The NewCo Daily: Today’s Top Stories
A central player in a deepening scandal has decided to “take the Fifth” — to remove himself from having to testify in a court proceeding because it could incriminate himself.
No, we’re not talking about the Trump administration’s Russia troubles. This is the latest twist in the legal battle between Google and Otto’s Anthony Levandowski, the self-driving truck company founder whose firm was acquired by Uber last year. Google has accused Levandowski of stealing its autonomous vehicle tech when he decamped from its subsidiary Waymo to Uber, and now Levandowski has taken the advice lawyers so often give and chosen to remain silent (TechCrunch).
Just as it’s hard to keep up with the twists and turns of the Trump-Russia investigations, it’s also been tough to stay on top of all the bad news coming out of Uber lately. Here are some key headlines from the past week alone:
- Recode has an in-depth look at the “mini civil war” that ensued inside Uber when it added the Otto team to its already ambitious self-driving effort in Pittsburgh built around a team from Carnegie Mellon.
- Uber had to suspend its entire self-driving vehicle program temporarily after a car was involved in an accident in Tempe, Arizona (USA Today). It doesn’t seem to have been the car’s fault.
- A story in The Information recounted the seedy tale of a 2014 visit to a Seoul “karaoke-escort” bar taken by Uber CEO Travis Kalanick and other executives, some of whom selected escorts from a lineup in which the women wore numbered tags.
- The company released its first-ever diversity report. The numbers were dismal — and also on par with other big tech companies (The New York Times). Uber’s weak diversity record is nothing new; it’s the result of a long history of simply sidelining the issue (Bloomberg).
- It’s going to get harder and harder for Uber to keep its prices low (Quartz).
Embattled Uber CEO Travis Kalanick is still running this show, and as long as he has his board’s backing there’s no reason he can’t keep doing so. But sooner or later, someone will have to take responsibility for the implosion of this brand.
Facebook Un-friends Palmer Luckey
Palmer Luckey, the controversial founder of virtual-reality pioneer Oculus Rift, is leaving Facebook — which acquired Oculus three year ago for nearly $3 billion (The New York Times). Luckey’s departure follows a $500 million ruling in federal court that Oculus had stolen technology from ZeniMax, a game publisher.
Luckey became the much-memed-about poster boy for VR’s geekiness when Time put him on its cover in an awkward mid-air leap with a headset over his eyes. He later made headlines for contributing money to a right-wing organization called Nimble America that pushed Trump-friendly memes during the 2016 election. Facebook had already elbowed Luckey out of his VR management position in January.
As the Luckey story and the Anthony Levandowski/Uber tale above indicate, It’s been a rough season for CEOs of ambitious, innovative startups that get swallowed by larger tech giants. Sometimes “acquihires” work out to everyone’s delight: When Microsoft put LinkedIn founder Reid Hoffman on its board earlier this month, Backchannel headlined its story, “Now We Know Why Microsoft Bought LinkedIn.” Hoffman is widely respected and even loved in Silicon Valley. But more often, the larger company that acquires a smaller one for the talent of its leaders ends up with buyer’s remorse, as it learns more about who it has gotten into bed with.
How Did We Get Prices So Low?
Everyone loves low prices! That’s how markets work. Consider the story of Charles Shaw wines, the remarkably popular Trader Joe’s brand known affectionately as Two Buck Chuck.
Thrillist traces the entire decades-long arc of the Charles Shaw winery saga: A high-flying, expensive Napa brand in the ’80s, Charles Shaw went bankrupt in the ’90s as its founding couple went through a messy divorce. A shrewd winemaker named Fred Franzia acquired the name and slapped it on a $2 bottle with a tasteful label that makes it look like a $20 wine. Then Trader Joe put it on your table — if you wanted it. (It’s sweet and has tested high in arsenic, according to some reports.)
But sometimes we get low prices not because one company has figured out some new way to satisfy a market need but because two companies are fighting a price war. That’s what’s happening in retail today: Walmart is famous for delivering goods cheap to customers by bargaining hard with suppliers. Amazon is famous for its willingness to take losses in order to win customers. Cue up the Clash of the Titans theme.
According to Jason Del Rey in Recode, Amazon is aiming to undercut Walmart on basic supermarket-shelf goods produced by giants like Procter & Gamble, Unilever, PepsiCo, Mondelez and Kimberly-Clark. Amazon is driving this price war in part with an algorithm that finds low prices at other stores — even for bulk items like those sold at Costco — and then applies those price tags to all sizes of the goods.
Customers love it, of course. Producers are less happy. Their quandary helps explain the logic of deals like Unilever’s Dollar Shave acquisition. Any new company that can get products into customers’ hands without passing through Amazon or Walmart is going to be able to field similar offers.