SoftBank takes control at Uber: Stay out of Asia

SoftBank completed its $9.3 billion transaction with Uber, making it the largest shareholder in the company and returning handsome profits to early investors, as well as making Travis Kalanick a billionaire. The cost: Uber must turn its focus to the United States, Europe, Latin American countries, and Australia to become profitable. 

The Financial Times reports that Rajeev Misra, Softbank’s Uber board member, said Uber can be profitable with a focus outside Asia, where SoftBank has investments in several mobility companies, including Ola and Didi Chuxing. In a pricelessly SoftBankian phrase, Misra said of Uber’s potential: “Who cares if they lost a billion more or half a billion less?”

On closing, SoftBank comes away with 15 percent of Uber for its money.

Didi diversifies with Bluegogo

Here’s the problem with building a purpose-specific marketplace, such as a consumer mobility platform like Uber, Lyft, or Didi Chuxing: Once the platform is saturated, it’s necessary to diversify. In the case of China’s Didi Chuxing, the ridesharing company is adding management of a bike-sharing service, moving into an adjacent, though painful, market with its platform.

Didi customers will get access to Bluegogo bikes in Chinese markets. Didi is taking a chance with Bluegogo since the company has already failed. In fact, all Didi is doing is acquiring Bluegogo’s abandoned bike inventory, hoping to earn back the cost by increasing revenues from existing customers.

As on-demand evolves, the apparently explicit delineation (rides on demand versus, for example, housecleaning) between one consumer market and another will become a barrier to expansion. Markets are more efficient when they include many products and services than in any dedicated marketplace. Early leaders in transportation may find that adding any non-mobility service proves difficult.

Didi customers may consider taking a bike instead of a ride. But not all those customers will be interested in bike options, so expansion into bike-sharing could produce little incremental additional spending by Didi customers.