HARI SREENIVASAN: Now: two high-flying companies whose value has soared and are the subject of intense scrutiny, Uber, and the parent company of Snapchat.
For Uber, it’s about the culture and leadership of the ride-hailing service, valued at nearly $70 billion. It’s back in the spotlight following release of a video of its CEO berating an Uber driver. More on that in a moment.
But, first, Snapchat is about to sell its stock to the public for the first time. The parent company announced it will offer its share at $17 a share, bringing its value to nearly $24 billion. The messaging app is used by nearly 160 million people each day, and is especially popular among teens and young adults.
But there are big questions about whether it’s worth this kind of value.
Mike Isaac is covering both these stories for The New York Times. He joins me now.
Let’s start with Snapchat. What is the value that Snapchat is trying to sell investors?
MIKE ISAAC, The New York Times: Yes.
So, Snapchat’s big story is, it’s going to be its next Facebook and not the next Twitter, essentially. One of Twitter’s big struggles, if you remember, when it went public a few years ago, is, it sort of failed to grow fast enough for investors on Wall Street.
And so, as far as Facebook is concerned, their growth was huge, but Snapchat just wants to say, like, look, this is the next big social network. You want to get in as quickly as possible on the ground floor of this IPO, and we’re going to have the success and strength and reach of Facebook, particularly with younger users.
HARI SREENIVASAN: How does it plan to make money? At one point, it calls itself now a camera company. So, is it a social network? Is it a camera company? Do they make money selling advertisements?
MIKE ISAAC: Yes, so it’s primarily advertisements. They have little what they call Snapchat stories.
And publications like The New York Times will show different things inside of their — usually video and photo-based. And then they sell ads against that.
And then they’re kind of experimenting with other things, whether it’s like e-commerce-related things inside the app. And then who knows? They have what are called Snapchat Spectacles, which are glasses on your face, and maybe they can make money from that. I’m not really sure.
HARI SREENIVASAN: And so part of the reason that it looks like Wall Street is excited is because there hasn’t been a big tech IPO in a while.
MIKE ISAAC: Yes, that’s right.
I think a lot of investors feel like they missed out on Facebook a few years ago, especially when the IPO went really terribly for the company, and now Facebook is trading at over $100 a share. So I think everyone is really looking forward to a successful IPO from a tech company. And it has been a bit.
HARI SREENIVASAN: And these two founders have also decided to take a lot of the — I guess the voting control of the company. This seems to be the new thing. Mark Zuckerberg has a tremendous amount of control over his company. Is this the kind of template that now tech CEOs want?
MIKE ISAAC: I think so.
And I think investors kind of have a sense of trust that the founders tend to know best and what’s best for their company. Mark Zuckerberg really sort of became the pioneer or advocate for this approach, where, you know, he doesn’t really want to hear much of what investors have to say about how he should run his company.
And investors are comfortable with that because he tends to be running it really well, and it keeps growing, and it keeps making them tons of money. So that might work.
HARI SREENIVASAN: Sorry.
Let’s shift gears then to Uber. It’s been in the news recently after a former employee wrote on her personal blog that she had been sexually harassed at the company and that it was covered up.
Yesterday, Bloomberg released a video of Uber CEO Travis Kalanick in a heated exchange with an Uber driver over lowering fares for its black cars service. The argument took place in February.
MAN: You changed the whole business.
TRAVIS KALANICK, CEO, Uber: What? What?
MAN: You dropped the prices.
TRAVIS KALANICK: On black.
MAN: Yes, you did.
MAN: We started with $20. We started with $20. How much is the mile now, $2.75?
TRAVIS KALANICK: You know what?
TRAVIS KALANICK: Some people don’t like to take responsibility for their…
TRAVIS KALANICK: They blame everything in their life on somebody else.
TRAVIS KALANICK: Good luck.
MAN: Good luck to you, too.
HARI SREENIVASAN: Kalanick later apologized.
He said in a statement: “It’s clear this video is a reflection of me, and the criticism we have received is a stark reminder that I must fundamentally change as a leader and grow up.”
That’s part of the statement.
So, Mike, why is this apology to the driver and the company so important?
MIKE ISAAC: If you followed the company for the past seven years, one thing you can say about Travis Kalanick, he’s pretty unapologetic. He’s aggressive. He’s pushed into markets where operating Uber was actually illegal.
And it’s been a real no-holds-barred approach to operating a company. So, to see him say, I have to be humble, I have to change the type of leader that I am is a real big shift for them. And I’m really curious if he can actually do it at this point.
HARI SREENIVASAN: And this is also a company that is not public yet, but when it goes, if it goes, the valuations are staggering — $70 billion is currently where it’s at.
Does this call into question perhaps the temperament of this individual and whether he is the right person to run such a big global company?
MIKE ISAAC: Yes, I think that’s right.
Almost a $70 billion valuation, I think investors, as well as employees, are wondering, we had this CEO who got us through the really tough early phases. Can this person lead us through an IPO, where people really want a more even keel?
And I think everyone is still asking that question, but it’s not really clear at this point.
HARI SREENIVASAN: This is in the wake of the revelations of a woman who left the company, and she had this — part of this to say in her blog.
“It became obvious that both H.R. and management had been lying about this being his first offense, and it certainly wasn’t his last. The situation was escalated as far up the chain as it could be escalated, and still nothing was done.”
She’s not talking about Travis. She’s talking about one of her managers who she contends was harassing to her, and now there’s a large investigation. This is a big deal for the company.
MIKE ISAAC: Yes, this is — you know, this is core to how the culture operates.
You know, it’s very — to take it from Facebook, move fast and break things. But, at some point, you have to sort of clean things up on the inside and change, especially if you want to go public. And I think they’re really facing that question right now. It’s just a question of, can you do it and how long will it take?
HARI SREENIVASAN: For a little while, there was — and there might still be continuing — a delete Uber campaign. Did that have an impact on their business?
MIKE ISAAC: Yes, it did.
It was — I would say it’s not a material financial impact, but I have spoken to a number of people who were watching that go down inside. And, you know, there were hundreds of thousands of people that deleted their Uber accounts entirely, and probably hundreds of thousands more that just deleted the app.
So, it worried Uber, and they definitely tried to curb it pretty quickly.
HARI SREENIVASAN: All right, Mike Isaac of The New York Times, thanks so much.
MIKE ISAAC: Thanks for having me.