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This is an audio transcript of the FT News Briefing podcast episode: Travis Kalanick’s excellent (and secret) venture

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, September 21st. And this is your FT News Briefing.

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Marc Filippino
Financial markets are fixated on the Federal Reserve today. Goldman Sachs is building up a new business and it’s uncharacteristically boring. Plus, Uber’s co-founder and former CEO Travis Kalanick is reinventing himself. But it’s really hard to find out what he’s doing.

Dave Lee
This has been very much under wraps since Kalanick took over that company. And that’s clearly, clearly by design.

Marc Filippino
The FT’s Dave Lee did find out a lot and he’ll tell us later in the show. I’m Marc Filippino, and here’s the news you need to start your day.

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Marc Filippino
Today, the US Federal Reserve is set to raise its benchmark policy rate by three-quarters of a percentage point for the third time in a row. That would bring the Fed’s benchmark rate to above 3 per cent. For a little context, it started the year at zero. That would be the most aggressive monetary tightening campaign since the early 1980s. Some economists have speculated the Fed will opt for a full percentage point increase. Markets have been bracing for this. Yesterday, leading US stock indices all ended the trading day down about 1 per cent.

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Marc Filippino
Goldman Sachs has been called a bloodsucking vampire squid. Yes, a bloodsucking vampire squid, because it’s known as a ferocious, aggressive investment bank. But now this vampire squid is developing a new business that’s kinda dull.

Owen Walker
So transaction banking is very much at the unsexy end of investment banking.

Marc Filippino
Our European banking correspondent Owen Walker has been writing about Goldman’s push into transaction banking services in the European Union. It just set up a team in Frankfurt.

Owen Walker
It’s helping the treasury departments of companies basically carry out their day-to-day activities, you know, helping with payments, helping with cash management. Every company needs a bank to help them do these services. So there’s a kind of a steady revenues and cash flows coming into this business. Individuals aren’t making sort of million bonuses in this area, but it’s certainly kind of a utility side of banking.

Marc Filippino
Transaction banking isn’t new. Other banks have been doing this for a while, like JPMorgan and Citigroup and European banks too. Owen explains why Goldman is getting into this now.

Owen Walker
Well, this goes back to David Solomon and he’s the CEO. And he kind of looked at the business and thought, you know, we are industry leaders in the really highly profitable and high risk taking parts of investment banking, which is great in the good times. But every now and then we have fallow periods, we have big blow-ups on the risk side, and so we need a kind of counterweight to that. So this is something they launched in the States a couple of years ago, they brought out in London last year. And now they’re doing the same across the EU, looking to expand into Amsterdam and eventually grow into Japan as well, and looking to take on Asian customers.

Marc Filippino
Owen Walker is the FT’s European banking correspondent.

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Marc Filippino
Some entrepreneurs never really go away. They just reinvent themselves. Take Travis Kalanick, the co-founder of Uber, who was ousted from that company five years ago under multiple scandals. Since then, he’s been quietly building up a food and delivery business across Latin America called CloudKitchens. It operates so-called dark kitchens that make food only for delivery apps. The FT’s Dave Lee has been digging into Kalanick’s new venture and he joins me now. Hi, Dave.

Dave Lee
Hey, Marc.

Marc Filippino
So, Dave, the way I understand it is that it’s actually very hard to find out about Kalanick’s new venture. There’s barely any press. Kalanick has never spoken about this. Employees are banned from talking to the press. Why all the secrecy?

Dave Lee
Well, the people I’ve spoken to who work closely with Kalanick at CloudKitchens and some that came with him from Uber, you know, they say that he’s incredibly paranoid. He’s really worried that what happened at Uber, where he was forced out by the company’s board in response to a huge wave of negative press coverage about sexual harassment issues at the company and other sort of big managerial failings. He’s worried that the same kind of scrutiny at this new company could see similar problems for him. And in fact, every single person I spoke to who’d worked at CloudKitchens, they kept, the word I kept hearing was paranoid, you know, paranoid, paranoid. Paranoid was every tone under every meeting, tone under every strategy for expanding the company. It’s all just about making sure that they can expand with as little attention as possible, both from avoiding the press, but also, you know, they want to avoid competition in these in these markets as well.

Marc Filippino
But it hasn’t been so quiet as to not get investment. CloudKitchens got a big, big round of funding from Microsoft, right?

Dave Lee
Yes, although under another sort of veil of secrecy. There was a funding round for CloudKitchens in November, a very large one, $850mn, that valued CloudKitchens at $15bn, which is you know, it’s quite incredible that Kalanick has kind of done it again, as it were, with another hugely successful start-up. And even then, we didn’t know who was involved. And we were able to discover recently through a couple of sources that Microsoft was part of that round. And so even though they are attracting this kind of investment — the kind of investment that every other company out here would be shouting from the rooftops as being a huge achievement — Kalanick says, no, no, thank you. We’ll just, we’ll just keep that as quiet as possible.

Marc Filippino
So, Dave, tell me about this business, CloudKitchens. What does it do and how successful has it been so far?

Dave Lee
So, you know, he’s been building this up in the US and also now in Latin America over the past couple of years. He’s done a couple of acquisitions to bring in some of these kitchen locations and put them under his company. And they now have around 70 of these warehouse spread across eight countries: Brazil, Colombia, Mexico, several others. And that’s enough for about 1800 of these individual kitchens, capitalising on what’s been something of an ecommerce boom in the region. As well as preparing the foods, they’ve also got this kind of side business, which they’re calling Pik N’ Pak that’s operating in Colombia, Brazil and Mexico. And Pik N’ Pak is using some of the space in those warehouses not being used for cooking, to store convenience goods, pet foods, over-the-counter medicines, even sex toys, sending out to the local community because they can be ordered through those apps as well. And so, yeah, it’s the next phase, to put it this way, the next phase of Travis Kalanick’s entrepreneurship.

Marc Filippino
Can this venture be successful if Kalanick is the public face of it? Or is he too much of a liability?

Dave Lee
There’s two things that are clearly apparent. Travis Kalanick is obviously an incredibly gifted entrepreneur. He knows how to build innovative companies in new areas, particularly areas where, you know, regulations are yet to be written or are fuzzy and so forth. And he did it with Uber and he seems to be doing it again with CloudKitchens. On the flip side of that, he does seem to have these personality tendencies where he’s very untrusting of people. He has a very close knit circle of decision makers and advisers. You know, there’s no publicly disclosed board of CloudKitchens. And I’m told that, you know, most major decisions are made by Kalanick and maybe one or two other people. And so that tendency to keep things close to his chest, that’s being seen by several people who work with him as a negative for the company. It’s creating a culture of secrecy that is actually hindering the growth of the company.

Marc Filippino
Dave Lee is a San Francisco correspondent for the Financial Times. Thanks, Dave.

Dave Lee
Thanks, Marc.

Marc Filippino
Before we go, we’ve got a deal for you. We’re offering half off a standard subscription to FT.com. So for £159, you’ll get access to the best business and financial journalism around for a whole year. Just go to FT.com/briefingsale. Again, that’s FT.com/briefingsale. We’ve also got a link to that in the show notes. You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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