The tough questions investors ask

Uber got away because it was funded by private equity. But what about Tata Steel and ITC? What cloak do they wear to get away from scrutiny?

Founding Fuel

[Photo by Drew Beamer on Unsplash]

In Silicon Valley, Uber’s IPO tanked and threw a spanner in the narratives most of us believe around how to value startups and private equity-funded unicorns.

For perspective, do read this line on a risk factor in the Uber IPO document: “We have incurred significant losses since inception, including in the United States and other major markets. We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.”

On poring over it, Ben Thompson of Stratechery raised some pertinent questions.

  • How much it costs Uber to acquire drivers
  • How much it costs Uber to acquire riders
  • How much it costs Uber Eats to acquire restaurants
  • How much it costs Uber Eats to acquire customers
  • What is Uber’s retention rate for drivers
  • What is Uber’s retention rate for riders

While he continues to remain an “Uber-Bull”, Thompson points to a malaise. The questions remain unanswered. That is why, he writes in a later post, “This was, to me, a tremendous disappointment…… To be clear, I don’t expect Uber — or any company — to answer all of the questions I listed; the point is they answered none of them… It’s worth noting that releasing more information can benefit companies.”

Thompson’s disappointment with Silicon Valley resonated with many on this side of the world and in a different context.

The top brass at Tata Steel announced its decision to pull back from partnership with the German steel maker Thyssenkrupp after the EU Competition Commission red flagged it. Then there was YC Deveshwar’s death—everyone associated him as being the face of ITC. The board knew he was terminally ill since 2014. A replacement was announced overnight.

That Tata Steel was in trouble and Deveshwar was unwell is something the board knew. Unlike Uber, both are listed entities and the boards here have a fiduciary responsibility to shareholders to disclose it. Yet, it went unscrutinized in the public domain. Our co-founder Indrajit Gupta thinks it is time tough questions are asked.

If Uber cannot get away when it comes into the public eye, there is no tangible reason large entities such as Tata Steel and ITC should either.

We’d appreciate your thoughts on the issue.

My very best,

Charles Assisi

For Team Founding Fuel

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