Former Uber Employee Reveals Thoughts on Whether Uber Failed in China

2 days later, on August 1st 2016, Uber’s China business was merged with its fierce rival Didi Chuxing. The media drew a conclusion that Uber failed in China, calling it a “defeat” or a “failure”.

Along with 600+ colleagues working on Uber China, I felt the immediate shake up. Overnight, they were off the table. Uber China became a business unit of Didi.

362 days has passed, looking back:

As a former Uber employee, a Chinese citizen specializing in bridging Silicon Valley and China, and a writer covering Silicon Valley for major China tech and lifestyle media, I followed the aftermath of this merger closely.

For context, I was a Product Marketing Manager on Uber China Partnerships and spent time between HQ in San Francisco, and five major offices in China (Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen). Before Uber, I co-launched Whisper’s China operations from 2014–2015 with Tencent, wrote a case study on Evernote China strategy and signed up hundreds of Airbnb new users in China via viral blog posts.

China is a land of opportunities. However, with fewer rules, ruthless hustle and a 996 working schedule (9am — 9pm, 6 days a week), it is difficult for Western companies to navigate through. Operating in China with all-in style takes grit and Uber did it .

First, let’s define what success means in China for a Silicon Valley company.

Due to its closed ecosystem and government regulation, China is unlike any other market and requires a separate strategy. A complete win over local competitors could be an over-ambitious goal. Setting up realistic milestones and defining success metrics of “Winning in China” is a helpful exercise before allocating resources.

It’s also worthwhile to assess the nature of your business. For example, Airbnb and Uber are quite different. Unlike Airbnb whose global supply network makes it more defendable from local copycats, Uber is a hyper local business. To win in China, Uber had to head-on compete with Didi and Yidao. In contrast, Airbnb’s copycats in China are collectively providing free user education as Airbnb dominates the overseas travel market and savvy consumers tend to convert to the coolest platform.

Now, switching gears to my views on Uber China, both financially and culturally:

Financially, Uber is in a long term gain — taking 17.7% economic interest in Didi Chuxing. Didi is much more than ride sharing — any Chinese internet giant will branch out into new businesses and become an untouchable conglomerate, especially as Didi is a child of Tencent and Alibaba from a merger in Feb 2015. Didi is also a major investor in ofo, a leader in China’s bike sharing battle. As the Didi empire grows, even with dilution, Uber’s economic value will grow.

You may argue that Uber could have invested in Didi for the same financial outcome, without going all in and losing billions of dollars per year in China. However, that is purely financial and neglects Uber’s culture influence in both China and Silicon Valley.

Chengdu, June 2016

Chengdu was the Number One city for Uber in terms of completed rides. After a long working week, we gathered to eat hotpot and hang out. One colleague remarked, half jokingly:

(Note: mafia is an analogy to the famous “Paypal Mafia” whose members have since started many successful businesses such as Tesla, Yelp, LinkedIn, Yammer etc.)

It was not a joke, and became a reality faster than anyone could think of. The Uber China Mafia now leads Mobike, ofo, bluegogo, Toutiao and other notable internet startups.

In China, Uber is nicknamed as “the Huangpu Military Academy” or West Point for tech talent. Any graduate of “Uber China” has the traits of hustle, extreme ownership and high productivity. In fact, bilingual talent as such is hard to find elsewhere in China.

This leads to my first viewpoint: Uber did not fail in China, but incubated entrepreneurs, and most notably, some of the highest performers from Uber China took the battlefield from ride-sharing in 2016 to bike sharing in 2017.

Bicycle to China is like cars to America. It is suitable for navigating small streets in China. Unlike America, China has a very developed public transportation system, notably subways, which make bikes handy to finish the last mile. Moreover, access to bikes is especially attractive to Chinese white collars with 996 working schedule. My friends say that riding bike home might be the only time for daily exercise.

Under the spotlight are Mobike, ofo and Bluegogo — all run by former Uber China employees.

The chart below (source: China Bike Sharing Report: March 2017) shows how relevant bike sharing is in China’s daily life. Bike sharing apps are attractive to investors due to its access to millions of users in China on daily basis — a new advertising channel.

Coincidentally, bike sharing trend heated up in fall 2016, when Uber China’s top talent were looking for the next challenge that gave them both purpose and a daily adrenaline rush, like the Uber/Didi combat days.

The battle between Mobike and ofo boils down to different tribes within Uber China.

As I walked into Mobike’s office, it felt like Uber China all over again: CEO Davis, VP of Engineering Jia, VP of Product Jack, Design Director Yao, PR lead Xue and many more familiar faces. More than the faces, the sparkles in their eyes and the energy in the room remind me of Uber China days. In some way, Uber China Mafia found home for their unrealized dream, and now have full autonomy to operate a Chinese local company.

This removed the underlying lack of trust between US and China, different time zones, and communications errors. Unlike Uber China whose product and engineering were located in the San Francisco HQ, Mobike and ofo can build engineering team to move faster.

In the end, this story reminds us that people follow people.

A reporter from The Information tweeted that “Didi had Uber China talent in its hands & threw it in the toilet!” He was right that a year ago Didi had Uber China’s talent at disposal, but the departure was voluntary and it came from a culture mismatch.

One commonality among all Uber China employees?

This trait is not required to work for Didi, and is not easy to recruit for in China.

Uber is a product that has touched the daily life of millions in China — from retired grandpa who gave up majong time for driving, to housewives who traded soap opera binge watching with earning extra cash. Uber’s brand value and purpose attracted top talent, overseas returnees, and type A personality doers with operations excellence — many from finance and consulting background.

This breed of talent did not belong to Didi, a local Chinese company. Instead of joining a department of a huge company, many wanted to write their own chapter.

Departing from Didi is mutual — the Uber disciples have the operational playbooks of launching new cities and the entrepreneurial hustle imprinted to take on new challenges. Bike sharing filled in the gap.

Besides local biking sharing and other transportation startups, some global minded talent from Uber China team joined Airbnb China, from design, copyright, public policy to user research. Airbnb also benefited from Uber’s China efforts.

Uber’s China endeavor also left long lasting marks in Silicon Valley. One of my roles at Uber was to assist cross functional teams in HQ to better understand cultural nuances to make product decisions and prioritize features, for example, in-app promo banners are displayed differently in China, WeChat and SMS messaging are more effective than email marketing.

I prepared “China Internet 101” presentations to explain Tencent, Alibaba, Baidu and other equivalent of big tech companies. Many American top talent have little knowledge about China and may not proactively learn about this rising power. However, Uber’s “China First” company wide OKR gave many colleagues a “passive” chance to learn about China’s innovation, user behavior and business etiquette.

Any Uber employee with exposure to Uber China product would benefit from the hands-on experience of combating fraud, and working with Baidu, Alibaba and other China companies. It is a preview of a future where cross border collaborations between US and China could be a norm. Despite the merger, Uber’s workforce will be more effective working with China wherever their next career leads them.

What are the key take-aways for other companies eyeing for a China presence?

Beijing, June 2016

“When do you think we can win over Didi?” an American manager asked me.

“Didi has 5,500 engineers. Perhaps the day we have engineering office in Beijing.” I answered.

I did not think Uber would win over Didi, but at the same time, Uber did not fail.In fact, Uber’s contribution to both China and the US can only be felt as the time goes by.

Special thanks to #Chris, Suhas, Matthew, Andrew, Sunny for the kind feedback on this article.