Ubers raising up to $600M in a secondary round at $62B valuation, Q1 sales grew to $2.5B

Uber’s CEO is in Paris this week meeting with the French chairperson to talk tech in Europe and expanding its insurance coverage in the region, but back in the U.S. the company are moving forward on another kind of expansion.

TechCrunch has learned and confirmed that Uber is creating another secondary round of funding of up to $600 million, on a valuation of $62 billion. The fundraising growth goes at the same hour that Uber is also releasing its Q1 financials — which indicate that the company pulled in $2.5 billion in net revenues, with a net loss of $601 million, and negative EBIDTA of $304 million on a pro forma basis.

Raising between $400 million and $600 million on a valuation of $62 billion( at $40 per share) would indicate that while Uber is regaining from the drop in valuation from its last round with SoftBank at the end of 2017another round with secondary components that valued the company at $48 billion — it’s still not back up( or higher than) its loftiest valuation of $69 billion.

From what we understand, investors participating in the offering, which has yet to close, include Coatue, Altimeter and TPG. Uber employees with at least 1,000 shares can also participate in the financing. According to the terms of offer , no one can sell more than $10 million worth of shares.

That general upward trend is also being reflected in Uber’s financials.

An investor presentation that was shared with TechCrunch indicated that the company’s $2.5 billion in net revenues was a seven percent one-quarter over one-quarter increase, and a 67 percentage increase year over year. Uber’s $304 million loss, meanwhile, were about half the amount they were last year: in Q1 2017, Uber’s adjusted losses were $597 million. Gross bookings — the total taken for all of Uber’s transportation services — was $11.3 billion in Q1, a 55 percent increase compared to $7.5 billion a year ago. At the end of Q1, Uber had $6.3 billion in gross cash.

GAAP numbers indicated net revenues of $2.6 billion with a GAAP profit nearly as big: $2.456 billion.” We had$ 3 billion of income on a GAAP basis because of the’ gain’ from the Yandex and Grab bargains ,” a spokesperson said.” That’s why we prefer to focus on EBITDA as the best number to present our underlying business in the one-quarter .”

“We are off to a terrific start in 2018, with our rides business beating internal plan and continuing to grow at healthy rates, while we significantly reduce our losses and maintain our leadership position around the world ,” Uber CEO Dara Khosrowshahi said in a statement.” Given the size of the opportunity ahead of us and our goal of attaining Uber a true mobility platform, we plan to reinvest any over-performance even more aggressively this year, both in our core business as well as in big wagers like Uber Eats globally.”

In other words, that could mean losses might get worse in the short-term as Uber continues to invest money in industries like Eats and JUMP, the bike-share service it acquired for about $200 million earlier this year to expand them into more markets. As with many tech companies, Uber appears to be focused more on growth than profitability, even as it eyes up an IPO, maybe as soon as next year.

Uber has raised over $21 billion in funding to date.

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50 tech CEOs come to Paris to talk about tech for good

Ahead of VivaTech, 50 tech CEOs came to Paris to have lunch with French President Emmanuel Macron. Then, they all worked together on “tech for good”. The event was all about leveraging tech around three topics — education, labor and diversity.

At the end of the working day, French Prime Minister Edouard Philippe invited everyone for a speech in Matignon. It wasn’t a groundbreaking speech as Macron is also speaking at VivaTech tomorrow morning. “We’re trying to pivot France, ” Philippe said.

With great power goes great responsibility Edouard Philippe

Maurice Levy, the former CEO of Publicis, one of the two companies behind VivaTech with Les Echos, first introduced the event, as well as Eric Hazan from McKinsey. McKinsey worked on the data that was used to start those discussions. So let’s watch what they talked about.

“As McKinsey demonstrated, there’s no question that technology overall is a net creator of job and GDP. It’s a positive force, ” Uber CEO Dara Khosrowshahi told. “At the same time, AI and automation, while driving the economy and productivity, […] will lead to large groups being disadvantaged.”

He then listed a few important points to make sure that nobody is going to be left behind, such as coaching and mentorship programs.

“This is not just the government’s job but it is also the job of private companies, ” Khosrowshahi added.

He wanted to remain hopeful and it felt a bit like a lobbying endeavor. “It’s easy to see the lost of jobs because of automation. But it’s much more difficult to dream about the possibilities of the future, ” he told. In other terms, don’t worry about the on-demand economy, don’t worry about self-driving cars.

IBM CEO Ginni Rometty was in charge of the discussions around education. “We also had a lot of technologists and pragmatic people there. And we aimed up with five recommendations, ” she said.

It sounds like these recommendations would be really favorable for IBM and other tech companies. So here are these recommendations 😛 TAGEND

Focus and segment this problem. Focus on the one-quarter of the population the most at risk.

Align the skills that businesses need with the education system( hard skills and soft skills ).

There should be an open partnership with governments to reposition vocational education, learnt by doing, foster internships, apprenticeships, simulations and redirect taxation to incentivize.

Run with educators to pilot, get hard evidence and then scale.

Retraining employees is the responsibility of all employers.

Ubers aerial taxi play

Uber’s flying taxis are taking off, as the transportation upstart looks for new ways to shorten trips constructed long because of distance or traffic congestion. Flying automobiles were once nearly the exclusive domain of tech maxims (” You promised us flying vehicles, but instead we have x .”), but now they are actually being put into gear in the form of electric vertical take-off and landing( eVTOL) vehicles. Over the last couple of days at the Uber Elevate summit in Los Angeles, the company further laid out its own ambitious plans to develop and commercially deploy air taxis by 2023.

Uber CEO Dara Khosrowshahi, who has been at the helm for less than one year, admitted he wasn’t initially 100 percentage on board for Elevate, he said at the Uber Elevate Summit. It took a couple of sessions and some reviews of the math for him to be sold on it, he said.

” For me the aha moment arrived when I started recognizing also that Uber isn’t just about cars ,” Khosrowshahi said.” Ultimately, where we want to go is about urban mobility and urban transport, and being a answer for the cities in which we operate .”

Uber Elevate is Uber’s all-encompassing word for its initiative to launch uberAIR, which is the its aerial electric ride-hailing service, as well as any other initiatives( think food delivery) that may benefit from air transport. Once Uber’s vision is fully implemented, Uber tells the service will be cheaper than the costs of owning a car, on a per-passenger, per-mile basis, and autonomous. At launching, however, pilots will be required.

In the U.S ., Uber is aiming to launching first in the Dallas-Fort Worth and Frisco, Texas, areas and LA. Last year, Uber said it would also aim to start testing in Dubai by 2020, but that’s no longer the occurrence. Instead, Uber now has an open call out to interested international cities to describe the clear need for aerial transit, the enabling conditions of the city and local government commitment.

In order to launch uberAIR, Uber requires the actual vehicles, skyports for them to land on, as well as batteries. The company won’t be developing and creating its own vehicles. Instead, it’s relying entirely on its aerospace partners — some of which have been developing aircrafts for decades.

” There’s a lot that has to come together ,” Khosrowshahi said about partnerships.” We utterly know that we cannot make this happen ourselves .”

At the summit, Uber announced a new partnership with Karem to develop eVTOLs. Karem Aircraft, which has patented Optimum Speed Tiltroter technology for military and commercial applications, has been working with Uber for about a year to create the Butterfly concept. This type of vehicle is supposed to be a passenger-friendly adaptation of Karem’s core technology. And some of Uber’s previously announced partners also demonstrated off what they’ve been working on over the past year. Embraer, for example, unveiled its first eVTOL concept.

At this point there are more than 70 companies working on eVTOLs for deployment in Uber’s air taxi network.

The company also requires skyports to enable people to board and exit these eVTOLs, which is where partners like Gannett Fleming and Corgan come in. On day two, these partners indicated off their skyport designs as part of a skyport rivalry Uber ran.

Since Uber wants its offering to be all-electric from the beginning, it’s working with a number of battery partners. One of them is E-One Moli, a newly announced partner that will set its battery technology in the first eVTOL prototypes from Uber’s Elevate vehicle partners. With these batteries, uberAIR vehicles could travel up to 84 miles on a single charge, compared to just 60 miles. That also entails Uber needs a way to charge these vehicles, which is where partners like ChargePoint come in.

Mega Skyport

Air traffic control

On day one of the summit, Uber Head of Aviation Eric Allison spoke about how certain skyports could manage hundreds or even thousands of landings per hour. In order to manage the skies and ensure uberAIR doesn’t simply replicate the horrendous traffic patterns we already have on the roads, Uber is working to develop systems that enable the ecosystem to function in what will be a more complex version of standard air traffic control, Allison told TechCrunch earlier in the day.

There are many ways to conceive of this, but one way is something Uber Director of Engineering for Airspace Systems Tom Prevot calls Dynamic Skylane Networks. He said you can think of them as a virtual network of lanes, overpasses, on-ramps and off-ramps in the sky that dynamically adjust to where the air traffic needs to flow.

But that’s a bit down the road. At the beginning of this process, Prevot said, Uber wants to work in parallel with what exists today and be” highly cooperative, interoperable and transparent for safety and efficiency reasons. But we also need to protect, plainly, privacy information .”

He added that cybersecurity is a” first-class citizen and we need to cook that in from the beginning .”

Although Uber could theoretically generate, own and control its own air traffic control system for eVTOLs, Uber says the intention is not to own it. Instead, the idea is to make it an open standard that other companies can work with, and therefore, enable interoperability.

” We don’t own airspace ,” Holden told.” We’re just trying to make sure airspace is managed in an extremely safe and efficient style .”

To try to achieve this goal, Uber is working closely with the FAA and NASA. At the Summit, Uber announced it has signed a second space act agreement with NASA to model and simulate airspace requirements for urban air mobility applications. As part of the agreement, Uber will share its plans for implementing its air-based rideshare network.

Using data from Uber, NASA plans to simulate a small passenger-carrying aircraft flying through the Dallas-Fort Worth area. The idea is to identify potential safety issues in an already-crowded air traffic control system.

Simulation of 50 aircrafts in the Dallas-Fort Worth area

” We’re designing our flight paths essentially to stay out of the scheduled air carriers’ flight paths initially ,” Prevot told at Elevate.” We do want to test some of these concepts of maybe flying in lanes and flying close to each other but in a very safe surrounding, initially .”

Regulating air taxis

All of these eVTOLs, of course, must comply with regulation from aviation authorities. At Elevate, FAA Acting Administrator Dan Elwell said he’s excited about everything that’s happening. But while Uber aims to start testing in 2020 and deploy commercially in 2023, all Elwell would say is,” We’ll insure .”

” Everything is changing, but remember it’s changing within the construct that we’ve built, that we know ,” Elwell said in a dialogue with Uber Chief Product Officer Jeff Holden.” We have to adapt .” He added, whatever happens, the FAA is going to do this right. If you were to ask him what his reaction is to the idea that” it has to happen and this date is certain, my answer is,’ well, we’ll see.'”

But Khosrowshahi said he’s confident in the 2020 testing timeframe. That’s because of the partners Uber has in place and the team on board, Khosrowshahi said.

” I think that’s something we can get to ,” he said.

In tandem with ensuring uberAIR operates in ways that are safe and consistent with current FAA criteria, sound regulation is key to community adoption. For the purpose of uberAIR, Uber has tapped David Josephson, a noise and acoustics consultant at Josephson Engineering. At the Elevate summit, Josephson explained how urban air mobility noise will be different from the noise of a conventional aircraft. Part of that is due to the fact that airports are not located within city center. With uberAIR, however, these skyports are going to be within city limits.

” We’ve decided to develop an entirely different decide of metrics for this purpose ,” Josephson said.

Those measurements entail looking at how many people are going to be affected by any given flight. More specifically, that entails looking at how many people are going to be able to hear the noise emissions from the eVTOLs.

Aerial equity

Uber is ultimately presenting AIR as a style to increase access to transportation. In an ideal world, uberAIR would be able to reach neighborhoods that are traditionally underserved by transit bureaux, Uber Head of Policy of Autonomous Vehicles and Urban Aviation Justin Erlich told me back in February. But in order to do that, Uber needs to remain conscious of the fact that it’s a goal it’s trying to achieve. That means ensuring the right policy infrastructure is in place and that’s where Erlich comes in.

We’re thinking about what this looks like for making things wheelchair accessible and so we’re having ongoing conversations with folks in that community, ” Erlich said. “We’ll really required to thoughtful long-term about where the routings are to make sure that we’re serving underserved communities in transit, and to make sure that this technology is made available to everybody.”

In addition to reducing the cost of aerial transit, it’s important to note where the skyports will be located and what areas they will serve, World Economic Forum Head of Drones and Tomorrows Airspace Timothy Reuter told at Elevate.

” One of the causes of inequality in this country is, it’s very difficult for people to live in low cost areas but get access to high wages ,” Reuter said.

And as Uber continues to scale and move further into independence, it will be worth paying attention to who is going to be tapped to manage the more monotonous, low-wage jobs.

” What we bring to the table here ,” Khosrowshahi said,” is constructing this to not be a service for the few but a service that is ultimately available for mass marketplace .”

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Uber vehicle reportedly saw but ignored woman it struck

The cause of the fatal accident of an Uber self-driving vehicle appears to have been at the software level, specifically a function that determines which objects to ignore and which to attend to, The Information reported. This sets the defect squarely on Uber’s doorstep, though there was never much reason to think it belonged anywhere else.

Given the multiplicity of vision systems and backups on board any given autonomous vehicle, it seemed impossible that any one of them failing could have prevented the car’s systems from perceiving Elaine Herzberg, who was traversing the street directly in front of the lidar and front-facing cameras. Yet the car didn’t even touch the brakes or sound an alarm. Combined with an inattentive safety driver, this failure resulted in Herzberg’s death.

Here’s how Uber’s self-driving cars are supposed to detect pedestrians

The only prospects that attained sense were 😛 TAGEND

A: Defect in the object recognition system, which may have failed to classify Herzberg and her motorcycle as a pedestrian. This seems unlikely since bikes and people are among the things the system should be most competent at identifying.

Flaw in the object recognition system, which may have failed to classify Herzberg and her bike as a pedestrian. This seems unlikely since bikes and people are among the things the system should be most competent at identifying. B: Fault in the car’s higher logic, which attains decisions like which objects to pay attention to and what to do about them. No need to slow down for a parked motorcycle at the side of the road, for example, but one swerving into the lane in front of the car is cause for immediate action. This simulateds human attention and decision making and avoids the car from panicking at every new object detected.

Uber acquires bike-share startup JUMP

Uber has acquired bike-sharing startup JUMP for an undisclosed amount of money. This comes shortly after TechCrunch reported that JUMP was in talks with Uber as well as with investors considering a potential fundraising round involving Sequoia Capital’s Mike Moritz. At the time, JUMP was contemplating a sale that surpassed $100 million. We’re now hearing that the final cost was closer to $200 million, according to one source close to the situation.

JUMP’s decision to sell to Uber came down to the ability to realize the bike-share company’s vision at a large scale, and quickly, JUMP CEO Ryan Rzepecki told TechCrunch over the phone. He also said Uber CEO Dara Khosrowshahi’s leadership impacted his decision.

” I had a chance to spend a couple of evenings with him, and really talk through his vision for the business and our vision, and watched a lot of alignment ,” Rzepecki said.

He noted that while Uber had a rocky 2017, he’s optimistic Uber is on the right track.

” I think it’s really on the right course now and[ Khosrowshahi] believes the route we approach working with cities and our vision for partnering with cities” aligns with Uber’s mission, Rzepecki told.” That was important for me and his desire to do things the right way. This is a great outcome and gives me a chance to bring my entire vision to the entire world .”

Meanwhile, becoming a top urban mobility platform is an example of Uber’s ultimate vision, Khosrowshahi told TechCrunch over the phone. As more people live in cities, there will need to be a broader array of mobility options that work for both customers and cities, he said.

” We insure the Uber app as moving from merely being about automobile sharing and automobile hailing to truly helping the consumer get from A to B int he most affordable, most dependable, most convenient route ,” Khosrowshahi told.” And we think e-bikes are just a spectacularly great product .”

As part of the acquisition, JUMP employees will join Uber’s team but the bike-share company will carry on as an independent, wholly controlled subsidiary, Rzepecki said.

JUMP is best known for operating dockless, pedal-assist motorcycles. JUMP’s bikes can be legally locked to bike parking racks or the “furniture zone” of sidewalks, which is where you see things like light poles, benches and utility poles. The motorcycles also come with integrated locks to secure the bikes.

Uber’s acquisition of JUMP is not too surprising. In January, Uber partnered with JUMP to launch Uber Bike, which lets Uber riders volume JUMP bikes via the Uber app. The majority of trip-ups, however, still come through the JUMP app, Rzepecki said. For the time being, JUMP’s app will continue to exist but that may eventually change.

” It’s our hope the experience will be more deep integrated into the Uber app moving forward and reflects what Uber has been working on to its implementation of being a multi-modal platform ,” Rzepecki said.

Meanwhile, Uber’s international competitors have constructed similar moves. India-based ride-hailing startup expanded into bicycles in December. Called Ola Pedal, the service is available on a handful of university campuses in India. Then there’s Southeast Asia’s Grab and China’s Didi, which both launched their own respective bike-share services this year. Both Didi and Grab have also invested directly in bike-sharing startups Ofo and OBike, respectively.

With JUMP under the ownership of Uber, we likely won’t see JUMP partner with any of Uber’s direct challengers, but Rzepecki told other types of partnerships could be interesting.

” I guess the idea of us being inside the Lyft app is not necessarily likely but there may be other partnerships that we’re able to do that are less directly competitive ,” Rzepecki said.

In January, JUMP closed a $10 million Series A round led by Menlo Ventures with participation from Sinewave Ventures, Esther Dyson and others. JUMP’s January funding brought its total amount created to $11.1 million. That same month, JUMP became the first stationless bicycle service to receive a permit to launch in San Francisco. Since then, JUMP has launched 250 dockless, pedal-assist bikes on the streets of San Francisco. Currently, people take between six to seven rides per day, with an average trip duration of 2.6 miles, Rzepecki said.

” We genuinely know we are serving a commute ,” Rzepecki told.” We’re serving the morning and evening commute. I think 22 percent of trip-ups are in the morning and 20 percent in the evening commute. We’ve really been a commuting solution .”

In October, the SFMTA will determine if JUMP can deploy an additional 250 motorcycles. The SFMTA will make its decision based on an evaluation of the program’s first nine months. That evaluation, the SFMTA told TechCrunch in January, will entail determining where the city should promote stationless bike-share, the impact stationless bike-share has on the public right-of-way,” including maintaining accessible pedestrian tracks of traveling, as well as the enforcement/ maintenance burden on city faculty .”

JUMP also operates its e-bike network in Washington D.C ., and plans to launch in Sacramento and Providence, Rhode Island subsequently this year. Through its software and hardware offerings, it operates via third-parties, like cities, campuses and corporations, in 40 markets including Portland, New Orleans and Atlanta. JUMP is also interested in deploying its motorcycles in Europe, where it hopes to be by springtime of 2019. JUMP has also applied for a permit to operate in New York, which lately decriminalize electric, pedal-assist bikes.

E-bikes, of course, are not the only route to get around township these days. This year, we’ve seen a number of startups launch electric scooters. While San Francisco is trying to figure out how to regulate them , people are watching closely to ensure what comes next.

Khosrowshahi is one of those people. He told me he’s been” staring at some of them quizzically on the street .”

Scooters are in an” odd place” due to the lack of regulation, Khosrowshahi said, but Uber will” look at any and all options” that” move in a direction that is city friendly .”

Also, be sure to check out my interview with Rzepecki from January on CTRL+ T.


Additional reporting by Katie Roof .

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Regulation could protect Facebook, not punish it

You know what tech startups dislike? Complicated legal compliance. The problem is, Facebook isn’t a startup any more, but its competitors are.

There have been plenty of bellows from congress and critics to regulate Facebook following the election interference scandal and now the Cambridge Analytica debacle. The government could involve extensive ads transparency reporting or data privacy protections. That could expense Facebook a lot of money, slow down its operations, or inhibit its ability to build new products.

But the threat is that those same requirements could be much more onerous for a tiny upstart company to uphold. Without much money or enough employees, and with product-market fit still to nail down, young startups might be anchored by the weight of regulation. It could prevent them from ever rising to become a true alternative to Facebook. Venture capitalists choice whether to fund the next Facebook killer might look at the regulations as too high of a price of entry.

STANFORD, CA- JUNE 24: Facebook CEO Mark Zuckerberg( R) hugs U.S. President Barack Obama during the course of its 2016 Global Entrepeneurship Summit at Stanford University on June 24, 2016 in Stanford, California. President Obama joined Silicon Valley leaders on the final day of the Global Entrepreneurship Summit.( Photo by Justin Sullivan/ Getty Images)

The lack of viable alternatives has constructed the #DeleteFacebook movement toothless. Where are people going to go? Instagram? WhatsApp? The government already missed its chances to stop Facebook from acquiring these companies that are massive social networks in their own right.

The only social networks to carve out communities since Facebook’s rise did so largely by being completely different, like the ephemeral Snapchat that purposefully doesn’t serve as a web identity platform, and the mostly-public Twitter that caters to guess leaders and celebrities more than normal people sharing their personal lives. Blockchain-based decentralized social networks sound nice but may be impossible to spin up.

That’s left few places for Facebook haters to migrate. This might explain why despite having so many more users, #DeleteFacebook peaked last week at substantially fewer Twitter mentions than the big #DeleteUber campaign from last January, according to financial data dashboard Sentieo. Lyft’s existence attains #DeleteUber a tenable posture, because you don’t have to change your behaviour pattern, only your brand of choice.

If the government actually wants to protect the public against Facebook abusing its power, it would need to go harder than the Honest Ads Actthat would put political ad on Internet platforms under the same scrutiny regarding disclosure of purchasers as the terms and conditions for TV and radio ad. That’s basically only extra paperwork for Facebook. We’ve seen regulatory expenditures deter competition amongst broadband internet service providers and in other industries. Real change would necessitate regulation that either creates alternatives to Facebook or at the least doesn’t impede their creation.

That could entail merely requiring certain transparency and privacy protections from apps over a certain size, like 200 million daily users. This would set the cap a bit above Twitter and Snapchat’s size today, dedicating them time to prepare for compliance, while immediately governing Facebook, Messenger, Instagram, WhatsApp, and Google’s social problem child YouTube.

Still, with Facebook earning billions in gain per one-quarter and a massive war chest built up, Mark Zuckerberg could effectively pay his way out of their own problems. That’s why it attains perfect sense for him to have told CNN” I’m not sure we shouldn’t be regulated” and that” There are things like ad transparency regulation that I would love to see .” Particular regulatory hurdles amount to only tiny velocity bumps for Facebook. Courting this level of the rules of procedure could bat down the question of whether it should be broken up or its News Feed algorithm needs to change.

Meanwhile, if the governmental forces instituted new rules for tech platforms collecting persona information going forward, it could effectively lock up Facebook’s lead in the data race. If it becomes more cumbersome to collect this kind of data , no competitor might ever amass an index of psychographic profiles and social graphs able to rival Facebook’s.

A much more consequential approach would be to break up Facebook, Instagram, and WhatsApp. Facebook is trying to preempt these drastic measures with Zuckerberg’s recent apology tour and its purchase of full-page ads in nine newspapers today claiming it understands its responsibility.

Establishing them as truly independent companies that compete would create meaningful alternatives to Facebook. Instagram and WhatsApp would have to concern themselves with actually becoming sustainable industries. They’d all lose some economies of data scale, forfeiting the ability to share engineering, anti-spam, localization, ad marketings, and other resources that information sources close to Instagram told me it gained by being acquired in 2012, and that Facebook subsequently applied to WhatsApp too.

Both permanent photo sharing and messaging would become two-horse races again. That could lead to the consumer-benefiting competitor and innovation the government hopes for from regulation.

Yet with strong regulation like dismantling Facebook seeming beyond the resolve of congress, and weak regulation potentially protecting Facebook, perhaps it’s losing the moral high ground that will be Facebook’s real punishment.

Facebook chief legal officer Colin Stretch witness before congress regarding Russian election interference

We’ve already seen that first-time download rates aren’t plummeting for Facebook, its App Store ranking has actually increased since the Cambridge Analytica scandal broke, and blue chip advertisers aren’t bailing, according to BuzzFeed. But Facebook relies on the perception of its benevolent mission to recruit top talent in Silicon Valley and beyond.

Techies take the job since they are wake up each day believing that they’re having a massive positive influence by connecting the world. These people could have founded or ran at a new startup where they’d have discernible input on the direction of the product, and a chance to earn huge return multiples on their stock. Many have historically worked at Facebook because its ads say it’s the “Best place to build and make an impact”.

But if employees start to see that impact as negative, they might not enlist. This is what could achieve that which surface-level regulation can’t. It’s perhaps the most important repercussion of all the backlash about fake news, election interference, well-being, and data privacy: that losing talent could lead to a slow-down of invention at Facebook that might leave the door open for a new challenger.

For more on Facebook’s Cambridge Analytica scandal, read our feature pieces :

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Update: Bird has raised $100 million to become the Uber of electric scooters

Update: Bird corroborated our reporting with an announcement of the close of the round. Index Ventures and Valor Ventures led the funding.

“It feels like investing in Uber when it first launched.”

That’s what one investor said of the hot new Santa Monica, Calif.-based startup, Bird — an electric scooter company that’s now in the process of creating as much as $100 million on a $300 million valuation, according to several people with knowledge of the company’s plans.

Bird, which has become a phenomenon in the Los Angeles neighborhoods where it’s available, shares a lot with America’s most valuable ride-hailing and logistics company.

The company was founded by a former Uber( and Lyft) executive, Travis VanderZanden, who( like his namesake) is no stranger to disagreement. Lyft sued him for allegedly breaking a confidentiality agreement when Uber hired him and the two sides later resolved for undisclosed terms.

Like Uber, Bird has also rolled out its services with little consider for the regulations imposed by the neighborhoods in which it operates. When TechCrunch first reported on the company’s $15 million raise less than a month ago, we noted that the company had surreptitiously put 1,000 of its electric scooters on the streets — to the delight of the 50,000 people who have taken 250,000 rides on them, and disregarding many laws put in place by the city of Santa Monica.

As a Washington Post article notes, the Santa Monica Police Department has constructed 281 traffic stops and issued 97 tickets since the start of the year and late February — and the coastal, Los Angeles-adjacent city’s fire department has responded to 8 accidents involving Bird’s scooters — ensure traumata to both minors and adults.

Under California law, riders of motorized scooters must be at least 16 years old, licensed drivers, wearing a helmet and not riding the scooters on sidewalks — all things that Bird has no control over.

The company is now in talks with Santa Monica’s director of transportation and mobility over how it can work to incorporate into the city’s regulatory framework — all while being taken to tribunal by the city for ignoring the existing regulations that it argues should already govern its ability to operate.

Then there’s the nuisance factor for businesses — Bird picks up its scooters by 8P M to get them off the streets and only offers them in front of storefronts that have agreed to host the scooters. And as for injuries — Bird will pay out if its scooter breaks, but not if a rider is putting the scooter through its paces for a bid at a new extreme sport.

As VanderZanden told us: “Every mode of transportation is dangerous … but you can’t protect against people not obeying traffic laws.”

The problem with the city’s debate for governing Bird is that it’s claiming that Bird should be governed by current regulations that encompass … food trucks. It’s the benefit( for Bird) of is working in a legally grey area with a service that lawmakers could never have predicted when writing regulations — something, again, that VanderZanden is familiar with from his days in the wild world of ridesharing.

What’s also familiar is the phenomenon that taking a Bird( flipping a Bird ?) has become. It’s a legitimate phenomenon in Los Angeles — with investors and clients alike aroused about the opportunities offered by a low-cost, last-mile answer fast rides for an initial cost of$ 1 and 15 pennies per minute traveled.

One executive from Sidewalk Labs visiting Los Angeles from New York couldn’t stop talking about the transformative potential of last-mile mobility answers like Bird when I spoke to them weeks ago( Sidewalk Labs has not been mentioned as an investor in the most recent financing for the company ).

It’s easy to assure the appeal that a service like Bird could hold for students at colleges and universities( which is basically the Westwood neighborhood adjacent to Santa Monica that houses the University of California Los Angeles campus ).

Some schools are the size of small cities( I grew up near LSU in Baton Rouge and it. is. huge .) and devoting students an easy way to zip around from one side of campus to another is definitely a big idea( it’s also why universities are considered good testing ground for autonomous vehicles ).

Bird’s big new round would likely tackle that growth strategy as it rolls out. The company needs to start pushing into new markets because( with its low barrier to entry) competitors are starting to pile in with services of their own.

Last month the bike-sharing companies Spin and LimeBike both announced they were working on similar plans for dockless electric scooters.

“People are taking notice of how quickly Bird is growing and they want to fulcrum in and clone us, ” VanderZanden told us last month. While he acknowledged that the business could be considered a nuisance, it’s less toxic than gas-guzzling automobiles and trucks throwing off greenhouse gas emissions, he said.

“Preventing car ownership is the goal of all these companies, ” he said at the time. ”I think if all of us are successful, that’s fine.”

Bird’s last round came from investors including Tusk Ventures, Valor, Lead Edge Capital and Goldcrest Capital, and was led by Craft Ventures — the investment firm co-founded by Yammer chief executive David Sacks.

Before VanderZanden joined Lyft through the acquisition of his first startup, Cherry, he was vice president of revenue at Yammer. Sacks actually wrote a $500,000 check to VanderZanden as he was get Cherry off the ground( it was Sacks’ biggest check to a single company as an angel investor ).

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Lyft says its revenue is growing nearly 3x faster than Ubers

Lyft made a lot of progress in 2017, helped by strong marketplace expansion within the U.S. and riding some very bad news from its primary contender, Uber. That’s helped it grow revenue to more than$ 1 billion as measured by GAAP standards for its fiscal 2017, with a particularly strong Q4 during which its revenue outpaced Uber’s by 2.75 x, lifted( get onto ?) 168 percentage year-over-year, versus 61 percentage growth for Uber’s revenue relative to its own performance during the final quarter of 2017.

Of course, neither company needs to release their official financial results for either the quarter or the year, because they’re both still private, but they do tend to enjoy letting a bit of the fiscal cat out of the pouch. Lyft provided this stat shot, which also includes some highlight numbers on its performance thus far in 2018.

Lyft say it’s still doing more than 10 million rides per week across the platform, and it tells the one-quarter aiming on March 31 st will also likely be its 20 th consecutive one-quarter with more than 100 percent year-over-year revenue growth.

Last year also marked the first international expansion for Lyft, with a launching in Toronto, and it’s also since spreading to Ottawa in Canada. The ride-hailing company also hired Tesla’s Jon McNeil as a COO, and brings with it YouTube’s Emily Nishi as its chief people officer.

Lyft growing revenue at a faster clip than Uber shouldn’t be surprising, however — it has a lot of ground to make up on Uber, the clear leader in the ride-hailing game, at the least when it comes to North America.

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Travis Kalanick is launching a venture fund

Travis Kalanick, the controversial co-founder and one-time chief executive of Uber, is launching a new investment fund “ve called the” 10100 Fund.

According to an announcement on his Twitter account, the new money is concentrated in “large-scale job creation.”

Investment areas are to include real estate, e-commerce and emerging innovations in China and India.

It’s the systematization of run that Kalanick had been conducting softly with boards , nonprofits and through investments in young companies.

It’s likely that Kalanick will invest in startups in that magic number between 10 and 100 employees( the magical growth stage for startup companies ).

We’ve reached out to Kalanick for comment and will update this once we hear back.

One user on Twitter pointed out that Kalanick might want to rethink the name of the new money. While the term resonates in startupland — among truckers the term entails something entirely different.

Whatever the brand, Kalanick now has a lot of fund at his disposal to play around with.

If the reports were accurate, Kalanick was up to sell nearly one-third of his ownership posture in the ridesharing giant he built. Given the SoftBank Group valuationof $48 billion for Uber( a huge discount from its last fundraising valuation )~ ATAGEND, that would mean the 29 percent stake that Kalanick was looking to sell would be worth about $1.4 billion.

Kalanick resigned from Uber last June but remains on the company’s board of directors and held a 10 percent stake in the ridesharing company.

As we noted in our initial reporting, Kalanick stands to become a billionaire if the sale goes through, but the bargain also is notable because he claimed during the Vanity Fair New Establishment Summit in October 2016 that he has never sold a single Uber share, even though he was still paying the mortgage on his home.

Kalanick has gone through a bumpy year in 2017. Uber was rocked by sexual harassment allegations, suits over intellectual property stealing and Justice Department investigations. The Uber co-founder also had to endure personal misfortune, as well.

Still, Kalanick appears to have emerged from the year undeterred. And with his latest venture, the Uber co-founder is going back to one thing that he inarguably knows how to do well … which is build startups .

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MIT study shows how much driving for Uber or Lyft sucks

Ride-hailing giants Uber and Lyft are delivering pitiful levels of take-home pay to the hundreds of thousands of US independent contractors providing their own vehicles and driving skills to deliver the core service, according to an MIT CEEPR analyse examining the economics of the two app platforms.

The report catalyses the debate about conditions for employees on gig economy platforms, and creates serious questions about the wider societal the health effects of taxation avoiding, VC-funded tech giants.

The study, entitled The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes, and which was conducted by the MIT Center for Energy and Environmental Policy Research, surveyed more than 1,100 Uber and Lyft ride-hailing drivers combined with detailed vehicle cost information — factoring in expenses such as gasoline, insurance, upkeep and repairs — to be submitted with a median earning per hour worked.

The upshot? The researchers determined benefit from ride-hail driving to be “very low”. On an hourly basis, the median profit was $3.37 per hour, with 74% of drivers earning less than the minimum wage in the state where they operate.

They also determined a median driver produces $0.59 per mile of driving but incurs costs of $0.30 per mile; and almost a third( 30 per cent) of drivers were found to incur expenditures exceeding their revenue or to be losing money for every mile they drive.

The research also looked at how ride-hailing earnings are taxed, and suggests that in the US a majority of driver profits are running untaxed owing to how mileage deduction is handled for tax purposes — indicating Uber and Lyft’s business are denuding the public purse too.

From the study 😛 TAGEND

On a monthly basis, mean profit is $661/ month( median $310 ). Drivers are eligible to use a Standard Mileage Deduction for tax purposes ($ 0.54/ mile in 2016) which far outstrips median costs per mile of $0.30/ mile. Because of this allowance, most ridehailing drivers are able to proclaim gains that are substantially lower. Mean drivers who use a Standard Mileage Deduction would declare taxable gain of $175 rather than the $661 earned. These numbers suggest that approximately 74% of driver profit is untaxed.

The authors add that if their $661/ month mean profit is representative then the US’ Standard Mileage Deduction facilitates “several billion in untaxed income for hundreds of thousands of ride-hailing drivers nationwide”.

So what does the study tell us about the ride-hailing business model? “It tells us that it’s a shitty place to run, ” says Mark Tluszcz, co-founder and CEO of Mangrove Capital Partners who has described the gig economy model as the modern day sweatshop, and says his VC firm made a conscious decision not to invest in gig economy companies because the model is exploitative.

“It tells you that it’s a great place if you’re a company. It’s really a poor place to be an employee or be a worker.”

The exploitative asymmetry of ride-hailing platforms comes because employees have a certain sum of fixed costs but the platform intermediary can just hike its commission at will and lower the service cost to the end user when it was wants to increase competitiveness vs a rival business.

“At the end of the day there are a certain amount of fixed costs[ for drivers ], ” says Tluszcz. “You have to buy a auto, you have to get insurance, you have to pay for gas … And if you as an intermediary, which those platforms are, are taking an increasing amount of committee — 10%, 15% , now 20 in most of their marketplaces — and then you’re use the price of the trip as a route of beating your challenger … then you as a driver are sitting there with basically all of your fixed costs and your income is going down and frankly the only way to cover your expenses is to spend more hours in the car.

“Which is candidly what’s clearly illustrated by this study. These people have to spend so much time to cover their costs when you break it down to an hourly revenue, it’s a pitiful quantity. And by the way you have no social coverage because you’ve got to take care of that yourself.”

At the time of writing neither Uber not Lyft had responded to a request for comment on the MIT study. But an Uber spokesperson told The Guardian the company believes the research methodology and findings are “deeply flawed”, adding: “We’ve reached out to the paper’s authors to share our concerns and suggest routes we might work together to refine their approach.”

Tluszcz was quick to dispatch that criticism. “MIT is not some second tier organization that did this study, ” he points out. “For me that’s a reference moment when MIT says appear, there’s an issue here … There’s something wrong in the model and we can tolerate it for a period of time but ultimately we’re making this lost generation of people.”

“These business are built on situations in the market that are not realistic, ” he tells TechCrunch. “They took advantage of a hole in legislation … Governments let that happen. And it made all of sudden services cheaper. But people have to eat. People have to live. And ultimately there’s merely 100% of a cake.

“Cabbies in the UK are not millionaires; they make a decent living. But they make a decent living because there’s a certain price-point to offer the service. And in every industry you have that. There is a certain fair cost point to be able to live in that industry … And clearly right now, in the ride-sharing businesses, you don’t have it.”

In Europe, where Uber’s business has faced a series of legal challenges, the company has begun offering some subsidized insurance products for platform workers — including one for Uber Eats messengers across Europe and a personal injury and insurance product for drivers in the UK.

In January in the UK it also announced a security cap on the number of consecutive hours drivers on its platform can accept trip-ups, after coming under rising political and legal pressure on safety and working conditions.

Last year Uber also lost its first appeal against an employment tribunal that judged a group of Uber drivers to be employees , not self-employed contractors as it had claimed — entailing they are entitled to workers rights such as vacation and sick pay.

Uber also had its license to be employed in London withdrawn last fall, with the local transport regulator citing concerns about safety and corporate responsibility as key considerations for not renewing the company’s private hire vehicle license.

Tluszcz’s view is that such moves prefigure a more major shifting incoming in Europe that could cement permanent roadblocks to business models that function via intentional worker exploitation.

“The flaw in the[ gig economy] model as a worker is so big that it seems to be quite clear that European governments are going to be looking at this and saying this is just not the European ethos. It’s merely not, ” he argues. “There’s going to be a moment when all these things are clashing. And I think it’s a culture conflict that we have really, between European values of equity and American values of simply pure market capitalism.

“You can’t expect somebody making $3.37 an hour to take a part of that aimed at contributing to retirement and social coverage. What the hell do you live on? ” he adds.

“We’re making the next lost generation of people who simply don’t have enough fund to live and those companies are basically enabling it under the premise that they’re offering a cheaper service to customers … And I just don’t think Europe will put up with this.”

Last month the UK government corroborated its intent to act on this area by announcing a package of labor market reforms intended to respond to changes driven by the rise of gig economy platforms. It dubbed the strategy a’ Good Work Plan’ — billing it as an expansion of employees rights and saying “millions” more employees would get new day-one rights, coupled with a tighter enforcement regime on platforms and companies to ensure they are providing sick and holiday pay rights.

“We are proud to have record levels of employment in this country but we must also ensure that workers’ rights are always upheld, ” said the UK prime minister, also emphasizing that her objective was to build “an economy that works for everyone”.

It’s likely to publish more detail on the employment law reform afterward this year. But the direction of traveling for gig economy platforms in Europe seems clear: Away from being freely be permitted to exploit legal loopholes and towards a much more tightly managed framework of employment and workforce welfare regulations to ensure that underlying support structures( such as the UK’s national minimum wage) aren’t simply being circumvented by clever engineering and legal positioning.

“This for me is an inherent dilemma one has between capitalism and some level of socialism which we have in Europe, ” adds Tluszcz. “This is a clash of two fundamentally different views of the world and ultimately as a company you have to be a company that views your role in society as one of being a contributor — and tech companies can’t hide behind the fact; they must do the same.

“And regrettably all these ride-sharing business, and including most of these gig economy companies, are just trying to take advantage of holes and candidly I don’t consider them at all looking at their reason to be as at the least having a component of’ I’m good for the society in which I operate’. They don’t. They just simply don’t care.

“That’s a dilemma we have as consumers, because on the one hand we like the fact that it’s cheap. But we wish that people could all have a decent living.”

Whether US companies will be forced into a less exploitative relationship with their US workers remains to be seen.

Tluszcz’s view is that it will need some kind of government intervention for these types of companies to rethink how their models operate and who they are impacting.

“Tech companies candidly have an equal sum of responsibility to be great corporate citizens. And right now it feelings — particularly because many of these tech companies are born in the US — it almost feels like this Americanism about them says I don’t have to be a good corporate citizen. I’m going to take advantage of the world for me and my shareholders, ” he says.

“I’m a capitalist but I do think there’s some moral guidance you have to have about the business you’re house. And the US tech companies, around the world — surely in Europe — are being highly blamed … Where is your moral compass? And unfortunately, today, sitting here, you have to say they lost it.”

Update: A Lyft spokesperson has now emailed the following statement in response to our request for comment: “Drivers are an integral part of Lyft’s success. An ever-growing number of individuals around the country are using Lyft as a flexible style to earn income, and we will continue to engage with our driver community to help them succeed. We have not yet reviewed this study in detail, but an initial review presents some questionable assumptions.”

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