When Uber Technologies Inc was raising venture capital in 2013, it was one of the hottest deals around — and no one was more eager to write a check than Bill Maris and David Krane of Google’s venture capital arm.
Not everyone at Google Ventures, since renamed GV, agreed.
The firm already had an investment in a competitor, Sidecar, and Uber was demanding what then looked like a sky-high valuation.
Photo: Reuters
Maris and Krane prevailed and the deal is now regarded as GV’s greatest success. On paper, the firm’s initial 2013 investment of US$258 million gained about 14 times its value over the next three years to more than US$3.5 billion.
However, now Alphabet Inc, Google’s corporate parent, is suing Uber for theft of trade secrets, alleging that one of the top engineers in its self-driving car program decamped with thousands of confidential files, including designs that helped him start self-driving truck company Otto and then quickly sell it to Uber.
Uber denies the claims.
Photo: Reuters
The lawsuit, filed by Alphabet’s self-driving car unit Waymo, has jolted the fast-growing and highly competitive industry that has sprung up around autonomous vehicles and ride services, which are seen as the future of private road transport.
Yet the confrontation was a long time in the making — the complex relationship between the companies was tense from the start, according to people familiar with the situation, and soured further as they increasingly competed with each other.
Now, if the Waymo suit damages Uber, GV’s investment in the ride-hailing company stands to go down as a Silicon Valley rarity — a large funding deal undermined by the firm’s own investors.
“Whatever Waymo gains, Google Ventures loses,” Santa Clara University associate professor of law Stephen Diamond said.
The lawsuit is just one in a series of public setbacks for Uber, including allegations of sexual harassment that prompted an internal investigation, a video of chief executive Travis Kalanick arguing with an Uber driver that led him to make a public apology and Uber’s admission on Friday last week that it used a secret tracking tool to avoid the authorities.
“We have reviewed Waymo’s claims and determined them to be a baseless attempt to slow down a competitor, and we look forward to vigorously defending against them in court,” Uber said in a statement in response to the lawsuit. “In the meantime, we will continue our hard work to bring self-driving benefits to the world.”
A spokeswoman for GV declined to comment.
Uber was more than just another investment for then-fledgling Google Ventures, which needed a high-profile deal to put it on the map.
Maris and Krane were early Uber fans, but it took about two years for the pair to connect with Kalanick. When Uber investor Benchmark finally brokered a meeting in May 2013, the GV partners were determined to do a deal at virtually any cost, according to two sources close to the transaction.
With other would-be investors waiting in adjacent conference rooms at Uber’s San Francisco offices, Maris and Krane made their pitch to invest.
Kalanick pushed for a higher valuation, without a board seat — GV pushed back, asking for a board observer seat and a liquidation preference for protection if Uber was sold at a loss, one of the sources said.
They finally came to terms, with a US$3.5 billion valuation, and there were signs that a broader alliance could be in the offing.
Separately, Google senior vice president of corporate development David Drummond had a social relationship with Kalanick and he joined the board.
A ride in a self-driving car and a meeting with Google chief executive Larry Page, recounted in Brad Stone’s book The Upstarts, seemed to bode well for the relationship, but conflicts emerged immediately. Kalanick, a tough negotiator, wanted a discount on the software tools behind Google Maps, the company’s ubiquitous mapping software, according to a person close to the transaction. The best GV could offer was close contact between Uber and Google’s mapping teams, the person said.
Kalanick also wanted Uber to be featured prominently in Google Maps, eventually giving customers a way to hail an Uber ride directly from Google Maps, and Google agreed, a source close to Uber said.
However, Uber felt Google dragged its heels on the integration and found the initial rollout disappointing, the source said.
The friction only grew as Uber turned its attention to autonomous driving, an area where Google had already established an early lead. Uber announced its intentions in typically abrupt style in early 2015, poaching 40 faculty and researchers from Carnegie Mellon University to set up a self-driving laboratory in Pennsylvania.
It bought mapping software firm deCarta and began investing heavily in its own mapping systems.
Meanwhile, Google launched an on-demand delivery service, a market Uber is also chasing, and began offering a carpooling service through driving app Waze, which it acquired in 2013. The carpooling feature in particular rankled Uber, a source close to the company said.
“Things escalated from ‘frenemy’ to now enemy quite quickly,” said Anand Sanwal, chief executive and cofounder of venture capital research firm CB Insights.
The tension bubbled to the surface in August last year when Drummond stepped down from Uber’s board.
Uber declined comment on any of its dealings with Google and did not make Kalanick available for an interview.
Uber’s aggressive culture was the subject of many conversations at GV, a source close to the transaction said. Hoping to influence the start-up, the venture capital firm at first encouraged a flow of talent from Google to Uber. Yet that, too, ultimately created problems.
Anthony Levandowski, a key engineering manager at the self-driving car unit, now Waymo, began to talk openly about leaving the company as the autonomous vehicle field blossomed, according to Alphabet’s lawsuit.
In January last year, Levandowski and some colleagues quit Alphabet to form the self-driving truck start-up Otto, which Uber acquired later that year for US$680 million. Alphabet claims in its lawsuit that Levandowski had been in touch with Uber even before he left Alphabet.
In the lawsuit, Alphabet alleges Levandowski downloaded 14,000 proprietary design documents and used them to create Otto’s — and later Uber’s — version of a key autonomous vehicle technology called Lidar, which uses light pulses reflected off objects to gauge their position.
Uber and Levandowski deny the allegations.
The high-stakes legal showdown over whether vital information was transferred between the two companies is perhaps the logical conclusion of their opaque relationship.
All along, Uber remained mysterious to its GV investors. Kalanick was adamant from the start that he would share little information and try as it might, GV could not gain better visibility over time, two sources said.
If anything, Kalanick grew more tight-lipped as his business matured.
“It was one of the few companies where we sat there and said: ‘Hope it goes well,’” one of the sources said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”