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Article: DaDa

Didi's huge losses, Cheng Wei's internal letter to employees

The Yueqing incident slammed the brakes on Didi's rapid development.

On September 7, Didi founder and CEO Cheng Wei sent an internal letter to employees, mentioning that Didi is by no means a heartless company, that in six years Didi has never achieved profitability, and that in the first half of 2018 alone the company posted an overall net loss of 4 billion yuan. Didi has lost 39 billion yuan in six years. Cheng Wei said profit is by no means Didi's top priority.

Cheng Wei pointed out that Didi is now actively cooperating with a joint safety inspection by multiple mainland departments, and that the company has now upgraded and established a safety command center, preparing for a deeper and more sustained battle against safety issues, with the goal of "uniting as one and going All in on safety."

"After a painful experience, we come to realize the problem lies with us. The desire to win overshadowed our original aspiration, and the runaway development model long ago planted hidden dangers." Cheng Wei said that internal system improvements could not keep up with scale expansion, just as the soul cannot keep up with the footsteps. We have not yet truly understood the responsibilities and challenges on our shoulders, and we lack reverence.

At the end of the letter, Cheng Wei encouraged everyone, saying that all the efforts they have made in the past are valuable.

Full text of the internal letter

Dear fellow Little Orange People:

More than ten days have passed since the Yueqing incident. I think everyone, like me, is immersed in the sorrow of a life lost. Didi has also fallen into a storm of doubt. I feel deeply remorseful. All problems are the problems of management, and the primary responsibility for the incident lies with me, unshirkably.

Taking the Hitch service offline, suspending service late at night, rolling out a series of safety measures, canceling growth targets internally, and preparing for inspections by multiple ministries and commissions... Didi, which had been developing rapidly, slammed on the brakes. That day, I ran into a young colleague in the office area whom I did not know. He walked over and gave me a hug, and said "keep going." It warmed my heart, and I was very moved. Everyone must have been suffering greatly lately. I am writing this letter to you so that we can hug across the distance.

These past few days, like everyone else, I have been listening to the criticism and suggestions of the public and the regulatory authorities with pain in my heart, and reflecting inwardly as well. We cannot escape a few piercing questions: Does Didi actually have values? Is it a heartless company that cares only about profit, ignores safety, and evades responsibility? Does Didi actually have the ability to protect users' safe travel? Is internet-based mobility actually an industry that should exist?

After a painful experience, we come to realize the problem lies with us. The desire to win overshadowed our original aspiration, and the runaway development model long ago planted hidden dangers. Internal system improvements could not keep up with scale expansion, just as the soul cannot keep up with the footsteps. For the first time, the internet has begun organizing the transportation of human lives on a massive scale, and we, who have been given this opportunity by the times, have not yet truly understood the responsibilities and challenges on our shoulders, and we lack reverence. There are blind spots in our safety indicator system; we focused too much on macro indicators such as accidents per hundred million miles, fatality rate, and conflict rate; and our system for preventing and controlling major malignant individual cases is still not sound. Criminals seized the opportunity, bringing irreversible harm to users, and Didi also paid a heavy price.

But, dear classmates, after the pain, should we completely deny this cause of internet-based mobility? Have we completely lost confidence, given up our dreams, and lost the ability to correct our mistakes?

In my heart, I am firm. Making travel better is the starting point of our entrepreneurship, and also the original aspiration of every Little Orange Person when joining the company. Today's challenge is precisely the direction we must continue to strive toward.

We are exploring a road that no one has walked before. Although some question the safety of internet-based mobility, we have still seen an incident rate far lower than that of the traditional taxi industry, and a 100% case-solving rate. Starting from taxi-hailing software, we have successively launched safety features and safeguards such as big-data risk prediction models, facial recognition, one-click alarm, emergency contacts, number protection, trip sharing, in-trip recording, and online and offline driver training. Every day, 27 million driver-passenger calls receive number protection; more than 400,000 people share their trips to let family and friends know they are safe. Every day, customer service staff handle 2.1 million inbound inquiries and complaints, including more than 10,000 emergency requests; every day, the access review platform keeps more than 40,000 unqualified applications outside the threshold. In 2017, the platform's incident rate dropped by 21%, and rear-seat seatbelt usage rose from 2.5% to 10%. All the efforts everyone has made in the past are valuable.

Didi is by no means a heartless company, nor is it by any means a company that places making money above all else. In six years we have never achieved profitability. In the first half of 2018, the company's overall net loss exceeded 4 billion yuan. The average Take Rate corresponding to GMV for our mobility business is about 16%, the vast majority of which is returned to drivers and passengers, and the company's overall gross margin corresponding to GMV is only 1.6%. In the first half of the year, the total amount of subsidies and returns, including driver peak-hour subsidies, order-taking and service rewards, and passenger discounts, exceeded 11.7 billion yuan. Profit is by no means Didi's top priority. As a platform undertaking hundreds of millions of transportation trips, we will adhere to low-margin operations and invest more of our revenue in safety and experience.

We still carry the trust of hundreds of millions of users. Every day, passengers contact us to express thanks for good service, and during the most difficult moments many drivers sent us encouragement. Every region treasures the banners sent by users and the police. It is precisely so as not to let them down that we cannot lightly give up, and we must redouble our efforts.

Dear fellow Little Orange People, please get up with me wherever we have fallen! Let go of restlessness, devote ourselves to safety, and thoroughly make up for what we have missed. We need all the more to integrate safety first into our blood at the cultural level. It requires us to work day and night to protect lives, and only then can we have peace of mind. It requires everyone to believe that we will never give up safety for profit, and only then can users and society have peace of mind.

The new business format has only just begun. We firmly believe that integrating the safety management experience of the traditional transportation industry with the transparency of the internet and big-data technology will certainly make travel safer. Actions speak louder than words. Let us win back users' trust with our actions and rebuild society's confidence in mobile mobility.

Didi must take a clear stand and be a social enterprise. We will make platform rules and pricing mechanisms public to the public and regulatory agencies, communicate with the public, regulatory authorities, and experts from all fields in a more open and transparent way, learn from the outside world more humbly and sincerely, listen to criticism and suggestions, promote the compliance process for ride-hailing more quickly, and jointly build with all of society a socialized mobility platform that serves the people.

Now, we are actively cooperating with the joint safety inspection by multiple ministries and commissions, and preparing for a deeper and more sustained battle against safety issues. The company has now upgraded and established a safety command center. I serve as group leader, and Liu Qing serves as deputy group leader. Core cadres from all fronts have been mobilized and committed:

- The CTO line is mobilizing resources to comprehensively upgrade the safety product operations system and minimize safety hazards;

- The customer service system is committed to the battle, ensuring the establishment of a rapid response mechanism and proper handling;

- All business lines are coordinating to rapidly advance the design and implementation of ride-hailing compliance plans;

- The Safety Affairs Department is strengthening the professional development and supervision of the overall safety system, and fully promoting police-enterprise cooperation;

- All other departments are working together on their respective fronts to build and improve the company's safety system.

Racing against time, doing everything possible. United as one, All in on safety.

At this critical moment, I want to say thank you to every steadfast Little Orange Person and your families.

I love you all.

Cheng Wei

September 7, 2018