Feb 16, 2016 ยท 9 minutes

Does Uber really have a new, deep-pocketed, equally aggressive competitor waiting in the wings?

In other words: Is Uber about to face another Didi Kuaidi -- but this time on its home turf, in the must-win market of  New York? The same city where Uber’s widespread driver furor seems to be having the biggest impact?

CB Insights-- a research agency that normally just publishes data-- had a surprising, and largely unnoticed, scoop Sunday night. A company called Juno is paying drivers to install some kind of tracking app,and keep it open during Uber rides,  apparently to gather research for a new ridesharing service. From the newsletter:

[An Uber driver] mentioned that he also gets paid by Juno.


More interestingly, he gets paid by them but doesn't drive for them.

He just turns on their app when he is driving for Uber as they (Juno) want data on the rides and routes he drives. He said that they are launching in April.


Using Uber drivers to get data on routes seems like an expensive and relatively sophisticated data acquisition strategy.

The company's website is just a landing page, but they did just rent 10,000 sq ft at 1 World Trade Center which is said to be going for $85/sq ft. So they have some money.

I mentioned this to Roy on our data team and he said that Juno appears to be founded by Talmon Marco. Marco was the founder of Viber which he sold to Rakuten for $900 million in February 2014. Juno has a team of engineers based in Israel as well as a ground team in NYC.

So, it looks like Juno has some resources and a successful founder at the helm based on what we could piece together. Whether Juno is some sort of other sharing economy play or a direct competitor to Uber remains to be seen.

The only other thing I could find online about Juno was this thread on the Uberpeople driver forum. It gives a link to sign up (which is apparently also on other anti-Uber threads around the Web) and repeats the idea that Juno will be a ridesharing service to rival Uber. The poster also cites a rumor that Juno will only take a 10% cut from drivers.

 I’m trying to find out more about Juno and, until I do, I have no clue if any of the rumors are true. But reading CB Insights’ story, and the Uberpeople thread, a few things occur to me.

Update: Adam Smith points out the 10% cut is confirmed on Juno's website, along with some other promises. The company is apparently paying drivers $25 a week to use its app, pre launch. They are also pledging to give 50% of founding shares to drivers.

Update II: Jeremiah Owyang also spotted the Juno app in the wild...

My first immediate thought is that this company sounds every bit as creepy as Uber. Paying drivers to install ride tracking apps without telling passengers? Creepy. What exactly are those apps doing? Are they just recording ride data? Are they recording other rider information? Are riders being secretly recorded in some other way?

By the way, this isn’t the first time Talmon Marco, the former CIO of the Israeli Defense Force, has been accused of spying on users. Back in 2014, Pando’s Dan Raile wrote about fears from some users of Viber in Lebanon that the service could be a secret IDF front.

There was no evidence to support those fears, and there’s no suggestion here that Juno is anything more than it appears. That said, it's beyond a strange coincidence, that drivers are reportedly using Marco's Viber app to coordinate their protests against Uber. Viber?!

From Buzzfeed...

Uber Drivers United in San Francisco have been using a secret Viber group to communicate during labor actions, and the Uber Drivers Network in New York is attempting to build an independent database of drivers to stay in touch with one another.

The lack of openness around Juno is pretty alarming. As a result, if Juno does prove to be a ridesharing service, I’m not sure I’d get in their cars.

That said Juno’s sneakiness should scare Uber even more than it scares me. As I’ve written before, Didi is so devastating in China to Uber because it excels at Uber’s own game. It has deeper ties with the government, deeper pockets, and a market leader position. And it’s globally aggressive. Uber has never had a player like that going after it in the US. Juno seems almost an Uber tribute band from the little we know, right down to the ties to government. (Uber employs the former head of the CIA Robert Gates as the head of “Uber Military.” He recently argued companies -- presumably like Uber-- should hand over more data to the US government.)

Still, the only way to fight Uber so far seems to be with another Uber. One of the most frustrating things about Lyft is that it has essentially resigned itself as a commodity product and it will always lose next to Uber because it has less cash. Commodity products are always about who can offer the lower price. Uber deciding to cut rates not only impacts Uber drivers, but also de facto sets the strategy for Lyft as well, as Lyft explained in a recent letter to drivers.

If Juno is really going to cut drivers a far better deal, it doesn’t really have to differentiate on the passenger side.

Uber is both the largest, strongest, and most vulnerable it’s ever been right now fighting major battles with drivers that threaten to drag it through the courts and union drives for the better part of the next decade, a costly and hopeless slugfest in China that’s already seen Didi surpass it as the largest ridesharing company in the world, and a massive public opinion battle which it’s hired political pros to fight.

Uber has “won” so far by fighting everyone and raising capital at unsustainable prices and amounts. It allowed the ease of raising capital to dictate its “why not?” strategy of global and product expansion.

But now that landscape has changed. Uber’s sources of capital have long since stopped being VCs or even hedge funds and mutual funds. They’re now little known or shady international oligarchs, and rich clients of private banks both here and in China. Those are basically sources you hit for capital when you are out of other options. Point being: Absent an IPO, Uber is running out of places to get a new $1 billion round. And it’s spending $2 billion a year losing in China and India alone.

Uber has another big problem: Time. Uber has bet its economics on self driving cars, but that’s at least six years off and then it graduates to bigger, deeper pocketed competitors like Tesla, Google, and Apple. An aggressive enough, well-funded enough company that makes a tactical strike to take on Uber in New York first, then San Francisco, LA and the other major, profitable markets? That could potentially wound Uber badly.

Additionally, there is a whole coalition of international billionaires who want to take Uber down, and have bet billions on that via Lyft, Didi, Grab, Ola and others Uber spoilers. If Juno poses a viable threat, a good deal of conflicted Silicon Valley money may not be able to back it, but there are billions in the rest of the world that happily will.

In fact there’s one tenuous link already: Rakuten. The company that Talmon Marco’s previous company sold to is a major Lyft investor and on Lyft’s board. It’s also an investor in a Madrid-based company called Cabify. Rakuten is very connected to the Asian multinationals and hedge funds that have backed so many of the other Uber-spoilers. This is not to say Rakuten would invest directly in a competitor to Lyft where it serves on the board. But it underscores how close the ties are between all the backers in this global fight. And all of them make money somewhere in the world if Uber stumbles.

All except ironically Lyft, if a stronger US rival appears. Lyft would very likely be SideCar’d in this hypothetical scenario. They’ve shown themselves to be completely unwilling to compete aggressively, and they’re essentially a like-for-like commodity service alongside Uber at this point. If Uber gets meaningfully damaged by a new competitor, smaller and less well funded Lyft would surely be toast.

The irony of all of this-- of course-- is that Uber’s Achilles Heel is the thing it high-fived itself so much about in the early days. It’s greatest “disruption”: A reliance on independent contractors it doesn’t have to pay or offer benefits to. This strategy always had risks, like the drivers also drive for Lyft. Big deal, Uber could outspend and out execute them. Even when they’ve infuriated them en masse, they may have figured the worst they’d have to contend with is a unionization drive. Uber is increasingly worried about that, sure. But they’ve hired the best people to fight it. They fought back threats like this before, even buying whole state legislatures when they had to.

But even Uber likely didn’t assume in a down funding market a company would come out of left field to challenge the most highly valued company in Silicon Valley history and take one-third the cut Uber is taking now. Nor did it likely assume it’s utter antipathy for drivers and it’s “hey you work for yourselves! not for us!” attitude would lead to drivers willingly giving away route data that could be a competitive leg up to a new entrant. And their “partners” rooting for that entrant all the while because as the forum reads, Uber has left them with “nothing to lose.” There’s not even a “devil we know” comfort to Uber-- that’s how much recent rate cuts have devastated its drivers.

Again, this is why everyone from Robert Noyce to Seth Sternberg have done things differently when it comes to labor-- even contract labor. Every startup faces enough competitive threats, why create your own?

Uber has based its valuation on being able to deliver low enough prices that people don’t need to own cars, global domination that Didi alone has already foiled, and somehow waiting the market out until self-driving cars make the economics better. Imagine if you could start with a clean sheet of paper without all of that. Would you go into markets like Detroit again? Or would you just focus on the largest, most profitable cities. How would you structure the deals with drivers? How would you think about your global footprint?

Granted, every “if” in this story are huge ifs. But as Peter Thiel [disclosure: a Pando investor] says, it’s not the first or second mover that counts in a market, it’s the last mover. Any entrepreneur going after this space would have learned a lot from sitting back and watching for the last seven years. And no one-- not drivers, not riders-- are fully happy with what we have now.