companies — to help taxi drivers suffering from medallion debt. In exchange, the companies asked to do away with the bills that give the TLC the ability to cap the number of vehicles allowed as well as set a standard for how well-utilized its cars are. The city declined.

This new set of bills is an attempt by the City Council to bring stability to a fragile market and reduce traffic congestion. Studying the market and ensuring no cars are driving around too long without passengers is a big part of that, Council members contend.

It’s worth noting that the last time the city took on Uber, it lost. And badly. After Mayor Bill de Blasio proposed a six-month cap on Uber to study its effects on congestion, Uber waged a month-long public relations war. De Blasio eventually backed off.

But this time, Uber and Lyft have less time and are up against a package of bills that also include driver-friendly provisions — making it harder to fight.

The companies don’t take issue with all aspects of the five proposed bills. Uber, for its part, says it has no problem with provisions that call for a minimum livable wage for drivers or a utilization standard for each car. It’s the ambiguity in how the TLC would determine utilization that Lyft takes issue with. Still, on its face, it benefits Uber and Lyft to have more people in more cars — especially in the companies’ shared-ride services, which both companies have made a priority.

But the companies have a problem with the 12-month pause on new cars, arguing it would deteriorate the quality of its service, especially in the city’s outer boroughs, where Uber has been a game-changer. The companies argue fewer drivers on the road would mean more unmet demand because drivers will be flocking to city centers.

Both companies claim the majority of their trips currently start or end outside of Manhattan’s central business district.

Is this a civil rights issue?

The companies have made it a civil rights issue, with backing from activists like Rev. Al Sharpton, claiming service in underserved areas will diminish.

The city says that doesn’t have to be the case. For one, there is a provision in the bill that allows for Uber and Lyft to ask for more licenses during the pause if demand is not being met in New York City’s outer boroughs.

“[Uber is] looking for the arguments that will support their cause,” Council member Brad Lander told Recode. “I think the pay regulation is going to mean that Uber and Lyft give incentives to their drivers to drive in the places they need them, which they’re already doing to some extent. …

“If it’s in Uber and Lyft’s interest to get utilization rates up because of the driver pay regulation,” Lander said, “they will have an interest in incentivizing spreading their drivers out in a thoughtful and strategic way that matches demand.”

Lyft, which has long trailed Uber in New York City, says it’s concerned about driver churn during the pause. About 25 percent of drivers leave the network every year, Lyft says, which suggests the company will be unable to meet demand if it can’t replace them. Indeed, as the current provision is written, there’s no way for a driver who wants to stop driving for ride-hail companies to transfer their vehicle licenses to another driver.

However, the bill allows for all for-hire vehicle companies to add wheelchair-accessible vehicles to their fleets. Companies were required to ensure 25 percent of the cars on the road were wheelchair accessible by 2023, and they’ve yet to reach that figure. The city council contends if Uber and Lyft added more wheelchair-accessible cars to their fleet, there would still be a significant amount of growth. The problem is wheelchair-accessible vehicles are much more expensive.

“We aren’t taking away any service that is currently being offered,” City Council Speaker Corey Johnson said in a statement. “We are pausing the issuing of new licenses in an industry that has been allowed to proliferate without any appropriate check. And if anyone wants to put a new wheelchair-accessible vehicle on the road, they can do that. In fact, we encourage them to do that.”

In the lead-up to next week’s vote, Uber and Lyft are scrambling to activate their customer base with the help of big names and third-party pressure, hoping that the City Council will ultimately vote against the bills.

This article originally appeared on Recode.net.