Chinese rival-- and, let’s be honest, the only real rival Uber has-- Didi Kuaidi announced in a “Dear Media Friends” email yesterday that it had surpassed 1.43 billion rides.
In a single year.
And 200 million of those came in December alone. Simple math shows accelerating growth and a run rate-- even if that growth slows to zero-- of some 2.4 billion rides next year.
That’s right: This claim would mean Didi is the largest ride sharing company in the world, by a large margin. It pulled off in two thirds of a year what it took Uber’s whole lifespan-- and some $8.2 billion including equity and debt-- to achieve.
I say “claim” because I’ve come to a point where I don’t believe anything any ridesharing company says about its ride volume or market share.
Uber says it jumped from 11% market share in China to some 30% as it also claimed it clamped down on widespread driver fraud. We all know that’s not remotely plausible. But credible outlets reported it as fact anyway.
Lyft says it has 40% market share in San Francisco. Now, I take Lyft exclusively. When I used to take Uber, every driver I encountered also drove for Lyft. I never have to wait more than three minutes for a car. Most drivers I meet who drive for both tell me they make more from Lyft because it allows tips. They all certainly have warmer feelings towards Lyft. And yet, even I find 40% market share in the city where Uber first became a verb to be a stretch. It hasn’t been verified by any third party. It is also reported as fact.
And now Didi.
This much is clear: True or not, Didi’s press strategy couldn’t be more different than “we’re number two!” Lyft. They are claiming to be number one globally by a wide margin. They are claiming to have done 40% more in a year than Uber has done…. ever.
I asked Didi’s PR folks if there was anything other than the company’s word they could tell or show me to prove the astounding figure. They called me to make sure they understood the question. I confirmed that, yes, unfortunately I was asking if the company was lying. And I asked if there was any way of confirming the number, beyond just taking Didi’s word for it. They said they’d ask and get back to me. I haven’t heard anything more.
To be clear: I have no reason to doubt Didi Kuadi. And I should note that at least its numbers are consistent, as opposed to Uber’s sudden and unexplained jump from 11% market share in China to 30%.
Back in September, Didi President Jean Liu said their servers processed 12 million ride requests on a recent day, completing seven million rides, three million from taxis, three million private rides and the rest Hitch and buses. She clearly singled out an outlier of a day, but do the math and it’s the same amount that Didi says it did in December with several months more growth under its belt, and the current run rate it’s on now.
But as I’ve written before, Didi is running Uber’s game better than Uber when it comes to China. It has deeper pockets-- backers worth some $2 trillion as it reminded the world in this press conference-- and just as many government touch points in China as Uber has here. (Reminder: Emil Michael who was running Uber China’s botched fundraising operations was previously special assistant to former Secretary of Defense Robert Gates. The same Gates who now works for Uber, chairing the advisory board of a division called UberMilitary. Uber continues to hire more political operatives to dig itself out of its various public relations crisis. And as we’ve reported, Uber has more lobbyists in Nevada than the entire gaming industry. It’s reportedly spent tens of thousands to buy pro-Uber laws in various state legislatures. Disruption!)
So what do I think is the truth?
Of the three I think Lyft is the most likely telling the truth. Because it’s just not a company that overreaches. I.e. it seems pathologically incapable of doing anything that might resemble aggressive competition.
All common sense says Uber is lying saying it has 30% market share in China. It was already spending $1 billion in annual subsidies to get to just 11%. It operates in a fraction of the cities Didi is. The boast doesn’t pass any basic smell test.
Frankly, if I were Didi, I’d probably pad the truth in some Clintonian “it depends on what the definition of ‘is’ is” way. If pressed, for instance, Uber might say it just meant market share in cities where it competes. Or one city. Or one city based on one month.
Why not? No one checks. There’s no way of checking or having any of these numbers verified by a third party. There’s no NPD of ride sharing. It also bears noting that the services are very different. Didi operates everything from cabs to ride sharing to enterprise shuttles and bus services in China. The number is across all of its services.
But let’s suspect the worse and assume Didi is using “Uber-like math” to inflate the numbers. Let’s be generous and assume Uber got to 15% market share in China through its wild subsides. And for the sake of the press, they just doubled it. Even if Didi’s claim were similarly doubled, it would still be the largest ride sharing company in the world, by a large margin.
That actually makes sense, even by Uber’s own boasts. When even Uber acknowledged its market share was in the low-teens CEO Travis Kalanick said China would be Uber’s biggest market by year end. So whether Didi has 80% or 70%, it would stand to reason that it’s a bigger company in terms of rides.
That insane level of ride volume also answers the question that even Uber’s own investors have been asking the company over the past year, according to multiple sources I’ve spoken with: Why on earth has Uber been spending this much time and money on China?
After all, it has no chance of winning the market. But against all odds, if Uber does get any real foothold in China, the government is not going to allow a company with such close ties to the US State Department and the CIA and a history of political agitation to control their transportation grids. They won’t even allow Twitter, Facebook, or Google to operate there, FFS. China and WeChat (owned by Tencent, an investor in Didi) have already begun fucking with Uber.
As Didi’s numbers show, the opportunity is too great not to try if you are company valued north of $50 billion, who investors are flooding with cash. Uber could afford to spend some $1.5 billion on subsidies in China last year, so why not buy options? Why not throw the dice?
As Uber’s board member Bill Gurley-- who routinely sounds alarm bells about burn rates-- has said, aggressive growth funded by venture dollars has been the game on the field. Until the spigot of free cash at nearly any price turns off, Uber is running the right plays.
Sadly, it’s lost the global market leader position anyway. I guess money can’t buy everything.
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