Acquired - The Uber - Didi Chuxing Merger with Brad Stone, author of The Upstarts & The Everything Store

0:00Any other way that we could phrase that would be great. Yeah. You guys want attention for this podcast, wouldn't that? Welcome to episode 31 of Acquired. The podcast where we talk about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenfall. And we are your hosts. We have another guest episode today and we are very, very, very excited to welcome Brad Stone.

0:35David will tell you about Brad before we dive in, but I wanted to do a little bit of administrative stuff before. All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, LaGora, the agentic operating system that is redefining how the world's best legal teams work.

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2:44Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm, or you're in-house at a company, you can learn more at logora.com slash acquired and just tell them that Ben and David sent you.

3:06For those of you who are long-time listeners of acquired, you know about the Slack. But if you're new to the show, join over 400 other listeners of acquired for real-time discussion analysis and news as it's happening. Whether it's the SNAP IPO, Trello a few weeks ago, app dynamics, a lot of interesting conversation going on there about the M&A world. And lastly, before we dive in, a big thank you to KUOW, a radio station here in Seattle, who has generously let us record in their studio this morning.

3:34Now, David, over to you to introduce Brad. Yeah, we are super honored and excited to have Brad on the show today. He is the actually our second guest from Bloomberg after a great show with Alex Sherman a couple months back.

3:51But Brad is the senior executive editor of Global Technology at Bloomberg. And before that he covered tech and Silicon Valley for nearly 20 years as a reporter at Bloomberg Newsweek and The New York Times.

4:05Most relevantly and fun for us Brad is the author a few years back of the canonical history of Amazon the everything store which as listeners know we have discussed a lot on this show and has had a big impact on Ben and my thinking is just a great book that we can't recommend enough and Brad actually has now a new book out called The Upstarts which covers the histories thus far of the kind of new generation of defining internet companies Airbnb and Uber I've heard of this. Ben and I both read it. It's great. We highly recommend it. We're going to be talking about a lot of the content within it on this show, but definitely go out and pick up a copy. If you like this show and history and analysis of ways of technology companies, you're going to love this book. Thank you, Brad. We're super excited to have you here. Thanks, guys.

5:01Yeah, and for and for listeners in my kind of typical style I Knowing we were interviewing Brad this morning just finished the upstarts last night and I I loved I mean it's truly I talked a lot about the everything store on the episode with with Tom Auburn But really the spiritual successor to to that Amazon book and it's interesting how It really is the next generation of a lot of the sort of same mentality and tactics in in Uber that And to a lesser extent Airbnb, but in Uber that we saw an Amazon. Thank you. Yeah, it's hard to follow up the story of Amazon because there's really nothing like it. And you know, somewhere along the journey of trying to find what was next, they decided, okay, maybe there maybe there isn't a follow-up. Maybe you can look at that kind of wave of companies in a defining moment in Silicon Valley. And that's kind of how I stumbled on this sort of dual profile. Very cool. Yeah, it's great. So today, we're going to talk about something that a story, a merger that

5:58Probably a lot of our readers know happened recently, but hasn't gotten nearly, I think, enough press in the Western world at least. And what press there has been has really been thanks to Brad. He's been the foremost reporter on this. And that's the merger that happened last fall between Uber and DD Shusheng. I hope I'm pronouncing that right. I may be butchering in China. This is a wild story.

6:27There are so many lessons here that I think all of our listeners can take away, and we're really, really glad to have Brad here to tell with us, so I'm gonna tell the story along the way, but...

6:39definitely want to credit Brad, you know, it's his story that he did the reporting on. So with that, I'm going to dive in. So we pick up the story in 2012. Ubers kind of already become a, you know, pretty meaningful household world, household word, at least in the US, and is starting to expand internationally. They've gotten word that there's this company in London called Halo, which started with the black cabs in London, has had a lot of success there and is is thinking of is planning plotting to come into U.S. and threaten Uber here. So in response, and Brad talks a lot about this in the book, Uber mounts a really aggressive international expansion campaign. And at the same time, Lyft and Sidecar have really pioneered true ride sharing in the U.S., not just the black car, limo and Liberty drivers that Uber started with, but

7:34True ride sharing where anyone can drive ubers responded with uber x and kind of the world is now realizing that the market for ride sharing is Orders of magnitude bigger than anyone thought yeah, and and David it's worth it's worth kind of noting there that in today's world where we all take Uber X's everywhere. That's the most common say when I'm going to take an Uber X. Uber did not pioneer ride sharing. In fact, they were reluctant to embrace it. Travis spent a lot of early 2013 trying to get Lyft and another company's sidecar shut down in California because he saw he saw as a disruption and he thought it was illegal and when the California PUC didn't do anything, that's when he embraced Uber X wholeheartedly.

8:17If you can't beat him, Julian, I think that's kind of Uber's motto, right? I want to say one more thing about Halo, though, because there's an interesting lesson in tactics. Halo in 2012.

8:28promoted the hack out of its international expansion and it was a huge mistake because they mobilized they not only mobilized Uber to grow more quickly in the US and then Uber got to markets like Chicago and other cities before Halo ever ever really moved on its promise to expand but Halo also stirred all this entrepreneurship in China and so you know what you have to understand these days is there entrepreneurs all over the world that are watching sites like tech crunch religiously and it was Halo and not really Uber or any of the other ride-charing companies that started stirring these companies in China to start competing. Yeah, and that's exactly thanks for tuning me up there. It's like you wrote this story or something. That's exactly what I was going to say, that all around the world people are starting to wake up to the potential of this market.

9:19and nowhere more than China are entrepreneurs sort of attuned to the size of this opportunity and ready to go after it with. just kind of aggression that makes, you know, even a company like Uber look team here here in America. So they're, as Brad writes about, they're about 30 companies between 2012 and 2013 that get started in China. Wow. All going after this ride sharing Uber opportunity. And one of those companies get started by a young entrepreneur named Chang Wei who at the time was a 29 year old salesman at Alibaba in Huangsau.

9:57and he had been kicking around some entrepreneurial ideas with his boss at Alibaba, a guy named Wang Gang. And actually earlier that year, it kind of started this side project that they could, an app that they called Momo. And Momo was essentially, you know, on iOS, the sort of fine friends feature. It was essentially that. And so they're working on this app on the side of Alibaba. See the market opportunity and ride sharing and immediately pivot and rename the company DD-.

10:26which translated into English means Hong Kong call a taxi. And so when they pivot, they decide to leave Alibaba go full time. Cheng is the CEO and Wang invests the initial seed capital into the company. And they're kind of off to the races, along with everyone else. So I wanted to ask Brad here, I mean, you spend a lot of time probably more than anybody interviewing these folks. What do they like? What drove them to start this company? Well, I just love Cheng Wei.

10:59You know, he was, he was great. I should say, you know, his English isn't so good and my Chinese is non-existent. So my partner in crime on this story was a Lulu Chen, one of my Bloomberg colleagues in in Beijing. And we, you know, we went to visit Chang Wei at the Dee Dee's headquarters. And I loved him because he presents his story as a series of small personal humiliations. So he, like, for example, he, in his very important college entrance exams in high school he leaves one page blank by accident and gets into a lesser school and in college he gets a job selling life insurance and he doesn't sell a single policy and then he signs up to work at a health care company only to find out that it's a chain of foot massage parlors

11:47And he sort of finds him, he walks into an Ali Baba office in Shanghai, gets a job, meets Wang Gang, his mentor, and really they start on their entrepreneurship.

11:59path because Wang Gong doesn't get a promotion, and they start kind of brainstorming ideas. Momo actually, it wasn't their idea, it was something that sort of a hack that existed on the app store in China. And they sort of realized the power of GPS and the potential to do things like a halo in China, taxi-hailing app. And then they launched this company called DD, only to find out that dozens upon dozens of other companies have had the exact same idea. So, you know, here you've got this young kind of whipper snapper in Cheng Wei, Wang Gong, you know, we spoke to him on the phone. He's very rarely does interviews but sort of flamboyant, the investor who, you know, as just by virtue of his small angel investment in DD, you know, has minted.

12:47at least a billion dollars and you know it was these guys were they had nothing you know and it was 30 is the number of companies that launch you know there may have been hundreds that spun up to address this opportunity in Beijing at the beginning of 2012 so you know they the odds were against them but I think you know as well as well to talk about there was you know They had they had some experience in the industry and knew what it took to succeed in China and Brad I think you put it on your book that it was it was roughly the American equivalent of a hundred K that that he put into to DDS is a pretty pretty good investment kind of on par with Sequoia's 600 K into Airbnb two years earlier that you also cover in the book

13:31I'm also struck by both the similarities between Travis Kalanik and Zhang Wei, you know, in terms of their histories and their failures in the past. I mean, these were neither of them when they started these companies were household names, you know, far from it. But also, like, the complete opposite in terms of their outward personalities. Like, it must have been, you know, did that come through? And as you were talking about the them, like, you know, this sort of underlying sort of drive that they have, that I suspect as in many ways been motivated by their past failures, but just contrasted with these wildly different services. I mean, I think that this is a cultural thing. It's funny because I was recently telling some of my colleagues in...

14:17in Asia that we need to stop describing internet CEOs and founders as humble, but I think they're all trying to present a humble veneer that there's just kind of cultural value in doing that. Whereas in the US, somebody like Travis doesn't hesitate to be presented or present himself as extremely aggressive. Of course Travis did that over the first few years. But behind the facade, they are very much alike.

14:47You know, I think one of the reasons, you know, D.D. succeeded and beat all these companies is that, you know, Cheng Wei had a vision which is that smartphones and technology could make transportation more efficient in China.

15:01But along with that idealism, there was a ruthlessness to go and pursue that goal. Like everywhere else in the world, right-hailing was quasi-legal in China. And yet nevertheless, he sent those early employees to cities to go and launch without permission. And in some places, they were shut down. And then he never less persevered. And that's what it took in this industry, relentlessness in the approach.

15:30And thinking about that perseverance and that relentlessness, you know, as you meet with the founders of the the founders of Uber founders of Amazon, do you get the sense that when you talk to these people in person, there's something about them that's just different than other people that this relentlessness and this kind of ruthlessness that that sort of thing could be predicted or like are they the inherent forces of nature that that set them apart from other people or you know, what is it about them?

15:56That's the big question. I mean, first of all, I wouldn't put anyone else in the category of Jeff Bezos, right? Because he stands alone and had the vision before anyone that the internet was going to change the world and bent so heavily on it and then had years of people thinking that Amazon was really just a boring retailer. I don't know that the ubers and the deities of the world have suffered the way that Amazon and its employees suffered for many years.

16:23I think in terms of Chang Wei probably what marked him and his story is that, you know, he and I'm sure we'll get to this. Like, he had great people around him and then was able, I mean, the dynamics of the Chinese market are so unique that the deities smartest move very early on was to hook into 10 cents. And when they did that, you know, everything became possible. To pick up the story there, you know, I think what's...

16:48Striking, reading the book and hearing about the early days of the right hearing competition in China is it makes the Uber lift fight that we think is so ugly and distasteful here in the States. It makes it look like kids in a sandbox, right? These 30 companies were just brutal to each other. And in particular, they all started raising large amounts of money.

17:16And then going, being willing to go deeply, deeply gross margin negative by paying drivers a lot more for each ride than the riders were paying the companies. So it kind of becomes that they're laying siege to each other's businesses in a way. You know, this is war. And one of the tools, one of the ways that they start raising money is from The large, the large, the big three internet companies in China. And D.D. Dash is actually the second one. They raised money from Tencent. But before that, their competitor Kwate raises money from Alibaba, which of course is Changway and Wanggangs.

17:56former employer. So, you know, Brad, you talked to all these guys, like, what was going on? Right. Well, I think when Quaidee went and raised money from Alibaba, it was definitely a blow to the DD guys, because, you know, that's their, you know, that's their alma mater. And that's, you know, Alibaba, obviously, the e-commerce giant in China. So I think that there was a moment of almost panic, you know, that Alibaba had placed its bet. It was on Quaidee.

18:24And as a result, Wang Gong, the investor and Chiang Wei's mentor, his next call was to Tencent. Now, as it happened, then it was probably difficult to see in 2012, but Tencent has this social network slash messaging platform called WeChat. That is interesting. And with this, of course, QQ before that.

18:44on the desktop, and this was like, you know, sometimes it's better to be like even good, right? I think that's right, and I think, you know, the big moment for this industry, you know, so quite the NDD start to emerge by virtue of the investments of Tencent and Alibaba, Baidu is still sitting on the sidelines, and what happens at the end of 13 beginning of 2014 and again almost sort of lucky is that over the Chinese New Year WeChat integrates DD as a way and there's a product called red envelope or red package and it's basically a way for for Chinese WeChat users to give each other small gifts and the idea of giving somebody a gift on deity, the gift of a ride, kind of takes off. And both Tencent and Alibaba, the sponsors of these ride sharing companies, realize that the next battlefield in this long-standing war between the internet giants and China is going to be mobile payments. And that the taxi companies, the ride-hailing companies, are ways to spur payment value.

19:47in mobile with mobile payments. And so they start to kind of use these two ride-chairing companies as proxies and funnel money, you know, right off their balance sheet, into these companies as a way to drive payment volume. And that is when Dede and Quaidee start to just take off on steroids, not only growing very rapidly, but burning tremendous amounts of money. Yeah, because this siege is continuing and both the, you know, Alibaba and Tencent are pouring tons of money in. But other investors You know, are also venture firms and private equity firms also pouring in lots of money. I mean, it gets to be billions of dollars that these companies are burning, just trying to subsidize rides to get kind of get big fast and beat the other one, right?

20:32That's right, and then you've got people like Yuri Milner at DST who all the big investors had missed on Uber, and believe me, they berate themselves nonstop, and that's an interesting aspect of the story. These companies very early on did not look like the prototypical internet companies, and so a Yuri Milner who prides himself on hitting all the big ones passed on Uber.

20:55And so bet's big on on ride sharing or ride hailing in China and so You know makes an investment in Dede and then kind of sees this destructive war playing out between these two indigenous Chinese ride hailing companies and Gradually over over to that throughout 2014 starts to broker a piece not only because both companies are losing a lot of money and just you know, and, and, and siphoning cash off the all about the intense balance sheet because you know, I think they also had the sort of a foresight to know that Uber was coming and that the Chinese companies were probably better off together than they were apart. Yeah. All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year, an audit or a static PDF, then everyone would not and you're done.

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23:23It's interesting thinking about the these the big three in China their investment firms They're their own business and in the America like or the US we tend to have I mean, there's corporate venture, but you don't have like oh Facebook invested in that and so you know Google needs to go invest in someone else that those corporations just just buy companies, right? And then they they subsumed them into their offering But we don't really have this like first tier of funding is kind of corporate venture like there is going to be we can make an interesting juxtaposition with Google and Uber because...

23:54Google Ventures invests in Uber. It's their biggest investment ever. And then they start competing with Uber, right? They roll out a ride sharing, well, they start talking about the ride sharing service, but they scare Uber into thinking that maybe Uber will be a competitor. And, you know, and relations between the two companies are strained, whereas, you know, Tencent invests in DB, and, you know, it doesn't, you know, doesn't ever compete with it. And, you know, and as a result, you know, it's so it's interesting. It's a different model.

24:23I mean, you know, I think maybe sort of smart, you know, that kind of tends to know that that is not in its core competency. Yeah. Well, it also feels like, to an outsider perspective, it feels like these big three Chinese internet companies are willing to sort of more directly exercise their influence in the market there. If that's the right way to put it, then the internet companies are in the US. I mean, it's really hard to imagine Google or Facebook sort of Giving preferential treatment to you know like a Facebook started giving preferential app installs to you know one I'm right sharing app over another or one other form of company over another. I can't imagine that going well. That's a great point. That's a great point. Not only will we get to this, but not only was Tencent prioritizing DD on WeChat, but when Uber comes into China, it starts blocking Uber from WeChat. So I think that's a good point. I think that there would be some regulatory or anti-trust scrutiny if Google was to play favorites in the way that Tencent and OliPaba did in China.

25:29Yeah, so Yuri Milner kind of comes in, brokers this piece between Dede and Kuwait and they know Uber is coming. Dede ends up, you know, quote-unquote, winning the battle. They get 60% of the combined company. Changway stays on as CEO of the company. And I just wanted to sort of step back for a minute here and talk about this is like two years after these companies were founded. So they go from getting started, inspired by Halo, not Uber, you know.

25:58having this sort of wide playing field and then a blood bath emerges the big internet companies get involved they raise and burn billions of dollars and like 700 days go by you know I mean the pace is just like blistering well and one funny one funny thing from from the book you know there were moments of like just technical meltdown for these companies and they, you know, they mythologized these periods within the company. I think they called one seven days seven nights where they worked so hard to prop up the infrastructure that one of the engineers had to go to the hospital because his contact lenses had become sealed as eyeballs. So that kind of tells you how hard and how fast they were moving.

26:43I mean it's like you know when Mike Zuckerberg talks about Facebook going on quote-unquote lockdown like I'm pretty sure the employees still go home at night but in China They don't. Well, and in crunching the numbers, it looks like it literally was about twice as fast. We can't, we don't know exactly when Uber hit a one billion dollar valuation, but they did their series B on 300 million in December 2011 and their series C in August 2013 on three and a half billion. So if you look back at their seed in August of 2009, they probably hit a billion dollars about four years after founding approximately twice as long as these

27:17they're Chinese counterparts. So it really is a insane pace. And you just think about the size of the Chinese market and how car ownership is so much less developed in China. And so there was just more of a hunger for this kind of service. Yeah. So Uber, as we've been mentioning, they're not blind to this too. And actually it turns out that Uber had had this kind of small sort of clandestine presence in China. Since 2013, there's a story that Travis and a few other Uber executives go over to China and Travis sort of famously calls back to headquarters in San Francisco and says, hey, I need you guys to tweak the text so that we're going to go out here. Our executives sign up a few drivers and just run some tests here in China.

28:11And so they start doing that in 2013, but they're just sort of testing. And then when Dede and Kwate are in the midst of their merger, that's when Travis decides, OK, he's going to put his foot on the gas and launch for real in China. And Uber does, and pretty quickly, while Dede and Kwate are consumed with the merger, Uber gets to a 30% market share, kind of right off the bat. So it's now sort of their real player in the market.

28:40How did that happen so quickly? Yeah, I mean, it's funny. We'll go back to like the story of technology in China as always, as always, the story of the big three. And one of the things that happened was, you know, Uber. So when they launched, you know, the integration was very poor in China because they were using Google Maps and, you know, we all know Google is pretty much blocked in China. So the integration was poor.

29:01And also this idea of launching via the black car or limo market in China was always a limiting one because it's just not that big of a market. So we're kind of tutels along for a year and a half.

29:15And then and then makes the very kind of smart observation that Baidu has sort of missed this wave of mobile payment competition and needs to catch up. So they solicit an investment in Baidu. They start using Baidu maps, you know, which is much smarter about the transportation in China than Google. And the product just gets much better. At the same time, at the beginning of 2014, DD and Qwidee are merging and, you know, as with all mergers, it's an awkward one and they kind of slow down. So I think, you know, Uber took advantage of sort of this opening and made up some ground. But as we'll see, it was temporary. Yeah, so they come in, swinging into the market with Baidu as a partner, get 30% market share and Travis goes over and he meets...

30:04He meets with Chiang, he meets with the newly merged DD. And Travis, he sort of walks into the meeting. He thinks Uber is international, DD is not at this point. Uber has, Travis is convinced, the better product, the better technology, they have body maps, which are the best maps in China. And he essentially offers to acquire DD. He frames it as an investment. He wants to invest in DD, but he wants a 40% stake. And this is really, you know, to my mind at least.

30:33Seems like he's trying to say like hey, I'm just gonna take you guys out on the cheap and Chewing and DD reject this offer and Brad you read a lot about this meeting sort of what would happen there?

30:44Well, I mean, I think you know Travis kind of met a smatch You know, one of the things that happens at this meeting is you know, Ching Wei stands up in on a whiteboard kind of charts uber's growth since 2010 and then in another with another fever line charts deities growth since 2012 and and the lines intersect and and he projects a deity will be larger than uber Be it primarily because the market in China is so much larger and and then the other there's there's all sorts of some funny little maneuverings here at this meeting. And one of the Uber executives were wondering whether the food that they had been served at the meeting was deliberately bad as a kind of strategic maneuver. But it was. And I think it was actually just a bad lunch. But, you know, so there's a lot of taste test here. It's like the middle ages here. All right. There's a lot of maneuverings here behind the scenes. But, you know, I think that, you know, to their credit, the DB

31:43executives, and at this point Jean Liu, an executive from Goldman Sachs, has, she's either advising DD at this time or is joined, really, as Chen Wei's partner. And I think there's a belief that, you know, as with so many other markets in China, the local player will be able to prevail. You know, there's a lot of sort of kind of fierce pride, I think, in the Chinese Internet market, that, you know, that they can hold their own. And it's funny because I Contrast that with the attitude in Europe where we really don't see that and so as a result, you know Travis and his his bid to acquire DD very early on was was rejected and they resolved that they're gonna fight it out in the marketplace Yeah, and question on that so, you know

32:28Google doesn't operate in China and many other large internet giants have been sort of kicked out of China and you know not allowed with the great firewall to operate on the internet there. Why was it that Uber was able to get to 30% market penetration and didn't DD have on its side the ability to just say hey we're going to make a couple calls and like you really need to work on that. I mean I think that the censorship challenges that companies like Facebook and Twitter and Google face are about information and sharing sharing information that the government in China just doesn't allow. And Uber is a transportation tool so it was sort of kind of less clear that they were violating those rules. Now I think there's an argument to be made.

33:13I don't happen to believe it was significant, but there's an argument to be made that maybe ultimately the Chinese government did tilt the playing field on behalf of Dede and slow Uber down or that maybe in the future, if Uber was going to stay in the market, they would have problems because obviously they do collect sensitive information about where people are and where they're going. But yeah, Uber, Uber did was not facing those kinds of censorship challenges and to the extent that all these companies had problems and do have problems, they're pretty universal in terms of who's allowed to drive for these services.

33:43Yeah, and Chang and DD kind of essentially saved it to Travis after this meeting. You know, okay, you want to fight. We can do that. Welcome to China. And we've been through this brawl with 30 other companies. We can take you on too. And this is where I know I keep saying this throughout this episode, but really just reading about this is so surprising to me.

34:09Because we still see this in tech here in America. Things go like kind of nuclear at this point. So what happens is D.D. and Uber both start raising huge amounts of money to fight each other in China. D.D. first announces... And not from the usual suspects either.

34:28And not from the usual suspects, yeah. You know, they already have the investment from the internet portals, but Uber raises $3.5 billion from Saudi Arabia's public investment fund. You know, and D.D. raises $7 billion of its own. So that's over $10 billion raised, you know, within a couple months. And they just basically start giving this money away to subsidize rides. And then D.D. does something that I think I suspect even Travis and Uber is...

34:55Machiavellian, as they were in the U.S., couldn't even imagine and see coming. Diddy starts investing in all of Uber's rivals around the world, including Lyft in the U.S.

35:06and Ola and India and Grab Taxi in Southeast Asia. And they announced that they're going to literally, it's like the Allies fighting the Nazis here, they've formed, they have this global alliance to fight Uber that they start building. You know, what were, Brad, what were when people, investors and executives at Uber start seeing this happen? Like, What was going through their heads? Well, I mean, I think they were dismissive of the global alliance, you know, because it was unclear what it really meant or whether there was much value in sort of integrating each other's apps or how smooth that would be. I think the more meaningful thing, like, you know, Uber was bringing a couple of assumptions to its battle with China that I think are interesting to examine. You know, one, obviously, I think at the time Travis is pursuing a global network.

35:52But this is not really a network effects business or if it is, it's very local. So it was sort of unclear that Uber's strength in the rest of the world would even translate into China. You know, the great contrast is with Airbnb where I think they do have more of a global network effect because they've got travelers going back and forth across across oceans.

36:13The other advantage I think Uber thought it had was a capital advantage and what we really started to see in 2015 and 2016 was this unique capital market where there were all sorts of unique sources of capital that were willing to shower all these companies with money. And I think it was more the fact that Dee Dee goes and gets money from Apple.

36:36or that all of these sovereign wealth funds start to kind of provide capital that begins to convince all these companies that they are on a sort of unsustainable path.

36:48You know, so I don't, you know, the investment lift, the global alliance, I think the Uber guys as arrogant and confident as they are sort of shrug, but it's when, you know, it's when a company like Apple or Foxconn gets into the fray and starts putting money into D.D. that I think, you know, Travis and Emil Michael, his deputy, start to wonder, can they really win this battle?

37:09Yeah, and so by the summer of 2016, DD is starting to pull away, and whether that's because Chinese regulators subtly tilting the field towards them, or because of this capital, or just better execution.

37:23hard to say but DD claims by summer 2016 that they have 85% market share so they've won back another 15% that Uber had taken and they're operating in 400 cities in China versus Uber which is only in 100 and then apparently it's Uber's investors that start pressuring Uber to negotiate a truce and Uber reaches out to DD and says you know okay let's begin peace negotiations and pretty quickly from when they reach out you know Brad I think he say it's two or three weeks They come to a deal where Uber sells its China operations to DD and return for a 17% equity stake. And DD agrees to invest 1 billion in Uber, US dollars, and get a board of server seed. How did that set of meetings come together and differ from that first meeting when Travis went over? Yeah, well, first of all, we should be clear that this is not a bad deal for Uber, right? It's a remarkable retreat.

38:23You know, nearly 20% of what will be kind of their major international rival, you know, a billion dollars investment to kind of recoup some of the massive losses.

38:35You know, I think at this point, this was a very respectful set of negotiations primarily between Jean Lou of D.D. and Emil Michael from Uber. You know, culminating in this as I depict in the book this kind of famous drinking session between Chen Wei and Travis in Beijing over the summer of 2016 where they're drinking Bai Zhu and Chen Wei was...

38:59sort of hilariously dismissive, Travis's drinking abilities. But of course, Baiju is not for the faint of heart. I guess I don't have much illumination on how they came to kind of 17 or 18% ownership stake. Other than that, this is what sort of the market was suggesting at this time. And for DD, it's a great deal too, because they kind of win not just the Uber China brand and its customers and all those employees, but basically an open playing field to be the primary kind of transportation innovator in the world's largest transportation market.

39:37Yeah, and we'll, you know, we usually save this more for the end. We are a valuation criteria. I think we're going to look at Uber here and say, you know, was this... Usually we look at the M&A events. It was this a good use of funds with this, you know, impactful and multiplicative in the future to bring this company in. And so the lens, I think we should look at this through is, was it a good move for Uber to engage in all of this activity and then leave with a 17% stake in Indeedee and like...

40:04If you just look at the raw dollar leverage, I mean, it's a very short period of time of blowing $2 billion to get almost $6 billion in value of, you know, present dollars. And, you know, the hope is, is you make that investment that D.D. continues to grow in value in China. And you raise a great point. One of the best markets in the world, with the best market in the world, the biggest market in the world should get remarkably bigger than Uber itself.

40:27So, I think it was a good deal for Uber, and I'll give two reasons, but I'm curious to hear what you guys think. You know, one, the Uber may not have known this, but the regulatory environment in China was about to change for all the ridesharing companies.

40:43And a lot of the big cities have now said it is illegal to drive for these companies if you don't live in the city. And that has constrained the supply of DD and slow down its growth. So I think Uber got out at probably the right time. If you've got a constrained supply, being on a battle for the hearts and minds of drivers is not the position you want to be in if you're the foreign company. And for listeners, Brad is telling us this earlier, I had no idea. I think this is super new, super interesting.

41:12I hadn't fully thought through it. Brad, why do you think it's advantageous? Why would you think a city would legislate that? It seems like it's only good for business. Well, I think it's protectionism. I mean, I think that the yellow cab fleets are a major source of revenue for cities and the fees and taxes that they pay and perhaps the medallion fees. And so I think that's one reason that I think they've kind of tipped their...

41:36fingers on the scale as like as the taxi companies have done all around the world and then I think the second reason is there's a rational argument around traffic and congestion and obviously all the Chinese cities struggling with them mightily That might be a little bit of a cover story for just protectionism. And of course, you know, the pendulum may shift. But I think for now, D.D. is kind of fighting that regulatory battle and they've reorganized, restructured their company a little bit to put more emphasis on some of their license, their chauffeur offerings and their commuting alternatives like buses.

42:11I think the other thing that happened and the reason why this was a smart deal, probably for both companies, is it became very clear over the last two years that this market was about to undergo a major pivot into driverless car technology. And so it really doesn't make a lot of sense to go waging a war and spending a battle for a market that's going to be changing very quickly. And now both Dee Dee and Uber are spending a lot of that money that they might have been spending on subsidies investigating the future. And I think that's a smart approach.

42:40PDs also working on a self-driving car offering. They've been trying to hire some folks and they've got a team. And they've got some partners. I think Baidu is also exploring it in China. And yeah, as is everyone now. And it's of course very fashionable to say you're looking into it. It's unclear to be now whether D.D. has made the progress of say Uber, which is testing cars now in Pittsburgh in a few other cities. Yeah. And one thing I learned from your book, Brad, is how fast, or how recent Uber is to this sort of...

43:16area of self-driving cars that they really weren't tipped off to it until Travis God in one of the self-driving Google cars when he went to meet with Larry Pageer. That's right. It was Larry Pageer. But even then, remember that's...

43:29My times are messed up, but I think that's 2013 even then he believes that Google will be Uber's partner right in that effort and it was only at the recode conference in in late 2014 where Sergey Bryn is talking about it in a little bit of a dismissive way toward Uber and Travis had gotten wind that Sergey was going to talk and maybe announce its own sort of Uber competitor that I think Travis starts starts to realize that Uber is not that Google is not a partner in self-driving cars, but but a competitor And that is when he begins to invest very seriously in self-driving cars. Gotcha. All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is no longer the hard part.

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45:21billion workflows annually, and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates. And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all? So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, Go check out servicenow.com slash acquired and tell them that Ben and David sent you. Let's move on to acquisition category and then come back to grading. But before I do, I just want to say we're recording this episode here in the middle of February in 2017, because the deal has happened, but the story is far from over. Just last month, DD announced that they were going to invest $100 million in a company called 99, which is the primary Uber competitor in Brazil.

46:18So they sort of always quiet on the eastern front of the battle in China, but... But I think this is a, you know, the war has not yet over. An armistice may be signed, but, you know, I think, I think I predict that we will see more Uber and DVD, you know, going head to head throughout the world, you know, in the years to come. Yeah, the interesting analogy is that it was the battle for China is settled. But at the end of the day, these are both global companies. And, you know, if not now, then that's the aspiration of the future. And their global companies in a market where it's really not clear that being global gives

46:56to do that much of an advantage? Yeah, to your point about network effects, it seems like with Airbnb, it's highly advantageous to have people everywhere on a single network since they travel a lot, where you could imagine like an eBay or Amazon where it's even stronger of a network effect, because it literally, it's all shipping, it doesn't matter where you are. But with Uber, shy of having to download a new app when you go to a new place, it really doesn't seem that strong. It seems like these pockets of network effects that...

47:24that better describe the service. Yeah and there's a belief at Uber that kind of technology will make a difference and that they can move kind of learnings around the world, but it's just not clear to me, like the continued strength of lift in a lot of US cities, I think is indicative of like, you know, maybe as long as you pick somebody up within three minutes, maybe nothing else matters. And, you know, like, Ola in India, you know, knowing that market, knowing the cash habits of those people, you know, knowing just how to press the buttons of city governments, or, or, you know, what to do in streets that are just

48:00congested. I mean, that's an advantage. It's not to say that Uber doesn't have that because they have local offices and very smart general managers. But, you know, I think there's a reason that Uber hasn't run the table yet. Right. And to your point, it's not that they aren't great at those things. It's that they don't have a structural...

48:16Advantage by gaining the position that they're in to necessarily make that N plus one market any easier than the end market, right? And I think that they thought that capital would be the ultimate advantage but all these other companies have been able to fund themselves just fine. Yep. Yeah, so much good stuff for tech themes. Let's do category real quick. Ben, what's what's your take? So for new listeners to the show, we normally assign a category of people technology product business line.

48:46asset or other and asset we added a few episodes back when we were talking about purchasing a data asset and in this episode I am going to go with other and possibly create another one too this was a takeout I mean this was a Uber was not buying something here that that they couldn't otherwise get by, you know, making a talent acquisition or buying an interesting new technology company. This was literally you are a massive competitor and we, it is massively disadvantageous for our business, for us both to be fighting here. It was like geopolitical. It was a peace treaty. It was Yalta. We will see this country to you and be puted of allies, and of course they took seats on each other's board. And yet it's an uneasy

49:35Yeah, the category I was gonna go with was sort of like you know marketplace consolidation sort of like we talked about with Kathleen Phillips in the Zillow truly an episode but but the twist I was gonna add is you know it's incomplete right like it's it's a marketplace consolidation in in one part of the world but the fight continues elsewhere as we've been talking about yeah we should make bets on how long we think they'll be on each other's board Yeah, they may who knows for all we know they're they're not even or that was a little illusory to begin with I mean they those were not voting seats as far as I understood it so and that's a heck of a long way to travel for a board meeting so You know it that may have been optics. Yeah, what so what would it happen otherwise? I mean Brad I'm curious for you like if they kept fighting like how long could this have gone on?

50:25You know, I think it could have gone on for a long time, but it would have been destructive to Uber and other parts of its business. It was fighting a multi-front war. Instead of fighting in China, they kind of reinvested in their India operation, so that wouldn't have happened. And I think they would have moved less aggressively into driverless cars and trucks, so they recently acquired auto, a driverless car.

50:51a driverless truck company, and so perhaps we would continue to see this war in China, but less activity in other parts of Uber's business. I don't know that they were constrained with capital. They phrased 12, 13 billion plus. They could have kept fighting, but in the end for what? For points of market share. Another thing to factor in here is, if they hadn't gone and spent a couple billion dollars in China waging that war, Could they have focused on an earlier IPO? I mean, it's been eight years now that Uber has been around and, you know, they've gotten these capital. They went aggressively raised capital from all sorts of different places to wage this war. Like, I don't know if they're mutually exclusive, but should they have IPO'd by now? What would have been the advantages of that? Well, I mean, they haven't been constrained in raising money, right? So if anything, that would be embracing a whole set of challenges and

51:48obligations towards transparency. Clearly, particularly with all the troubles that Uber has had recently in the press, the company's not ready for. I think it's probably valuable that they haven't gone public so they can get their house in order. Yeah, but the flip side, though, is I think at least in terms of public perception. And honestly, as a user of the product too, You know, like, one story that, like, just sort of, to me, as a total outsider, but totally characterizes Uber to me is, I was in San Francisco. This was probably a year or two ago. I was going to meet a friend who's an Uber employee at dinner, and I ordered an Uber to take me there. And the driver just started driving in the other direction, like, clearly didn't want to pick me up.

52:41So I waited a couple minutes, you know, I ended up canceling the ride, then had to get another one. It was rush hour. I was like 30 minutes late to dinner. I showed up. I apologize to my friend who works at Uber, and he said, oh yeah, it happens all the time. And I was like, wait, you work at Uber, you know? And I just wonder if, you know, without like, and I don't say that to be to castigate Uber, but like they've been fighting on so many fronts for so long. If they'd had If they had the space and time to focus a little more internally, I wonder if some of these problems that we hear so much about there wouldn't have popped up or would be taken care of by now. It's perhaps. It's a company whose founder and CEO had a manifest destiny to be the global transportation innovator and moved in one mode aggression.

53:38And I think like you know all these guys are disciples of Bezos right and they're kind of following that blueprint of boldness and But I think it's true. I mean like you know Uber is not infallible. To some extent, it's still very much dependent on the limits of GPS. And I was just in DC and was taking Uber's and lifts all around the city. And every single time there was a phone call between me and the driver, where are you? What street are you on? There's lots of aspects of the transaction that Uber just can't control, because it doesn't control GPS and is operating on a smartphone.

54:17smartphone platforms that it doesn't it doesn't own so there's lots of rooms for room for improvement for sure let's i feel like we've been touching on it as we often do throughout the show right now let's jump into tech themes then what uh what do you have a big one that i really want to talk about is company culture and its impact on business trajectory i i think that um uber is one that has been a win at all cost company and brad you mentioned in your book that Airbnb defined its mission and values very early and Uber didn't really. Their mission and values were just keep going and win. And I think you have a more eloquent way of phrasing it, but it's really something where they're massively leaving a scorched earth behind them. They've won so far through incredible, you know, boldness and strongheadedness. And they're leaving like everybody has a different reason to be pissed off at it.

55:10It seems very true, particularly recently. Yeah, and I mean drivers are feeling like they're getting the short end of the stick. Uber claims that they're their customer, but they're changing the take rates and the drivers get last. With riders, they're feeling like they're getting the short end of the stick on surge pricing too. And this will probably be last week. By the time we release this episode, there'll be new news since then. But just the horrible news coming out of the Uber engineering organization yesterday with the misogynistic sexist behavior that Uber has moved incredibly fast everything in the name of winning and there's a lot of problems there and I think that I'm not totally sure this is a tech theme that applies to every other company but we're certainly seeing another companies too where as everyone is a you know either a disciple of Bezos or let's just call it a disciple of boldness we're really seeing a lot of this churn in the wake and I think as a lot of these mega unicorns get ready to start going public that's going to be a major issue for them.

56:07Yeah, no doubt. I did think it was interesting that Uber kind of came late to developing its values. And when it did, when Travis did present them to the company in 2015, they very much mirror Amazon. In fact, some of them are quite similar. And I think it's a company that's some extent that it's still searching for its identity. And like I don't...

56:30First of all, I don't jump to conclusions about the broad conclusions about the engineer who blogged about her time at Uber. I think it's deplorable what she went through, but it's hard to reach broad conclusions about a company culture from an anecdote. We will see if others follow their wake and how well Uber does in investigating and addressing her claims.

56:56But I mean, I think it's true that, you know, this is a company that as they all are in rapidly growing internet world, that was marked by a lot of chaos early on. And yeah, I talked to lots of Uber employees and Airbnb employees in my book whose experience is kind of mirrored, you know, the folks at Amazon early on. Just chaos, you know, the busiest year, two years of their life kind of traumatized when they get in, when they leave.

57:23But, you know, I mean, I certainly don't want to make excuses for Uber on that sexual harassment, those allegations, but I think, you know, we're gonna have to watch. And I think, you know, Colbert heads hopefully will prevail before we kind of reach broad conclusions. I think it's, let me put it this way. I think it's unfair to the many accomplished women who work at Uber and have leadership positions to just dismiss it as a frat boy culture. Yeah. Yeah. Yeah. And totally, I mean, it's...

57:53We're at the beginning of the new cycle on this, and there's lots of, you know, that's why, in tech as well as in politics, that's why the role of an independent, inquisitive press is so important, and the story remains to be told. But I think there is no question that, you know, and I suspect even people who work at Uber, and if listeners, if you do work at Uber, you know, reach out to us and would love to hear your perspectives, but I think it's...

58:21Uncontroversial to say, like you said Brad, there are a lot of challenges. and chaos there that needs to be solved. That seems, that at least seems clear. And I think it's sort of a hopeful sign that Travis last year hired an executive from Target named Jeff Jones to be his right hand. I think his title is president. And one of Jeff's goals for 2017 was to address the rider community. You know, we all know from being in this industry that that two-sided marketplaces are hard. And from the very earliest days of eBay, you had sellers complaining or buyers complaining. It's just hard to balance the two. I mean, Airbnb's approach is clear, like they are kind of a host-driven community. And they started as hosts, and they catered to their hosts. Uber is really a writer-driven community. The founders started out wanting classy rides around San Francisco. And so, you know, they've...

59:19you kind of have to pick where you start. And so Uber now is sort of focusing on the driver community and has a lot of work to do, I think, to quell some of the dissatisfaction, particularly among full-time drivers. And if we all, when we get into these cards and talk to our drivers, we know that dissatisfaction is there. And partly, David, as you said, because of the sort of relentless lowering of the fares to try to position Uber as an alternative to car ownership.

59:46And you touch on another thing that's been a tech theme for us before and couldn't ring true here is founder DNA. When you when you describe the culture and values and character of a company, not even through like the internal workings, but in the way that the product experience feels when you use it, it's it's almost indistinguishable from the founders personality and very rarely does a company even when it goes through multiple CEOs significantly deviate from that that founder DNA I think we talked about it within the next episode David we talked about it definitely in the the Amazon episode and it just Companies take the the shoes of their founders and stay that way kind of forever. Yeah, go ahead Brett

1:00:28Well, I was going to say, Garrett Camp is really the inventor of Uber. And he's on the board, but it's in a large presence in the company. And every company, I like to say, has to combine idealism and ruthlessness. And the idealism of Uber almost comes from lift.

1:00:48You know, it's funny because Logan and John from Lyft are talking about replacing cart ownership and solving traffic on the highways of LA, far before Travis ever was at Uber. I think that he drew a lot of their idealism and kind of borrowed it. And I think it's authentic, and it's now a mission at Uber as well. But, you know, if that does make a difference and we'll see, I think the idealism is more genuine at Lyft than it is at Uber.

1:01:17And I certainly don't mean that that founder DNA is a negative slide. I think for kind of for better or for worse here, you know, you're stuck with it. It's your personality. The the tech thing that I wanted to talk about is I think in many ways just a a slightly different perspective on the culture question, you know, and the founder DNA from a investor view as opposed to a kind of internal company view.

1:01:47And that's what this story of both Uber and D.D. really highlights for me is the difference between building a moat and scorching the earth. And these are companies, all of them in ridesharing really. I mean, I think Lyft has, you know, gotten dragged into it too, and probably all the other companies around the world, like they've taken this scorched earth approach. And they've gotten huge, you know, probably You know, I don't know, but I would suspect that just in terms of net revenue to the company, Uber is probably larger than Airbnb at this point, and DD perhaps as well. They've gotten big quickly, but you have to ask how sustainable is what they're doing. And I think at points along the way, it's clear through this story that

1:02:39Uber and others thought perhaps capital raising was gonna be a sustainable advantage in a mode that they could build thought that driver density was gonna be sustainable well turns out it's really easy for drivers to multi-home and they do all the time you know and I think about that versus versus as you just opposed in the book Brad you know kind of Airbnb and while it's while what they're doing and what they're what they're The market they're attacking looks very similar. I do think they've taken a much smarter approach to building a mode and that's around focusing on the community. Things like a host could multi-home, but by making reviews and trust and interaction between the community, the focal point.

1:03:29of the network, you know, once you have 50 positive reviews on Airbnb, you know, you're not going to spend much time on home-boy because you're going to get so many more bookings and that's I think something that the ride sharing companies have and I don't know if it's possible to create something like that or if the dynamics of the market are just such that it's not, you know, something where you can build a moat like that but an investor makes me think about, you know, those dynamics. Yeah, David, it's really interesting to think about how could Uber Lift, DD, how could ride sharing in general be better at building their flywheels for defensibility? Because I love that point that it's just not as the networks of extras and they're not as strong as in Airbnb or other businesses, like at least in a global sense, what can they do to bolster that? I think there's a belief, particularly among some Uber investors, that...

1:04:19maybe there is a mode we just don't see it right now that when the capital environment changes and these companies have to get profitable we're gonna we're gonna separate the men from the boys so to speak and so we don't yet know because none of these companies have had to get real rationalize rationalize their balance statements um you know lift clearly still loses a lot of money you know and they they they discount they're still in expansion mode they don't have the scale that Uber has so In some respects, it almost might be too early to make a judgment on the value of these businesses. There's ambiguity around driverless cars. There's still some regulatory question. I would say that there's still a lot of regulatory ambiguity around Airbnb. It's a separate topic, but almost like cities are waking up now to the potential and the disruptive.

1:05:11power of Airbnb and are beginning to wonder if they want residential communities to have a little hotel sprinkled throughout and all the problems and economic opportunities that brings. And so that's Airbnb's challenge. I mean Uber, I think has to hope that we move into a different capital environment and all these companies like Lyft, but also like Juno, this New York startup that's giving its drivers equity that all that stuff starts to look.

1:05:34you know very unsustainable in an environment where companies have to go public and they have to show profits. You know right now Juno is winning this battle for hearts and minds in New York of drivers because you know drivers can feel a part of it and we have no idea whether any of that is sustainable. So it's still we're still that you know 2017 we are still kind of high on the on the on the drug that is internet stock right and this amazing opportunity it's see I agree David it seems to me like the moat is a lot shallower in the ride-sharing market but I think that there is a belief and it may be a sort of errant one that time will anoint uber as the king and we'll see Brad thank you for bringing your your season journalistic take to this and you're right my crazy metaphor is

1:06:26Well, you want to render the conclusion? Yeah, well, I mean, I think we discussed earlier. You know, my grade on this is probably, I think I'd give it a, well, I think I'm going to give it a B plus for both sides because it was clearly the right thing to do and in that it was just going to be unsustainable going forward. But also sort of, you know, I don't get into A territory. I guess a little bit punitively, like, I'm scratching my head a little bit as like if I were a board member of one of these companies, how would I let the situation get to this point? But Brad, you make the great point that like, you know, hey, this was a good investment for Hooper, you know, despite all that distraction, but I just keep coming back to thinking about what are they building here at these companies and what is going to be sustainable.

1:07:18And 10 years from now, you know, if you really don't know, you know, 10 years into the company, you're close to 10 years into the company in Uber's case, if you don't know what the mode is you're building, that would make me really scared. So be plus for me. I, you know, it's interesting to think about, I phrased in the raw dollar perspective earlier that they got, you know, two to three X on the dollars that they, they poured into China in terms of the highly illiquid stock that they have in Indeedee. And that's sort of the like, private equity approach it's like if uber wanted to be a conglomerate then like hooray they they put in some dollars and got you know three times those dollars out I don't know that it actually gives them it doesn't if the machine that they're building is uber technologies proper then what did they really get out of

1:08:08investing in D.D. It doesn't actually help the Uber business to have a large value in D.D. And so I think with Uber, to me it was their best option and it was the best record to pull at this point and a highly profitable one.

1:08:23But David, I sort of agree that, like, I don't know that it was that strategically interesting other than kind of competitive truce. And then from the DD side, you know, you got to wonder, is there any way they could have gotten away with this without giving up 70 to 17% to 20% of their company? So that's a little rough too. So, you know, I think...

1:08:43I think I'm going to go A- for Uber because there might have been a lot more interesting things I could have done with that capital over those years and I'm going to go with B- for D. Brad, what do you think? Well, I don't know that I want to get into the business of the grading but the only point I would add is that both of these...

1:09:02companies and their investors and their founding teams took enormous amounts of dilution to wage this battle. And I wonder if you're, let's say, a Changwei right now, a DD, and you, you know, you, you had a certain percentage of your company, and then you merge with Quaidee, and then you merge with Uber China, and, you know, and you're sitting there probably with your low single digit ownership percentage and still extraordinary, you know, stake. But, but like, what did, you know, what did you gain for all that dilution?

1:09:31You know, was there... I guess the question is, was there a way to win in the marketplace? And what we've been saying is that perhaps that, right? Perhaps it was... I mean, Dee Dee always had the high ground in China because it had the integration with Tencent. So the question is, was there a way to just kind of leverage that position and circumnavigate all these awkward mergers? I don't know. Maybe there wasn't because it's just too easy for other...

1:10:00competitors that come in with alliances with the big three. So, I don't know, I think we have to give Cheng Wei a particular credit for, you know, moving very quickly from being an anonymous middle manager at Alibaba to really joining the ranks of the upstarts. And it's why I included him in the book and why I was very impressed with his journey. Ben, do you want to really quickly mention our follow-up and hot take? Yeah, so we just have one dimension listeners. The Snapchat IPO will price on the evening of March 1st. Go out on the second for the first day of trading. David and I are going to be recording an episode on the third in the morning and then hopefully producing that and getting it out over the weekend on the fourth. So we'll let you know when that's here and stay tuned for far too early to tell speculation and lots of

1:10:53You know lots of fun analysis on Snapchat because we haven't really covered the IPO yet or I'm sorry the the S1 yet and no matter what happens the first day of trading there is some gold to talk about in there Absolutely carve out Yeah, I'll do mine real quick. So I, you know, I think our carveouts collectively between us, David, have been wait but why like five times so far on this show. But I was recently out of flight back from London and had just like way too much time and read a whole bunch of wait but why. And this one from 2014 that I really love is why you should stop caring what other people think, taming the mammoth.

1:11:30He brings up a really great idea that you shouldn't care what other people think, but it's deeper than just this thing that we always talk about. We frequently talk about how we're people pleasers, or we overweight.

1:11:48our perception of what other people are talking about, or thinking of us, and really they're just not thinking that much about us, they're consuming their own lives, their heads probably in their smart film. But then links it to this evolutionary track that I never really thought about before, that was it was evolutionarily advantageous for other people to like you. For you to be a member of the tribe and have other people like you and want to look out for you and feel sameness.

1:12:12so that they would protect you in events. And so you can sort of trace that every splashy article that we read is, don't care what other people think about you. And here's some new research to show that you really need to be your own person and underweight that influence in your life. And as it turns out, that's really, really grained into us. Or it's possibly the result of natural selection of that being a highly advantageous thing in the fact. And we're really fighting biology there. And so it's a really cool to tie those two things together. Yeah, you know who probably doesn't have that trade is Travis, but maybe he cultivates it through Zen practice. Mine real quick is a podcast. Conversations with Tyler, by Tyler Cowan, who we've talked about on this show before. Co-author of the Marginal Revolution blog, really good. His first one is with Peter Tiel and well, I certainly don't agree with all of Peter's

1:13:10statements, it's a fascinating conversation. Here's another great one with Kareem Abdul-Jabbar, well worth listening to. Brad... Do you want to close it out with your recommendation for our listeners to listen to or perhaps read? Sure. Aside from my own, touting my own book, which, naturally, needs to be honest. You're welcome to recommend your own book. We recommend it. Well, thank you. So I will not do that, but I will say, and this is an easy one to recommend.

1:13:42You know, the book Sapiens by you've all know Harari was a sample for so many people, and he's got a new book out that I'm just starting, but enjoying very much a homo, homo-duce, I think is how you pronounce it, a brief history of tomorrow.

1:13:56which is him kind of looking at the future and automation and the future of humanity. And I just find his writing to be mesmerizing. I listened to the first book on Audible. I'm reading this one, but I might actually get the Audible. And he's just brilliant. And he puts everything in perspective. We can be so consumed with the daily ebb and flow of the tech industry. So to be able to step back and look at humanity in an ethical time frame is why I just love his his work, so he's got a new one coming out that everybody should read. Love it. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep. In the...

1:14:48crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn.

1:15:00what changes actually created value for customers, and how fast you can use that signal to guide what you shipped next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

1:15:19So if you want to make learning your competitive advantage, whether you're building new AI experiences, or just evolving your existing core product, go to statsig.com slash acquired to get started. Well, that's it for us. Close it down. I just want to say if you want to join the Slack, we're there. Join us 400 strong and would love to bring you into the conversation. Share the show if you liked it on Twitter or Facebook. Rate us on iTunes wherever you feel that would be something you want to do.

1:15:48Go read the upstarts. It's fantastic and thanks so much to Brad for joining us and we will see you for the next one.