"That's my view. They'll cut preemptively in June. That is to say Wednesday," says the Grant's Interest Rate Observer newsletter editor.Economyread more
It's about time to write off high-growth tech stocks, Goldman Sachs warned, saying the double whammy of sky-high valuation and elevated regulation is becoming a "hazard" to...Marketsread more
Iran will surpass the internationally agreed levels of its low-enriched uranium levels in 10 days, the country's atomic energy body said Monday.Politicsread more
Sotheby's announced Monday that it's signed an agreement to be acquired by BidFair USA, a venture owned by art collector Patrick Drahi.Marketsread more
The Fed is not likely to make a move on interest rates when it meets this week, but it should clear the way for a rate cut later in the summer.Market Insiderread more
Ross played down the prospect of an agreement being reached at the G-20 meeting in Osaka on June 28-29.Paris Airshowread more
Boeing is scrambling to restore confidence in the 737 Max from regulators, customers and the flying public.Paris Airshowread more
Google CEO Sundar Pichai said in a CNN interview that while the company will work to remove as much harmful content as possible, the company can't remove 100% of it.Technologyread more
The chipmaker crush could persist and investors should be selective, but Nvidia looks like a clear buy, one market watcher says.Trading Nationread more
In a rare downgrade for the stock, Imperial Capital lowered its rating for Disney to in-line from outperform and maintained its target price of $147.Investingread more
Atlassian is releasing a document that's meant to simplify the negotiation of terms for acquisitions. That way the buyer and seller can focus on more important topics, like...Technologyread more
Following are excerpts from an exclusive CNBC interview with Geoff Cutmore and Travis Kalanick, CEO and Co-Founder of Uber.
GC: So let me just start by asking you about your ambition for Uber and where the business is now globally compared to where you'd like it to be?
TK: I mean, really Uber is one of these wild rides that you can't totally plan for and so the way we approach the business is slightly different we sort of take it, I don't wanna say, I mean we do plan in the business, but from the entrepreneurs perspective it's about solving problems. It's about what are the interesting, complex, worthwhile, valuable problems to solve and we go after them. You could have never predicted where we are now and I don't know if I could predict where we are going. And so, one way I like to describe this is, being at Uber, you know, whether it's myself running it or any of my employees, it's like you're driving a car down the road, pretty good clip, but its foggy. And so you've really gotta hold on to that steering wheel and you gotta keep your eyes on the road. You don't have enough time to look back at where you've been and you can only see so far ahead, but we enjoy the journey every day. So, look, our mission is transportation as reliable as running water, everywhere for everyone and we've got a long way to go.
GC: So you've got a mission statement and the company strategy, or the strategy from you as the man running the business effectively just comes from that mission statement rather than a big plan that you'd set out for all employees to understand at this point?
TK: Well look I think it starts at that mission but then you say how do you make transportation as reliable as running water everywhere? Like it means you're in China, but it also means you are in Pakistan, we just launched Lahore and everywhere else in the world. OK, so that's a start but then you say everyone, and so that means you have to get the price down low enough that everyone can use it, it's that everybody moves around in their cities, how do you make it so affordable that everybody can use Uber to get around, and that's where the real innovation comes and once you see it, once you see it like that, you're like, wow the work never ends, and so that's kind of how we think about what we do.
GC: When I think of a traditional company though, pricing is something that traditional companies consistently want to hold the line on because that's their margin, and they see that as something to be defended, but everywhere I look at Uber at the moment, it feels like a race to the bottom. I mean the Indian example is a very pertinent one and China, your competition here as well – how can you have a successful business where everything seems to be measured on the price and it is a race to the bottom?
TK: Well, you know, I think the non-intuitive thing about our business is that the cheaper the service gets, the more luxurious it gets. Let me explain. I like to say time is a luxury. Well, when the price goes down, you have more riders because more riders can afford it. But if you have more riders that means you have more drivers, and if you have more drivers that means that your pick up times are shorter. It also means that wherever you go in a city, you're more likely to get a ride back. And so it just so happens in our business non-intuitively, when the price goes down, the system or the product or the service becomes more luxurious. And so this isn't a race to the bottom in sort of the traditional sense, it's that the lower we go, the better the service gets. And that's why we do what we do.
GC: So when your local office picks up the phone and says ,Travis, bad news, we've got another competitor in our marketplace, you don't throw your hands up in the air and stamp around and say oh my god, how are we going to run a business in this market?
TK: (laughs) Look I mean you know we're here in China, we have the most fierce competition here in this country. I like to say if that hypothetical happens, I know that I'm going to be losing an hour or two sleep that night and maybe for 100 nights following that, but that's part of the fun. You know it makes us better that's for sure, but it makes us better because we are just very very focused on how do we deliver a better experience for riders, how do we do a great job building a platform for drivers.
GC: Have you been surprised by the resistance that you've had, I mean it's been remarkable that it's been sort of at a policy level with some governments, it's been at a rival, kind of driver system level with incumbent taxi businesses. I mean everywhere you look there seems to be something involving Uber and somebody who's kind of angry about you.
TK: Well look, you know, I think the context that you have to see when it comes to Uber and specifically actually ground transportation industry around the world, is that this is an industry that has been built and designed to outlaw competition. And so when somebody or an entity comes in and represents competition for the first time in decades, it becomes, you know, some people call it disruptive, but it's about change and it's actually about positive change cos when we go to a city, we are telling cities and cities like here in China, we're like within the next year we're gonna create 20,000 jobs, we're gonna take hundreds of thousands of cars off the road which is going to make pollution in the air much better and save people time like, that's just fundamentally good, how can we bring so much good so quickly? It's because we are going into a system that had no competition before we came. And so, some places are better at sort of embracing that change than others but the change is so positive and so straight forward that it's why we're in 400 cities. It's why in all the cities that we've rolled out in we are, we still operate there. Even when it creates a little bit of angst with that change, that change is so positive that it ultimately works out.
GC: Have you seen any difference in reception – bit of a broad brush question, but between developed and developing economies?
TK: You know – It's really a mix, I mean the way it works for Uber is it's really city by city and every city is different. So I can't bucket Bogota and Bangalore, I can't put them in the same bucket. I can't put Stockholm in the same category as Singapore, they're all very different. Now there's different kinds of cities. What we could say about in the developing world is that the fares are really low and they're really low because often in the developing world labor is quite a bit, it's just a lot less expensive, and so that means you can get the price really far down, that means that you see hyper growth, I mean really really intense growth, because they're really in the developing world there is no reason to own a car because the price can go so low. In the developed world, the prices are much higher, labour is of course more expensive and so owning a car might be in some cases cheaper than taking Uber. Our job is to get, taking Uber cheaper than owning a car and that's where all the innovation still is to come.
GC: How would you say your China Strategy is going at the moment? I read that you're sinking a billion dollars a year into this marketplace but you're not profitable. When do you become profitable? How does the strategy work?
TK: Well look I think there has to be a sort of an understanding of the overall context of our Chinese journey, our China journey. In January 2015 we had maybe 1-2% market share and today, 15 months later, 14 months later we're right around 30% market share. And so that's phenomenal, possibly unprecedented, growth in a multibillion dollar industry here in China. We're obviously very excited about that but you have to, if you're gonna compete in China you have to be willing to invest. If you are focused on profits right out of the gate, you're gonna have the smallest profitable business that has ever been seen. So in order to succeed here, you have to be open to that kind of investment but as you know investing in China has so much upside when you see the kind of success that we've seen. So around the world in the 400 cities we are in, look I've sort of built a culture around disciplined business building and we'll ultimately have that here as well, but we're very young here in China and we're still in that investment mode. The good thing though is when you have profitable cities around the world, those profitable cities can then help us to invest more deeply in this country so you take like the top 30 countries, sorry the top 30 cities that we're in around the world, we're already generating a billion dollars in profits from those 30 cities a year today, and those cities are growing by 2x, 3x, 4x per year. And so that is sort of the fuel that allows us to go to places like China and invest deeply to make the system work, and to work in a big way.
GC: Where do you think the next big disruption takes place in the sharing economy?
TK: Man, I don't know, you know. I know a lot about, like if you want to know about the latest Toyota Prius model, like, I've got you covered, I can tell you all the specs about it, but I don't know as much about some of the other industries that sharing economy's getting into and in many ways I'm left to reading the headlines that you're writing so I don't know where the next big disruption is, but I think you know Premier Li here in China has a very good vision for what he calls internet plus, which is take internet technology and cross it with an old industry and magic and progress and big things can happen. And for us we're internet plus transportation but what happens when you bring internet to healthcare, what happens when you bring internet to education. I mean there's a long list of these sorts of older industries that need the sort of internet technology dynamism that can create change and progress but also can bring big business benefits as well.
GC: Who do you think is complacent about China and technology in China? You know, occasionally I listen to the newsbeat coming out of the United States or coming out of Western Europe and there's a kind of view that because we don't think of China as traditionally free and open in the way that we talk about North America and Europe, that in some way is going to limit technical innovation here or the unleashing of that kind of can-do spirit that makes innovation happen, the kind that you've been involved in.
TK: Look I mean I think there's a lot of misperceptions about China, and about how it works and you don't really understand it, and I never really understood it until I spent a lot of time here but the Chinese culture is incredibly entrepreneurial and it also, y'know, has incredible educational institutions, they have great engineering here and so I think the surprise that maybe a lot of folks will be seeing in the next 5-10 years Is the amount of innovation that's gonna be happening in Beijing, is gonna start to rival what we see in the Bay area right. I like to say that the global innovation hubs in the coming 10 years is about the 3 Bays. It's the Bay Area, its Beijing and its Bangalore. And Beijing's rise as a technology hub is about to be seen in a big way, at least that's my sense, and as an entrepreneur that's exciting to me because you know entrepreneurs want to be where all the action is, and there's a lot of exciting work being done.
GC: You've raised money, not that long ago, it's given us a good sense of the value of the business, can you talk us through a little further what your plans are on the financial side?
TK: Well look I think the private markets have been incredibly liquid…
GC: REPEATS QUESTION
TK: The private markets, I mean you only have to open the financial news on your favourite website, and you see the private markets are incredibly liquid, lots of folks getting hundreds of million or billions of dollars in investment, there's a lot of money out there looking for the next big thing, looking to invest in tech and innovation, and what that means, well our competitors around the world, they're going out there and getting that investment and because of the way our system works, we can't be in a position where we're running a small profitable business, but they're deeply investing and we're not matching that and so our strategy is to make sure that we are raising as much as our competitors are, that our balance sheets is as healthy as theirs is, and remember we have lots of competitors all over the world because we're global, but then a second part is to more efficiently spend every dollar, and if you do those two things then you're on even footing from a balance sheet perspective, especially net cash, and you are more efficiently spending those dollars that's on the income statement then you eventually do well, and so that's our strategy, is it raise the funding and how we think about things, but what's really been happening over the last six months is that we've just been watching literally hundreds of cities go profitable, we've just tightened up the operation, things are just, you know we're getting good at running profitable cities, and of course it may be in an almost Amazonian kind of way, I like to take our profits in some places and then invest it in others, and that's working out well so far.
GC: So when does that break even for the business as a whole?
TK: I mean, look I don't know, and the reason I don't know is because I'm not yet sure how much invest China will, how much investment will take to get to profitability in China, but I'm optimistic that within the next couple of years we're going to start seeing Chinese cities start to prop up and be profitable…
GC: So all those salivating investment bankers who are hoping for an IPO this year they should forget about it?
TK: Most definitely, and the reason why is, like look I'm an entrepreneur, I want to move as fast as I possibly can, I want to build something that endures, and we've raised, I don't know the last 18 months something like, somewhere in the neck of the woods of 10 billion dollars, we're not in need of public capital if that makes sense, but there also of course is that sort of, I call it the moral obligation with investors who put money in they need to see liquidity and of course we have employees as well who put in a lot of blood, sweat and tears to make Uber successful, and they own equity and so we have to ultimately find liquidity for all shareholders. I'm going to make sure it happens as late as possible.
GC: And so what does that mean? 2 years, 3 years, 5 years?
TK: I mean I'll, I'll keep you posted, I have no idea.
GC: I will give you my number…
TK: Okay far enough…
GC: And you can have that on speed dial and let me know first because I'd like to hear that…
TK: Fair enough understood
GC: But I think it's interesting there is so much capital around at the moment, particularly for technology companies…
TK: And particularly for technology companies in China, I mean there's a lot of money going around right now.
GC: Does it worry you that there's malinvestment taking place, I know a lot of people are speculating about unicorns being over valued and because there's so much liquidity, a lot of it is going into the wrong kind of innovation? Does it bother you?
TK: Well look, I think we're at, at some point it's gotten to the irrational place and that's a little bit unfortunate because I think it tweaks, it's hard to run an efficient market place when there's too much money floating around, but at the end of the day it's just the reality, there's a lot of money going after an incredibly huge market, that's of course transportation, that's my perspective on the industry that we're in, but there's other industries as well and so you, what I like to say, when you get into something that feels like a bubble or at least feels irrational is that you still want to build a company that has a strong discipline business building culture, and when the irrational comes is you have to sort of find ways to contain it and we spend time on that because it's important that in our cities, we've so much of our team operating in these cities around the world, it's important that right culture, that right business building culture sort of provides all of them.
GC: Is it possible to have a permanent start up mentality, I know a lot of people are very excited about this idea, trying to keep a business permanently like a start-up operation, but can it work when you have the transition that you're experiencing where you're suddenly a 60 billion dollar company, you're no longer a start-up in a garage.
TK: Yeah I mean look 2 and half years ago, was it 2 and half, let me think, yeah 2 and a half years ago, Uber was 400 people, and we're now 7,000 people, and so that is serious scaling right, and before Uber, my biggest company was like 12 people, at least my last one was 12 people, I'm a small time entrepreneur really at heart, scrappy entrepreneur. The holy grail of scaling a business is finding a way for it to feel small even as it gets big, and the reason why is because if you can feel small as you get big, then you are able to innovate quickly but at scale, and that is the holy grail, and that is essentially what we've really tried to build our culture around is how to be, how to feel entrepreneurial, how to feel small while we grow.
GC: Could you do me a favour and just nail some myths here, or maybe they're true, okay, so I read that you have ordered 100,000 Mercedes Benz limousines.
TK: Not true
GC: That's not true, where do people get these stories from?
TK: I have no idea
GC: I read that you're planning to replace all drivers with driverless vehicles at some point?
TK: We are investing in driverless technology and the answer there, what that's about is, look Google's investing in this stuff, they've been doing it for 10 years almost, why? Well a million people a year die in cars, and how many more millions get injured, it's just needless right, and how much time, how much worse is our lives because we're sitting there with a steering wheel in our hands being stressed out and frustrated with traffic remember, well I don't know if I mentioned earlier but I'm from Los Angeles, I grew up in Los Angeles, I literally spent years of my life continuously if you put it all together sitting behind a steering wheel, driving frustrated in traffic, when you can give people their time back, and when you run these cars more efficiently and there's no more traffic, this is magic. So the investment thesis makes sense and now you've got Google, Apple, Tesla manufacturers all going into the future and for us for Uber it's about do we resist the future or do we make sure that we're part of it? And I mean there's only one answer for us especially when we think about the taxi industry and how they're trying to resist it, and so then we look at that as a sort of a moment, an opportunity for what we call optimistic leadership is how you partner with cities for that transition, and how do you do that in an optimistic way.
GC: Because you're private, people just make stuff up I think because they don't actually have access to you, to get answers, but what's the funniest thing you've read about yourself or read about Uber that you've just gone, 'my god where do the people get this from?'
TK: I mean there's probably some good ones, I don't have any on the top of my head but there are some funny ones out there, yeah… I'll have to get back to you on that one but there's some good ones.
GC: Do you get the feeling that people somehow feel, I don't know, intimidated or fearful because suddenly this business is almost appeared from nowhere and as you say it's almost been viral in its growth rates, and do you think that worries people in established companies or worries authorities who find it hard to understand why the rate of change is so rapid?
TK: I mean that's a really good question, I'm an engineer by trade, and what engineers do is they go and build, and they don't think a lot about storytelling, they don't think a lot about opening things up and sort of doing a lot of communications and PR it's just not something we naturally do, or it's certainly not something I naturally do. And what I've learned as we've gotten bigger is that it's really really important for us to take all opportunities to tell our story, because as we grow and have a bigger impact on cities, if we don't tell our story somebody else will and sometimes that's fine but if it's someone in an industry that's maybe, is seeing change too fast or really is attached to the old ways of doing things then maybe it's not the accurate story, maybe it's not giving the full picture and so that's something we've had to learn to do overtime.
GC: And I want to sort of come to a conclusion here, just by asking if you can give us a little bit of an insight into what you think about as the challenges from here, I mean my bread and butter is talking about financial markets, worries about the China slowdown. What's a Trump presidency going to look like if it ever comes to air?
TK: Does anybody know what that looks like?
GC: Is it something that keeps you awake at night?
TK: I mean, I try not to focus on things I have no control over, or can have any impact on, and we've got a business to build, we are serving cities and building transportation systems in hundreds of cities around the world, so we're pretty focused on that, don't know what a sort of presidential election is going to look like at the end and I certainly don't know what's going to happen after, but I would encourage all candidates to really think about how much progress new technologies can bring to cities, how many hundreds of thousands or millions of jobs can be created, and of course all things we see that we do in terms of lowering congestion, lowering pollution, lowering drunk driving, making the roads safer, there's just so many positives there that I hope that regardless of who the candidate is from what party, I hope they can see those positives and allow this kind of progress to continue.
GC: And, I don't think anybody, I don't think you'll mind me saying but I think you're coming up on 40, and I'm coming up on 50 and…
TK: I totally mind you saying
GC: We can always edit this later...
TK: No that's fine…
GC: But I mean I'm looking down on this millennial group that are coming up, and they're embracing the sharing economy and they get you, they get Uber, they're switched on very quickly to these apps, how do we stimulate that community to rise to the challenge of the opportunity that the sharing economy brings? I mean what kind of guru style message do you have for them about how they should think about, as they come into the world, the opportunities and how they seize them?
TK: Well I try not to separate the world into groups of generations, like you can read writings from [inaudible] thousands of years ago and he's like those damn kids right they're not responsible, they're not this, they're not that and if he was right and all the people between him and now are right, wow we would be a pretty, we'd be pretty degenerated at this point, but I really think of all people as mostly the same, we all have families, we all have sort of dreams and hopes, I think maybe what it is if there is a young entrepreneur out there, we have a cultural value which we call the champions mind set, and a lot of people think about maybe it's LeBron James going in for the dunk when they think about a champion but at Uber we think about, the way we define it is, when you get out on the field you put all of your heart, you put all your passion and you don't leave an ounce of energy on the field, you put it all out there, and when you're doing a start-up, you're an entrepreneur you're going to get knocked down, and so the key is well when you see adversary and you get knocked down, get back up. And if you put everything you've got and you put it all out there and you get back up when you get knocked down it's very hard to fail, and that's very much how we think about things at Uber and that's really how I think about entrepreneuring in general.