Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares(bloomberg.com)
bloomberg.com
Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares
https://www.bloomberg.com/news/articles/2017-11-29/uber-s-third-quarter-loss-is-said-to-widen-to-1-46-billion
252 comments
Except... Growth.
The (buzzword warning) hyper-growth startup model is in essence 2X revenue, 1.5X costs. Repeat until inevitably profitable - and I say inevitably because with enough time, 2X revenue, 1.5X costs gets to profitable. The only variable there is having a long enough runway.
Uber seem, from the financial data I have seen, to be sticking to that playbook down to the 3rd decimal place (exaggeration for effect). When Uber does turn the profitability corner, it will be at a level well over a billion a quarter.
Sure it's a risk, but if any company was setup to be huge, had followed almost all the meta-rules on growth and looked to be hitting those growth targets, it is certainly Uber.
The (buzzword warning) hyper-growth startup model is in essence 2X revenue, 1.5X costs. Repeat until inevitably profitable - and I say inevitably because with enough time, 2X revenue, 1.5X costs gets to profitable. The only variable there is having a long enough runway.
Uber seem, from the financial data I have seen, to be sticking to that playbook down to the 3rd decimal place (exaggeration for effect). When Uber does turn the profitability corner, it will be at a level well over a billion a quarter.
Sure it's a risk, but if any company was setup to be huge, had followed almost all the meta-rules on growth and looked to be hitting those growth targets, it is certainly Uber.
> Uber seem, from the financial data I have seen, to be sticking to that playbook down to the 3rd decimal place
Except, if you check the linked article, you'll find that bookings grew 11%, revenue grew 21%, and losses grew 38%.
Except, if you check the linked article, you'll find that bookings grew 11%, revenue grew 21%, and losses grew 38%.
And YoY (backing out the Q4 numbers to Q3 numbers), bookings grew 80%, revenue grew 20%, and losses grew 56%. Assuming that "costs" are revenue+loss, costs grew 34%, still faster than revenue.
>The (buzzword warning) hyper-growth startup model is in essence 2X revenue, 1.5X costs. Repeat until inevitably profitable - and I say inevitably because with enough time, 2X revenue, 1.5X costs gets to profitable. The only variable there is having a long enough runway.
it is like gambling with doubling (or even tripling) down each time - with enough time you will inevitably win and as result will reap a huge profit in total. Now if just somebody write me a blank check backed by an unlimited bank account... On practice though, even if got that check - what if the casino can't match my next 3x bet?
The same thing with Uber - the important thing isn't just the Uber's money runway. The other side's "runway" (i.e. total size of the market) is also extremely important - are there enough people on Earth needing enough rides so that that amount of rides would allow for that "2x revenue 1.5x costs" model to reach profitability?
it is like gambling with doubling (or even tripling) down each time - with enough time you will inevitably win and as result will reap a huge profit in total. Now if just somebody write me a blank check backed by an unlimited bank account... On practice though, even if got that check - what if the casino can't match my next 3x bet?
The same thing with Uber - the important thing isn't just the Uber's money runway. The other side's "runway" (i.e. total size of the market) is also extremely important - are there enough people on Earth needing enough rides so that that amount of rides would allow for that "2x revenue 1.5x costs" model to reach profitability?
Now if just somebody write me a blank check backed by an unlimited bank account... On practice though, even if got that check - what if the casino can't match my next 3x bet?
It's called a table limit. At one point you just can't raise your bet anymore.
That is exactly his point actually. It's an example of why the model breaks down in reality despite the math working in theory. That's why it's called gambling whether it's a casino or a startup.
Except gambling has the odds stacked in the house's favour. There is no such problem with a startup.
Will revenue double forever? No. Will revenue double for 100 years? No. Will revenue double for 10 years? Hmmm. Will it double for a year? Lets just say yes. Solve for between 1 and 10, and place your bets accordingly.
Will revenue double forever? No. Will revenue double for 100 years? No. Will revenue double for 10 years? Hmmm. Will it double for a year? Lets just say yes. Solve for between 1 and 10, and place your bets accordingly.
>"The (buzzword warning) hyper-growth startup model is in essence 2X revenue, 1.5X costs."
Can you elaborate on this? What is the relationship between those figures? I am guessing there is a third component that those are multiples of?
Can you elaborate on this? What is the relationship between those figures? I am guessing there is a third component that those are multiples of?
Growth rate... which he implies is large.
Yeah I am really perplexed with Uber's business model. They can't survive much longer and they can't keep getting injections of cash to stay alive, can they? It's rumored they'll IPO in 2019, if I remember correctly, which means they have to somehow survive until then to at least reach that stage.
Are they planning to raise prices? Cut employees? What are they planning on doing here?
Are they planning to raise prices? Cut employees? What are they planning on doing here?
The idea is to drag the entire ride hailing industry underwater long enough to drown out competitors, and the trick is to do this without drowning themselves in the process.
This is the nature of "predatory" pricing.
There is something to be said for volume and if a couple competitors die in the process then Uber's volume can only go up. Unfortunately their competitors have found a variety of ways to keep from being dragged down (eg: regulatory support of municipal taxi orgs) or ways to keep oxygen expenditure stable (eg: controlled expenditures through higher pricing and "friendlier" demeanor).
This is the nature of "predatory" pricing.
There is something to be said for volume and if a couple competitors die in the process then Uber's volume can only go up. Unfortunately their competitors have found a variety of ways to keep from being dragged down (eg: regulatory support of municipal taxi orgs) or ways to keep oxygen expenditure stable (eg: controlled expenditures through higher pricing and "friendlier" demeanor).
Is that really the idea? Do you know how large the ride hailing market is?
I am almost positive the point of subsidizing the price of the rides is to get you addicted/ build up a habit or get you comfortable using the service.
I think they are aware of the competition and are comfortable owning 60+% versus trying to get 80%+.
Their revenue is growing which is still wild despite bad press.
>Unfortunately their competitors have found a variety of ways to keep from being dragged down
Not a bad point but it is highly dependent on the market. In the US, Uber is 4x Lyft in market share.
A common problem drivers cite is that Lyft pays better, but the volume of Uber riders is much much larger.
I am not a fan of Uber, just extremely bitter at poor journalism, hence , I stopped reading at the first paragraph.
I am almost positive the point of subsidizing the price of the rides is to get you addicted/ build up a habit or get you comfortable using the service.
I think they are aware of the competition and are comfortable owning 60+% versus trying to get 80%+.
Their revenue is growing which is still wild despite bad press.
>Unfortunately their competitors have found a variety of ways to keep from being dragged down
Not a bad point but it is highly dependent on the market. In the US, Uber is 4x Lyft in market share.
A common problem drivers cite is that Lyft pays better, but the volume of Uber riders is much much larger.
I am not a fan of Uber, just extremely bitter at poor journalism, hence , I stopped reading at the first paragraph.
>Their revenue is growing which is still wild despite bad press.
Not really. The revenue for a company selling dollar bills for 80c each will keep increasing until all the cash is gone as well.
Not really. The revenue for a company selling dollar bills for 80c each will keep increasing until all the cash is gone as well.
>Not really. The revenue for a company selling dollar bills for 80c each will keep increasing until all the cash is gone as well.
The rides that I have taken are not subsidized. Maybe it's not statistically significant but I have yet to see the subsidy in the major cities that I have traveled in.
SoftBank obviously sees something in them.
Who knows. I don't disagree with what you said.
The rides that I have taken are not subsidized. Maybe it's not statistically significant but I have yet to see the subsidy in the major cities that I have traveled in.
SoftBank obviously sees something in them.
Who knows. I don't disagree with what you said.
> The rides that I have taken are not subsidized. Maybe it's not statistically significant but I have yet to see the subsidy in the major cities that I have traveled in.
How do you know that?
How do you know that?
The prices are higher per mile this year.( I have kept all my digital receipts for business travel purposes)
How do you know they are subsidized?
How do you know they are subsidized?
Because the drivers told me that they keep 100% and then Uber pay them bonuses on top of that.
> I think they are aware of the competition and are comfortable owning 60+% versus trying to get 80%+.
While in reality, their overall share of the ride-hailing + taxi market in the US is ~25% as of August 2017, and far less in Europe and Asia.
While in reality, their overall share of the ride-hailing + taxi market in the US is ~25% as of August 2017, and far less in Europe and Asia.
>While in reality, their overall share of the ride-hailing + taxi market in the US is ~25% as of August 2017, and far less in Europe and Asia.
You don't know what you are talking about.
https://www.google.com/amp/s/www.recode.net/platform/amp/201...
>That week, Uber’s market share dropped 5 percentage points compared with the previous week, from 81 percent to 76 percent, according to Second Measure data. Lyft’s market share gained about the same amount that week. Other ride-sharing companies, including Gett and Juno, saw a nominal increase that week.
You don't know what you are talking about.
https://www.google.com/amp/s/www.recode.net/platform/amp/201...
>That week, Uber’s market share dropped 5 percentage points compared with the previous week, from 81 percent to 76 percent, according to Second Measure data. Lyft’s market share gained about the same amount that week. Other ride-sharing companies, including Gett and Juno, saw a nominal increase that week.
I'm assuming the difference is the +taxi component in the calculations.
Even if they manage to kill their competition -- and I'm not expecting they will -- I don't understand what their endgame is. I don't see what their moat is. Ridesharing companies are not hard or expensive to start. They'll have a hard time extracting monopoly rents, and there isn't much of an economy of scale they can reap.
And once autonomous cars become part of the picture, I think they're in an even worse position. Suddenly they're not competing just against would-be moguls. Now they're up against the car companies, who have strong brands, deep pockets, and the ability to make cars at cost. Imagine, for example, BMW extending their leasing business to on-demand car use. We also have existing car rental companies that will be eager to get in on the action. And that's not counting the zillion other outfits with strong brands and a taste for expansion. Apple, for example. Virgin. Amazon.
I just don't see how this ends well for them. At best, I think 10 years from now they'll be the next Groupon: the hot startup everybody everybody loved but now nobody talks much about and is trading at a fraction of their peak valuation.
And once autonomous cars become part of the picture, I think they're in an even worse position. Suddenly they're not competing just against would-be moguls. Now they're up against the car companies, who have strong brands, deep pockets, and the ability to make cars at cost. Imagine, for example, BMW extending their leasing business to on-demand car use. We also have existing car rental companies that will be eager to get in on the action. And that's not counting the zillion other outfits with strong brands and a taste for expansion. Apple, for example. Virgin. Amazon.
I just don't see how this ends well for them. At best, I think 10 years from now they'll be the next Groupon: the hot startup everybody everybody loved but now nobody talks much about and is trading at a fraction of their peak valuation.
Offerings like Uber Pool and Lyft Line are the future of the business and depend entirely on economies of scale. Putting multiple paying passengers in the car at once and reducing driver downtime completely changes the economics, but only if there is a high density of riders and drivers.
Edit:
There are two possible stories here about Uber and Lyft's losses, and we can't tell which is right from the outside.
1. Uber and Lyft are in a price war death spiral, heavily subsidizing all rides to compete. Their only hope is for all competitors to die, so they can take over the whole market and raise prices. Then vague hopes of lowering costs with self-driving tech and take the surplus as profit. The plan doesn't seem viable, since they have no moat and they can't outspend GM and other self-driving players.
2. Uber and Lyft can actually make a profit in mature markets, but choose to subsidize rides in growing markets, on the theory that growing the market size increases the long term profit opportunity. The data we need to evaluate this idea isn't public, however Uber did a "prove it" quarter in 2016 where they turned the spigots to be profitable in the US. They are now pursuing growth in the US again, expanding to a larger territory and expanding Pool and other offerings like flat-rate passes in mature cities. Under this model, Uber could at any time decide to become profitable, but the revenue growth would stop, placing a cap on the valuation. Notably, there is no "predatory pricing" here.
With internal finances, we could easily tell whether option 2 is valid. You can bet Uber is constantly doing experiments on price elasticity of demand and knows exactly where the truth is. You can bet Softbank has seen numbers we have not. If Uber wants to IPO, I would expect them to provide additional public info, possibly pivoting to profitability again in the US. But doing a pivot like that permanently reduces the size of the opportunity, allowing Lyft to capture that new market instead, so they may be reluctant to do it large scale.
Edit:
There are two possible stories here about Uber and Lyft's losses, and we can't tell which is right from the outside.
1. Uber and Lyft are in a price war death spiral, heavily subsidizing all rides to compete. Their only hope is for all competitors to die, so they can take over the whole market and raise prices. Then vague hopes of lowering costs with self-driving tech and take the surplus as profit. The plan doesn't seem viable, since they have no moat and they can't outspend GM and other self-driving players.
2. Uber and Lyft can actually make a profit in mature markets, but choose to subsidize rides in growing markets, on the theory that growing the market size increases the long term profit opportunity. The data we need to evaluate this idea isn't public, however Uber did a "prove it" quarter in 2016 where they turned the spigots to be profitable in the US. They are now pursuing growth in the US again, expanding to a larger territory and expanding Pool and other offerings like flat-rate passes in mature cities. Under this model, Uber could at any time decide to become profitable, but the revenue growth would stop, placing a cap on the valuation. Notably, there is no "predatory pricing" here.
With internal finances, we could easily tell whether option 2 is valid. You can bet Uber is constantly doing experiments on price elasticity of demand and knows exactly where the truth is. You can bet Softbank has seen numbers we have not. If Uber wants to IPO, I would expect them to provide additional public info, possibly pivoting to profitability again in the US. But doing a pivot like that permanently reduces the size of the opportunity, allowing Lyft to capture that new market instead, so they may be reluctant to do it large scale.
True, but that doesn't necessarily make a company hard to start. There are a zillion niches in transport that could be profitable places to get traction. Uber Pool and Lyft Line might be the future of cheap transport, but as Uber itself shows, you can have a decent business just at the high end of the market. There are several companies in the rides-for-kids department. Taxis do a significant business in hospital-specific transport, both of patients and of urgent medical delivery.
To start a rideshare company, you only need to do reasonably well in one segment in one geographic market. Then you have a basis for expansion into other areas, other segments. Contrast this with a search engine, where people really expect you to be good for everything and covering the entire internet.
To start a rideshare company, you only need to do reasonably well in one segment in one geographic market. Then you have a basis for expansion into other areas, other segments. Contrast this with a search engine, where people really expect you to be good for everything and covering the entire internet.
The problem though is that they led the way by breaking down all the regulatory barrier to entries. Whats to stop anyone from starting a ridesharing company tomorrow?
The network effect.
You have the give your drivers a reason to use your app instead of uber.
You have to give riders a reason to use your app instead of uber.
The two reasons have to be good enough to build a large enough network for the rideshare system to work.
You have the give your drivers a reason to use your app instead of uber.
You have to give riders a reason to use your app instead of uber.
The two reasons have to be good enough to build a large enough network for the rideshare system to work.
I would argue there isn't really a network effect for lyft or uber or any ride-sharing company for that matter. There might be brand and price effects for the companies to battle over amidst both riders and drivers.
I'd say there is a network effect for ride-sharing in aggregate, neither Lyft nor Ueber has been good at locking drivers and riders in with loyalty programs to try to keep people solely on their platform.
I'd say there is a network effect for ride-sharing in aggregate, neither Lyft nor Ueber has been good at locking drivers and riders in with loyalty programs to try to keep people solely on their platform.
More drivers means faster pickups for riders, and more riders means less downtime for drivers. Drivers doing more rides per hour means they can be paid less per ride, lowering the price of a ride and further increasing demand. Sounds like a network effect to me. Offerings like Lyft Line and Uber Pool multiply both of these effects.
There is no cost for a driver to use multiple apps. There is no cost for a user to use multiple apps.
those reasons have largely boiled down to "lose money on each ride", that's not going to last.
Please name one comparatively successful ridesharing company founded in 2013 or later in any global market. I'll wait.
Here's a list of them in fact. Literally the top result on my Google SERP for "local uber competitors" http://mashable.com/2017/08/16/uber-global-rivals-didi/#vCa1...
Yes, and which were started after 2013 or even as early as 2013?
The truth is that all the viable competitors are likely already out there and it's going to be very very difficult to replicate what these incumbents have without burning ridiculous amounts of capital.
If the Softbank deal closes, we'll likely see a wave of consolidation with Softbank orchestrating acquisitions by Uber. It's very common for relatively young markets to consolidate over time.
No one in their right mind would start a new company to compete with the existing TNCs in 2017.
The truth is that all the viable competitors are likely already out there and it's going to be very very difficult to replicate what these incumbents have without burning ridiculous amounts of capital.
If the Softbank deal closes, we'll likely see a wave of consolidation with Softbank orchestrating acquisitions by Uber. It's very common for relatively young markets to consolidate over time.
No one in their right mind would start a new company to compete with the existing TNCs in 2017.
Just looking at the ones active in Austin, Fasten, Chariot, and InstaRyde were started in 2014; Fare in 2015; Ride Austin in 2016.
Ride sharing is essentially a local business with very low barriers to entry. You don't need to replicate what the incumbents have right away. You just need a modest number of drivers (who can also be driving for the incumbents) and a modest number of customers.
Ride sharing is essentially a local business with very low barriers to entry. You don't need to replicate what the incumbents have right away. You just need a modest number of drivers (who can also be driving for the incumbents) and a modest number of customers.
Do you have any data to support the position that any of those three are not irrelevant from a market share by rides given or by industry profits?
Some were listed by local news as the leading rideshare companies.
That seems sufficient to me. It's hard to name any company started in the last few years that is a major market player when then have a bunch of competitors. New businesses take time to grow.
The discussion here is about whether Uber has a moat. The point being made is that it's pretty easy to start a rideshare company. Which it is. That one hasn't become major yet isn't proof that one can't become so. As long as there's room for new companies to start and be sustainable at modest scale, then Uber can't extract monopoly rents.
That seems sufficient to me. It's hard to name any company started in the last few years that is a major market player when then have a bunch of competitors. New businesses take time to grow.
The discussion here is about whether Uber has a moat. The point being made is that it's pretty easy to start a rideshare company. Which it is. That one hasn't become major yet isn't proof that one can't become so. As long as there's room for new companies to start and be sustainable at modest scale, then Uber can't extract monopoly rents.
They do have a small moat in the short term; the network of drivers, brand recognition they've built up (even w/ the bad press), the large codebase they have by now, and the amount of capital to start such a business from scratch is not insignificant.
However, you are right to bring up autonomous cars. I always thought it amusing that Kalanick et al were so anxious to bet the house on autonomous cars, when in fact, they are the company's greatest existential threat long-term. Once those cars are readily available and street-legal, there's nothing stopping Enterprise or Avis or the automakers themselves from becoming overnight competitors.
And once drivers are taken out of the picture, ride prices will plummet. Margins will also thin because of the likely extreme competitiveness of this market. I would not want to be an Uber investor that's for sure. In theory, the "winner" will be whoever scales the most (i.e. has the most capital to put into their fleet) and has the most effective marketing. In practice, prices may be close enough that people will rent car X because they like brand/model Y better.
If I were on Uber's board, I would advise against trying to win that war which they will lose once/if the automakers get in on it, and instead get creative about how to conquer the market in a more niche way.
Someone is going to have to program self-driving ambulances :)
However, you are right to bring up autonomous cars. I always thought it amusing that Kalanick et al were so anxious to bet the house on autonomous cars, when in fact, they are the company's greatest existential threat long-term. Once those cars are readily available and street-legal, there's nothing stopping Enterprise or Avis or the automakers themselves from becoming overnight competitors.
And once drivers are taken out of the picture, ride prices will plummet. Margins will also thin because of the likely extreme competitiveness of this market. I would not want to be an Uber investor that's for sure. In theory, the "winner" will be whoever scales the most (i.e. has the most capital to put into their fleet) and has the most effective marketing. In practice, prices may be close enough that people will rent car X because they like brand/model Y better.
If I were on Uber's board, I would advise against trying to win that war which they will lose once/if the automakers get in on it, and instead get creative about how to conquer the market in a more niche way.
Someone is going to have to program self-driving ambulances :)
>And once drivers are taken out of the picture, ride prices will plummet.
1. This is probably further out than a lot of people assume. Reliable door to door fully autonomous in dense cities is one of the hardest use cases to solve but it's more or less what you need for self-driving taxis.
2. The pricing probably also won't "plummet." The IRS mileage rate (about 53 cents/mile) is probably a reasonable floor to use. That's still about half current Uber rates.
1. This is probably further out than a lot of people assume. Reliable door to door fully autonomous in dense cities is one of the hardest use cases to solve but it's more or less what you need for self-driving taxis.
2. The pricing probably also won't "plummet." The IRS mileage rate (about 53 cents/mile) is probably a reasonable floor to use. That's still about half current Uber rates.
Electric cars might do better on that mileage rate?
The IRS puts "variable costs" at about 14 cents per mile. So, yes they may do better, but not significantly better. Also, electric means either battery swaps or significantly longer refueling time. Not a problem for commuter cars with downtime anyway. But for a 24/7 business, that becomes more impactful.
https://www.irs.gov/newsroom/2017-standard-mileage-rates-for...
"The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs."
https://www.irs.gov/newsroom/2017-standard-mileage-rates-for...
"The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs."
Literally none of the old assumptions will apply. Let's go through some of them.
1. Maintenance. Electric vehicles require far less maintenance than ICE vehicles. (First thing I found on Google: https://insideevs.com/ev-vs-ice-maintenance-the-first-100000...)
2. Vehicle size. Once these systems are up and running, do you think Waymo & Uber, once their systems reach any level of maturity, are going to send you a 4 person vehicle to pick up 1 person? This reduces:
a- the capital cost of the vehicle
b- its cost of maintenance (less parts, etc)
c- the amount of energy required to get from point A to point B
Which brings me to...
3. Price of electricity. Waymo, Uber, et al will get their electricity at wholesale rates.
4. Low cost of capital. The cost to access the capital to buy these vehicles will be lower than anything a peon like you or me could ever access.
5. Bulk-buying 1,000,000 vehicles. No dealers, no dealer commissions, zero customizations, less parts, smaller vehicles, no car manufacturer marketing budget...
6. Maintenance scaling. The need to scale maintenance operations country-wide is going to lead to its own interesting effects. With a hard limit on the types of vehicles in a network, most cleaning and general maintenance will, in time, be doable by human-monitored robots.
7. Ride subsidization will effectively crush any margins any of these companies could ever hope to have.
8. Shared depreciation. Depreciation will be significant per vehicle but overall, cheaper, as each vehicle will have more utilization.
I'd hesitate to guess at the effects of all of the above, but it's not much of a stretch to anticipate an additional 50% reduction here, barring any unforeseen taxes, of course.
You might pay more for the network with great coverage and lux vehicles.
You might pay less for the crappy network with dirty cars and plastic seat buckets.
Etc.
1. Maintenance. Electric vehicles require far less maintenance than ICE vehicles. (First thing I found on Google: https://insideevs.com/ev-vs-ice-maintenance-the-first-100000...)
2. Vehicle size. Once these systems are up and running, do you think Waymo & Uber, once their systems reach any level of maturity, are going to send you a 4 person vehicle to pick up 1 person? This reduces:
a- the capital cost of the vehicle
b- its cost of maintenance (less parts, etc)
c- the amount of energy required to get from point A to point B
Which brings me to...
3. Price of electricity. Waymo, Uber, et al will get their electricity at wholesale rates.
4. Low cost of capital. The cost to access the capital to buy these vehicles will be lower than anything a peon like you or me could ever access.
5. Bulk-buying 1,000,000 vehicles. No dealers, no dealer commissions, zero customizations, less parts, smaller vehicles, no car manufacturer marketing budget...
6. Maintenance scaling. The need to scale maintenance operations country-wide is going to lead to its own interesting effects. With a hard limit on the types of vehicles in a network, most cleaning and general maintenance will, in time, be doable by human-monitored robots.
7. Ride subsidization will effectively crush any margins any of these companies could ever hope to have.
8. Shared depreciation. Depreciation will be significant per vehicle but overall, cheaper, as each vehicle will have more utilization.
I'd hesitate to guess at the effects of all of the above, but it's not much of a stretch to anticipate an additional 50% reduction here, barring any unforeseen taxes, of course.
You might pay more for the network with great coverage and lux vehicles.
You might pay less for the crappy network with dirty cars and plastic seat buckets.
Etc.
Very few of these points have anything to do with ICE vs EV. Most of them are automated vs not. (1) and (3) are maybe valid, though if you don't think large fleet operators aren't hedging their fuel purchases... Even my local school district buys desiel for buses via wholesale and futures.
And regarding (8), many taxis are rented by drivers for their shift, with multiple shifts per car per day. Uber could be doing the same right now, but they'd rather rely on drivers not realizing the full value of their car and giving the difference to Uber.
And regarding (8), many taxis are rented by drivers for their shift, with multiple shifts per car per day. Uber could be doing the same right now, but they'd rather rely on drivers not realizing the full value of their car and giving the difference to Uber.
Your points covers the entire scenario with self-driving & electric cars.
I totally envision the points mentioned. I put the $$ figures for on-demand hail service subscription a month ago, on a HN thread as follow .
https://news.ycombinator.com/item?id=15644680
2021 : Electric Self-driving on-demand FLEET Car 1000 miles/month SUBSCRIPTION from Google, DiDi, Uber, Renault/Nissan,Tesla, VW,Toyota,GM for $400/month
2024 :same 1000 miles/month SUBSCRIPTION $200/month
------
> Literally none of the old assumptions will apply. Let's go through some of them.
> 1. Maintenance. Electric vehicles require far less maintenance than ICE vehicles. (First thing I found on Google: https://insideevs.com/ev-vs-ice-maintenance-the-first-100000...)
> 2. Vehicle size. Once these systems are up and running, do you think Waymo & Uber, once their systems reach any level of maturity, are going to send you a 4 person vehicle to pick up 1 person? This reduces:
a- the capital cost of the vehicle b- its cost of maintenance (less parts, etc) c- the amount of energy required to get from point A to point B
Which brings me to...
> 3. Price of electricity. Waymo, Uber, et al will get their electricity at wholesale rates.
> 5. Bulk-buying 1,000,000 vehicles. No dealers, no dealer commissions, zero customizations, less parts, smaller vehicles, no car manufacturer marketing budget...
> 6. Maintenance scaling. The need to scale maintenance operations country-wide is going to lead to its own interesting effects. With a hard limit on the types of vehicles in a network, most cleaning and general maintenance will, in time, be doable by human-monitored robots.
> I'd hesitate to guess at the effects of all of the above, but it's not much of a stretch to anticipate an additional 50% reduction here, barring any unforeseen taxes, of course.
> You might pay more for the network with great coverage and lux vehicles.
> You might pay less for the crappy network with dirty cars and plastic seat buckets. Etc.
I totally envision the points mentioned. I put the $$ figures for on-demand hail service subscription a month ago, on a HN thread as follow .
https://news.ycombinator.com/item?id=15644680
2021 : Electric Self-driving on-demand FLEET Car 1000 miles/month SUBSCRIPTION from Google, DiDi, Uber, Renault/Nissan,Tesla, VW,Toyota,GM for $400/month
2024 :same 1000 miles/month SUBSCRIPTION $200/month
------
> Literally none of the old assumptions will apply. Let's go through some of them.
> 1. Maintenance. Electric vehicles require far less maintenance than ICE vehicles. (First thing I found on Google: https://insideevs.com/ev-vs-ice-maintenance-the-first-100000...)
> 2. Vehicle size. Once these systems are up and running, do you think Waymo & Uber, once their systems reach any level of maturity, are going to send you a 4 person vehicle to pick up 1 person? This reduces:
a- the capital cost of the vehicle b- its cost of maintenance (less parts, etc) c- the amount of energy required to get from point A to point B
Which brings me to...
> 3. Price of electricity. Waymo, Uber, et al will get their electricity at wholesale rates.
> 5. Bulk-buying 1,000,000 vehicles. No dealers, no dealer commissions, zero customizations, less parts, smaller vehicles, no car manufacturer marketing budget...
> 6. Maintenance scaling. The need to scale maintenance operations country-wide is going to lead to its own interesting effects. With a hard limit on the types of vehicles in a network, most cleaning and general maintenance will, in time, be doable by human-monitored robots.
> I'd hesitate to guess at the effects of all of the above, but it's not much of a stretch to anticipate an additional 50% reduction here, barring any unforeseen taxes, of course.
> You might pay more for the network with great coverage and lux vehicles.
> You might pay less for the crappy network with dirty cars and plastic seat buckets. Etc.
Agreed, except that I would say that Uber has a lead, not a moat. Since the car transport market is 99% local, I don't think it would take all that much money to start something. Look at the competitors that started in Austin, for example.
I also suspect that ride pricing and scale will not be the determining factors. Look at the variety that still exists among car manufaturers after a century of competition:
http://www.thetruthaboutcars.com/2017/08/usa-auto-sales-bran...
There's such a wide variety in terms of both cost and experience that I'd be very surprised to see that drop off to one or two players.
I also suspect that ride pricing and scale will not be the determining factors. Look at the variety that still exists among car manufaturers after a century of competition:
http://www.thetruthaboutcars.com/2017/08/usa-auto-sales-bran...
There's such a wide variety in terms of both cost and experience that I'd be very surprised to see that drop off to one or two players.
See my response above. The buyers of these vehicles are going to be the networks themselves, which will eliminate most if not all car brands.
The car brands know it, which is why they're panicking.
(Why ALL car brands? Because you're going to have companies like Bosch and Foxconn competing. I'd like to see Ford beat Foxconn at a challenge like this.)
The car brands know it, which is why they're panicking.
(Why ALL car brands? Because you're going to have companies like Bosch and Foxconn competing. I'd like to see Ford beat Foxconn at a challenge like this.)
Maybe, maybe not. Cars are Americans' most expensive status good. We might end up in a PRT-ish world, where transport is practically a utility, in which case you'd be right. But it's also plausible that people will continue to pay for social cachet and self-image enhancement.
This would be especially true if people continue to own or lease private cars, which I'm sure will continue at some level for decades at least. Look at how much stuff families keep in their minivans, for example. Or all the tradespeople who keep working materials in their trunk.
Or look at commuters. Taxi-ish providers like Uber and Lyft will have a hard time dealing with commutes because they'll have to buy a lot of vehicles to cover the peak that just won't get used much during the off hours. If people treat it like a minibus, where they share, then the providers might do well. But I suspect a lot of people will be willing to pay up for a private commute, at which point they might as well just have a dedicated car. In which case, the market will look a lot more like it does now.
This would be especially true if people continue to own or lease private cars, which I'm sure will continue at some level for decades at least. Look at how much stuff families keep in their minivans, for example. Or all the tradespeople who keep working materials in their trunk.
Or look at commuters. Taxi-ish providers like Uber and Lyft will have a hard time dealing with commutes because they'll have to buy a lot of vehicles to cover the peak that just won't get used much during the off hours. If people treat it like a minibus, where they share, then the providers might do well. But I suspect a lot of people will be willing to pay up for a private commute, at which point they might as well just have a dedicated car. In which case, the market will look a lot more like it does now.
BMW extending their leasing business to on-demand car use
BMW has no choice but to do this, as do all the strong brands. They can't compete in a world that you don't care about the brand because you're riding journey-by-journey with no personal investment.
BMW has no choice but to do this, as do all the strong brands. They can't compete in a world that you don't care about the brand because you're riding journey-by-journey with no personal investment.
[deleted]
or worse, the next webvan
> Ridesharing companies are not hard or expensive to start.
There is a lot of work that goes into the infrastructure behind companies like Uber and Lyft. You need good engineers that build products that are reliable and well tested, to work 24/7.
It is a hard problem. A lot of the smaller city taxi companies that have apps contract to larger vendors as well.
There is a lot of work that goes into the infrastructure behind companies like Uber and Lyft. You need good engineers that build products that are reliable and well tested, to work 24/7.
It is a hard problem. A lot of the smaller city taxi companies that have apps contract to larger vendors as well.
You need good engineers that build products that are reliable and well tested, to work 24/7
So did newspapers - the very definition of mission-critical computing is the the paper HAS to hit the stands the next morning. Didn't save them from half-arsed competitors running glorified blogs...
So did newspapers - the very definition of mission-critical computing is the the paper HAS to hit the stands the next morning. Didn't save them from half-arsed competitors running glorified blogs...
The backend systems can be SaaS. Amazon could do it. Anyone can then buy a local franchise for that backend service in their area. Or it could be offered whitelabel.
Sure. But compare with Flywheel, which has less than 50 employees and produces a perfectly adequate app. Infrastructure is also much easier at small scales. And as you point out, this is pretty easy to outsource. That means that that Uber's engineers are not making much of a mote.
"controlled expenditures through higher pricing and "friendlier" demeanor"
- Assuming this refers to Lyft, Lyft's expenses compared dollar to dollar are on-par if not worse than Ubers - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...
As long as Uber can keep the cost per ride lower than other competitors, it just needs to wait for the burn to end faster on the competitors side before turning break-even.
- Assuming this refers to Lyft, Lyft's expenses compared dollar to dollar are on-par if not worse than Ubers - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...
As long as Uber can keep the cost per ride lower than other competitors, it just needs to wait for the burn to end faster on the competitors side before turning break-even.
> As long as Uber can keep the cost per ride lower than other competitors, it just needs to wait for the burn to end faster on the competitors side before turning break-even
Uber have joined loss leading with scale, a combination that works if one has access to an endless spigot of money. The scandals have impacted Uber's fundraising. Time for eyes to match stomach.
I predict, in addition to lay-offs, we'll soon see more Didi-style hand-offs of offshore ride-sharing markets. Southeast Asia to Grab et al seems reasonable.
Disclaimer: this is not investment advice. Do not buy or sell anything based on this Internet comment.
Uber have joined loss leading with scale, a combination that works if one has access to an endless spigot of money. The scandals have impacted Uber's fundraising. Time for eyes to match stomach.
I predict, in addition to lay-offs, we'll soon see more Didi-style hand-offs of offshore ride-sharing markets. Southeast Asia to Grab et al seems reasonable.
Disclaimer: this is not investment advice. Do not buy or sell anything based on this Internet comment.
And hence the potential Softbank deal, who can broker these mergers across the various asian markets. This is also why Softbank is so keen on investing in Uber over Lyft. With Lyft, the best Softbank can muster is a parternship of equals amongst disparate localized companies, which is nothing but a mess in the end. Uber allows them true mergers where one side absorbs another and both come out with a net value-add. An Uber with one or more majority regions along with stakes across the globe can be a massive massive company.
Also Disclaimer: this is not investment advice. Do not buy or sell anything based on this Internet comment.
Also Disclaimer: this is not investment advice. Do not buy or sell anything based on this Internet comment.
even if lyft's burn-to-revenue ratio is higher, their burn is still lower that uber's, and it's going to cost a lot fewer incremental dollars to prop up lyft's burn than uber's for a few years.
some interested parties (waymo/alphabet) might be happy to foot that bill.
some interested parties (waymo/alphabet) might be happy to foot that bill.
I've had the feeling that Alphabet has been using Lyft as a cat's paw in its war with Uber. Given its buckets of cash and what Alphabet perceives as the opportunity to dominate the next big market, can't Lyft expect almost unlimited funding? Or even an acquisition once its independence is not an asset?
Definitely this. It takes a lot of effort to burn through as much cash as Uber is and moving the needle in Lyft's favor requires a lot less effort, which is where things get dangerous for Uber.
I'm somewhat reminded of Jack Tramiel's pricing scheme in the mid-late 80s with Commodore. Great, popular machines beating everyone on price until they couldn't afford to anymore. They didn't capture the market and they failed.
They did capture the market.
Commodore 64 was a profitable bestseller.
Tramiel left Commodore while it was still very successful, founded new company, bought Atari and tried to replicate Commodore 64 success with Atari ST.
Commodore failed because they failed to transition from Commodore 64 to a better specced machines, despite having a technological marvel at their hands (Commodore Amiga).
Commodore 64 was a profitable bestseller.
Tramiel left Commodore while it was still very successful, founded new company, bought Atari and tried to replicate Commodore 64 success with Atari ST.
Commodore failed because they failed to transition from Commodore 64 to a better specced machines, despite having a technological marvel at their hands (Commodore Amiga).
Yeah but it's also well documented how the pricing strategy he chose left the company unable to adapt at that critical time you mentioned.
Currently the biggest drag on their expenditure is drivers. Their golden bullet is making an efficient transition to self-driving, all while maintaining a leading position
"Are they planning to raise prices? Cut employees? What are they planning on doing here?"
Both! Just don't tell anyone.
https://twitter.com/neilanalien/status/627873374505562112
Both! Just don't tell anyone.
https://twitter.com/neilanalien/status/627873374505562112
It's already 25% just for two apps. That's insane. They don't do any specific work for a trip for these money.
It's like having Stripe getting a 25% cut from all card transactions.
It's like having Stripe getting a 25% cut from all card transactions.
But it's the crux of their entire business model -- saturate markets to kill competition so they can do whatever they want with the financial side of things.
If Uber had to, they could flip the profit switch. They haven’t chosen to because they’re reinvesting in growth, but if it was an existential question they could survive in the short term.
Reinvesting for growth is a terrible euphemism for subsiding taxi fares.
When they flip the switch they become more expensive that a regular mini-cab. Customers will leave in droves, drivers will leave in droves. There s no loyalty to a middleman.
When they flip the switch they become more expensive that a regular mini-cab. Customers will leave in droves, drivers will leave in droves. There s no loyalty to a middleman.
The QC alone makes Uber’s business model viable. Holding drivers accountable with ratings makes Uber worthwhile at a premium over regular cabs, and significantly expanded the market. The only real risk at that point would be Lyft, the company that started the price war in the first place.
Uber may or may not be subsidizing fares, but they’re also spending tons of money on engineering and product development, both on their existing product and in an attempt to develop self-driving cars. That’s growth.
Uber may or may not be subsidizing fares, but they’re also spending tons of money on engineering and product development, both on their existing product and in an attempt to develop self-driving cars. That’s growth.
Rating people is great but it is not a unique value proposition.
But when customers leave in droves, they can respond by reducing infrastructure and doing layoffs, and then they'll probably still be profitable.
With Uber, I think there is some degree of loyalty just because of the ubiquity and convenience. Plus, I imagine their prices will be more or less the same as a taxi since they don't have the expense of dealing with the regulatory overhead (since they just blatantly ignore the law instead)
With Uber, I think there is some degree of loyalty just because of the ubiquity and convenience. Plus, I imagine their prices will be more or less the same as a taxi since they don't have the expense of dealing with the regulatory overhead (since they just blatantly ignore the law instead)
> (since they just blatantly ignore the law instead)
This is not true for all markets in which Uber operates - in NYC for example, uber cars are all registered with the TLC.
This is not true for all markets in which Uber operates - in NYC for example, uber cars are all registered with the TLC.
Oddly enough, when I compare Uber to Lyft in the East Bay, 99% of the time Lyft is cheaper by at least $3. Even Uber Pool is usually the same or slightly more expensive than a dedicated Lyft.
I have no idea why (maybe less drivers?) but I already stopped using Uber because of that. If their prices when even higher then I'd simply never use them again instead of the occasional time that I do now.
I have no idea why (maybe less drivers?) but I already stopped using Uber because of that. If their prices when even higher then I'd simply never use them again instead of the occasional time that I do now.
In my experience Uber is cheaper than Lyft for any 5/10 minute ride within SF city borders.
This is at best deeply unproven. We don't have a good idea of how much their volume would be depressed if they raised prices.
Honestly if they need to make money, they can lay off a ton of staff, and license their logistics software to a lot of companies. It wouldn't be what their game plan has been, definitely a severe pivot but they would be a money printing machine for years to come.
> they can lay off a ton of staff, and license their logistics software to a lot of companies.
I have a feeling this isn't as easy as you think. There are some great talks on Uber's microservice architecture and it's pretty insane. They could create new services, but I have a feeling their existing infrastructure is very custom. They've got over 1,000 microservices and it's actually difficult to get an exact number.
I have a feeling this isn't as easy as you think. There are some great talks on Uber's microservice architecture and it's pretty insane. They could create new services, but I have a feeling their existing infrastructure is very custom. They've got over 1,000 microservices and it's actually difficult to get an exact number.
Uber's microservice architecture and it's pretty insane
Symptomatic of too many engineers and too little leadership
Symptomatic of too many engineers and too little leadership
"Too many engineers" is the impression I tend to come away with whenever I attend a tech talk by someone from the more fiscally beleaguered of the tech darlings.
The talk is invariably about some really impressive bit of software that appears to have required equally heaping measures of smarts and money to build, and also appears to be a $10 solution to a 10¢ problem.
The talk is invariably about some really impressive bit of software that appears to have required equally heaping measures of smarts and money to build, and also appears to be a $10 solution to a 10¢ problem.
Never underestimate the ability of someone with an IQ of 135 to make every problem difficult.
Yet technology has never been a problem or a limiting factor of Uber. Uber deserves plenty of criticism, yet it seems rich to blame technology when they grew from nothing to enormous with few if any hiccups. It worked.
But yeah, extraordinarily few internal projects can be turned into an external project without enormous rework. It's only the myth of middle managers who perceive software as a growing asset who think otherwise.
But yeah, extraordinarily few internal projects can be turned into an external project without enormous rework. It's only the myth of middle managers who perceive software as a growing asset who think otherwise.
That explains most of the engineering culture in the Valley, really. Even the "leadership" is on board with it, because they have their own resume driven development to pursue.
"license their logistics software to a lot of companies."
It's quite tricky to package an internally used system into something that can be sold and used by others. It most likely takes years to get to any significant amount of sales.
It's quite tricky to package an internally used system into something that can be sold and used by others. It most likely takes years to get to any significant amount of sales.
Every taxi company on earth would buy this immediately.
That is... Overly optimistic at best. You're assuming every taxi company on Earth:
* Thinks they have a logistics problem in the first place.
* Thinks that software can solve that problem.
* Are in the market for software to solve that problem.
* Think that Uber's software is the software that would solve that problem the best.
That's a hell of a lot of assumptions, each of which is fairly easy to pick apart.
* Thinks they have a logistics problem in the first place.
* Thinks that software can solve that problem.
* Are in the market for software to solve that problem.
* Think that Uber's software is the software that would solve that problem the best.
That's a hell of a lot of assumptions, each of which is fairly easy to pick apart.
I politely disagree. Taxi companies hate ride sharing companies. As an industry that refused change for decades saw a software company come in and eat away market share quickly. If Uber were to 'go away' and allow the taxi company to use the ride hailing software they would be all over it. [1][2][3][4]
And this is just the taxi industry, there are plenty of industries that would love to use a logistics software to help their business. The only real magic Uber has is this software, the rest is easily replaceable or overhead.
[1] https://daymondjohnssuccessformula.com/launch-pad/cab-compan...
[2]https://www.watchdog.org/california/the-uber-effect-why-cab-...
[3] https://www.quora.com/Why-do-taxi-drivers-hate-Uber-if-its-c...
[4] https://therideshareguy.com/what-taxis-need-to-do-to-survive...
And this is just the taxi industry, there are plenty of industries that would love to use a logistics software to help their business. The only real magic Uber has is this software, the rest is easily replaceable or overhead.
[1] https://daymondjohnssuccessformula.com/launch-pad/cab-compan...
[2]https://www.watchdog.org/california/the-uber-effect-why-cab-...
[3] https://www.quora.com/Why-do-taxi-drivers-hate-Uber-if-its-c...
[4] https://therideshareguy.com/what-taxis-need-to-do-to-survive...
Ubers big magic is subsidising rides. You can do ride hailing app without uber.
Of course you can but most taxi companies do not want to be in the app development business. And most other ride hailing apps are not very good. They'd rather focus on their main line of work which is transportation. People know Uber, that app works, people would use it if it was available.
The subsidizing is what made them a household name, along with the ease of use.
The subsidizing is what made them a household name, along with the ease of use.
The other ride hailing apps are in the business of selling hailing services to taxi firms and have sales teams dedicated to doing so, are not despised by taxi firms, and provide solutions optimised for regulated taxi firms. If they tend to provide surprisingly few drivers and poor price estimations and the app companies are orders of magnitude smaller in terms of revenue and geographic spread, that's probably an indication the licensed-partnerships-with-cab-firms market is more awkward and less lucrative than it sounds.
And the taxi firms usually won't and often legally can't use Uber's pricing algorithms which is pretty much the only secret sauce to the app, they don't want to ignore bylaws that Uber has cheerfully skirted around and they don't want their expensively-licensed drivers competing for leads on an equal footing with new Uber drivers.
And the taxi firms usually won't and often legally can't use Uber's pricing algorithms which is pretty much the only secret sauce to the app, they don't want to ignore bylaws that Uber has cheerfully skirted around and they don't want their expensively-licensed drivers competing for leads on an equal footing with new Uber drivers.
Yeah to be honest I wasnt even considering the pricing algorithm but just the supply/demand matching portion of it. I feel there is a lot of value there, billions? Maybe but probably not, but I feel this is a huge asset if they run out of runway and need to stay in existence.
I understand that there are taxi companies worldwide and I'm sure they operate different by different types of people, but I still think you're overestimating these taxi companies and what they want.
I worked for a very big "Old Media" company in Australia when we rebuilt one of their key properties. Their "definition of success" was to _not accelerate the rate of decline_ of page views. Since then I've realised that these types of businesses are ran by people who are motivated differently than 'us'.
I worked for a very big "Old Media" company in Australia when we rebuilt one of their key properties. Their "definition of success" was to _not accelerate the rate of decline_ of page views. Since then I've realised that these types of businesses are ran by people who are motivated differently than 'us'.
For sure, I agree with that. My original point was Uber has a pivot that they can use to make money. Layoff most the people, license the software, profit. It might not work for everyone, but it will definitely work for some.
They could be food if they would be willing to invest money and refine refine refine. They are not. So, even if they would buy from Uber it would be for cheap.
Plus any other startup or company can build such app to compete.
Plus any other startup or company can build such app to compete.
Im not sure what you mean by 'They could be food'?
Any start up could build this, but most companies don't want to deal with an MVP and the bugs that come with it, or a startup that may or may not exist in 6 months, etc... Companies will over pay for enterprise grade software if it has a history of just working. This is why Uber has an advantage, software that has a track record of doing what it says it does.
Any start up could build this, but most companies don't want to deal with an MVP and the bugs that come with it, or a startup that may or may not exist in 6 months, etc... Companies will over pay for enterprise grade software if it has a history of just working. This is why Uber has an advantage, software that has a track record of doing what it says it does.
I meant "good", but either typo or autocorrelat got in the way.
I think that companies like taxis are cheap and while they are willing to pay, they are not willing to pay much.
I think that companies like taxis are cheap and while they are willing to pay, they are not willing to pay much.
Every taxi company on earth would buy this immediately.
Every taxi company on Earth (well, at least in the UK) has an app of their own now, even if it's just a white-label with their branding applied. They all let you book a journey and tell you the name of the driver and the reg plate of the car, and have a nice animated map of how far away the car is. No-one will buy it.
Every taxi company on Earth (well, at least in the UK) has an app of their own now, even if it's just a white-label with their branding applied. They all let you book a journey and tell you the name of the driver and the reg plate of the car, and have a nice animated map of how far away the car is. No-one will buy it.
They are trying in the US as well but most the apps are garbage and no one uses them. Uber (and Lyft) are ubiquitous now and I think there would be a much higher adoption rate if they licensed it. Most companies also do not want to be in app development, if you could just buy software that works and focus on the core of your business companies would be much happier. This happens in giant enterprise-y businesses today. They consistently overpay on software that just works and lets them get along with their actual work.
But as I mentioned above the taxi industry is only the first immediate one I'd tackle, there are plenty others.
But as I mentioned above the taxi industry is only the first immediate one I'd tackle, there are plenty others.
What exactly? Most taxi companies probably can run on a spreadsheet or s simple database. What does Uber have for them?
For ride hailing?
And that would justify a 50 billion dollar valuation? They would need to create multi-billion dollar market to make it worthwhile. And also learn selling to businesses.
Oh the valuation doesn't mean anything except to new potential investors. It's essentially a made up number that means nothings especially since they are not earning a profit and don't look to any time soon.
But that aside, yes a pivot would require them to do things differently, just as in your example learn selling to businesses However every taxi company in the world would jump at this opportunity immediately. The same industry that refused change for decades and had their parade rained on when Uber came around would greet this change with open arms. Especially if Uber were to 'go away' as a result.
There are going to be down rounds for Uber in the future no matter what, valuation means nothing if your business won't survive.
But that aside, yes a pivot would require them to do things differently, just as in your example learn selling to businesses However every taxi company in the world would jump at this opportunity immediately. The same industry that refused change for decades and had their parade rained on when Uber came around would greet this change with open arms. Especially if Uber were to 'go away' as a result.
There are going to be down rounds for Uber in the future no matter what, valuation means nothing if your business won't survive.
Their revenues are in the billions per year, and so their investors would be looking for new revenues in the billions. The assumption that there's an untapped multi-billion dollar market for logistics software that they could quickly dominate - quickly enough to avoid running out of money - seems unwarranted.
There's an enormous opportunity in UberEATS if they can get the unit economics right.
They could also retreat into already profitable markets .
I've used UberEATS a couple times, but after figuring out that it's basically impossible for delivery people to make much real money off of it I feel really bad.
Not sure if the unit economics can ever work out.
Not sure if the unit economics can ever work out.
Revenues are in the billions, but profits are nil, and if it comes to bankruptcy vs pivot and earn a profit everyone will find it acceptable. Of course they'd want billions, they want an ROI from the unicorn, it might not be there in its current unicorn form.
Also they could maybe stop literally giving away free money.
Very interesting situation they are in. Part of me wonders if the negative press coverage is driven in part by the investors losing confidence in management's business acumen (vs ethics / culture), and using the press to push travis and others out
TO my understanding (probably not a full understanding), Uber's business model to date has always been predicated on subsidizing cheap fares and wages that at least keep lots of drivers around. The idea was at some point this would be sustainable and the subsidies would go away. It is unclear now whether such a point exists
Uber could cut costs, ie massive layoffs, but imagine what that would do to its talent base. Who would stay at uber amid massive layoffs when the hiring market is so strong?
THey could try to improve unit economics by charging higher fares or squeezing drivers further, but it is unclear how much more they could squeeze drivers, and if fares rise materially, a lot of their business goes to lyft or goes away entirely.
i rarely used uber when i was in NYC or non-SF places in CA. in SF uber might still be viable because public transportation is so terrible, but in many other cities uber could disappear and people wouldnt miss it all that much
TO my understanding (probably not a full understanding), Uber's business model to date has always been predicated on subsidizing cheap fares and wages that at least keep lots of drivers around. The idea was at some point this would be sustainable and the subsidies would go away. It is unclear now whether such a point exists
Uber could cut costs, ie massive layoffs, but imagine what that would do to its talent base. Who would stay at uber amid massive layoffs when the hiring market is so strong?
THey could try to improve unit economics by charging higher fares or squeezing drivers further, but it is unclear how much more they could squeeze drivers, and if fares rise materially, a lot of their business goes to lyft or goes away entirely.
i rarely used uber when i was in NYC or non-SF places in CA. in SF uber might still be viable because public transportation is so terrible, but in many other cities uber could disappear and people wouldnt miss it all that much
the waymo case will certainly take some time to play out, wont it? I'm assuming year(s), but that's just a guess.
Probably, but can they successfully go public with that unsettled?
Can they successfully raise money at a huge valuation with that case unsettled, news that they (almost-certainly-illegally) hid a data breach, a potential class-action lawsuit about sexual assault by their drivers, a business model that shows no signs of breaking even, etc. etc. etc.?
If so, they then probably think they can go public with all of that baggage.
If so, they then probably think they can go public with all of that baggage.
That is only half of the equation though. They also have to open their books which may complicates some of those issues.
[deleted]
>> A large fine in the Waymo case [2] could literally bankrupt them.
After reading the Times article (currently #7 on HN list) it would look like a fine is probably the least of their worries in the Waymo case.
After reading the Times article (currently #7 on HN list) it would look like a fine is probably the least of their worries in the Waymo case.
>That means they are down to $5.1bn.
Just curious, but does it actually mean this? I thought some of their $1.5B losses could be in the form of debt that has to be repaid in the future?
Just curious, but does it actually mean this? I thought some of their $1.5B losses could be in the form of debt that has to be repaid in the future?
It really just depends on what their gross and net margins look like, and what elements they can ramp up/down quickly.
So Uber cash in bank will run thru end of 2018 .
That is exact time 2019 January google Waymo will be having driver less full autonomous Ride hailing service at least in 10 US Cities in limited routes of each city to begin with ( as Phonix driver less service is LIVE at this time).
Unless Uber driver less technology is ready for deployment for real world Ride hailing service by 2019 January (even in small limited routes in those 10 cities), Uber is in big trouble !!!!!
I think this Uber 30% lowered valuation is result of this two factors of perceived RISK that is
a) running out of money in one year
b) driver less technology readiness by 2019 for real world use
That is exact time 2019 January google Waymo will be having driver less full autonomous Ride hailing service at least in 10 US Cities in limited routes of each city to begin with ( as Phonix driver less service is LIVE at this time).
Unless Uber driver less technology is ready for deployment for real world Ride hailing service by 2019 January (even in small limited routes in those 10 cities), Uber is in big trouble !!!!!
I think this Uber 30% lowered valuation is result of this two factors of perceived RISK that is
a) running out of money in one year
b) driver less technology readiness by 2019 for real world use
Driverless cars in 10 cities by 2019? Without perfect sunny weather?
Waymo won't bankrupt Uber. If Uber loses, they will appeal. Uber will run out of runway for other reasons before they're done with the appeal.
What a loss to Waymo might do is make an Uber IPO much less attractive. It might even be the difference between an IPO happening and not happening. And that might be the difference between Uber getting another year or two of runway and them dying in 2018.
What a loss to Waymo might do is make an Uber IPO much less attractive. It might even be the difference between an IPO happening and not happening. And that might be the difference between Uber getting another year or two of runway and them dying in 2018.
"Waymo won't bankrupt Uber. If Uber loses, they will appeal. "
So? They'd almost certainly be forced to put up a very large bond to do that, assuming they can get it.
In some jurisdictions, this can be 100% of judgement + interest. IIRC, in the 9th circuit, it's at the discretion of district courts, but given the financial situation, if they did have a multi-billion judgement against them, and not a lot of runway, what makes you think a judge won't make them put up a full bond to appeal?
These cases actually often do bankrupt businesses, and the predatory lawsuit creditors take over (though usually that happens more in patent cases) :)
So? They'd almost certainly be forced to put up a very large bond to do that, assuming they can get it.
In some jurisdictions, this can be 100% of judgement + interest. IIRC, in the 9th circuit, it's at the discretion of district courts, but given the financial situation, if they did have a multi-billion judgement against them, and not a lot of runway, what makes you think a judge won't make them put up a full bond to appeal?
These cases actually often do bankrupt businesses, and the predatory lawsuit creditors take over (though usually that happens more in patent cases) :)
If they lose they could be forced shut down they're AV research. I don't think the judge would let them continue using waymo's tech while uber appeals
If you lose a judgement, you still have to post a bond before you can appeal.
Better source, and one that the article references:
https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th...
At this point, two things are clear to me:
1) Uber will IPO, there's just oo much money and influence behind it to stop that.
2) I'd be really worried if I was an employee about my options and also about my job.
Employee's now ahve two large worries hanging over their heads.....
What about my job and what about my options...
With Uber preparing for an IPO, they'll od what most companies do, clean up their balance sheet. And with the losses piling up they'll start cutting costs, which as for most tech companies starts with employee's.
And now I don't htink anyone believes that they'll IPO at anywhere close to the 60+ Billion valuation they had a year ago.
Infact SNAP looks like a great model to study for what an Uber IPO might look like, lots of good first day to week action with price rises but then a steady stream of down days leading up to their first quarter report which will almost certainly show them loosing money and then much larger short interest leading up to a huge lock up expiry of their employee's options.
Given how much money institutional investors put into the company, and the late stage at when they did and given how much they valued the company at, I'd be very afraid if I was an option holding employee at just how many shares are going to flood the market before I get to try and redeem my own options.
And to top it all off, the biggest thing driving their valuation recently, self driving cars, appears to be in serious jeopardy, can anyone make a credible case of Uber having self driving fleet in the next 5 years?
EDIT to those of you who i confused with layoffs. No one is saying that Uber needs to be profitable when they go public, but their burn rate had better be decreasing. T
hey don't need to fire 3 billion dollars worth of salary, no one would think that's a wise move, but they had better show they are moving towards profitability, and the easiest way to show this is a string of quarter where their quarterly loss is decreasing and the easiest way to do that is to cut costs and the largest cost is people.
https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th...
At this point, two things are clear to me:
1) Uber will IPO, there's just oo much money and influence behind it to stop that.
2) I'd be really worried if I was an employee about my options and also about my job.
Employee's now ahve two large worries hanging over their heads.....
What about my job and what about my options...
With Uber preparing for an IPO, they'll od what most companies do, clean up their balance sheet. And with the losses piling up they'll start cutting costs, which as for most tech companies starts with employee's.
And now I don't htink anyone believes that they'll IPO at anywhere close to the 60+ Billion valuation they had a year ago.
Infact SNAP looks like a great model to study for what an Uber IPO might look like, lots of good first day to week action with price rises but then a steady stream of down days leading up to their first quarter report which will almost certainly show them loosing money and then much larger short interest leading up to a huge lock up expiry of their employee's options.
Given how much money institutional investors put into the company, and the late stage at when they did and given how much they valued the company at, I'd be very afraid if I was an option holding employee at just how many shares are going to flood the market before I get to try and redeem my own options.
And to top it all off, the biggest thing driving their valuation recently, self driving cars, appears to be in serious jeopardy, can anyone make a credible case of Uber having self driving fleet in the next 5 years?
EDIT to those of you who i confused with layoffs. No one is saying that Uber needs to be profitable when they go public, but their burn rate had better be decreasing. T
hey don't need to fire 3 billion dollars worth of salary, no one would think that's a wise move, but they had better show they are moving towards profitability, and the easiest way to show this is a string of quarter where their quarterly loss is decreasing and the easiest way to do that is to cut costs and the largest cost is people.
> And to top it all off, the biggest thing driving their valuation recently, self driving cars, appears to be in serious jeopardy, can anyone make a credible case of Uber having self driving fleet in the next 5 years?
Uber currently sends teams to major cities all over the world to build maps for self driving cars. They outfit cars in those cities with 6 figure camera rigs and enable 'passive collection', where maps are built over the course of normal rides. After that they actively collect any missing pieces and move on to the next city. They've got teams in C / D level cities (which I won't name because I don't want to ID anyone but are the international equivalents of a Baltimore MD or Miami FL).
They are not positioned as well as say Tesla IMO but they also aren't just sitting around waiting for something to happen on this front.
Uber currently sends teams to major cities all over the world to build maps for self driving cars. They outfit cars in those cities with 6 figure camera rigs and enable 'passive collection', where maps are built over the course of normal rides. After that they actively collect any missing pieces and move on to the next city. They've got teams in C / D level cities (which I won't name because I don't want to ID anyone but are the international equivalents of a Baltimore MD or Miami FL).
They are not positioned as well as say Tesla IMO but they also aren't just sitting around waiting for something to happen on this front.
And if those maps were built with illegally obtained lidar technology (or just if the judge thinks they might have been), they become fruit of the poisonous tree.
I thought fruit of the poisonous tree was only relevant in evidence collection: https://en.wikipedia.org/wiki/Fruit_of_the_poisonous_tree
I think the responder is correct that FOTPT is not applicable here, but I wonder if there is an analogous legal concept for the product of a stolen good.
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I wonder if one of those international cities is Perth, Australia? We had a news report today that Perth is launching trials of a self-driving on-demand taxi service in April 2018:
http://www.zdnet.com/article/navya-bringing-driverless-vehic...
(I realize the trials aren't Uber, but if our government is getting ready to allow self-driving taxis, I imagine Uber would want to be prepared & ready to launch ASAP.)
http://www.zdnet.com/article/navya-bringing-driverless-vehic...
(I realize the trials aren't Uber, but if our government is getting ready to allow self-driving taxis, I imagine Uber would want to be prepared & ready to launch ASAP.)
Perth was not the first AUS city ;)
Parent comment is likely referring to the lawsuit against them which has recently seemed to take a turn for the worse for Uber.
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An IPO would be the best scenario but it is far from certain.
Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long.
Why else would Benchmark and others be running for the exits now? If all the smart money that knows the company best is dumping at a discount it does not paint a pretty picture.
Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long.
Why else would Benchmark and others be running for the exits now? If all the smart money that knows the company best is dumping at a discount it does not paint a pretty picture.
> Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long.
I don't think this can be understated. In the social and political climate of today, it would be hard (I think) for Uber to have a banner IPO. When you look at where we are, with sexual misconduct headlining the nightly news, I feel like Uber would generally like to avoid public scrutiny until the issue is not as hot.
I don't think this can be understated. In the social and political climate of today, it would be hard (I think) for Uber to have a banner IPO. When you look at where we are, with sexual misconduct headlining the nightly news, I feel like Uber would generally like to avoid public scrutiny until the issue is not as hot.
I kind of suspect that Uber might have skeletons much bigger then sexual misconduct. I would be surprised if their financials were in order and if legal documents did not contained a lot of lies.
I don't think any Uber investors can be characterized as smart, even if they have made or end up making money.
Hindsight is always 2020.
Hardly. That has been my position for years. I have always believed that Uber's management made it a profoundly risky investment, and accordingly not smart. Reasonable minds will disagree with me. I'm entitled to think they're wrong.
Are Uber's costs really in the tech space? It's a complex tech operation for sure, but I wouldn't have thought they could make up much of the 1.5bn USD if they fired a bunch of developers. These bulk of these costs must be in marketing, customer acquisition and discounted fares, right?
They have around 12,000 employees according to Wikipedia (and a few other sources show a similar figure). If we figure the average employee is 250,000/year in liabilities on the balance sheet (salary + benefits + options/RSUs) then thats $3 billion a year in employee expenses. I don't think $250k is too unrealistic considering the massive capital gains many employees must have on paper as well as the high level of talent Uber has lured away from competitors. They had the creator of Google Maps, the Otto acquisition (and the subsequent legal costs if we want to factor those in), and a whole lot of other experts around mapping / autonomous vehicles.
Don't confuse years and quarters. Their quarterly loss is $1.5B. If we accept a $3B yearly salary cost (I expect it's actually a lot lower, because their 12,000 worldwide employees, I think, include lots of local employees at far-flung cities who probably have very low salaries by silicon-valley-programmer standards), and extrapolate their quarterly loss to a year, then they could cut all of their salaries to 0 and still only reduce their loss from $6B/year to $3B/year.
That seems like an absurdly high number of employees for what's basically a taxi company, especially considering their drivers aren't employees.
That's roughly as many employees as Apple had in 2005, a company that was making laptops, desktops, servers, wireless routers, portable audio players, and entire operating systems.
That's roughly as many employees as Apple had in 2005, a company that was making laptops, desktops, servers, wireless routers, portable audio players, and entire operating systems.
Self driving cars and operations eat a lot of staff
It's not even clear why self-driving is an important pursuit at this point for a company like Uber. They're going to blow through billions on this and someone else will come in with a solution that just works.
I doubt a scrappy "startup" like Uber can beat companies like Toyota, Volkswagen, GM, Google or even Apple to market with a viable, certified self-driving car. They have, at best, a few billion left to dump into that venture. Those big companies could throw in ten times that if they wanted to.
Maybe someone needs to disrupt Uber. Go Lyft!
I doubt a scrappy "startup" like Uber can beat companies like Toyota, Volkswagen, GM, Google or even Apple to market with a viable, certified self-driving car. They have, at best, a few billion left to dump into that venture. Those big companies could throw in ten times that if they wanted to.
Maybe someone needs to disrupt Uber. Go Lyft!
Uber has a lot of Operations staff all around the world who are getting faaar less than $250K a year (even if you add everything in the kitchen sink to reach the compensation number). And by faar I mean an order of magnitude less.
Other than engineering they also have a lot of people going around mapping cities, QAing those maps etc.
Other than engineering they also have a lot of people going around mapping cities, QAing those maps etc.
Most operational staff are hourly workers who don't get paid anywhere near what a engineer gets and hourly works usually don't get RSUs. You have to consider the 1000s people working on city ops, support, their insurance ops teams are huge, in the US alone they probably have 1 to 2k of people in support roles. Only salaried employees garner the big pay which is guess is less than half the company.
Ps... you'd crap your pants if you knew how many contractors they have doing operations work. Their mostly in low cost counties like the Philippines, and Brazil. Nothing about support scales with growth.
Ps... you'd crap your pants if you knew how many contractors they have doing operations work. Their mostly in low cost counties like the Philippines, and Brazil. Nothing about support scales with growth.
Sure on the other hand employees who got in early have pay packages that are easily in the tens of millions
250k may well be an average, but not the type of average that matters. The few high-pay people warp the average. They will not be culled before an IPO as doing so will reduce confidence. Uber needs to keep its headliners. They can only cut from the plebs costing in the 50-100K range. So either they need to fire 4x as many people, or a cull won't solve the problem.
I doubt that there's a single full-time employee (in the US) that only costs them 50k/year. Total overhead costs are a lot higher than the employee's salary. I have no idea what the distribution of salaries look like, so this doesn't necessarily invalidate your point.
Their sales/brand reps are reportedly paid 20$/hour, which works out to about 40k. I don't know what the benefit package is but I doubt it's much, as I doubt they are all paid for full 40-hour weeks. So I assume they have a pool of sub-40k people.
rule of thumb is 3x your salary is your cost to employer
Not at engineer salaries. Maybe if you're a minimum wage employee.
So remember that it's not that they burned $1.5B this quarter; they burned $3.5B (net revenue of $2B, $1.5B loss).
If their average employee costs them $500,000 a year (surely a generous estimate), then that's $125k per quarter. A $2B spend on salaries would suggest then that they had 16,000 employees (not counting drivers, who aren't part of this equation -- they're the difference between the $9.7B "gross bookings" and the $2B net revenue).
Uber employs apparently "more than 12,000 people," which is shocking, but salary still can't plausibly be the entire story here.
If their average employee costs them $500,000 a year (surely a generous estimate), then that's $125k per quarter. A $2B spend on salaries would suggest then that they had 16,000 employees (not counting drivers, who aren't part of this equation -- they're the difference between the $9.7B "gross bookings" and the $2B net revenue).
Uber employs apparently "more than 12,000 people," which is shocking, but salary still can't plausibly be the entire story here.
How about driver bonuses? Would those count as expenses, pr as the difference between gross bookings and net revenue?
I know sometimes (especially in new markets) Uber let drivers keep 100% and then add bonuses on top of that.
I believe that bonuses and other incentives, to drivers and passengers, are the source of a huge amount of expenses and are counted out of the $2B net revenue, not included in the difference between bookings and revenue.
I generally agree with this, however if Softbank easily fills their tender offer I wonder if it puts a crimp in the IPO plans. Lets say that Softbank's tender is filled with a bunch of executives and Kalnick contributing their shares to get a payoff (shades of Groupon's last raise before going public). What does that look like to potential investors on the roadshow? How much bump will they need to be 'promised' before they subscribe?
No matter what I think Uber will remain a big part of the unicorn bubble story going forward.
No matter what I think Uber will remain a big part of the unicorn bubble story going forward.
Fwiw Travis Kalnick isn't selling.
I couldn't understand the part about an employee and loosing my job. Are you saying that they won't be able to sell their equity even at a steep discount in 90 days? Even, if they incur a loss of ~30-40% over the current prevailing price; it would still be a fortune. They can easily do that to save on the tax or did you mean something else?
1) They're worried they'll be fired to make the IPO work.
2) They're worried the value of their options will drop out before they have the option to exercise them.
2) They're worried the value of their options will drop out before they have the option to exercise them.
And I would add that in situations like this, employees should be very careful assuming that they'll get a price anything like what the most recent investors are getting.
Check out Table 2 here, down on page 45:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455
It uses Square as an example. The headline valuation price from their E round suggests that a share of stock was worth $15.46. But later investors can have all sorts of preferences. Common stock, though, is valued at $5.62.
As people who were here for the last bubble know, this is exacerbated when valuations dip. I know a number of people who worked their asses off for companies that got sold for hundreds of millions of dollars. But the employees saw nothing, because investors get paid first.
Check out Table 2 here, down on page 45:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455
It uses Square as an example. The headline valuation price from their E round suggests that a share of stock was worth $15.46. But later investors can have all sorts of preferences. Common stock, though, is valued at $5.62.
As people who were here for the last bubble know, this is exacerbated when valuations dip. I know a number of people who worked their asses off for companies that got sold for hundreds of millions of dollars. But the employees saw nothing, because investors get paid first.
Well, let's use the SNAP example which has been quoted above.
They went public earlier this year. With burgeoning balance sheet they have to fire people:
https://www.businessinsider.in/Snap-hit-with-more-layoffs-pl...
They went public earlier this year. With burgeoning balance sheet they have to fire people:
https://www.businessinsider.in/Snap-hit-with-more-layoffs-pl...
To be fair, 18 / 2000 is very small and hardly a dent - the layoffs came because they are decreasing the rate of recruiting, which is still notable but is not laying off engineers (yet anyways). If Uber wanted to make IPO and were pressed for money, a slowing of hiring would not be enough.
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Thanks! We've updated the link from https://techcrunch.com/2017/11/29/ubers-losses-grew-to-1-5-b....
All recent employees (within the last 2 years+) are on RSUs, not options.
Option exercise price is 409A price, not the preferred price per share.
These two things make it highly unlikely that any option holder is truly under water.
Option exercise price is 409A price, not the preferred price per share.
These two things make it highly unlikely that any option holder is truly under water.
When looking at SNAP vs UBER, I think that this negative publicity will stop that first positive bump. Each negative scandal after will hit their stock hard, along with each quarter report. I do agree it will happen, but I think most everyone will see through it.
Given their burn rate and their IPO scheduled for 2019, they will still struggle to get there even with the incoming round. At this point it's hard to find any winners besides Lyft.
Given their burn rate and their IPO scheduled for 2019, they will still struggle to get there even with the incoming round. At this point it's hard to find any winners besides Lyft.
Winners besides Lyft? Their financials are on-par if not worse - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...
Part of Uber's increased losses are stemming directly from massive burn on Lyfts end to try and capitalize on Uber's problems.
Part of Uber's increased losses are stemming directly from massive burn on Lyfts end to try and capitalize on Uber's problems.
How is 1.5B a quarter on-par or worse than 750M per year?
An apples to apples comparison would standardize across:
1. GAAP v.s. non GAAP. Different media sites are reporting between 1.5B and 750B for Uber because of this discrepancy.
2. Timelines - Uber numbers are from Q3. Lyft from H1
3. Size discrepancies - it's better to look at loss per trip given that Uber is far bigger.
1. GAAP v.s. non GAAP. Different media sites are reporting between 1.5B and 750B for Uber because of this discrepancy.
2. Timelines - Uber numbers are from Q3. Lyft from H1
3. Size discrepancies - it's better to look at loss per trip given that Uber is far bigger.
You're still mixing different time period sizes in 1. I think even size adjusted per ride, Lyft may still be in a better position. 6B vs 750M (more if using newer numbers) when the market ratio of Lyft is nearing a third means that unless their yearly losses are over 2B, they still have the edge.
Overall I agree somewhat, but when what matters is explicitly runway (who can survive the longest), scaling for size may not make sense. Lyft's smaller current size might actually advantage them in this marathon.
Overall I agree somewhat, but when what matters is explicitly runway (who can survive the longest), scaling for size may not make sense. Lyft's smaller current size might actually advantage them in this marathon.
What happens to stock which isn't part of the IPO? Ie, all the stock owned by employees, investors, etc? Does it become instantly tradeable?
I would imagine that considering the long road, a lot of people are really ready to sell. There are lots of owners that will have achieved 50X or more return, even at a low market cap. Former employees with option strike prices @ £20m, early investors that got in @ £150m....
That means far too much of their net worth is in Uber. They need out regardless of fundamentals. They've probably felt this way for a while. Meanwhile all the shifty news about workplace bullying, an ousted ceo, legal battles.
I guess this applies to all IPOs. Why don't prices plummet as soon as all the people who want out can get out?
I would imagine that considering the long road, a lot of people are really ready to sell. There are lots of owners that will have achieved 50X or more return, even at a low market cap. Former employees with option strike prices @ £20m, early investors that got in @ £150m....
That means far too much of their net worth is in Uber. They need out regardless of fundamentals. They've probably felt this way for a while. Meanwhile all the shifty news about workplace bullying, an ousted ceo, legal battles.
I guess this applies to all IPOs. Why don't prices plummet as soon as all the people who want out can get out?
I've heard anecdotes that this is indeed the case at Uber. Lots of senior engineers / techs are burned out but can't afford to quit without abandoning their options. Many of them don't do any work at all, and Uber is fine with it because they don't want a mass exodus before the IPO. This is not uncommon around the Valley, but I hear it's especially problematic at Uber. I'm sure it's a continued drag on earnings, but probably not big enough to make a dent in the driver payment gap.
But I honestly doubt that Uber will ever make it to IPO; at least not an IPO that pays off employees in any meaningful way. Their business model is basically "buy for $10 and sell for $8" -- it's fundamentally flawed, and they're about to get a whole bunch of competition in the form of self-driving fleet management. New challengers wouldn't have the overhead of Uber's legacy infrastructure / driver incentives / etc. and much of the tech that made Uber unique has been commoditized. I doubt their IPO will even cover the late-stage investment they've received; much of their valuation was based on brand value which has been thoroughly destroyed by recent scandals.
But I honestly doubt that Uber will ever make it to IPO; at least not an IPO that pays off employees in any meaningful way. Their business model is basically "buy for $10 and sell for $8" -- it's fundamentally flawed, and they're about to get a whole bunch of competition in the form of self-driving fleet management. New challengers wouldn't have the overhead of Uber's legacy infrastructure / driver incentives / etc. and much of the tech that made Uber unique has been commoditized. I doubt their IPO will even cover the late-stage investment they've received; much of their valuation was based on brand value which has been thoroughly destroyed by recent scandals.
Wow, is this a real phenomenon? This is fascinating.
I would love for one of these people to speak on the record about this, but I imagine that’ll never happen.
I would love for one of these people to speak on the record about this, but I imagine that’ll never happen.
There are lockup periods that prevent them selling.
https://www.investopedia.com/ask/answer/12/ipo-lockup-period...
>For example, Facebook's IPO lock up prevented the sale of 271 million shares during the company's first three months of public ownership. FB hit an all-time low of $19.69 the day its first lock-up period ended, a price about 50% lower than the share price on the day the company went public. Further restrictions prevented the sale of another 1.66 billion shares through mid-2013. Facebook's unusual lock-up policy released insider shares at five different dates.
https://www.investopedia.com/ask/answer/12/ipo-lockup-period...
>For example, Facebook's IPO lock up prevented the sale of 271 million shares during the company's first three months of public ownership. FB hit an all-time low of $19.69 the day its first lock-up period ended, a price about 50% lower than the share price on the day the company went public. Further restrictions prevented the sale of another 1.66 billion shares through mid-2013. Facebook's unusual lock-up policy released insider shares at five different dates.
All the more reason to quit just before the IPO! (assuming they own the shares)
Nearly all insiders (i.e. management, investors, employees, etc.) will be subject to a "lock-up" on an IPO that prevents them from selling immediately. Typically the lock-up lasts for 180 days, but this can vary.
Share price does often drop when the lock-up expires, but usually not as much as you'd expect--the number of restricted shares to be release and resulting liquidity effects of that expiration are well know and disclosed in public filings. So this mostly gets baked into pricing well in advance.
Share price does often drop when the lock-up expires, but usually not as much as you'd expect--the number of restricted shares to be release and resulting liquidity effects of that expiration are well know and disclosed in public filings. So this mostly gets baked into pricing well in advance.
A third worry: Uber's brand on your resume. At every turn there just seems like increasingly shady stuff coming out of there: covering up data breaches, covering up IP theft, etc.
Every person who I know has left Uber this year is at some company HN would probably agree as "better" (FANGs as backup, startups if more adventurous). So unless you're in the handful caught in the crossfire of these issues, Uber is an extremely strong brand name on a resume.
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How long does this remain so though? Is there a point where it starts to look bad (like why didn't you leave earlier?)
Wasn't the case in the beginning of the year and isn't the case at the end (I know people who have left this week for FANG). And that period arguably coincides with the most intense PR snafu for Uber. Most companies are smart enough to distinguish between a rotten top-mandated culture against individual actions, and not generalize 14k+ employees. Also worth noting that a large contingent were already former FANG employees so some are just returning back home.
With regards to why not move sooner, isn't the company going through an entirely top-down overhaul starting with the CEO? If someone wants to be part of that change, and if they still believe in the ride-sharing space and if they were never in the crossfires of any of this anyways, then all of these are valid reasons to stick around.
With regards to why not move sooner, isn't the company going through an entirely top-down overhaul starting with the CEO? If someone wants to be part of that change, and if they still believe in the ride-sharing space and if they were never in the crossfires of any of this anyways, then all of these are valid reasons to stick around.
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Maybe. I've interviewed people eager to leave Uber and the name was mixed for us. I see it as an indicator of technical talent, but a culture risk for sure. Clearly a lot of people at Uber at least acquiesced in the face of unethical, abusive, or outright criminal behavior. That's not a character trait I'm excited about having on my teams.
You have to understand human nature though. Most people are more or less followers. They will do whatever a strong leader tells them to do--unless it's something clearly, blatantly wrong or illegal--and they will rationalize it.
If Uber had ethical leadership, there would be no worry about any of the technical talent, and they would be the very same people.
If Uber had ethical leadership, there would be no worry about any of the technical talent, and they would be the very same people.
People have been trained to be followers. Our industrial-age education system and our industrial-age-derived corporate structures do that training.
That worked adequately for industrial work. But for creative work, following isn't enough. Our whole field is about making computers do the dumb stuff so that humans can focus on the smart stuff. The SV startup model gets much of its economic power from the way that a small group of people can out-think, out-innovate large companies that operate along industrial lines.
But that only keeps working as long as individuals have a fair bit of autonomy. Which in turn only works as long as workers are able to think for themselves. As David Marquet wrote, modern effective organizations don't move information to authority; they move authority to information.
I want to build teams that can spot a ball, pick it up, and run with it. That doesn't work well if they have to run every detail up to the CEO for signoff.
That worked adequately for industrial work. But for creative work, following isn't enough. Our whole field is about making computers do the dumb stuff so that humans can focus on the smart stuff. The SV startup model gets much of its economic power from the way that a small group of people can out-think, out-innovate large companies that operate along industrial lines.
But that only keeps working as long as individuals have a fair bit of autonomy. Which in turn only works as long as workers are able to think for themselves. As David Marquet wrote, modern effective organizations don't move information to authority; they move authority to information.
I want to build teams that can spot a ball, pick it up, and run with it. That doesn't work well if they have to run every detail up to the CEO for signoff.
Maybe if you're in senior management.
Frontline devs or middle management? Honestly they're some of the best talent in the valley esp if they joined in 2014 when Uber was the top destination ($19B valuation timeframe)
Frontline devs or middle management? Honestly they're some of the best talent in the valley esp if they joined in 2014 when Uber was the top destination ($19B valuation timeframe)
Seemingly not even sr management gets dinged for this. Cruise (GM) just named Susan Fowler’s former boss from Uber their new CTO.
https://news.ycombinator.com/item?id=15819808
https://news.ycombinator.com/item?id=15819808
It is strange that private investors are willing to fund my discounted travel.
I seriously don't understand the endgame here.
Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking.
But where are the barriers to entry that would allow Uber to solidify as that new monopoly? There's already Lyft today... and once Uber starts to charge their true costs, then we'll likely see numerous other competitors emerge to compete on price. Ultimately, they're just a phone app! Most Uber drivers today are running the Uber app and Lyft app side by side anyway.
The usual playbook calls for the early leader to pay off politicians, and have them write new laws or regulations that raise the barrier to entry for future competitors. But Uber's playbook has been to take an antagonistic stance toward politicians, rather than buying them off. So what's to stop some newer competitor from beating them on price... or some huge company to swoop in after Uber establishes the market, and beat them by cross-promoting and leveraging their other lines of business?
Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking.
But where are the barriers to entry that would allow Uber to solidify as that new monopoly? There's already Lyft today... and once Uber starts to charge their true costs, then we'll likely see numerous other competitors emerge to compete on price. Ultimately, they're just a phone app! Most Uber drivers today are running the Uber app and Lyft app side by side anyway.
The usual playbook calls for the early leader to pay off politicians, and have them write new laws or regulations that raise the barrier to entry for future competitors. But Uber's playbook has been to take an antagonistic stance toward politicians, rather than buying them off. So what's to stop some newer competitor from beating them on price... or some huge company to swoop in after Uber establishes the market, and beat them by cross-promoting and leveraging their other lines of business?
Exactly. The only thing that keeps me coming back to Uber is their lower cost. And sometimes when $COMPANY is paying I don't even care about that. If I'm at a taxi stand why not take the taxi in front of me.
In economic terms the switching cost for the consumer is low. Really low. I'm not locked in and Uber is not Amazon that is spending their runway on capital investment. They're spending their capital on paying drivers who will leave once they start getting paid more somewhere else.
The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business.
In economic terms the switching cost for the consumer is low. Really low. I'm not locked in and Uber is not Amazon that is spending their runway on capital investment. They're spending their capital on paying drivers who will leave once they start getting paid more somewhere else.
The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business.
> The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business.
That's kinda funny. I'm sure you know it will never happen. We're talking about billions in countries all over the world. Get out of an Airport in London, Melbourne, Auckland, Atlanta, Vegas .. you can get an Uber.
That combined with their questionable ethical track record (which I don't think has really turned around since they symbolically hired Eric Holder's company to do damage control).
If Uber does fail, it will do it gloriously and colossally.
That's kinda funny. I'm sure you know it will never happen. We're talking about billions in countries all over the world. Get out of an Airport in London, Melbourne, Auckland, Atlanta, Vegas .. you can get an Uber.
That combined with their questionable ethical track record (which I don't think has really turned around since they symbolically hired Eric Holder's company to do damage control).
If Uber does fail, it will do it gloriously and colossally.
The barrier to entry is that they're building a marketplace. Building a marketplace from scratch is hard: no driver wants to drive for a network with no riders, and no riders want to ride a network with no drivers. To make it work you basically have to pay drivers to drive empty cars until your customer acquisition gets enough riders that the market is self-sustaining. That requires a lot of capital. If you follow that game plan in one market against a national monopolist, they'll cut their pricing in your market to drive you out of business. So really, you need enough capital to mount a credible attack in enough markets that the monopolist is better off accepting duopoly profits than burning what it would take to put you out of business. That's a lot of capital to raise and a lot of hassle, and you don't even get monopoly profits if you win. As a result, you'd probably have trouble raising the money. That's the theory anyway.
I would LOVE to develop an Uber clone and pitch it to Governments around the world. We could even link them up so you have one unified account for people who cross borders.
The government and taxpayer could then take any profit (or operate at a loss / break even if they want to subsidise costs for their citizens). The customer acquisition / marketing costs would be almost zero if the government mandates it as the only or preferred ride-hailing app.
I don't really think Uber is going to innovate much from here (e.g .how much has the uber experience changed since UberX was rolled out?) outside of self-driving cars etc. there's no reason why we need a private company to innovate further, and there's almost no risk in doing this.
It would be seen as a natural extension to mass transit, and every government around the world should be providing it for their citizens.
The government and taxpayer could then take any profit (or operate at a loss / break even if they want to subsidise costs for their citizens). The customer acquisition / marketing costs would be almost zero if the government mandates it as the only or preferred ride-hailing app.
I don't really think Uber is going to innovate much from here (e.g .how much has the uber experience changed since UberX was rolled out?) outside of self-driving cars etc. there's no reason why we need a private company to innovate further, and there's almost no risk in doing this.
It would be seen as a natural extension to mass transit, and every government around the world should be providing it for their citizens.
Have you seen software developed by the government? Outside of things like NSA spying, military things, etc, it's generally terrible, I doubt there are many governments that could pull this off
> Outside of things like... military things, etc
"Aside from the most impressive engineered systems known to man kind, the government can't do anything right"
"Aside from the most impressive engineered systems known to man kind, the government can't do anything right"
Right, things that enable those currently in power to remain in power they do well. Things that help the average citizen, most definitely not.
Both components of your claim are dubious.
> things that enable those currently in power to remain in power they do well
1. It's unclear to me how most of our military hardware is in any way even closely related to "enabling those currently in power to remain in power", perhaps aside from functioning as PC jobs programs. Super impressive engineering, but it's not really clear to me why most of it is particularly necessary.
2. Then I guess maybe we should vote for people who run effective services.
> Things that help the average citizen, most definitely not.
My local government has a system that allows you to reserve park space. I can also look up hours for rec centers on the city website. Those things are helpful to me, the average citizen, and definitely work well.
> things that enable those currently in power to remain in power they do well
1. It's unclear to me how most of our military hardware is in any way even closely related to "enabling those currently in power to remain in power", perhaps aside from functioning as PC jobs programs. Super impressive engineering, but it's not really clear to me why most of it is particularly necessary.
2. Then I guess maybe we should vote for people who run effective services.
> Things that help the average citizen, most definitely not.
My local government has a system that allows you to reserve park space. I can also look up hours for rec centers on the city website. Those things are helpful to me, the average citizen, and definitely work well.
The government wouldn’t actually build it, it would be built by a private company that licenses it to governments. No need to reinvent the same tech over and over.
> we'll likely see numerous other competitors emerge to compete on price
I've been beating this drum for years. One interesting point is that competitors aren't only competing on price, and there are a lot of ways to cut into Uber's market. Juno [1] offers an example that focused on a tight geography (Manhattan), and became popular by paying drivers more, scooping the highest rated drivers from Uber, and offering consumers a perceived better experience. Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators.
In places like Germany where the laws make it hard for Uber to operate, smaller companies like MyTaxi offer ride-hailing services to the traditional taxi network. Their valuation likely offers a very different idea of how much of the surplus offered by ride-hailing apps can ultimately be captured by apps.
[1] Acquired earlier this year by the VW-funded Gett - https://techcrunch.com/2017/04/26/on-demand-ride-service-get...
[2] https://de.mytaxi.com/index.html
I've been beating this drum for years. One interesting point is that competitors aren't only competing on price, and there are a lot of ways to cut into Uber's market. Juno [1] offers an example that focused on a tight geography (Manhattan), and became popular by paying drivers more, scooping the highest rated drivers from Uber, and offering consumers a perceived better experience. Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators.
In places like Germany where the laws make it hard for Uber to operate, smaller companies like MyTaxi offer ride-hailing services to the traditional taxi network. Their valuation likely offers a very different idea of how much of the surplus offered by ride-hailing apps can ultimately be captured by apps.
[1] Acquired earlier this year by the VW-funded Gett - https://techcrunch.com/2017/04/26/on-demand-ride-service-get...
[2] https://de.mytaxi.com/index.html
> Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators.
I feel like the prices I get from within Google Maps are both vague and higher than the prices I get from opening the actual apps, so I never actually use the Google Maps integration and just end up checking both apps, which is pretty annoying.
I think the Maps integration is basically a customer acquisition tactic, not something they expect most people to actually use.
I feel like the prices I get from within Google Maps are both vague and higher than the prices I get from opening the actual apps, so I never actually use the Google Maps integration and just end up checking both apps, which is pretty annoying.
I think the Maps integration is basically a customer acquisition tactic, not something they expect most people to actually use.
I honestly think the original vision was something similar to Amazon: bleed money when they are an online bookstore, make it all back when they swing for the fences and go for replacing all of retail. Likewise, Uber might lose money as a taxi service, but the idea would be to make it back in self-driving tech that replaces all transportation with 5 lanes of self-driving Ubers zipping about in all directions.
The problem is that 2017 seems like a major hiccup in this vision. The original visionary is gone. There's been some issues with self-driving technology. Lyft wasn't a huge problem when they were small and had no self-driving tech, now they are much bigger and have a viable self-driving tech partner in Ford... and so on.
It'll be interesting to see if this is actually the case, and, if they are off track enough, how they might change the way they operate.
The problem is that 2017 seems like a major hiccup in this vision. The original visionary is gone. There's been some issues with self-driving technology. Lyft wasn't a huge problem when they were small and had no self-driving tech, now they are much bigger and have a viable self-driving tech partner in Ford... and so on.
It'll be interesting to see if this is actually the case, and, if they are off track enough, how they might change the way they operate.
That was absolutely not the original vision.
The original vision was that they would somehow be a profitable concern as a taxi company despite the total lack of barrier to entry because, um, reasons. That they could create an app that was hard to compete with. In all fairness, it wasn't super clear seven or so years ago that there would be so relatively little innovation in the app after the core business of hailing happened.
Then, they would expand into being a logistics company. They used to talk about this all the time. Taxi -> logistics, Uber for things. Uber Eats was supposed to be part of this, and they did a bike courier service in NYC that was supposed to be part of it and several other experiments.
Then, when self-driving tech came along, and they were probably thinking like mid-2020's (hardly anyone in 2010-2011 believed that self-driving would go as fast as it did), their vast profitable concern would be well-positioned to get even bigger.
That was the original narrative. It wasn't hidden, they talked about it a lot. As little as about two years ago, their redesign was heavily concerned with positioning themselves as a logistics company.
But what happened is:
1. They've never been more than razor-thin profitable in certain very favorable markets as a taxi company, and obviously overall are grossly unprofitable as a taxi company.
2. Nobody in the entire world wants their logistics business. The only company who would be even remotely interested in it is Amazon, and Amazon laughed and said, "Nothing about your taxi business makes you well-suited to do logistics, we'll just build our own version kthx."
3. So now they spun up a self-driving car program out of nothing a couple of years ago and have desperately pumped cash into it. Hoping that they can somehow catch up with companies that are both substantially better-resourced than they are and who have multi-year head-starts on them, or, more cynically, that they can play some kind of pixie dust story into an IPO and dump their losses on dumb money.
The original vision was that they would somehow be a profitable concern as a taxi company despite the total lack of barrier to entry because, um, reasons. That they could create an app that was hard to compete with. In all fairness, it wasn't super clear seven or so years ago that there would be so relatively little innovation in the app after the core business of hailing happened.
Then, they would expand into being a logistics company. They used to talk about this all the time. Taxi -> logistics, Uber for things. Uber Eats was supposed to be part of this, and they did a bike courier service in NYC that was supposed to be part of it and several other experiments.
Then, when self-driving tech came along, and they were probably thinking like mid-2020's (hardly anyone in 2010-2011 believed that self-driving would go as fast as it did), their vast profitable concern would be well-positioned to get even bigger.
That was the original narrative. It wasn't hidden, they talked about it a lot. As little as about two years ago, their redesign was heavily concerned with positioning themselves as a logistics company.
But what happened is:
1. They've never been more than razor-thin profitable in certain very favorable markets as a taxi company, and obviously overall are grossly unprofitable as a taxi company.
2. Nobody in the entire world wants their logistics business. The only company who would be even remotely interested in it is Amazon, and Amazon laughed and said, "Nothing about your taxi business makes you well-suited to do logistics, we'll just build our own version kthx."
3. So now they spun up a self-driving car program out of nothing a couple of years ago and have desperately pumped cash into it. Hoping that they can somehow catch up with companies that are both substantially better-resourced than they are and who have multi-year head-starts on them, or, more cynically, that they can play some kind of pixie dust story into an IPO and dump their losses on dumb money.
It doesn't make sense. If the endgame for Uber is self driving cars they'd have much longer runway if they were a startup doing only that, instead of bleeding money on both ends. They were originally an app company from the time when an app gave you easy access to capital. It's more likely the self driving thing was something they had to do to keep the high valuation as a tech company. It was probably an easy pick since it's something in vogue not too far from their normal business.
It's also something that would potentially kill their initial business so they had no choice I think but to go into it
Uber's endgame has been making an Uber of everything (e.g. Uber eats), i.e. a platform for the so-called 'sharing economy.' They obtain this by network effects. That and self-driving cars, I don't know. They're basically an R&D operation funded by investors. It may or may not pan out.
> They're basically an R&D operation funded by investors
No, they're basically a taxi service funded by investors. They served almost $10 billion in rides, and lost $1.5 billion in this single quarter. Other projects, like UberEats and self-driving car R&D are, in comparison, little more than distractions at present. You can buy self-driving companies or restaurants and employ an army of self-driving engineers for a billion dollars a year, and have that be a tiny fraction of those financials.
No, they're basically a taxi service funded by investors. They served almost $10 billion in rides, and lost $1.5 billion in this single quarter. Other projects, like UberEats and self-driving car R&D are, in comparison, little more than distractions at present. You can buy self-driving companies or restaurants and employ an army of self-driving engineers for a billion dollars a year, and have that be a tiny fraction of those financials.
But the network effects aren't very strong. My wife and I used different taxi hailing apps, it doesn't matter.
"I seriously don't understand the endgame here."
The end game is owning logistics (IE all forms of delivery, etc). It's a dumb end game, but that's what it is!
The end game is owning logistics (IE all forms of delivery, etc). It's a dumb end game, but that's what it is!
So the big question: Is Uber too big to fail? It looks like it will IPO at this point, it will keep finding more drivers and then cutting their wages .. it has a huge market. I refuse to use it, preferring the bus or Lyft when I absolutely have to ...
If Uber does go under within the next ten years, will we see a reemergence of people taking cabs and drivers getting paid better?
If Uber does go under within the next ten years, will we see a reemergence of people taking cabs and drivers getting paid better?
I think they believe in total automation within a few years, rather than the realistic decades.
They can simply used the tech solutions they have developed and try to do something like AWS.
I recently went on a holiday to place where Uber is not there. It made me realise how much actual value they provide me.
As someone who was born near mid eghties, Amazon and Uber are the only two apps who have my credit card.
I recently went on a holiday to place where Uber is not there. It made me realise how much actual value they provide me.
As someone who was born near mid eghties, Amazon and Uber are the only two apps who have my credit card.
The more you oppose Uber, the more you should use them, to help bilk their investors faster.
Better use up Uber credits I guess. Uber gc's are selling at 80%-90%, not sure if default risk is properly priced in, lol.
I am sorry, but I don-t understand why they lose so much money. They take 30 % of all trips, they don-t have cars, they don-t pay salaries to drivers. Is it the infrastructure so expensive?
In many markets they pay drivers more than they make on each ride - significantly more.
It happens in various forms, but I suspect minimum-payout subsidies are one of the main causes.
In many cities Uber is trying to shorten wait times (so there's a car very close to you always), and the only way to do this is to flood the streets with drivers. Flooding the streets with drivers lowers each driver's earning ability, since there are now more drivers competing for the same number of passengers.
To make sure drivers don't quit, Uber has been in the habit of guaranteeing payouts - if you work this area during a particular time period, they guarantee you a minimum level of earnings, paying you the difference if there aren't enough passengers.
This is a big part of how they lose money - in order to maintain a system where a car is always nearby, they need to pay drivers a lot more than they make from the passengers.
It happens in various forms, but I suspect minimum-payout subsidies are one of the main causes.
In many cities Uber is trying to shorten wait times (so there's a car very close to you always), and the only way to do this is to flood the streets with drivers. Flooding the streets with drivers lowers each driver's earning ability, since there are now more drivers competing for the same number of passengers.
To make sure drivers don't quit, Uber has been in the habit of guaranteeing payouts - if you work this area during a particular time period, they guarantee you a minimum level of earnings, paying you the difference if there aren't enough passengers.
This is a big part of how they lose money - in order to maintain a system where a car is always nearby, they need to pay drivers a lot more than they make from the passengers.
They subsidize rides (in many jurisdictions) so presumably they're not making much money on that 30% cut.
Probably most of there losses are explained by markets they are trying to develop and also expansion into areas where they do not yet have drivers. I can't imagine the cost would increase too much going forward - it's essentially the same as the cost of delivering pizza, and pizza isn't too expensive, and riders can pool, so it should be below the cost of pizza to deliver a person. And once people start giving up cars for Ubering, pooling will become much more efficient.
Marketing and ride subsidies?
They have a lot of expensive developers, lawyers and marketing deals.
> as the ride-hailing leader struggled to fend off competition, legal challenges and regulatory scrutiny
A good read on this topic calling these business Regulatory Entrepreneurship :
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741987
A good read on this topic calling these business Regulatory Entrepreneurship :
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741987
Anecdotally, Uber seems to have a large foot print. If it were to fail I wonder how much the economy would be affected? Ie would it start an end of much of the sharing economy - and thus trigger some market corrections?
LOL if Uber disappeared tomorrow you would get the same driver in the same car on Lyft or another app and the day after that would have forgot Uber ever existed.
What's to stop Uber from slowing the burn via an increase in base prices? People would still use Uber as long as it's A) more convenient than other transportation B) better quality rides than cabs and C) just a little cheaper than cabs.
There are surely other forms of revenue they can spin up too, but this seems to be pretty straightforward, especially in markets where they have already decimated local taxi firms.
There are surely other forms of revenue they can spin up too, but this seems to be pretty straightforward, especially in markets where they have already decimated local taxi firms.
Increased competition. Lyft is burning through money at an unprecedented rate to catch up with Uber given that they smell blood this year and investors ala Google are willing to subsidize the burn. At some point, this has to stop but 2017 does not seem to be the year.
Source: Lyft pushes back profitability after increased burn - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...
Source: Lyft pushes back profitability after increased burn - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...
Looks like the easy Fed money made it into consumers' pockets after all.
>Increased competition.
Maybe I'm weird, but:
1) I don't even look at what the price of lyft is. So they could up the price by a significant percentage I wouldn't even notice.
2) Even if Uber was more expensive than lyft, I would almost definitely still take uber.
Maybe I'm weird, but:
1) I don't even look at what the price of lyft is. So they could up the price by a significant percentage I wouldn't even notice.
2) Even if Uber was more expensive than lyft, I would almost definitely still take uber.
You're not weird and this is precisely why Uber is still the market leader. But there is a cohort, in some specific areas where Lyft's network is on par with Uber's such that price, and more specifically targeted discounts, do play a part. Lyft can analyze which one of its riders has not taken a ride in a while (and is hence presumably using Uber) and target them with discounts.
Lyft just can't shake the ... downmarket vibe.
yes you are weird.
Every time I take an "expensive" ride (let's say more than 10$), I open both apps in parallel and take the cheapest. Even sometimes cancelling one to get the other if the price changed meanwhile.
Every time I take an "expensive" ride (let's say more than 10$), I open both apps in parallel and take the cheapest. Even sometimes cancelling one to get the other if the price changed meanwhile.
Is this abnormal given their size? I remember similar articles about Facebook, Twitter and others.
It is - Twitter lost ~$2 billion over 10 years (http://time.com/4241716/twitter-losses-twtr/). $1.5 billion in a quarter is nuts.
Did pre-2012 Facebook and Twitter ever 1.5B in a single quarter, running a website?
OK, a down round at last. "The sale of those shares would value the business at $48 billion, a 30 percent discount to the last private valuation."
I'll bet that gets trimmed even more if the deal closes. Losses are increasing, not decreasing.
I'll bet that gets trimmed even more if the deal closes. Losses are increasing, not decreasing.
And of course given how things have been going for them in the courts this week all signs point to a massive hit in the Waymo lawsuit.
They still don’t have a real business (a company kept on life support by constant external cash injections is not a real business).
They still don’t have a real business (a company kept on life support by constant external cash injections is not a real business).
Very relevant here:
http://www.businessinsider.com/australian-fund-manager-calls...
Uber has raised more than $11B over the years. Does anyone know how much of that is left and what their runway is?
edit: runway to IPO I meant
edit: runway to IPO I meant
Apparently they are at about $5.1B cash-on-hand, not including the potential $1B SoftBank investment. So they have about a year of runway right now.
> So they have about a year of runway right now.
I think that assumes their burn rate will not increase. Which, historically, is not the case. At their current increase of burn, assuming it is linear, they're probably looking at less than a year. Maybe even as little as 9 months.
I think that assumes their burn rate will not increase. Which, historically, is not the case. At their current increase of burn, assuming it is linear, they're probably looking at less than a year. Maybe even as little as 9 months.
How much of it operating the part everyone is familiar with, vs investment into the self-driving cars and other expenses?
> Uber Technologies Inc.’s net loss widened to $1.46 billion in the third quarter, according to people with knowledge of the matter, as the ride-hailing leader struggled to fend off competition, legal challenges and regulatory scrutiny.
"according to people with knowledge of the matter.."
How is reporting like this legal? Is this not speculation?
It baffles me that no fact checking/ benchmarking exists for such a major news platform.
"according to people with knowledge of the matter.."
How is reporting like this legal? Is this not speculation?
It baffles me that no fact checking/ benchmarking exists for such a major news platform.
It's strange to me that you assume that just because sources aren't named in public that no fact checking occurred.
As far as legality, there is a system in place; if it's false, it's handled in civil court.
As far as legality, there is a system in place; if it's false, it's handled in civil court.
>It's strange to me that you assume that just because sources aren't named in public that no fact checking occurred.
It's hard to take things seriously when people/organizations do not take/put skin in the game.
From a risk perspective it is genuis, but from a readers perspective it is problematic in my opinion.( I am not a fan of gossip)
What's stranger to me is how you assume that they fact check....
For all I know they do, but it defeats the purpose of confidentiality agreements if sources speak up when they are explicitly told not too. (I am referring to confidential finance contracts)
It's hard to take things seriously when people/organizations do not take/put skin in the game.
From a risk perspective it is genuis, but from a readers perspective it is problematic in my opinion.( I am not a fan of gossip)
What's stranger to me is how you assume that they fact check....
For all I know they do, but it defeats the purpose of confidentiality agreements if sources speak up when they are explicitly told not too. (I am referring to confidential finance contracts)
> How is reporting like this legal?
Why wouldn’t it be?
> Is this not speculation?
No, in the same way that court decisions based on witness testimony are not.
It is, of course, difficult for outside parties to verify the reporting, but journalism has never been legally bound to the standards appropriate to scientific research where reproducibility is key.
> It baffles me that no fact checking/ benchmarking exists for such a major news platform.
The absence of named sources does not imply the absence of fact checking.
Why wouldn’t it be?
> Is this not speculation?
No, in the same way that court decisions based on witness testimony are not.
It is, of course, difficult for outside parties to verify the reporting, but journalism has never been legally bound to the standards appropriate to scientific research where reproducibility is key.
> It baffles me that no fact checking/ benchmarking exists for such a major news platform.
The absence of named sources does not imply the absence of fact checking.
>It is, of course, difficult for outside parties to verify the reporting, but journalism has never been legally bound to the standards appropriate to scientific research where reproducibility is key
What about when false information could cause financial harm?
It is ironic considering that BBG( Bloomberg is private )
Is it wrong to question sources?
What about when false information could cause financial harm?
It is ironic considering that BBG( Bloomberg is private )
Is it wrong to question sources?
This sort of formulation is extremely common in all kinds of news reporting. Journalists frequently have recourse to anonymous sources - so frequent that there are strong journalistic ethical injunctions against exposing such sources.
Deep Throat was 'a person familiar with the matter'.
Deep Throat was 'a person familiar with the matter'.
>so frequent that there are strong journalistic ethical injunctions against exposing such sources.
Ethical injuctions? Lol, yeah if maybe the industry was not based off of advertising as a primary source of revenue. The way that it currently stands getting those clicks/eyeballe is way more important than ethics.
Journalism is dead in the United States.
Ethical injuctions? Lol, yeah if maybe the industry was not based off of advertising as a primary source of revenue. The way that it currently stands getting those clicks/eyeballe is way more important than ethics.
Journalism is dead in the United States.
I am not saying that journalism is ethical 'in general', but that among journalists there is a strong taboo against revealing sources. Whether we compare that to the omertà code of the Mafia or the Hippocratic oath is a different matter.
Absent cost-cutting, that implies a 9 to 12 month runway. Even if SoftBank injects $1bn, that could only mean a few months’ runway. A large fine in the Waymo case [2] could literally bankrupt them.
[1] https://venturebeat.com/2017/08/23/uber-is-still-burning-cas...
[2] https://mobile.nytimes.com/2017/11/29/business/waymo-uber-tr...