Benner on Tech: A League of Uber's Own, Reader Mail and Hackers

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

UBER! UBER! UBER! UBER!

Everyone’s favorite rideshare startup has now amassed nearly $3 billion in cash. It’s borrowing another $1 billion from Goldman Sachs’ private clients by issuing convertible debt.

Investors reportedly include big influential public market stock pickers such as Fidelity Investments, Wellington Management, Valiant Capital Partners and Lone Pine Capital; and they’ve paid enough per share to value Uber at $41.2 billion, on par with travel and logistics companies Delta Airlines and CSX.

Finally, veterans of other huge public companies currently lead Uber’s finance and growth teams. Chief financial officer Brett Callinicos was the treasurer at Google. Head of growth Ed Baker formerly led growth at Facebook.

It’s clear that Uber is in a class of its own. No longer a startup, not yet a public company. It’s no longer a bellwether of the tech bubble or an indicator of venture financing health. So if you’re trying to assess the health of the startup landscape, you might want to put Uber to the side. Throw out the high score. The question isn’t whether Uber will survive or make it to an initial public offering. The question is whether it will be the next Facebook or the next Groupon.

 You all have strong opinions on Uber. A sample from the reader mailbag:

*John: “Prove me wrong but despite first mover advantage there are few barriers to entry in these internet based app businesses. It might capture a hefty valuation for the VC exit but for investors it will be getting out before the music stops.”

*Reta: “As a driver who worked with Uber for 2 years I can see how they are getting worse everyday for drivers. It only takes one rudy customer complaint to get a driver fired or (deactivated) as uber calls it. They keep dropping their rates without even telling drivers. They just grew big to a degree they think they can do whatever they want however they want.”

*Sid: Katie can you tell me what I am missing about Uber? I tried the service in NY and found it would take 5 min for a taxi to show up at Central Park - so I just stopped a passing yellow cab instead. 5 mins saved by not using Uber. In Mumbai, it said the car would show up in 7 mins - it was more like 20.  And cost me twice as much as the cheap black and yellow cabs."

*Russell: i think a great story would be on the number of lawsuits uber is currently facing and why drivers at dominos pizza or papa johns (who also own their vehicles) are employees but uber drivers are not.  the amount of money in taxes being avoided by uber (sales tax, employee taxes, license fees, income taxes) is staggering. the reality is uber in nyc is not making money as competition is already heating up and they are not even following the agreement they made on limiting surge pricing (which is why taxi fares are fixed in the first place)

Ventureland

With all these breaches, each one more horrible than the last, wouldn’t you think it would be incredibly easy for cybersecurity startups to raise lots of money? It is! And The Information’s Amir Efrati tells us why that’s going to end pret-tay, pret-tay, pret-tay badly.

People and Personnel Moves

Kira Wampler has joined Lyft to head the company’s marketing efforts, after working at the real-estate website Trulia.

Brian Roberts, a former Lyft business development executive, has been promoted to CFO.

Julian Assange resurfaces in the New York Times Op-Ed pages, discussing the consequences of living in a surveillance state.

At their core, companies like Google and Facebook are in the same business as the U.S. government’s National Security Agency. They collect a vast amount of information about people, store it, integrate it and use it to predict individual and group behavior, which they then sell to advertisers and others. This similarity made them natural partners for the NSA, and that’s why they were approached to be part of PRISM, the secret Internet surveillance program.

Companies

Apple…

*Alabama will name its anti-discrimination bill after Tim Cook. Reuters says that Apple didn’t like the idea, but that Cook (who perhaps has a better perspective on what history will deem as important) gave it the greenlight.

* Re/code has some details about the company’s new spaceship headquarters, including plans for a $161 million theater and a $74 million fitness facility.

Amazon…

The company is now selling its own line of diapers and other baby care accouterments, according to Re/code, in direct competition with the merchants on its own platform.

Google…

* The company is going to pay higher commissions to outside firms that sell its workplace software as it tries to challenge Microsoft’s enterprise dominance, the Wall Street Journal reports.

* Meanwhile, the search giant is combining its Google for Work and Google for Education programs.

Microsoft…

* Ex-CEO Steve Ballmer tweeted that it’s not a good idea for Microsoft to buyback stock while “the market this high.” He’s probably right. As my colleague Dina Bass points out, he’s the company’s biggest individual shareholder and the stock is trading near highs set in 2000. But the Wall Street Journal says that the company could go ahead with a massive share buyback program anyway.

* The Xbox could’ve had a beautiful relationship with Hollywood. Tom Dotan at The Information tells us how it all fell apart.

Softbank…

The Japanese telecom company wants to solidify its position as one of the world’s best corporate venture investors; and the Financial Times says that founder Masayoshi Son is working with ex-Google exec Nikesh Arora to meet this goal.

T-Mobile…

The Nexus 9 tablet has been delayed.

Cybercrime Never Sleeps

Sony fallout…

* Former employees tell Fusion that the hack could have been avoided.

* Bloomberg Businessweek says that the hackers were walking around the company’s systems for a long time.

* Social Security numbers of more than 47,000 current and former employees along with Hollywood celebrities like Sylvester Stallone and Judd Apatow were leaked, the Wall Street Journal reports.

The Justice Department is launching a new division to work with companies to prevent cybercrime and advise on electronic surveillance.

News and Notes

Benedict Evans on mobile innovation and the new questions we face now that it’s clear that “Apple and Google both won” the platform wars.

In the heart of Silicon Valley a huge homeless camp dubbed “The Jungle” is being cleared out and there’s no place for residents to go.

Buzzfeed reports that trolls destroyed Gamergate’s headquarters. “Today, /gg, the 8chan subforum that served as the pulsing core of #GamerGate, is in shambles,” defaced with everything from My Little Pony pornography to images of Christian Bale as Patrick Bateman.

Public interest groups, unions and other companies have created a group to stop Comcast’s proposed $45 billion bid to buy Time Warner Cable, the New York Times reports.

Ars Technica says that AT&T still throttles unlimited data users, even when the network isn’t congested.

Bitcoin watch

The New York State Department of Financial Services received over 3,700 comments about its virtual currency regulatory framework that would include a BitLicense for bitcoin companies. CoinDesk notes that Amazon, Wal-Mart and Western Union submissions were also disclosed.

Weekend reading

Nicholas Lemann tries to understand how Google became “the most successful new business corporation of the twenty-first century” in a story for the New Yorker titled “When G.M. Was Google.”

Check out Bloomberg Businessweek’s list of the 85 most disruptive ideas in history, featuring the jet engine, the Air Jordan and Clay Christensen.

(Corrects description of Uber in fourth paragraph.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Timothy L. O'Brien at tobrien46@bloomberg.net