Return to Transcripts main page
First Move with Julia Chatterley
DiDi, the Chinese Ride Hailing App Raises $4 Billion in its U.S. IPO; The U.N. Warns COVID Could Cost $4 Trillion; Elon Musk Admits His Internet Satellite Business will Cost Billions. Aired 9-9:45a ET
Aired June 30, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:52]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York. I'm Julia Chatterley. This is FIRST MOVE, and here is your need to know.
DiDi does it. The Chinese ride hailing app raises $4 billion in its U.S. IPO.
Tourism trounce. The U.N. warns COVID could cost $4 trillion.
And space splurge. Elon Musk admits his internet satellite business will cost billions.
It's Wednesday. Let's make a move.
Welcome once again to FIRST MOVE this Wednesday, a day where we focus on the bulls, the bears, and yes, the three lions. Congratulations to England
on their quite frankly, astonishing win against Germany on Tuesday. Sorry, to our German viewers. I hope you don't -- former German viewers, please
stay with me, and good luck, too, to England this weekend against Ukraine.
And from a fab football crew to a wow Wall Street debut. The lion's share of focus today on the Chinese ride hailing giant, DiDi Global and a lion-
esque roar, I think from investors, too as DiDi raised more than $4 billion as I mentioned. We'll discuss the DiDi delight and potential downsides,
too, perhaps as well throughout the show today.
And from a headline grabbing app to a softer open as you can see on tap, not much though, it's the last trading day of the month, the quarter and
the first half of the year, which can always be pretty lively.
The S&P though on target for a fifth straight month of gains. That said, the third quarter could be increasingly choppy, I think if higher growth
and inflation pressures the Fed to quicken its policy pivot, so we'll certainly be talking and watching for that, too.
European stocks, meanwhile, paring recent gains. Interesting on an inflation read there though. Prices actually eased from a two and a half
year high in May, currently lying just below the European Central Bank's below or around two percent target.
What about in Asia? Well, China ending the quarter with gains, but factory activity there slowed in part due to extreme weather driven power
shortages, the worst energy crisis there in a decade. That could also weigh on export growth.
An important Chinese export topping our drivers today, too. As I mentioned, ride hailing giant and mobility company, DiDi revving up for its U.S. stock
market debut in around half an hour's time. The Chinese company raised over $4 billion in the IPO, giving it a valuation of some $67 billion.
Clare Sebastian joins me on this. Clare, I'm so excited about this one, you only have to have driven or at least sat in a traffic jam perhaps in one of
the biggest cities in China, the first year, second year, third year or fourth year, quite frankly, to understand the potential for the gig economy
in ride sharing in China.
What do we make of this one? What do we need to know?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, so DiDi, first of all, is being called and quite rightly, in many ways, the Uber of China. It
dominates the ride hailing market there, and Julia, I just to give you a sense of the size of the company because by many metrics, it is actually
bigger than Uber revenues last year where $21 billion versus $11 billion for Uber, and has 156 million monthly active users compared to 98 million
for Uber.
So, this is a giant, but as you say, they are expanding far beyond the sort of core ride hailing. They have got e-bikes and things like that as well.
They are really investing in technology. They're really keen on electric vehicles.
They're not only building out their own fleet with a purpose built electric vehicle design for ride sharing, that's called the D1, but they're also
investing heavily in autonomous driving. Interestingly, where Uber has actually scaled back its ambitions due to the cost of something like that,
DiDi is really ramping up here, investing in level four that's fully autonomous driving technology.
It already has a fleet of around a hundred fully autonomous vehicle. So, this is a bet on the sort of the consumption of ride hailing in China, but
also on DiDi's sort of embrace of this technology and its ability to grow what it calls the future of mobility.
So, it's a really interesting opportunity for U.S. investors. It is though a bet on China and 93 percent of DiDi's sales are in China.
[09:05:08]
CHATTERLEY: Clare, I love that you mentioned the fact that people are calling this the Uber of China, which I think quite frankly is so 2017,
because of course, they beat out Uber in China and Uber invested in them back then. For me, and you touched on this, I think the difference between
what ride hailing is in the western United States and in Europe where it's kind of a luxury, it's relatively expensive, access to cars is really easy,
you can still get around.
In China, you try buying a car, affording one, but then getting hold of one. Try getting a license plate. And then if you manage to get those
things, you're told, sorry, you can't drive this week, or sorry, you can't drive this day because of the license plate, because of sheer congestion.
So for me, I love the fact that actually, the cost per kilometer in ride hailing in China is cheaper than actually a cost per kilometer of actually
owning a car and getting around, this according to the CIC.
So much in this that I find quite exciting. What about growth opportunities? Is China enough, given urbanization over the coming years?
SEBASTIAN: Well, they did commission this report from a Chinese consultancy called CIC, which they quote widely in their IPO prospectus,
Julia, and that would suggest the statistics from this report that there is a huge growth opportunity in China, that this really is a bet on China's
continued urbanization.
I want to pull out some of those statistics for you. They say -- according to CIC -- that the growth of these cities will drive the urbanization rate
to 70 percent by 2030 in China. That's an additional 200 million city residents. They say that the growth opportunity in what's called Tier Three
and Beyond Cities is even bigger.
Currently, the shared mobility penetration of those smaller cities is seven percent compared to 24 percent in the larger Tier One and Tier Two cities
according to CIC. So, urbanization in China are big growth opportunities. They are, with those extra sort of seven percent of sales outside of China,
going into other markets, their first ones were Brazil and Mexico. They are rolling out their sort of electric vehicle offerings in those markets, too.
So certainly, there are opportunities outside of China, and I think they are looking for more of those emerging markets where some of the similar
opportunities for urbanization and that kind of growth exists similar in China.
CHATTERLEY: Yes, it makes perfect sense to me. And I know another big one, you mentioned it as well, the technology aspect. Things like autonomous
technology as well. They would argue, I think, is a great opportunity, too. It is going to be interesting to see how this one trades.
Clare Sebastian, thank you for your wisdom on this one.
All right, let's move on. The toll on tourism, the global pandemic could cost the tourism industry more than $4 trillion by the end of this year;
that, according to a new U.N. report. Anna Stewart has been reading through that report for us.
Anna, it makes pretty bleak reading, I think, and they play out three scenarios, the cost, in some of these scenarios, actually more than $4
trillion if you include, of course, what we saw last year, and the damage last year and what continues this year.
ANNA STEWART, CNN REPORTER: I think what some people will be shocked by is that a year on, after multiple vaccines have been developed and rolled out,
actually the case could be as bad as it was last year for tourism.
Taking a look at the three scenarios that the U.N. report gives, the worst case sees a similar decline in tourism from last year and that results in a
global GDP knock on effect of $2.4 trillion, taking into account not just the loss of tourism receipts, but the overall impact on indirect sectors
like agriculture, and so on.
The middle one you see there, that is the most optimistic scenario with some recovery there in tourism around the world. And the third option,
Julia, this is really interesting. This is a two-speed recovery. This is if countries you have 50 percent or more of the nation vaccinated see a
recovery. So, tourism is still down from 2019, but only by, say 37 percent.
But countries who do not have that level of vaccination are impacted badly. You see a huge impact actually, in terms of the global economy, $1.8
trillion down as a result of that. And I think the worry here for me, Julia is when we were looking at the 2020 report and their various scenarios
then, the worst case scenario was actually as it turns out, optimistic.
CHATTERLEY: Yes, I mean, this is quite terrifying, quite frankly. And I think it goes to the point that we've heard from not only the U.N., but
from the I.M.F., from the World Bank, and we discussed it with Niall Ferguson yesterday, the need for vaccines. If we want to get the tourism
industries back up, we have to get more vaccines out there to the nations that are most reliant on tourism. And they are, in many cases, emerging
markets and poorer nations around the world.
STEWART: And they are being impacted much, much worse in terms of the impact of tourism, many of them, of course are much more reliant on tourism
than some of the advanced economies, particularly international tourism. But yes, and the advanced economies, actually this report brings out who
are faring better as a result of vaccine are the U.S., France, Germany, the U.K., and Switzerland.
[09:10:01]
STEWART: The ambitious plan to vaccinate 40 percent of the world by the end of this year and 60 percent by the middle of next year, the I.M.F. says
will cost $50 billion, but this report makes absolutely clear that the benefits far outweigh that cost. They are worth it.
And actually, experts think that tourism will not recover this year, or next year, but the year after that, and actually 50 percent of the experts
interviewed by this report, put it even further, so 2024 and beyond -- Julia.
CHATTERLEY: Wow. It says it all. Anna Stewart, thank you for that update there, bleak as it is.
All right, let's move on to some stratospheric spending, literally, yes, Elon Musk is at his again. This time we're talking a satellite network
called Starlink that one day aims to provide high speed internet wherever you are in the world, and it could take as much as $30 billion dollars to
do it.
Paul La Monica joins me now. What's $30 billion to Elon Musk and SpaceX and his companies? But let's explain what this is first. I mean, the goal is, I
think to own the skies to, as I mentioned there, provide Internet wherever you are in the world, but at least in the short term, and Elon Musk said it
yesterday, the goal is not to go bankrupt.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, exactly, Julia. This is a high cost endeavor, as you point out, it could be $30 billion in expenditures.
That is obviously a lot of money. And let's just make one thing clear, when Musk is talking and joking about avoiding bankruptcy, he is referring
specifically to the Starlink aspect of SpaceX, not the broader part of the company that is making these big missions or you know, potential space
tourism down the road. And obviously, a lot of big contracts that it gets from NASA and other agencies around the world to send missions in to space.
So, he is talking specifically about Starlink, which is part of SpaceX, and it's going to cost a lot of money, but he is hopeful they have about 70,000
customers already signed up and, you know, plan to have the service launched in August.
CHATTERLEY: In August?
LA MONICA: Yes, they said that they are getting ready to deploy their first service as early as, you know, August of this year. How quickly, what
type of, you know, coverage will some of the customers actually receive I think, remains to be seen.
I mean, satellite internet has long been a promise and a dream, it is something that could bring, you know, the internet to a wider array of
customers around the globe. So far, it's been a bit of a pipe dream, but we might finally be able to get it commercialized because of Elon Musk and
SpaceX.
CHATTERLEY: Yes, I was about to say, if anyone can do it, Elon Musk can. I know though there was a tweet this week where and I don't know whether you
saw it Paul, where Elon Musk was ranting about the F.A.A.'s rules because he had to postpone a rocket launch because a plane flew over. Look at this,
"Launch called off today as an aircraft entered the 'keep out zone,' which is unreasonably gigantic."
So in order to create this global constellation of satellites, you've got to be able to get them up there in the first place, and Elon Musk was
having some difficulties this week.
LA MONICA: Yes. Elon Musk complaining about something on Twitter. The sky is blue. Water is wet.
CHATTERLEY: You said it.
LA MONICA: No, wait when he is hot headed or he says something nice --
CHATTERLEY: Back to work -- visionary.
LA MONICA: Yes.
CHATTERLEY: Thank you. Paul La Monica, thank you for that.
All right, right. Let me bring you up to speed now with some of the other stories making headlines around the world. In Surfside, Florida, the search
continues for the 149 people that remain missing after last week's tower collapse.
Rescue workers say they are still hopeful for more survivors may be found, though at least 12 lives have been lost. The U.S. President says he'll
visit the site on Thursday.
A historic heatwave is engulfing the Pacific Northwest, over 230 people have lost their lives in Western Canada since Friday, and there have been
more than 60 reported deaths in the United States.
CNN's Paula Newton joins me now with more. Paula, these are astonishingly high temperatures, and it's no surprise that people are struggling with
these extreme temperatures.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Yes, and to join really those numbers we have been hearing about the heat, unfortunately, those
translate into calls to paramedics and the calls to 911. And really, officials were so stricken earlier this week, Julia, when they were talking
about this.
The chief coroner in British Columbia saying 233 deaths. Now, look, she is saying I can't -- since Friday, so just in the span of four days. She can't
say all of them were related to heat, but dozens of them were.
What was happening, Julia, is that people were in heat distress before they really knew it. The temperatures so unbearably hot, over 40 degrees
Celsius, at least Lytton, British Columbia for the third day in a row, Tuesday recorded the highest temperature ever in Canada at about 47 and
some odd degrees Celsius that is hotter than the record temperature of Las Vegas.
[09:15:12]
NEWTON: And, Julia, this isn't changing. You know, we discussed on your show many times the impact of climate. You know, Environment Canada has
said repeatedly in their climate change report that what would normally have been a once in a century event will now be once every 20 years,
perhaps once every five years.
And as if on cue, Julia, again, wildfires now breaking out in British Columbia overnight. Fires really there, at least two of them now burning
out of control, saying it was so hot that helicopters had to stall their engines from overheating. This is becoming a very precarious situation as
that so-called heat dome moves further east throughout Canada, and as we have been seeing as well through the United States.
CHATTERLEY: Yes, I mean, it's dangerous for so many reasons, Paula, and I think you raise a great point -- is this year -- the year finally that the
skeptics over global warming suddenly quiet down and we take more action, whether it's business or as individuals about protecting the environment.
But I just wonder in the short term, what are people being told to protect themselves? And what impact are we seeing on infrastructure, too? I mean,
just basic things like roads. They were not built -- buildings were not built to sustain these kind of temperatures.
NEWTON: Yes, we have seen things like cables melting down, air conditioners not working, ventilation that would normally be adequate is
not again, and the region where you had this heatwave in Canada and the United States, not an area that normally would have electricity, obviously
brownouts and blackouts now also a threat.
I think what's key here, though, is you make the issue about a public health emergency. So, when you think about the fact that you might have a
snowstorm or a tornado or a hurricane, people prepare, right? Businesses and people in general, in order to keep themselves and their families safe,
need to prepare in exactly the same way, and that is the way that people are beginning to look at extreme heat.
So whether you're a business or you're taking care of your family, again, remembering the elderly and young children are the most vulnerable. When
you see the forecast coming, get to those cooling centers, make sure you are cool.
Well, it was just so sad, Julia, as people would arrive at the homes of their loved ones and did not know that they were in distress because their
loved ones couldn't really feel it, until it was too late, especially vulnerable as well are very young children.
All of this, as you just pointed out, perhaps having to change the way all of us react when we know that a heatwave is coming.
CHATTERLEY: Absolutely. Paula, and some great advice there and yes, people, if you're watching protect yourselves as best you can. Thank you
for that.
Okay, North Korea's leader has reportedly berated senior officials for failing to enforce COVID prevention measures. According to state media, Kim
Jong-un said that negligence had caused, quote, "a great crisis" that risk the safety of the country. But the report did not elaborate on the nature
of the incident.
Okay, still to come here on FIRST MOVE, a ride hailing road test, its next stop is the NYSC for China's DiDi as Uber and Lyft see a reopening
recovery, is the gig economy resurgence complete?
And COVID and the end of cash -- why Latin America Fintech Uala betting pandemic changes are here to stay. Stay with us.
(COMMERCIAL BREAK)
[09:20:50]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where we're bracing for the hottest day of our summer heatwave yet, with temperatures
nearing 38 degrees Celsius, that's 100 Fahrenheit if that's the measure you use.
A not so hot open though ahead for the U.S. majors. Softness after a record setting day for the S&P and the NASDAQ on Tuesday. What is red hot,
however, and we've discussed it already is the IPO market Chinese ride hailing and mobility app, DiDi, just one of many new listings on tap today,
including cybersecurity startup, SentinelOne -- great timing for these guys -- manufacturing outsourcing firms, Xometry, biometric ID verification
company CLEAR Secure, and LegalZoom, an online legal document company all beginning trading today and all pricing above their expected range
All technology firms, look at that, too, there is a really stark message and those that are coming to market at this moment. But for now, let's
return to China's DiDi. The IPO values at $67 billion, DiDi, making it the biggest U.S. IPO in fact by a Chinese company since Alibaba seven years
ago.
Joining us now, Dan Ives, Managing Director of Equity Research at Wedbush Securities. Dan, if you've been listening to the show, you can tell I'm
super excited about this one. Talk to me about what you think as far as DiDi is concerned. What is this company? And what's the opportunity?
DAN IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: Yes, I mean, look, I think this is -- as you talked about, the most anticipated
Chinese IPO since Alibaba, but it's one of the unicorns in terms of Chinese tech players going after the gig economy. That's a trillion dollar market.
When you look at China, by 2030, you have about 70 percent of the population living in cities. Many don't have cars, especially compared to
U.S. This is just a massive market opportunity. Now, investors get the opportunity, of course, not just by Uber and Lyft, but by that Chinese play
here with DiDi a long time coming.
CHATTERLEY: Yes, and it's that stat for me as well. If indeed 70 percent of the Chinese population, we're talking what -- 1.4 billion people are
living in urbanized environments, that's too many people trying to be on the road in cars, perhaps ride hailing is a far better opportunity.
And I talked earlier on, just in terms of the cost difference, at least at this stage, too. But it's not just about that for these guys. It's about
looking at the mobility value chain, as far as I can see, too. They see value in electric vehicles, and we've all talked about the pollution
aspects of operating in some of the biggest cities and some of the second and third tier cities, too. Do you see this as a huge part of the story as
well, or at least some part of the story?
IVES: Yes, it's a big part, because you could see sort of the tip of the spear is ride sharing, but the broader ecosystem, what you're tapping into
especially on EV is that green tidal wave. And that, especially given the broader climate, what we're seeing in China and DiDi is -- they are pure
play and really have an iron fence around that market.
And when you compare it even in the U.S., you continue to have Uber and Lyft were where they battle it out in "Game of Thrones" style. DiDi really
owns China, and they're going to continue expanding throughout Asia.
And I think you look at this, it's a pure play, almost an Amazon-like model, especially going to China, you know, when it comes to e-commerce,
but more importantly from the EV side.
CHATTERLEY: Yes, I mean, they've got around a million electric vehicles on the platform already, and clearly hoping to scale that up around a third,
30 percent, I think of the charging infrastructure as well in China, which is, of course going to be crucial as well. It's a huge country, just to be
clear.
And of course, that ties to some of the broader concerns when we talk about Chinese tech companies about the prospect of tighter regulation. They are a
giant technology company. They are by far the most dominant player in ride hailing. Any concerns there, particularly given when you're talking about
electric vehicles? To your point, the green tidal wave that we're seeing in China and trying to sort of enable mobility in cities, perhaps they align
to some degree, if not to a greater degree with regulatory thinking, at least in China.
[09:25:03]
IVES: Yes, that's a great point because I think when you look at regulatory, of course, Alibaba, Baidu, J.D., and others, they continue to
be -- Tencent -- in the sort of hairs of regulators.
I think, DiDi, that's part of what ambassadors are going to see. I don't really see too much regulation issues there from an antitrust or, you know,
in terms of some of those other sort of anti-competitive issues.
And I think it's important because when you look what's happened, of course, in the U.S. and China, that's an overhang, not just on us, but
Chinese tech stocks.
DiDi, I think, they've done a good job in terms of really broadening out the market, but going to areas where they can really expand and not get
into those regulatory crosshairs from Beijing, because clearly Big Brother is watching when it comes to EV, but I think DiDi is in the right side of
this.
CHATTERLEY: What about potential growth opportunities? Clare and I were talking about not only within China, which is clearly a huge market in of
itself, but also perhaps looking around and looking at other emerging markets that have the same kind of challenges, the same kind of structures.
Brazil, of course, is already one that they are focusing on, but it's such a tiny fraction of the revenues that they're bringing in right now. Do you
see that as an opportunity? Because clearly, if you look internally in China, and perhaps some of the comparisons that you could make within Uber,
for example, is delivery, not an option in China, I don't think; it's just dominated by other big players.
IVES: Well, look, I think, also, if you look at Uber, I mean, they kind of went down that path as well going after so many different countries and had
to scale that back. I think, when you look at DiDi, because of the China market and just the secular growth, I think some of these other areas or
sort of the growth story, when you look at the next three, four, or five years.
For now, they're going to continue to focus on China and broader Asia, because, you know, we're talking about a market that's about three to five
percent penetrated today. And those trends, unless they drop the ball, I mean, they're going to continue to see massive growth, and this is
something in the decoupling between U.S. and China in tech; U.S. investors want to play Chinese impact names. And I think that's what -- that's very
interesting to see the appetite, as you see this play out, not just today, but over the coming weeks and months in terms of how the stock reacts.
CHATTERLEY: Yes, great point. And the stock reaction was where I was coming to next and just valuation here. I mean, I've seen a number of
analysts point out that actually, this gives them an approximate valuation, at least where they've priced this IPO, where they were raising money back
in 2018.
And, you know, they've had some challenges. They've had questions over the security of passengers, then of course, COVID hit in 2019, which was a sort
of super storm for the gig economy and for ride hailing, in general, what do you make of a sort of valuation here? And what are you saying to
investors about potentially getting in or not here?
IVES: Well, especially on the gig economy, and we saw similar with Uber and Lyft. And these companies have really been through category five storm,
especially with COVID and in what we're seeing with ride sharing. But now the issue, just as we're seeing with Uber, it's about drivers, price
surging, and to make sure you start to see growth here, we love playing the gig economy. I think, DiDi is a great way to play the Chinese side of it,
but it's an execution story.
And I think that's what they're going to need to prove out, especially as you're starting to see this sort of massive rebound in the gig economy
named Uber and Lyft. But it all -- it's that balance. Not sure DiDi is going after it especially as they really have an iron fence around that
Chinese market.
CHATTERLEY: Yes, and I mean, and I mean, some have come out of that and sort of pivoted away from saying, look, safety comes first and then we'll
focus on growth and for all the challenges of still seeing what double digit growth, I think over the last few years, so it's going to be an
interesting story to watch.
Dan, always great to get your insight and perspective.
IVES: Thank you.
CHATTERLEY: Dan Ives of Wedbush Securities there, great to chat with you, sir, as always.
The market opens next. Let's see how it trades. Stay with us.
(COMMERCIAL BREAK)
[09:32:04]
CHATTERLEY: Welcome back to FIRST MOVE and U.S. markets are open for business on this steamy Wednesday. On Wall Street, popsicle weather. For
investors, the bulls hoping for some IPO pops, too, as DiDi and other big names make their market debut. Stocks having trouble popping higher there.
You can see in early trade, at least, despite a better than expected pop in U.S. payroll numbers.
New numbers show private firms adding a greater than expected 692,000 new positions this month, a sign perhaps that Friday's U.S. jobs numbers might
be strong, too.
A scorching petrol pop, too, going on in the market. Brent and us crude up around one percent as data shows U.S. crude supplies falling at a faster
than expected rate. Remember OPEC Plus meets tomorrow to discuss production levels and commodities wrapping up a mixed month in fact overall.
Crude up more than 10 percent, natural gas up 22 percent. But aluminum only rising a modest amount, 2.4 percent as you can see and sizeable losses for
both copper and lumber despite monster gains in prior months, too. So, that's a relief, I think, for the broader industry that use them.
Now many times on FIRST MOVE, we've shone a light on the unbanked around the world especially in cash driven economies where traditional banks
underserve their customers. The pandemic changed a lot of that.
According to a report commissioned by MasterCard last year, 40 million people in Latin America became banked within five months as savers rushed
to protect their stimulus payments, too, and it seems cheap and nimble disruptors like Uala are benefiting the most having concrete Argentina,
Uala is now making inroads into Mexico.
Pierpaolo Barbieri is founder and CEO of Uala, and he joins us now.
I love the name, beyond anything else. Fantastic. Let's be clear. You saw a huge opportunity back in 2017, so long before the pandemic hit in Argentina
to provide financial services to those that are simply unbanked. Talk us through what you saw and what you now provide.
PIERPAOLO BARBIERI, FOUNDER AND CEO, UALA: Thank you so much for having me. Uala started as a universal account with a global card that you can use
for any of your digital purchases. And what we saw is an unbanked continent.
In Latin America, over 50 percent of adults have never had access to a payment mechanism that is not cash, and that's what we're here to solve.
So, we started with that premise that you can buy anything you want, anywhere around the world with a global card, and then we've evolved from
that.
So, now you can pay your bills, you can pay your cell phone, you can invest, you can take a loan, create a credit history, and now we even have
merchant acquiring services that we launched just a few months ago to help not just consumers, but also small businesses.
And as you said, we started in Argentina, where 50 percent of adults had been completely left out of the financial system. And now we're in Mexico,
a country where around 65 percent of the population has never had a card to pay away.
[09:35:05]
CHATTERLEY: I mean, this is astonishing. It's the ultimate disruption in terms of financial products and easier access to finance online, in
particular. And yet, it's not disruption at all when as you see, the statistics are so vast for the people that simply don't have access really,
to anything other than cash. It's absolutely life changing.
And the growth that you've seen is pretty astonishing, too. I mean, if I have this correct, 20 percent of people between the ages of 20 and 24 years
old in Argentina have one of your cards.
BARBIERI: Actually, it's almost like 25 percent now, and almost 10 percent of the whole country, which is insane. But we're very happy because it
means that there is demand for these kinds of services, but people have been left outside of the system for so long. And as we always say, we ask
people to believe in democracy and capitalism, but then we don't give them access to the system.
And so we're here to provide that access to allow people to create a credit history, to give them their first loan, their first investment or savings
product, and even an insurance product, which is essential, as the World Bank says for emerging markets to be able to grow out of the middle income
trap.
CHATTERLEY: Whether you're looking at Argentina, or you're looking at Mexico, they are countries that have a history of challenges in terms of
the economy in terms of the currency. How are you pricing risk when you're talking about people that traditionally have only used cash and to your
exact point, building a credit history is so essential to be able to bring the cost of credit down? How are you pricing the risk of giving money to
these people -- or access to credit?
BARBIERI: That's a great question, Julia. So, what we've done is start with the most inclusive possible product. And so if you start with a
revolving credit card, it's very difficult because you have to turn 90 percent of people away.
Why? Because they don't have a credit history. Why don't they have a credit history? Because they've never had a card. So, it's a self-fulfilling
prophecy that is very negative and has a very negative externality.
What we do is start with debit. So, we give everyone a debit card. And so you can only spend that first what you have on the card, or what you have
on the Uala ecosystem. And as you grow that amount, and as we know a little bit more about you, how much you make, and how you're paying your bill
payments, your cell phone top ups, now we even have a transport card in Argentina, like, you know, the MetroCard in New York or the BART, we create
a credit history for you.
And then we can give you access first to installment payments, which are very popular in Latin America, and then personal loans. And with those
personal loans, you can now become an entrepreneur or you can do you know, remodeling your home, anything that you want. You can access at an
affordable rate that wasn't accessible to you before because you didn't have a history.
So with debit, we are able to give a lot of people access to building that history, just with the money that they have no more than that, and then
allow them access into credit and you know, make it rewards based.
So, the more we know about you and the more you pay back, the lower your financial cost, and the more inclusive it. But it has to start from a
product that we can give everyone.
Just in the last month, we issued over 130,000 cards in Argentina. That's like 0.3 percent of the population in one month and we issued over 40,000
cards in Mexico. And so as we see this, it's a great opportunity to finally bank Latin America and end this lack of financial access that has been so
unfair to these societies for so long.
CHATTERLEY: Yes, and I'm assuming in terms of how you make money here, it is fees on the credit card. I know you're in growth phase, we're in year
four, which is just astonishing in and of itself, but I'm just looking down the number of people that have invested in you and the names -- Tencent,
SoftBank, Soros, Goldman Sachs Investment Partners, Point72 -- I mean, these are huge names that are looking at what you're doing and saying we
see great growth opportunities in this as well. Are you profitable?
BARBIERI: No, not yet and was definitely part of the plan. When I started this in 2017, we were very lucky to have investors that understood that if
you're going to give everyone a free account and a free debit card, things that are naturally free in the United States where I lived for 12 years,
but I wanted to bring it to Latin America, where the banks charge you opening fees and maintenance fees, renewal fees, all those bad things that
they don't do in the developed world, and sometimes it's the same institutions, but they do it in Latin America. We had to think long term
and we had to think about real scale.
And so I am very happy to tell you that even though we're not profitable, we already cover just about 70 percent of our costs in Argentina. And as
you know, Argentina has gone through very difficult times in the last few years, particularly from a macroeconomic perspective.
But what started as an account now has you know, investment services, it has lending, it has merchant acquiring services, and now even insurance,
which was just launched three months ago. So, you can access insurance services and we act as a broker for those insurance products and we get a
small fee from the provider of insurance.
But if you think about it, we are cutting 80 to 90 percent of the costs than it would have been for that same insurance company to provide that
product. And so we don't take our money from the user, we just provide the financial marketplace and we charge the companies that sell those services.
But we always make it a priority to have our social mission clear. So the products need to be not just inclusive, but also very transparently priced.
Because one of the problems in the emerging markets, and in particular, with middle class and lower middle class audiences is that people give them
products, and they are not transparent. So the people that have the least end up paying for things that they didn't really know about, and we really
don't want that kind of business.
And so we're very happy about the growth trajectory. And in fact, our investors are telling us to invest more and grow more.
CHATTERLEY: I'm sure they are. I have 30 seconds. You know, we said that you're sort of a disruptor, but you're not because you're going for parts
of the market that the big banks aren't accessing. What's the greater likelihood here that they come and try and buy you to operate and do what
you're doing or a one day you're going to go in and sort of buy them and sort them out?
BARBIERI: Well, we'll see. But we're not for sale, we're very happy with our growth.
CHATTERLEY: Okay.
BARBIERI: We are in the middle of a regulatory process -- we're in the middle of a regulatory process with the Argentine Central Bank, where we
just bought a bank license that needs to be approved by a Central Bank.
CHATTERLEY: I saw.
BARBIERI: And we're also very happy with our growth in Mexico. Mexico is a country of 130 million people, 65 percent of which have never had a card
and we're very happy to be now the fastest growing Fintech in Mexico.
So, I think that there's a lot of opportunities in Latin America for innovation, for technology to disrupt and to create better products that
are more transparent and more inclusive.
CHATTERLEY: Awesome. We will chat again. I've got so many more questions for you. I'm going to be fascinated to watch you rise.
Great to have you with us, Pierpaolo Barbieri there.
BARBIERI: Thank you.
CHATTERLEY: The founder and CEO of Uala.
BARBIERI: Thank you so much for your time.
CHATTERLEY: Thank you.
All right, and finally on FIRST MOVE: back in the 70s, "James Bond" fans saw this flying car with a bad guy behind the wheel. Well, fast forward
nearly 50 years and a prototype flying car has completed a half hour test between two cities in Slovakia. It's called the Air Car and it transforms
from sports car to aircraft in under three minutes.
I'm trying to look at the video while I am talking, which is hard. Wow, look at that -- and lands on a traditional runway. One big benefit, no need
to find an airport parking to get home. That's pretty cool.
I want a red one.
That's it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. Search for @jchatterleyCNN.
In the meantime, stay safe. I'll see you tomorrow. "Marketplace Europe" is up next.
(COMMERCIAL BREAK)
[09:45:00}
END
