
Travis Kalanick Is Exiting His Uber Holdings Uber Quickly - ninninhall
https://www.bloomberg.com/news/articles/2019-12-16/travis-kalanick-is-getting-out-of-his-uber-holdings-uber-quickly
======
gwd
From TFA:

> The 43-year-old’s remaining stake in the ride-hailing company now
> constitutes about a fifth of his $3 billion fortune, according to the
> Bloomberg Billionaires Index, down from about 75% before the lockup.

To be fair, if I had 75% of my net worth in a single asset, I'd also try to
diversify. My wife and I both have lots of stock in the companies we work for,
due to RSUs and employee stock purchase programs; and although we both believe
our companies are a good investment _overall_ , we regularly sell shares just
so that we don't have so many of our eggs in those two baskets. 20% is a
perfectly reasonable target I think.

~~~
fastball
Although you make a good point about general portfolio diversification, the
difference between a "normal" employee and a co-founder is fairly large in
this instance. Co-founders are supposed to have confidence in the business
they built - if they don't, why should other investors?

~~~
williamdclt
I don't agree with this logic: you can be confident but prudent. Self-
confidence leads to bias, I wouldn't consider it a bad sign that the co-
founder stays prudent.

However, going from 75% to 20% means that something changed, and _that 's_ not
a good sign

~~~
kjs3
What do you think changed for the worse beyond he's no longer part of the
company, no longer party to the 'inner circle' decision making, and no longer
has a vested interest in maintaining the perception everything is perfect?

~~~
OnlineGladiator
Uber's stock price has been steadily falling since it went public. There are
many people who believe it still has a long way to fall.

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michalu
That's to be expected. He was ousted from the company, has no control now so
there's little reason why he should be bullish on a stock run by other people.

Plus, the future isn't so clear and the markets are at all time highs and he
has other company that may require liquidity in the coming years. Better be in
cash.

~~~
jodrellblank
_the markets are at all time highs_

Isn't the world economy built on the idea that markets will always go up?
Every year should be an all time high, otherwise we're in recession which is
(apparently) tragedy to be avoided at all costs, no?

~~~
thorwasdfasdf
It's not just that it's at all time highs. PE ratios are also at all time
highs: that's the Price to earnings ratio. There's a number of indicators
right now that are at all time highs like the Warren buffet ratio
(GDP/earnings), all pointing saying this market is really expensive.

This is the most hated bull market ever. None of the experts are buying
heavily into this market (it's all stock buybacks that's driving this market
up).

So, you can see why everyone is uneasy about these extremely high PE ratios.

~~~
rootusrootus
Since you mention Warren Buffet, I will say that what makes me most nervous
about the market is that collectively everyone seems to be concluding that
it's overheated. By the time the hordes figure it out, it's already happened.

~~~
Clubber
This recession talk seems to be happening suspiciously close to an election
year. It's almost as if someone is trying to concoct a self-fulling prophecy.

~~~
tehlike
This was the case last year too... In 2017 and 18, there was discussions of
melt up and then melt down...

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duxup
My questions about the viability of Uber aside, I stick to the story I've
heard repeated in many forms "executives sell shares for any number of
reasons, but only buy for one reason".

Accordingly I don't put much meaning behind stories about an executive
selling.

~~~
hgmason
What would be the only one reason for executives to buy?

~~~
duxup
They think the stock will go up.

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fastball
Travis Kalanick and Adam Neumann should co-author a book entitled "Making
Billions - No Profitability Required".

~~~
thisisbrians
Your company doesn't have to make a profit for it to be (legitimately) worth a
lot of money...Amazon is a great example.

~~~
fastball
Amazon does make a profit though. And when they weren't, it was by choice and
they were not burning billions in investor dollars to do it. But yes, I
probably should've said "Viability" instead of "Profitability".

~~~
ralph84
Every unprofitable growth company says they’re doing it “by choice”. And every
unprofitable growth company burns investor dollars (where else would the
dollars come from?). During Amazon’s unprofitable years many people were
saying the exact same things about Amazon that people say about Uber now.

Of course that doesn’t mean every unprofitable growth company is Amazon, but
Amazon’s success means companies won’t stop trying to emulate it.

~~~
aguyfromnb
> _During Amazon’s unprofitable years many people were saying the exact same
> things about Amazon that people say about Uber now._

Maybe "people were saying" the same things about Amazon then as Uber now, but
that doesn't mean they are correct. Completely different business models.
Amazon had _billions_ in free cash flow going back to 2005, just no accounting
profits. Uber has negative free cash flow. We hear the same thing about Tesla
("they're reinvesting profits!"), but they have something like $10B _negative_
free cash flow since inception.

All profitable companies are alike; each unprofitable company is unprofitable
in its own way.

~~~
8ytecoder
People look at profits with a narrow focus. It's entirely possible for a
widely profitable company to have no future than a company reporting a narrow
loss. It's also possible that a company has reached it's end of days for lack
of a way to _sustain_ profits.

Hypothetically speaking, if there were a reporting mechanism that clearly
separated operational expenditure from re-investments, Amazon and Uber would
likely be in two different ends altogether. More importantly, Amazon didn't
just reinvest into existing products, they were also adding entire new
categories of businesses (AWS), new models of operation (2-day shipping) and
relentlessly adding new categories (wider selection) - all at the same time.

It's possible that Uber might be doing something similar, I'm just not that
aware of the breakdown of Uber's expenditures and losses.

------
tonymet
He's moving his investment over to CityStorage Systems

[https://www.crunchbase.com/organization/city-storage-
systems](https://www.crunchbase.com/organization/city-storage-systems)

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gumby
Steve Jobs dumped all his apple stock when he was ousted in 1985

~~~
CRUDite
I was thinking about this also. Perhaps he will come back in when it hits rock
bottom

~~~
gumby
He’s been dead for more than three days so I doubt he’ll be back.

Of, you mean Kalanick. I doubt it but who knows.

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mercwear
This is not shocking at all. Anyone surprised by it has not been paying much
attention to Uber and or Kalanick over the past 18 months (I am not saying
that's a BAD thing!).

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dannylandau
I wonder what the tax rate on his windfall, 50%?

~~~
TylerE
Try 15%, at a maximum.

~~~
akavi
20%, you mean, for federal long term capital gains.

Plus 3.8% for Net Investment Income Tax.

Plus, he resides in CA, so tack on ~12% (he's making so much marginality
doesn't _really_ affect things) in state taxes.

~36% in total, which is a lower effective tax rate than many people here, but
not quite as outrageous.

~~~
gok
There's actually another 1% in CA on income over $1 million in California, so
it's 13.3% + 23.8% = 37.1%

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salimmadjd
Actually getting fired by the VCs might have been a blessing for him.

He can liquidate his holdings without worrying much about misleading the
market and a potential law suit from shareholders if he was still the CEO or a
director.

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alistproducer2
While there may be more upside to this market, the probability of his fortune
being halved are much higher than them being doubled in the next 12-24 months.
He could always buy back in now that he's liquid, but when the bottom drops
out of the market and there aren't any bids (especially for unprofitable
monopoly plays like Uber) he could find himself a lot poorer really fast.

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javajosh
A bit meta, but I wonder how this became a story. Is someone constantly
analyzing data for this kind of thing? How did it get surfaced? And, in
general, what kinds of news services trigger off of polling public data?

~~~
frockington1
Large insiders have to send forms to the SEC of their purchases/sales of
equity in their company and then the SEC makes it public

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enahs-sf
I wonder what his effective tax rate will be on these sales.

~~~
frockington1
Tax rate is 20% on long term capital gains. Will be a nightmare to figure out
the cost basis for everything

~~~
naveen99
There is a startup exemption for investments that happened below $50 million
valuation, that he might qualify for.

~~~
ericd
That's only on the first $10M of gain, so it's not a huge percentage for him.

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dep_b
I wouldn't want to think about how a company is doing that kicked me out. I
would sell it ASAP and focus on the future.

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itsmhuang
At first I didn't understand what the title meant, then I remembered the
original meaning of uber.

~~~
Clubber
Yes, journalists and editors can't resist puns these days. To me it cheapens
their credibility on that particular article, like I shouldn't take it too
seriously.

------
ryanmercer
I would too. I can spend money, I can't spend shares.

------
joncrane
Interesting that the currrent CEO is buying Uber stock while founders are
dumping it.

It's unclear whether the stock Dara Khosrowshahi is buying comes at a
discount, though.

~~~
fastball
Seems pretty reasonable. Travis is no longer steering the ship, so he gets his
money out. Dara is in charge and presumably has confidence in his own
abilities, so he buys shares at what are probably a low (given all the
controversies and hiccups in the past two years), assuming Uber can actually
get to profitability.

~~~
libria
Hundreds of people who are not Uber CEO's are continuing to hold Uber stock.
Not controlling a company is not a common reason to sell.

The article's implication - that Kalanick is simply pessimistic about his
investment in Uber - seems more reasonable.

~~~
fastball
Diversification. Having 75% of your wealth in a single asset is a terrible
idea for anyone _except_ the co-founder/CEO of a business, for whom continuing
to have a skewed portfolio can be a signal of confidence.

Once you're not longer the person running the show, it makes a lot more sense
to diversify, as you probably don't give a damn whether you're signalling
confidence or not.

------
kerng
Isn't that just the money he would need to pay in taxes??? So he has to sell?

~~~
hannasanarion
The United States doesn't have a wealth tax (yet). Once you have something,
you pay no taxes on it forever.

~~~
kerng
When the stock vested at IPO sometime earlier this year, he had to pay at
least 30% taxes on it - in the US. That is not money he could have had without
actually selling some. No?

This is a serious question, so I'm not understanding the downvotes.

When the company i worked for IPO'd I had to pay taxes on the stock when the
paper money turned into real money.

~~~
djrogers
> When the stock vested at IPO sometime earlier this year, he had to pay at
> least 30% taxes on it - in the US. That is not money he could have had
> without actually selling some. No?

You generally don't have to pay taxes on stock options until you actually have
income from them - ie sell. There are some exceptions, and in some cases
paying at-vest can actually reduce your overall tax burden (by excercising
options you don't intend to sell right away, you can start the clock to turn
them into long-term capital gains when you do).

~~~
kerng
Did the Uber guy have options or restricted stock units? For restricted stock
units one has to pay tax at time of vesting/IPO afaik. But as founder things
are probably different...

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larodi
man knows when to jump ship. not a big surprise indeed.

