Former GE CEO Jeff Immelt Close to Becoming Uber’s CEO(techcrunch.com)
techcrunch.com
Former GE CEO Jeff Immelt Close to Becoming Uber’s CEO
https://techcrunch.com/2017/08/19/former-ge-ceo-jeff-immelt-close-to-becoming-ubers-ceo/
138 comments
That article is a bit biased, especially given that it ignores that not only has GE has paid out around $15 in dividends since Immelt took over, and that GE stock was in a huge bubble at the time.
Uber doesn't need tech leadership, it needs adult leadership. It's wounds are all entirely self inflicted.
Uber doesn't need tech leadership, it needs adult leadership. It's wounds are all entirely self inflicted.
To really dispute GP's claim you'd need to make a claim that GE has innovated in new categories under Immelt. The fact it paid out $15 in dividends might only support GP's (and the Forbes article) claim that Immelt has optimized for better selling what currently exists.
This is the same thing that happened to MSFT under Ballmer. MSFT stocked performed well, but they missed the biggest opportunity of the post-PC era (mobile), were late to the cloud game, and probably missed some other opportunities I can't think of.
This is the same thing that happened to MSFT under Ballmer. MSFT stocked performed well, but they missed the biggest opportunity of the post-PC era (mobile), were late to the cloud game, and probably missed some other opportunities I can't think of.
Every company doesn't need to innovate, sometimes just running the business well is the best strategy. Warren Buffett's entire massive track record is based on companies that do little innovation. And it's a strategy Uber desperately needs.
> Every company doesn't need to innovate, sometimes just running the business well is the best strategy. Warren Buffett's entire massive track record is based on companies that do little innovation. And it's a strategy Uber desperately needs.
Uber absolutely does need to innovate. Its business model up to this point has been operating at below cost to suck the life out of the competition so that they can reap the massive network effects when they have driverless cars they can reap the profits.
They can't run their business like a mature low-growth software business where the name of the game is to milk profits and license revenue, because they have no profits and license revenue to milk. Their current business model of subsidizing fares with VC cash is not a sustainable one, so they need a visionary CEO who can get them to driverless cars.
Once they have driverless cars, then they'll be the kind of mature, milk the revenue stream business that Buffett tends to invest in (and then, they'll need the 'keep the business ticking over' CEO too). But Uber is not Geico yet.
Uber absolutely does need to innovate. Its business model up to this point has been operating at below cost to suck the life out of the competition so that they can reap the massive network effects when they have driverless cars they can reap the profits.
They can't run their business like a mature low-growth software business where the name of the game is to milk profits and license revenue, because they have no profits and license revenue to milk. Their current business model of subsidizing fares with VC cash is not a sustainable one, so they need a visionary CEO who can get them to driverless cars.
Once they have driverless cars, then they'll be the kind of mature, milk the revenue stream business that Buffett tends to invest in (and then, they'll need the 'keep the business ticking over' CEO too). But Uber is not Geico yet.
Betting the house on perfecting driverless cars before they run out of money has always been a fools errand. If Uber is lucky Immelt will find another path to profitability.
Here's all that Uber has to do to succeed:
Become the quality brand they started as. Charge more than Lyfy and Taxis because they have higher standard. Immelt can make that happen with process and measurement. Uber's tech will allow them to monetize data, and show customers their value is better. Better response times, better service, shorter faster trips, etc. That's how they can win. Trying to be cheaper than Lyft will fail miserably.
Right after he's announced, he should find a buyer for 3/4 of Benchmark's shares to get them out of the conflict, and immediately appoint Travis Kalanick as Chief Vision Office, and hire Holder or someone with perceived panache as Chief of HR and put them on the board. That'd be a good deal to make with Travis - Kill Benchmark's influence by paying them to go away, trade a TK board seat for a neutral party. Win/win/win/win.
Become the quality brand they started as. Charge more than Lyfy and Taxis because they have higher standard. Immelt can make that happen with process and measurement. Uber's tech will allow them to monetize data, and show customers their value is better. Better response times, better service, shorter faster trips, etc. That's how they can win. Trying to be cheaper than Lyft will fail miserably.
Right after he's announced, he should find a buyer for 3/4 of Benchmark's shares to get them out of the conflict, and immediately appoint Travis Kalanick as Chief Vision Office, and hire Holder or someone with perceived panache as Chief of HR and put them on the board. That'd be a good deal to make with Travis - Kill Benchmark's influence by paying them to go away, trade a TK board seat for a neutral party. Win/win/win/win.
Is being a super-lux Taxi service (or even a Lux taxi service) going to get Uber the kind of valuation that's now being touted?
I don't doubt that there are some people who will go for it, and I'm sure Immelt would run that business very well, but it doesn't strike me as a multiple billion dollar offer...
We kind of are hitting on Uber's core problem here though. "Profitability" would seem to involve either involve removing the drivers from the equation or hiking the price.
Removing the drivers is really hard. Hiking the price is easy but massively cuts Uber's appeal and cedes the low end to Lyft/Gett.
I don't doubt that there are some people who will go for it, and I'm sure Immelt would run that business very well, but it doesn't strike me as a multiple billion dollar offer...
We kind of are hitting on Uber's core problem here though. "Profitability" would seem to involve either involve removing the drivers from the equation or hiking the price.
Removing the drivers is really hard. Hiking the price is easy but massively cuts Uber's appeal and cedes the low end to Lyft/Gett.
I really don't believe this is true for tech companies at all.
A decade ago, I had a front-row seat for Yahoo! under the stewardship of CEOs brought in to run the business well. The focus was not on innovation, and the company continued to languish. Why? Because tech companies that don't innovate get their lunches eaten by the ones that do.
As for Buffett, I'm no expert on his portfolio, but I believe his track record was built on non-tech companies until very recently.
A decade ago, I had a front-row seat for Yahoo! under the stewardship of CEOs brought in to run the business well. The focus was not on innovation, and the company continued to languish. Why? Because tech companies that don't innovate get their lunches eaten by the ones that do.
As for Buffett, I'm no expert on his portfolio, but I believe his track record was built on non-tech companies until very recently.
Uber as far as I'm concerned isn't really a tech company - its a logistics company existing under tech company rules - in essence its a freight broker for human 'freight' - how it connects with its customers is irrelevant to what kind of company it is. In short, you're providing short term contracts between a consignor (the passenger) to transport an object (the passenger) between two known end points, by an independent contractor. Uber provides the infrastructure to make this happen, and takes a cut of the revenue from the shipment.
If you wouldn't call JB Hunt a tech company, you shouldn't call Uber one.
(The research into autonomous cars is not really central to their current core business model - and assuming the technology is successfully developed - their entire business model would change - they'd also need a massive capitalization to purchase a fleet of self driving cars when it does.)
If you wouldn't call JB Hunt a tech company, you shouldn't call Uber one.
(The research into autonomous cars is not really central to their current core business model - and assuming the technology is successfully developed - their entire business model would change - they'd also need a massive capitalization to purchase a fleet of self driving cars when it does.)
"how it connects with its customers is irrelevant to what kind of company it is"
This is a pretty bold claim. The fact that it's instant, and that it geolocalize every party involved thanks to a mobile app, and that every part of the process is fully automated is what makes uber something different from a regular cab company.
To reduce uber to its high level functions abstracting away the technical details and implementation is i think one of the big mistakes business people make in general. I wouldn't be surprised if this kind of reasoning is what business CEO show in their slides before they take the decisions that completely screw the tech companies they're leading.
This is a pretty bold claim. The fact that it's instant, and that it geolocalize every party involved thanks to a mobile app, and that every part of the process is fully automated is what makes uber something different from a regular cab company.
To reduce uber to its high level functions abstracting away the technical details and implementation is i think one of the big mistakes business people make in general. I wouldn't be surprised if this kind of reasoning is what business CEO show in their slides before they take the decisions that completely screw the tech companies they're leading.
Scenario...
Twenty years ago an astute and entrepreneurial young man named John took over his father's taxi company, Orange Cab based in San Diego. Exploring ways to reach potential customers, he found that all the cab companies in town were marketing their services through the same traditional mediums - newspaper ads, Yellowbook listings, billboards, etc. Not sure what else he could do, he remembered he still had 4 free hours of America Online credit, and decide to see if the internet had any advice. Then it struck him... Maybe my competitors have websites that I could browse for hints on how they advertise. The search came up empty. Damn he muttered, "none of them have websites", to which his wife Jane (expertly lurking from the nearby davenport desk) quips, "well neither do you, so maybe you should get a website". I have a brilliant idea, he thinks while slightly tilting his monitor away from Jane, maybe I should get a website. He types into the Lycos search bar "how. to. make. a. website." enter, "You know in that technology class I took last semester they taught us how to make a webpage using HTML", pipes Jane; then she smiles and taps John on the shoulder "move over".
After building the website they noticed things starting to pick-up a bit, and in a short few years they were beginning to see real growth; recently their was a nice spike in their marketshare after implementing an online form to request rides directly from their homepage. Younger crowds in particular preferred to request rides over speaking with someone on the telephone.
Fast-Forward ~10 years...
Orange Cab is not so little anymore. They now manage fleets in 14 metropolitan areas and recently incorporated so they could merge with Yellow Cab, making them the biggest cab company in the US. A few days after the merger, Jane (formerly Orange Cab's head of operations) had a meeting with Yellow Cab CEO to see how her role would change after the merger. She came into the meeting excited with ideas about how to innovate to reach new customers (particularly since the new operating budget was 10x the pre-merger budget). She started by sharing an idea where the whole point-to-point experience, from cab request to fair payment is managed entirely by a little software applications on someone's mobile phone. Jane, Jane, Jane, ahhh silly Jane, we are not a tech company. Yes, the website has been really helpful, but don't those smartphone things have a web browser? We are the biggest taxi company in the US, and we have a veteran management team, what's the worst that could happen!
Twenty years ago an astute and entrepreneurial young man named John took over his father's taxi company, Orange Cab based in San Diego. Exploring ways to reach potential customers, he found that all the cab companies in town were marketing their services through the same traditional mediums - newspaper ads, Yellowbook listings, billboards, etc. Not sure what else he could do, he remembered he still had 4 free hours of America Online credit, and decide to see if the internet had any advice. Then it struck him... Maybe my competitors have websites that I could browse for hints on how they advertise. The search came up empty. Damn he muttered, "none of them have websites", to which his wife Jane (expertly lurking from the nearby davenport desk) quips, "well neither do you, so maybe you should get a website". I have a brilliant idea, he thinks while slightly tilting his monitor away from Jane, maybe I should get a website. He types into the Lycos search bar "how. to. make. a. website." enter, "You know in that technology class I took last semester they taught us how to make a webpage using HTML", pipes Jane; then she smiles and taps John on the shoulder "move over".
After building the website they noticed things starting to pick-up a bit, and in a short few years they were beginning to see real growth; recently their was a nice spike in their marketshare after implementing an online form to request rides directly from their homepage. Younger crowds in particular preferred to request rides over speaking with someone on the telephone.
Fast-Forward ~10 years...
Orange Cab is not so little anymore. They now manage fleets in 14 metropolitan areas and recently incorporated so they could merge with Yellow Cab, making them the biggest cab company in the US. A few days after the merger, Jane (formerly Orange Cab's head of operations) had a meeting with Yellow Cab CEO to see how her role would change after the merger. She came into the meeting excited with ideas about how to innovate to reach new customers (particularly since the new operating budget was 10x the pre-merger budget). She started by sharing an idea where the whole point-to-point experience, from cab request to fair payment is managed entirely by a little software applications on someone's mobile phone. Jane, Jane, Jane, ahhh silly Jane, we are not a tech company. Yes, the website has been really helpful, but don't those smartphone things have a web browser? We are the biggest taxi company in the US, and we have a veteran management team, what's the worst that could happen!
Apparently Yellow Cab went bankrupt. I didn't know this and it wasn't clear from the preceding anecdote, so now you know.
http://www.marketwatch.com/story/uber-and-lyft-didnt-bankrup...
http://www.marketwatch.com/story/uber-and-lyft-didnt-bankrup...
Uber is aggressively pursuing self-driving cars as we can observe from their massive investments to acquire Otto and other AI startups, and to set up labs filled with experienced robotics and AI researchers in the US and Canada.
Once autonomous vehicles become practical, it is almost imperative for Uber to own the critical technology to be competitive in their current businesses.
Once autonomous vehicles become practical, it is almost imperative for Uber to own the critical technology to be competitive in their current businesses.
First Uber has to survive for the next 5-10 years until autonomous vehicles become practical at the scale required for them to replace their drivers.
What are you, an agent for autonomous engineers?
Uber can't ever own the critical technology in autonomous. They are late to the party, critical patents have been filed. Autonomous technology will be freely available when it's commercially feasible, Uber can buy some then. In the meantime it has to avoid blowing through the remainder of it's capital and stay alive.
Uber can't ever own the critical technology in autonomous. They are late to the party, critical patents have been filed. Autonomous technology will be freely available when it's commercially feasible, Uber can buy some then. In the meantime it has to avoid blowing through the remainder of it's capital and stay alive.
There are certain industries and companies that you do really need to continue to innovate. If your product is a technology innovation, it has a life span. Eventually, something will replace it. History has proven this over and over again.
At this point of time, Uber is an excellent example. There is an innovation on the horizon that will completely change the taxi industry; autonomous vehicles. It's not a secret either. It's an inevitable future. The date of realization? No one knows, but we can see it's coming. Now, should Uber optimize on it's current product set and optimize until they are profitable on every ride? Or should they balance some part of that, with innovating on the future of autonomous vehicles? Travis seems to be working towards the big vision of driverless cars. What would Jeff do?
Fun stuff to think about :)
At this point of time, Uber is an excellent example. There is an innovation on the horizon that will completely change the taxi industry; autonomous vehicles. It's not a secret either. It's an inevitable future. The date of realization? No one knows, but we can see it's coming. Now, should Uber optimize on it's current product set and optimize until they are profitable on every ride? Or should they balance some part of that, with innovating on the future of autonomous vehicles? Travis seems to be working towards the big vision of driverless cars. What would Jeff do?
Fun stuff to think about :)
"It's an inevitable future"?
I'm assuming you mean it's something that will happen within the next 50 years?
I just don't get how this isn't a super-hard social/political issue that we haven't even begun to address as a society. Maybe spending significant resources on this now, is not optimal.
I'm assuming you mean it's something that will happen within the next 50 years?
I just don't get how this isn't a super-hard social/political issue that we haven't even begun to address as a society. Maybe spending significant resources on this now, is not optimal.
How are driverless cars a huge social issue?
* Who will be liable when a self-driving car hits someone.
* Will people, on mass, accept being driven around by a machines, on public roads.
* How will they deal with "trolley problem" type ethical scenarios? How will these decisions be made.
* How will self-driving cars cope with rural roads (where they are arguably MORE useful than in Urban settings better served by public transport)?
* How will they cope with signs/marking intentionally designed to fool machine vision systems. Who will be liable for accidents caused in these cases?
There are other issues too. However, overall, I think with some infrastructure investment we could have had self-driving cars since the late 90s early 2000s and there have been many prototypes. It's the ethical/social issues that are the bigger barrier in my mind.
* Will people, on mass, accept being driven around by a machines, on public roads.
* How will they deal with "trolley problem" type ethical scenarios? How will these decisions be made.
* How will self-driving cars cope with rural roads (where they are arguably MORE useful than in Urban settings better served by public transport)?
* How will they cope with signs/marking intentionally designed to fool machine vision systems. Who will be liable for accidents caused in these cases?
There are other issues too. However, overall, I think with some infrastructure investment we could have had self-driving cars since the late 90s early 2000s and there have been many prototypes. It's the ethical/social issues that are the bigger barrier in my mind.
> How will they cope with signs/marking intentionally designed to fool machine vision systems.
They won't, but neither can humans. Signs aren't secure. Anyone with a wrench can take down a stop sign or put up a fake speed limit.
They won't, but neither can humans. Signs aren't secure. Anyone with a wrench can take down a stop sign or put up a fake speed limit.
Even if a sign is modified, a human will sanity check/ignore it. Currently many machine vision systems would be fooled. Basically in this scenario I think it's likely humans would fail safe.
They'll put millions of people out of their jobs.
Autonomous cars will do ride-sharing, years from now when autonomous cars eventually become legal and accepted. And every ride sharing service will buy them, because every car company will sell them.
You don't have to panic, throw huge amounts of stock at a shifty development team, while ignoring due diligence (or do an incompetent job at it) all to do your own.
You don't have to panic, throw huge amounts of stock at a shifty development team, while ignoring due diligence (or do an incompetent job at it) all to do your own.
Autonomous cars will do ride-sharing, years from now when autonomous cars eventually become legal and accepted. And every ride sharing service will buy them, because every car company will sell them.
Car rental companies are the most likely first bulk buyers of self-driving cars. They already buy, store, maintain, and clean large fleets of cars. They're all set up to handle the problems of a big fleet of cars used by many people. Uber doesn't have that infrastructure.
Car rental companies would like to have a car pick you up outside baggage claim and drive you away, rather than using a shuttle bus to get you to their car lot. Customers will like that, too. Even if the cars aren't self-driving on all roads, if they can get from rental car storage to the airport and onto the freeway, that's enough to justify the technology.
Car rental companies are the most likely first bulk buyers of self-driving cars. They already buy, store, maintain, and clean large fleets of cars. They're all set up to handle the problems of a big fleet of cars used by many people. Uber doesn't have that infrastructure.
Car rental companies would like to have a car pick you up outside baggage claim and drive you away, rather than using a shuttle bus to get you to their car lot. Customers will like that, too. Even if the cars aren't self-driving on all roads, if they can get from rental car storage to the airport and onto the freeway, that's enough to justify the technology.
Yeah but do you think any car rental company is innovative enough to do so? Every taxi company was the perfect business to start Uber but they didn't
Avis is already there. They handle the fleet maintenance and storage of Waymo's self-driving cars for Waymo's Phoenix testing.[1] When one breaks down, Avis sends the tow truck.
Avis already owns Zipcar, so they have app-based car services already deployed. So as soon as the technology is ready, Avis is there with the customer base and the infrastructure.
[1] https://www.bloomberg.com/news/articles/2017-06-26/alphabet-...
Avis already owns Zipcar, so they have app-based car services already deployed. So as soon as the technology is ready, Avis is there with the customer base and the infrastructure.
[1] https://www.bloomberg.com/news/articles/2017-06-26/alphabet-...
And with that model Ubers best bet would then still not be innovation - it would be infrastructure. It would be building out the support network to transition to look more like a rental company.
If rental cars have the infrastructure Uber lacks, it should focus on surviving until autonomous is freely available and having the resources to build that infrastructure.
Burning money on autonomous now buys them little. They can't control it, they don't have key patents, they will have to buy it just like everyone else.
Burning money on autonomous now buys them little. They can't control it, they don't have key patents, they will have to buy it just like everyone else.
wat.
Uber doesn't need to innovate? That is literally the premise of their entire business.
Uber doesn't need to innovate? That is literally the premise of their entire business.
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The premise of their business is ride-sharing. It was once innovative. Going forward they have to execute, not innovate.
What's all that funding for? Ride sharing?
If you look deeper, the premise of their business is to take over all of transportation. Not just ride sharing. Taking over transportation needs innovation.
If their premise was just ride sharing, their funding and priorities would be very different.
If you look deeper, the premise of their business is to take over all of transportation. Not just ride sharing. Taking over transportation needs innovation.
If their premise was just ride sharing, their funding and priorities would be very different.
Most of that funding was from really dumb investors (Saudi Royal Family) who paid a really dumb price. The new CEO shouldn't give a crap what late stage investors think Uber should be, he should focus on what Uber actually can be.
It could never take over all of transportation. It's burning billions every year just trying to build out ride-sharing.
It could never take over all of transportation. It's burning billions every year just trying to build out ride-sharing.
Uber does indeed need tech leadership as their entire premise is to segue the whole world to electric self driving cars. Their whole valuation is based on this premise, not that they replace taxis.
This valuation has been botched by the recent success of Tesla, Apple, Google, GM and a few more who are developing self-driving technology. The one with the best technology will win the race and probably become the first trillion dollar company.
So, in order to keep Uber competitive, you don't need to keep status quo. You need to invent probably the most meaningful technology of this century, at least of the next decades. This requires deep knowledge in tech, artificial intelligence, being able to find the right people for that, navigating the legal landscape in a.i. ethics (e.g. kill my passenger or kill the two pedestrians), motivating your employees through inspiring leadership and being able to lead your company through the next decades.
Adult leadership as you called it is not it. It might conserve the company as is, but you need a lot more than that to make it succeed.
Kalanick had the competitiveness and vision, however could not control his competitiveness, which lead him to build a toxic company culture. He might have succeeded in making Uber competitive to Tesla & Co. from a competition point of view, however, sooner or later the toxic culture would have made the company fold under the pressure, so the decision to replace him was a necessary one.
This valuation has been botched by the recent success of Tesla, Apple, Google, GM and a few more who are developing self-driving technology. The one with the best technology will win the race and probably become the first trillion dollar company.
So, in order to keep Uber competitive, you don't need to keep status quo. You need to invent probably the most meaningful technology of this century, at least of the next decades. This requires deep knowledge in tech, artificial intelligence, being able to find the right people for that, navigating the legal landscape in a.i. ethics (e.g. kill my passenger or kill the two pedestrians), motivating your employees through inspiring leadership and being able to lead your company through the next decades.
Adult leadership as you called it is not it. It might conserve the company as is, but you need a lot more than that to make it succeed.
Kalanick had the competitiveness and vision, however could not control his competitiveness, which lead him to build a toxic company culture. He might have succeeded in making Uber competitive to Tesla & Co. from a competition point of view, however, sooner or later the toxic culture would have made the company fold under the pressure, so the decision to replace him was a necessary one.
Their valuation never made any sense. They can never justify it.
They can never win the self driving technology war. They were late to the party, they missed out on key patents. They chose a team that may have stolen technology from Waymo, exposing them to massive potential liability. Now they have to start over.
Automous car technology will be freely available to everyone when it's commercially viable. Uber can't transition to that model unless it becomes far more economically successful. No one is going to give them $50B more to build out autonomous car infrastructure (cars, service, storage, parking) world-wide when they are still hemorrhaging money in their first business model.
Uber doesn't need to invent squat. It has to maintain it's massive lead in drivers and installed apps. When it's customers want an autonomous car, they'll use the same app they always did.
They can never win the self driving technology war. They were late to the party, they missed out on key patents. They chose a team that may have stolen technology from Waymo, exposing them to massive potential liability. Now they have to start over.
Automous car technology will be freely available to everyone when it's commercially viable. Uber can't transition to that model unless it becomes far more economically successful. No one is going to give them $50B more to build out autonomous car infrastructure (cars, service, storage, parking) world-wide when they are still hemorrhaging money in their first business model.
Uber doesn't need to invent squat. It has to maintain it's massive lead in drivers and installed apps. When it's customers want an autonomous car, they'll use the same app they always did.
Why do you say, autonomous car technology will be freely available to everyone? So, if Apple or Google are the first to achieve autonomous driving stage 4 technology, they will directly open source it even though it is their one competitive advantage?
I don't buy that. They'd use that technology to build out their advantage over all the competitors instead.
Regarding your point about Uber not being able to compete in the autonomous technology race. Having a network of drivers (which will become obsolete) and users is a bit of an advantage, but not much.
The first company to reach stage 4 can release their own app and get 100 million installs in a few months, if they reach stage IV. They don't need the Uber app.
Maybe a second mover who reaches stage IV after the first mover will buy Uber, because they can't get that many installs as the first mover, and they want to catch up as fast as possible, but that won't be worth more than a few billion.
I don't buy that. They'd use that technology to build out their advantage over all the competitors instead.
Regarding your point about Uber not being able to compete in the autonomous technology race. Having a network of drivers (which will become obsolete) and users is a bit of an advantage, but not much.
The first company to reach stage 4 can release their own app and get 100 million installs in a few months, if they reach stage IV. They don't need the Uber app.
Maybe a second mover who reaches stage IV after the first mover will buy Uber, because they can't get that many installs as the first mover, and they want to catch up as fast as possible, but that won't be worth more than a few billion.
Google and Apple are going to licenses their autonomous tech. Tessa, GM and Volvo are going to sell autonomous cars.
No one who reaches stage 4 is going to build tens of millions of their own cars within months and build the parking/service infrastructure nationwide to boot. No one is going to download their app till they do.
The idea that the company that is first and best at developing autonomous tech is going to also simultaneously build huge factories and make good cars is ludicrous.
No one who reaches stage 4 is going to build tens of millions of their own cars within months and build the parking/service infrastructure nationwide to boot. No one is going to download their app till they do.
The idea that the company that is first and best at developing autonomous tech is going to also simultaneously build huge factories and make good cars is ludicrous.
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I worked 13 years under Immelts mediocre reign.
Jeff tried to push rope, desperate knee-jerk reactions to stock analysts opinions, superficial restructuring with no real change to the company.
GE leadership/management was vastly overvalued. Tech, and technical talent was a completely unvalued commodity, outsource to the lowest bidder in India.
When he understood that software eats the world(via some SV guru whisperer) he tried to coin some "industrial internet" mumbo jumbo that was going to be a trillion dollar business. Out of touch like an unfrozen Dr. Evil.
Not sure how it's played out in practice but I've heard a lot about GE Predix. It's something like an IoT PaaS "Heroku for factories".
https://en.m.wikipedia.org/wiki/Predix_(software)
https://en.m.wikipedia.org/wiki/Predix_(software)
As someone who hasn't followed GE closely, why is Immelt considered a good CEO?
Looking at the numbers, over his tenure, GE's stock is down ~38% while the S&P 500 is up 123%. He did take over during some rocky times, but in the last 10 years, it's the same picture. If you put $100 into GE at the start of 2007, today you'd now have ~$105. For the S&P, you'd have $210. For a basket industrial stocks, you'd have $205.
http://performance.morningstar.com/stock/performance-return....
How can the CEO who delivered this be considered good at his job?
Looking at the numbers, over his tenure, GE's stock is down ~38% while the S&P 500 is up 123%. He did take over during some rocky times, but in the last 10 years, it's the same picture. If you put $100 into GE at the start of 2007, today you'd now have ~$105. For the S&P, you'd have $210. For a basket industrial stocks, you'd have $205.
http://performance.morningstar.com/stock/performance-return....
How can the CEO who delivered this be considered good at his job?
Welch left that company in a sorry state, and a lot of the financial machinations that pumped up that stock were played out (and worse became liabilities) by the time Immelt arrived. (Welch turned GE into a leveraged bank that happened to make generators and plastic)
GE's stock performance imo is more about how the market no longer favors conglomerates and relatively boring industries.
GE's stock performance imo is more about how the market no longer favors conglomerates and relatively boring industries.
If you assume Immelt was a great CEO and was just victim to Welch leaving GE in a very over-valued state, you'd expect the stock's performance to start off lousy and be better as Immelt's 16 year tenure went on. But that's not what we see. If you only take the last 10 or 5 years, GE has greatly underperformed both the market and similar industrial stocks.
Total return for 5 and 10 years:
Total return for 5 and 10 years:
GE 6.6% -1.6%
S&P 500 13.7% 7.6%
Diversified Industrials 13.0% 6.4%Frankly I don't know enough to say the Immelt was good or bad.
However... based on the experience of friends and colleagues who worked for different divisions of the company, I think that Welch's glory was a little overstated and not well understood at the time.
However... based on the experience of friends and colleagues who worked for different divisions of the company, I think that Welch's glory was a little overstated and not well understood at the time.
That's a good context, thanks. Is there a better indicator of Immelt's measure as a CEO in your opinion?
I really can't comment on the specifics of Immelt or GE. But one question I've always had around situations of supposed lack luster performance is this...
How much worse would it have been had they not been at the helm? And of course the logical follow-up of how do you know that it could actually be turned around?
How much worse would it have been had they not been at the helm? And of course the logical follow-up of how do you know that it could actually be turned around?
That's a fine question but it can't be answered. Unless there was some creditor saying they would wipe away a significant amount of debt unless that CEO was put in you can't figure out what could have been. Since every CEO that I know of is willing to evaluate and compensate their employees based on their actual results and not "what ifs" then I am perfectly fine evaluating CEOs the same way
All you can argue that his skills (adult leadership) are what's needed. But (similar to here) he took office after a legend who puffed up the stock, and couldn't take it back to the original glory.
But perhaps his job is to land the plane at a $30 billion valuation.
But perhaps his job is to land the plane at a $30 billion valuation.
Uber's valuation is entirely driven off the idea that they will reap monopoly profits in a market that is exploding. Like PayPal, Google and Facebook before them the wager is that they are going to be dominant and collect all the profits while all competitors are scraping up nickels and dimes.
I think that there is good reason to doubt that premise. Driving people around has a very different cost structure from a SaaS business that can throw off 85% margin if you get to product / market fit. Uber is a commodity and is trying to create margin by sucking all the air out of the room for competitors. A key strategy has been weaponized fund-raising. But even if you snuff out Lyft the barrier to entry for any player with a platform and scale is very low.
Then let's think about the tech. There's an implicit assumption that Uber is going to be a force in the self driving car market. Even if you set aside the Otto mess, why does anybody think that a 6 year old company that drew a car on Google Maps and did a payment integration is going to dominate the driverless car game? GM, Tesla, Volkswagen, Google have been thinking about this shit for decades. Why is Uber going to win? They can't run HR yet -- how are they going to own what happens next?
It's a monster business and they should be super happy with where they are. But I just don't see how they win in the shift that is coming. Car ownership is dying. It's becoming about transit experience
I think that there is good reason to doubt that premise. Driving people around has a very different cost structure from a SaaS business that can throw off 85% margin if you get to product / market fit. Uber is a commodity and is trying to create margin by sucking all the air out of the room for competitors. A key strategy has been weaponized fund-raising. But even if you snuff out Lyft the barrier to entry for any player with a platform and scale is very low.
Then let's think about the tech. There's an implicit assumption that Uber is going to be a force in the self driving car market. Even if you set aside the Otto mess, why does anybody think that a 6 year old company that drew a car on Google Maps and did a payment integration is going to dominate the driverless car game? GM, Tesla, Volkswagen, Google have been thinking about this shit for decades. Why is Uber going to win? They can't run HR yet -- how are they going to own what happens next?
It's a monster business and they should be super happy with where they are. But I just don't see how they win in the shift that is coming. Car ownership is dying. It's becoming about transit experience
Uber has essentially become too-big-to-fail startup for all the involved investors, so at this point it's game of how you can get it into a stable state where the involved investors can withdraw without making the whole cardhouse fall down.
Should Immelt become CEO this would be a huge culture shock not only to UBER employees but also drivers given the button downed culture Immelt originates from. He is also very financially focused so not sure we would continue to see pricing that we are accustomed to in the long-term. On the plus side, he comes with a reputation of integrity and professionalism which may help Uber gain entrance to cities and other areas that have previously been inaccessible.
I realize Immelt fits the picture that the Board is looking for (professional, intelligent, organizational, experienced, etc) but given SV's tendency towards men under 40, Immelt does not fit that bill at all. Would be interesting to see how well he would be accepted at all the tech conferences, events etc.
I realize Immelt fits the picture that the Board is looking for (professional, intelligent, organizational, experienced, etc) but given SV's tendency towards men under 40, Immelt does not fit that bill at all. Would be interesting to see how well he would be accepted at all the tech conferences, events etc.
To my eye, SV has a preference for founders to be under 40. I'm not sure many care about the age of the CEO once the company has hit its stride. Uber has hit its stride, right?
Google with Eric Schmidt, for example. Coming from Novell, I thought he would not be a good fit...
They've hit their stride only if their goal was to run headfirst into a wall.
That very much depends on your perspective. They're losing huge amounts of money and they're in the middle of a pile of lawsuits. They may end up losing their driverless tech, which they may have never owned in the first place.
They've hit their stride?!? Looks to me like a company in crisis that needs a turn-around artist.
They've hit their stride?!? Looks to me like a company in crisis that needs a turn-around artist.
You are correct that he is not a founder and in that respect SV is a bit more forgiving of age.
He will be a terrific asset in managing the legal issues that are surrounding Uber w Google and others as Immelt has vast experience in managing intensive litigation threats to a company.
He will be a terrific asset in managing the legal issues that are surrounding Uber w Google and others as Immelt has vast experience in managing intensive litigation threats to a company.
Any insight on why his failures innovating at GE that caused him to resign aren't a red flag for an innovative company like Uber? Just because they're looking for a grown up?
Because they desperately need a grown up. Uber doesn't need to be innovative, it needs to execute without continuing to shooting off it's toes.
What exactly does it need to execute on? It's valued at $60B and is losing money with every. single. fricking. ride.
It doesn't need someone to "execute" some sort of plan, it needs a miracle only innovation can provide.
It doesn't need someone to "execute" some sort of plan, it needs a miracle only innovation can provide.
It needs to re-focus on it's core ride-sharing business and substantially reduce it's burn rate. There is little doubt that ride-sharing will be a massively profitable business, they get paid dollars per ride and their booking costs should only be pennies.
The myth that their rides are unprofitable is because they spend money like drunken sailors in a whorehouse. Anyone analyzing their financials has no insight into whether ride sharing is profitable in the US, or other countries because the needed information is not broken out in those reports
They have up to 100 side businesses like UberEats. They've spent a ton trying to design autonomous vehicles they don't need now and likely never will need (given they'll be freely available for purchase from Tesla, GM, etc when created). Lastly, they spend huge amounts opening new markets, basically paying drivers to sign up with such lucrative bonuses that Uber gets scammed constantly by them.
The plan is pretty simple 1) Kill almost every side business, and do a substantial headcount reduction. 2) Dump the autonomous driving development group and cheaply settle the Waymo lawsuit. 3) Focus everyone left on ride-sharing, improving the brand, and efficiently expanding internationally. 4) Clean house in the HR department and of every remaining harasser. 5) Raise another round to ensure Uber's long term financial stability.
Thats a plan that gives Uber a very long runway to achieve full profitability, even without an IPO.
The myth that their rides are unprofitable is because they spend money like drunken sailors in a whorehouse. Anyone analyzing their financials has no insight into whether ride sharing is profitable in the US, or other countries because the needed information is not broken out in those reports
They have up to 100 side businesses like UberEats. They've spent a ton trying to design autonomous vehicles they don't need now and likely never will need (given they'll be freely available for purchase from Tesla, GM, etc when created). Lastly, they spend huge amounts opening new markets, basically paying drivers to sign up with such lucrative bonuses that Uber gets scammed constantly by them.
The plan is pretty simple 1) Kill almost every side business, and do a substantial headcount reduction. 2) Dump the autonomous driving development group and cheaply settle the Waymo lawsuit. 3) Focus everyone left on ride-sharing, improving the brand, and efficiently expanding internationally. 4) Clean house in the HR department and of every remaining harasser. 5) Raise another round to ensure Uber's long term financial stability.
Thats a plan that gives Uber a very long runway to achieve full profitability, even without an IPO.
If Uber just focuses on ride-sharing, without innovation, it's unclear to me how they could survive.
They seem to scale in reverse. That is, an Uber that runs in the US and the UK will cost more to operate than an Uber that runs in just the US. An Uber that runs in one state will cost less than an Uber that runs in a whole country, and so on. The more diverse an area you serve, the more legislation and markets you have to deal with, more hours you'll have high customer support load, and the less well you will be able to analyze and react to trends in individual markets.
What stops me, then, in an era where Uber isn't fueled by investor money every trip, from being a competitor with Uber? Raise a few million dollars, get a simple app together with a few friends, and then convince drivers to try (take a lot of short Uber rides and pitch good drivers) and riders to ride. I'd have less staff, less overhead, and therefore less costs. The savings could be passed on equally to the drivers and riders. I could give discounts on nights when there was a big game, I could advertise in local areas, I could poach good drivers from Uber, etc.
It seems to me there is no way for Uber to be competitive if they aren't using investor to subsidize the price of rides. There is nothing, that I am aware of, that is impossible or expensive to replicate in their tech.
They seem to scale in reverse. That is, an Uber that runs in the US and the UK will cost more to operate than an Uber that runs in just the US. An Uber that runs in one state will cost less than an Uber that runs in a whole country, and so on. The more diverse an area you serve, the more legislation and markets you have to deal with, more hours you'll have high customer support load, and the less well you will be able to analyze and react to trends in individual markets.
What stops me, then, in an era where Uber isn't fueled by investor money every trip, from being a competitor with Uber? Raise a few million dollars, get a simple app together with a few friends, and then convince drivers to try (take a lot of short Uber rides and pitch good drivers) and riders to ride. I'd have less staff, less overhead, and therefore less costs. The savings could be passed on equally to the drivers and riders. I could give discounts on nights when there was a big game, I could advertise in local areas, I could poach good drivers from Uber, etc.
It seems to me there is no way for Uber to be competitive if they aren't using investor to subsidize the price of rides. There is nothing, that I am aware of, that is impossible or expensive to replicate in their tech.
I don't think you understand their business. The code that supports the US market also supports the UK market, it needs changes for currency/regulations, but it's not being entirely rewritten. Providing the booking service for a ride can't cost more than a few cents, and they get paid a few dollars.
And Uber has hundreds of competitors, and it's crushing all of them because of brand. I have Uber on my phone. I will never have your app. Getting app installs is hugely expensive and they have a huge lead. Even if you pay for installs, people will delete your app as soon as they realize you don't have as many drivers.
They have a huge lead in a big market. They need to not lose that.
And Uber has hundreds of competitors, and it's crushing all of them because of brand. I have Uber on my phone. I will never have your app. Getting app installs is hugely expensive and they have a huge lead. Even if you pay for installs, people will delete your app as soon as they realize you don't have as many drivers.
They have a huge lead in a big market. They need to not lose that.
When I say that they need more people, I mean that they need customer service that can handle the new market, legal people for the new laws, finance people for the taxes, etc. I'm aware they can largely reuse the code that underlies their service.
People do switch their ride solution. For example, I used to use taxis when I needed to hire a ride. I switched to uber because it was easier and cheaper. If something was as easy and cheaper, I'd use that instead (For example, I use lyft whenever it has a better price and I have the time to check).
Building a competitor for a single city seems plausible. I don't think there is a technology related hurdle. All you need is the capital to build the brand and to be competitive on price.
People do switch their ride solution. For example, I used to use taxis when I needed to hire a ride. I switched to uber because it was easier and cheaper. If something was as easy and cheaper, I'd use that instead (For example, I use lyft whenever it has a better price and I have the time to check).
Building a competitor for a single city seems plausible. I don't think there is a technology related hurdle. All you need is the capital to build the brand and to be competitive on price.
I wonder if Uber should explore some type of franchise model. I don't think I've seen anything like this in tech but it would allow them to offload some of the local costs/complexities to a presumably more locally dialed in franchisee, while maintaining a focus on their core tech & brand marketing. Despite the spate of HR/PR disasters, the Uber brand is still extremely strong.
I think we need to make peace with the word innovation sometimes. Innovation should be realistic in the right timing. Surely autonomous car is a really interesting future, but Uber has plenty of organizational problems require urgent and decisive surgery.
Abandon the auto project and UberEats (I don't even know if UberEats is even profitable or how many people actually use it) will allow the company to focus on core problems. How can you clean your house if your kids constantly go around the house making a mess? Let's get the house cleaned first then we worry about how to correct the kids' behaviors. Basically, do one thing well enough before moving to another.
They really need to focus on growing in cities and countries where they face competitions but already have a strong root. I understand the awesomeness to be the bigges, but look at Uber China, Uber had to parnter with Di Di instead (Uber doesn't run its business in mainland China anymore). Uber also recently shut down its business in Marcu because the drivers were fined so much no one would work for Uber.
Abandon the auto project and UberEats (I don't even know if UberEats is even profitable or how many people actually use it) will allow the company to focus on core problems. How can you clean your house if your kids constantly go around the house making a mess? Let's get the house cleaned first then we worry about how to correct the kids' behaviors. Basically, do one thing well enough before moving to another.
They really need to focus on growing in cities and countries where they face competitions but already have a strong root. I understand the awesomeness to be the bigges, but look at Uber China, Uber had to parnter with Di Di instead (Uber doesn't run its business in mainland China anymore). Uber also recently shut down its business in Marcu because the drivers were fined so much no one would work for Uber.
For what it's worth, my understanding is that Uber eats is more profitable than the core ride-sharing business.
You must mean less unprofitable.
Not really disagreeing with the rest of this comment, but a couple of points:
> given they'll be freely available for purchase from Tesla, GM, etc when created
Tesla has a built-in "feature" in their cars, to make OTA updates to the software running the car. One part of the vision of buying a Tesla, is supposed to be the day when customers let their autonomous car "work" for them while they are not using it.
I don't think it's a huge stretch of imagination for Tesla to come out with it's own version of the ride sharing parts of Uber when autonomous driving becomes a full reality with their cars. They could eat Uber at this point.
> Thats a plan that gives Uber a very long runway to achieve full profitability, even without an IPO.
Points 3, 4 & 5 of the plan are likely going to be very difficult! Why?
> 3) Focus everyone left on ride-sharing, improving the brand, and efficiently expanding internationally.
I'm fairly certain there are very smart, well-paid people already trying to do each of things at Uber, not sure how reducing headcount will magically improve the state of affairs here. Mythical man month like arguments come to mind.
> 4) Clean house in the HR department and of every remaining harasser.
If the company was built on a foundation of sexist and abrasive culture, rooting every one out will take a long time, not to mention disruptive as it involves disentangling the fiefdoms built by these people (who may even be doing a "good job", causing damage to raw business metrics in removing them). I'm not saying this shouldn't be done, I'm just saying "birds of a feather flock together", so if I may dare say, wholesale pest removal might unfortunately be low on the priority of any new exec. They would be more focussed on other matters and just treat the symptoms. Human nature.
> 5) Raise another round to ensure Uber's long term financial stability.
If Points 1 & 2 are followed, without the silver-talk of "constant innovation" and projections of "taking over global transportation with our technology" - raising private funds might get extremely challenging and may not have the expected results. At that point, an IPO might provide better success as public investors are interested in "business that execute" as well, as opposed to the private investment folks who look for returns in the Order(s) of Magnitude scale.
> given they'll be freely available for purchase from Tesla, GM, etc when created
Tesla has a built-in "feature" in their cars, to make OTA updates to the software running the car. One part of the vision of buying a Tesla, is supposed to be the day when customers let their autonomous car "work" for them while they are not using it.
I don't think it's a huge stretch of imagination for Tesla to come out with it's own version of the ride sharing parts of Uber when autonomous driving becomes a full reality with their cars. They could eat Uber at this point.
> Thats a plan that gives Uber a very long runway to achieve full profitability, even without an IPO.
Points 3, 4 & 5 of the plan are likely going to be very difficult! Why?
> 3) Focus everyone left on ride-sharing, improving the brand, and efficiently expanding internationally.
I'm fairly certain there are very smart, well-paid people already trying to do each of things at Uber, not sure how reducing headcount will magically improve the state of affairs here. Mythical man month like arguments come to mind.
> 4) Clean house in the HR department and of every remaining harasser.
If the company was built on a foundation of sexist and abrasive culture, rooting every one out will take a long time, not to mention disruptive as it involves disentangling the fiefdoms built by these people (who may even be doing a "good job", causing damage to raw business metrics in removing them). I'm not saying this shouldn't be done, I'm just saying "birds of a feather flock together", so if I may dare say, wholesale pest removal might unfortunately be low on the priority of any new exec. They would be more focussed on other matters and just treat the symptoms. Human nature.
> 5) Raise another round to ensure Uber's long term financial stability.
If Points 1 & 2 are followed, without the silver-talk of "constant innovation" and projections of "taking over global transportation with our technology" - raising private funds might get extremely challenging and may not have the expected results. At that point, an IPO might provide better success as public investors are interested in "business that execute" as well, as opposed to the private investment folks who look for returns in the Order(s) of Magnitude scale.
Let me address your points
1) It's possible Tesla could enter the ride-sharing market. And it's possible they could win. But I won't download a Tesla app until their service is as good a Ubers, and that's a huge barrier to overcome.
Uber's advantage is their massive lead in installed apps and available drivers. If they lose that, then they'll be at risk. Some autonomous company may pull it off, but the far more likely route is that Uber adds autonomous fast enough that none can catch them.
3) I'm not arguing to add headcount to ride-share, I'm arguing to add focus to it. Having a CEO 100% focused on ride-share instead of CEO 50% focused on ride-share and 50% focused on autonomous/uberEats/100 other side hustles will trickled down through exec staff, directors, etc.
4) Starting over in HR is your first start. You can't have a culture where people were allowed to hide problems or protect bad employees. It starts in HR.
5) An IPO is fine. It's all about financing the business over the long term, so the new CEO will pick the best possible financing path. And reducing burn rate might be enough alone to do it, since Uber should still have billions left in the bank.
Let's be fair, the $60B valuation was really dumb and won't be seen again for a long time if ever. You can't count on having investors as dumb as the Saudi's again.
1) It's possible Tesla could enter the ride-sharing market. And it's possible they could win. But I won't download a Tesla app until their service is as good a Ubers, and that's a huge barrier to overcome.
Uber's advantage is their massive lead in installed apps and available drivers. If they lose that, then they'll be at risk. Some autonomous company may pull it off, but the far more likely route is that Uber adds autonomous fast enough that none can catch them.
3) I'm not arguing to add headcount to ride-share, I'm arguing to add focus to it. Having a CEO 100% focused on ride-share instead of CEO 50% focused on ride-share and 50% focused on autonomous/uberEats/100 other side hustles will trickled down through exec staff, directors, etc.
4) Starting over in HR is your first start. You can't have a culture where people were allowed to hide problems or protect bad employees. It starts in HR.
5) An IPO is fine. It's all about financing the business over the long term, so the new CEO will pick the best possible financing path. And reducing burn rate might be enough alone to do it, since Uber should still have billions left in the bank.
Let's be fair, the $60B valuation was really dumb and won't be seen again for a long time if ever. You can't count on having investors as dumb as the Saudi's again.
I hope they don't do all of this. UberEATS is best in class. Seriously an order of magnitude better experience than all of the other food delivery apps.
Well put. I hope the new CEO reads this.
How do you know it looses money on every ride (genuine question)? Is there proof?
Could it be that there are profitable rides in some of its markets that inspire investors that it would eventually be able to make every ride profitable at some point?
Could it be that there are profitable rides in some of its markets that inspire investors that it would eventually be able to make every ride profitable at some point?
> Uber passengers were paying only 41% of the actual cost of their trips
https://www.nakedcapitalism.com/2016/11/can-uber-ever-delive...
That analysis is speculative at best. It ignores all of the costs that aren't part of providing Uber ride-sharing, including a large number of side businesses, and it's massive investment in international growth. The financials simply don't provide detail to break down the actual costs of ride-sharing when it's mixed in with so many incidental operations and costs.
Sure it does. Uber is like Dropbox for cars. WTF are they doing?
If you fired 75% of the people, and focused on selling rides and selling cars to drivers, the company would probably coast and make money for years.
If you fired 75% of the people, and focused on selling rides and selling cars to drivers, the company would probably coast and make money for years.
What it needs is a time machine to bring the necessary automotive tech back from 2050.
Uber is an international brand for taxis. I'm not even sure why they are considered a tech company.
It's a mystery. They do have a nice app for hailing their taxis, but so does my local "legacy" taxi company.
Similarly: Why is Blue Apron a tech company? Their business model is putting food in a box, and then shipping it to people. That's great, but my local grocery chain does that too?
And then there's Juicero, who's only claim to being a tech company seems to be they printed QR codes on the packaging, despite the QR codes being entirely unnecessary to their core business. If Kraft puts a QR code on a box of mac and cheese so you can scan it and get a cooking instruction video on your phone, do they become a tech company too?
It's just branding.
Similarly: Why is Blue Apron a tech company? Their business model is putting food in a box, and then shipping it to people. That's great, but my local grocery chain does that too?
And then there's Juicero, who's only claim to being a tech company seems to be they printed QR codes on the packaging, despite the QR codes being entirely unnecessary to their core business. If Kraft puts a QR code on a box of mac and cheese so you can scan it and get a cooking instruction video on your phone, do they become a tech company too?
It's just branding.
After the slashed IPO pricing and the continued downward trend since, besides the fact that Blue Apron's unit economics are dubious, the market has been crystal clear that they don't value Blue Apron as a tech company.
https://hackernoon.com/blue-apron-is-not-a-tech-company-neit...
https://hackernoon.com/blue-apron-is-not-a-tech-company-neit...
I see you've read Matt Levine's newsletter:
https://www.bloomberg.com/view/articles/2017-08-09/yogurt-li...
They're virtual-reality companies.
https://www.bloomberg.com/view/articles/2017-08-09/yogurt-li...
They're virtual-reality companies.
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My guess is that it's "cool" to be a tech company. It gives an excuse to not be profitable. Get wider range of talent.
My current and my previous company is a traditional business, both more than 20 years old. They sell a product or service that has existed for decades. But damn they both tried to say we are a startup, we are a tech company, etc etc.
My current and my previous company is a traditional business, both more than 20 years old. They sell a product or service that has existed for decades. But damn they both tried to say we are a startup, we are a tech company, etc etc.
This always blew my mind: a smartphone app for a cab company that doesn't even own any cabs raised $16 billion.
It simply can't be that they spent even a small fraction of that writing software, smartphone apps just aren't that expensive. But they've got one helluva marketing engine and investor relations group...
That, and a lot of their money is buying market share, effectively subsidizing people's rides.
I've never understood how that's going to work, beyond vague handwavey arguments about potential future driverless cabs and other complex arguments that don't seem backed by data.
It simply can't be that they spent even a small fraction of that writing software, smartphone apps just aren't that expensive. But they've got one helluva marketing engine and investor relations group...
That, and a lot of their money is buying market share, effectively subsidizing people's rides.
I've never understood how that's going to work, beyond vague handwavey arguments about potential future driverless cabs and other complex arguments that don't seem backed by data.
I think the lesson here is that kickstarting new markets (entering new countries) is not easy. They basically have a local or regional team that needs to find a way to drive user adoption. They also spend a lot of money on promotions to change user and driver behavior.
IMO it doesn't do them just when we say "it's just an app". It's a complex operation that they've simplified to appear as that way.
IMO it doesn't do them just when we say "it's just an app". It's a complex operation that they've simplified to appear as that way.
It's fine to spend money driving a new market but you eventually have to capitalize on it. How will that work? Large price increases, or just betting that driverless tech will eliminate costs and get them to profitability?
Also, they already have substantial scale. When would one reasonably expect them to stop losing so much money?
Also, they already have substantial scale. When would one reasonably expect them to stop losing so much money?
Just take a look at Didi. They won the market in China and now prices are up, driven incentive pay is cut, wait times are up because drivers are leaving the platform because pay is down.
https://www.google.com/amp/amp.timeinc.net/fortune/2016/09/1...
https://www.google.com/amp/amp.timeinc.net/fortune/2016/09/1...
When they stop expanding worldwide. The world is an extremely large place. Paying drivers hundreds of dollars to sign up with Uber in hundreds of countries is a massive startup expense.
I agree with you. I was simply trying to address the comment that it's "just an app".
Well, it's clearly a very successful business. But to your point, their success if their ability to break into new markets. Striking a deal with the Taxi and Limousine Commission in NYC was probably their single most valuable innovation and it was lawyers, not programmers who pulled it off.
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Hush now the money men are in charge, it's time for grown ups to run things.
Like that Pepsi guy that ran Apple (into the ground).
Like that Pepsi guy that ran Apple (into the ground).
The parallels are actually pretty interesting.
You can argue that Sculley saved Apple. At the time Jobs was a terrible leader and manager, and he had way over-forecast Macintosh sales. And because of it, Apple was hemorrhaging. After booting Jobs, Sculley cut head-count, refocused Apple on it's bread and butter product, the Apple II and led Apple to a massive turnaround. Sculley did so well he lasted 10 years as CEO.
Uber is a company that was a great idea, got off to a great start, but then management started to constantly sabotage themselves. Travis has acted as irrationally as Jobs 1.0 did. Bringing in a Sculley type is exactly the type of leader they need now. Clean out all the dumb side business ideas, refocus on the car sharing service, and work hard to rebuild it's brand.
Ten years from now they might need someone more creative (and Immelt is so old there is no way he's going to run it for that long). But right now they need to survive and get back on track.
You can argue that Sculley saved Apple. At the time Jobs was a terrible leader and manager, and he had way over-forecast Macintosh sales. And because of it, Apple was hemorrhaging. After booting Jobs, Sculley cut head-count, refocused Apple on it's bread and butter product, the Apple II and led Apple to a massive turnaround. Sculley did so well he lasted 10 years as CEO.
Uber is a company that was a great idea, got off to a great start, but then management started to constantly sabotage themselves. Travis has acted as irrationally as Jobs 1.0 did. Bringing in a Sculley type is exactly the type of leader they need now. Clean out all the dumb side business ideas, refocus on the car sharing service, and work hard to rebuild it's brand.
Ten years from now they might need someone more creative (and Immelt is so old there is no way he's going to run it for that long). But right now they need to survive and get back on track.
John Sculley.
"Jeff [Immelt], do you want to sell planned-obsolescence dryers and weather derivatives the rest of your life?"
"Jeff [Immelt], do you want to sell planned-obsolescence dryers and weather derivatives the rest of your life?"
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They need to be in the self driving car game or the company has maybe a 7-10 year life span. Managing that innovation is necessary, and it's unclear they are optimizing around that.
The other interpretation is this decision is entirely about managing short term to get to an IPO, so investors who have lost faith can cash out. The candidate they are considering fits that bill more closely.
The other interpretation is this decision is entirely about managing short term to get to an IPO, so investors who have lost faith can cash out. The candidate they are considering fits that bill more closely.
As valuearb has pointed out in other comments, it's not at all clear that Uber needs to be in the self-driving car game to the point of making self-driving car technology, any more than they need to be in the human-driven taxi game they're in now to the point of buying an automobile manufacturer.
It's not at all unreasonable to think that the way to save Uber is to ruthlessly cut costs and focus on the business of fleet and driver management, without banking on the assumption that the drivers are all going to go away within a decade. They should certainly still be watching autonomous cars, and perhaps find someone to partner with the way Lyft has with Google/Waymo, but I'm not at all convinced that's a business they should actually be in.
(I also suspect that the belief that we're going to have "level five" autonomous cars within the decade is far too optimistic. Also, an awful lot of discussions apparently assume the vast majority of consumers will, as soon as it becomes practical, stop buying cars and switch to autonomous taxis for all transportation needs. At least among American consumers, I'm going to stamp that with "[citation needed]" until further notice.)
It's not at all unreasonable to think that the way to save Uber is to ruthlessly cut costs and focus on the business of fleet and driver management, without banking on the assumption that the drivers are all going to go away within a decade. They should certainly still be watching autonomous cars, and perhaps find someone to partner with the way Lyft has with Google/Waymo, but I'm not at all convinced that's a business they should actually be in.
(I also suspect that the belief that we're going to have "level five" autonomous cars within the decade is far too optimistic. Also, an awful lot of discussions apparently assume the vast majority of consumers will, as soon as it becomes practical, stop buying cars and switch to autonomous taxis for all transportation needs. At least among American consumers, I'm going to stamp that with "[citation needed]" until further notice.)
Why would anyone who is working on their own products partner with Uber (or Lyft etc.)? It's pretty clear that a genuine self-driving product would demolish the human driving equivalent. Forget network effect, it's going to be way cheaper.
Because, if they're still in business long-term, 1.) they're potentially a very big customer and 2.) They can be a great source of data and broader insights about exactly how people use/want to use taxis in different locations. What are the patterns? Pickup and dropoff points. Etc.
The question is whether to focus on tech leadership or adult leadership. In Meg, they had a candidate that had both experience scaling a tech company and maturity in building a real organization.
But TK and his buddies ruined that by leaking her name to the press and putting her in an impossible position. Given how leaky the board is - they can only go after candidates that are between jobs.
But TK and his buddies ruined that by leaking her name to the press and putting her in an impossible position. Given how leaky the board is - they can only go after candidates that are between jobs.
Well, if Uber needs some serious earnings manipulation, errr, management, Immelt is certainly the guy. And boy do they need it. Guy made something like $300-400 million during his tenure - GE stock did nothing.
I don't get why anyone would associate themselves with Uber at this point.
There is no fix for the "bro culture" at Uber except firing everyone and rebuilding the company from the ashes. Also, regulators are starting to apply pressure to all this "sharing economy" crap (Uber, Lyft, AirBnB, Foodora and friends) which is basically just exploitation of workers combined with open ignorance of laws and regulations... which means that there is no way Uber can justify its valuation except they manage to roll out fully autonomous driving in 2 years.
There is no fix for the "bro culture" at Uber except firing everyone and rebuilding the company from the ashes. Also, regulators are starting to apply pressure to all this "sharing economy" crap (Uber, Lyft, AirBnB, Foodora and friends) which is basically just exploitation of workers combined with open ignorance of laws and regulations... which means that there is no way Uber can justify its valuation except they manage to roll out fully autonomous driving in 2 years.
We've been fixing "bro culture" given that it's largely a myth propogated by a select group of SV tech writers via cherry picking a small group of bad apples that are in no way representative of the majority of folks at the company.
You associate with Uber if you want the chance to solve big problems with incredible teams to continually improve a product that you and millions of others rely on as a matter of necessity.
The "Uber exploiting workers" meme is a classic, and holds little water given the fact that everyone on the platform consents to be there and can leave at any time. If anything, the flexible earnings opportunity Uber provides is transformational to a group of people who have historically had to make insidious trade offs (money over family time) to keep the lights on.
You associate with Uber if you want the chance to solve big problems with incredible teams to continually improve a product that you and millions of others rely on as a matter of necessity.
The "Uber exploiting workers" meme is a classic, and holds little water given the fact that everyone on the platform consents to be there and can leave at any time. If anything, the flexible earnings opportunity Uber provides is transformational to a group of people who have historically had to make insidious trade offs (money over family time) to keep the lights on.
This is great news for Lyft.
And Apple, and Tesla, and Google, and GM, and Ford, and Toyota, and Honda, and Kia, and every other group out there working on a self driving car.
Oh wow. When did Immelt become former GE CEO? With so much political news, I did not even notice he got fired recently. He will take Uber to the ground with his excellent non technical chops.
I think a visionary tech leader, like Robin Chase (zipcar co-founder), would still be better as CEO, and hire someone with experience running a big company like Immelt as a COO.
Historically speaking, putting blue chip CEOs in charge of tech companies, had worked out disasterously. The skill set, management style and risk profile is completely different.
Uber's been at war on several fronts for a while now, imo they were on a course for disaster already. I don't see how money managers in charge might help but if ever there were a time for hail marys for them, this is it.
I doubt it'll help but hey.
I doubt it'll help but hey.
Is Uber a tech company?
Among the more interesting speculation I'd seen was that Marissa Meyer might be considered. Putting a woman in charge would send a clear and strong signal.
I'm not sure I'd want to inherit that particular mess, though, particularly not after Yahoo.
I'm not sure I'd want to inherit that particular mess, though, particularly not after Yahoo.
The culture change would be huge. I'm curious how the rank and file would respond.
[deleted]
Lyft would love this.
Hey this guy and Travis were both on Trumps business panel. At least Travis quit months ago, this guy waited until till the bitter end. Probably the biggest reason Travis quit outside of the public was because his employees asked him to. I wonder how the employees will react to this new guy support of Trump
Being on the oanel does not imply support.
Apple CEO is pretty anti Trump but still sits on panels.
Ignoring the president just creates divide and conflict. If you sit on the panel you get Trump’s ear and don’t really have to give anything in return.
Apple CEO is pretty anti Trump but still sits on panels.
Ignoring the president just creates divide and conflict. If you sit on the panel you get Trump’s ear and don’t really have to give anything in return.
Just to correct, the Apple CEO, Tim Cook, has attended meetings with Trump, but never sat on any formally organized council.
Jeff Immelt and Travis Kalannick sat on the "American Manufacturing Council" and "Strategic and Policy Forum" respectively, which had memberships and were regularly consulted.
Jeff Immelt and Travis Kalannick sat on the "American Manufacturing Council" and "Strategic and Policy Forum" respectively, which had memberships and were regularly consulted.
That's true and Travis said that when he first got calls to quit but he listened to his customers and employees and quit. I'm no fan of Travis or uber but I feel like Travis deserves some points for making the right call months ago and I wish others followed his lead back then.
The fact is that the employees wanted Travis to quit. Whatever the truth is about Travis or anyone else supporting Trump, that's what happened. And this new guy didn't quit. Those variables therefore matter. The capable of what the CEO actually thinks doesn't matter.
You don't have to be on the President's showpiece panels to not be ignoring him.
Anyone who would be invited to be on one of those panels has no trouble hearing from and making themselves heard by government without being on a panel.
Anyone who would be invited to be on one of those panels has no trouble hearing from and making themselves heard by government without being on a panel.
Wow, this is going to be bad.
Why? He can't be anywhere near as bad as Kalanick.
There are different kinds of bad. Immelt has been at GE since 1982, which was about the time the early SMTP RFCs were written. That's a long time. Will the skills and behaviors that worked for him there be what Uber needs?
Personally, I'd be surprised if they were. Of course, it's not clear anybody has what Uber needs.
Personally, I'd be surprised if they were. Of course, it's not clear anybody has what Uber needs.
There are many skills in managing a business and people that never change. Uber needs basic blocking and tackling, not some new age management wonderkind. They absolutely don't need a technology person.
You assume that there's a pony under all that horseshit. But it's not clear that Uber has a real, defensible business there.
I don't think they have to have a technology person at the helm; I mention that comparison just to give a sense of how long this guy has been doing exactly one thing. Uber is in a very different market.
However, some technology savvy is going to be necessary, because Uber is facing a deep change in their business. It's sort of like Netflix. They started with mailing DVDs, but that was not the business that mattered. I don't think you can run a Netflix or a Tesla without a deep appreciation for the business volatility created by technological change.
I don't think they have to have a technology person at the helm; I mention that comparison just to give a sense of how long this guy has been doing exactly one thing. Uber is in a very different market.
However, some technology savvy is going to be necessary, because Uber is facing a deep change in their business. It's sort of like Netflix. They started with mailing DVDs, but that was not the business that mattered. I don't think you can run a Netflix or a Tesla without a deep appreciation for the business volatility created by technological change.
>Uber needs basic blocking and tackling
Can you explain these terms?
Can you explain these terms?
It's a term from American Football. It means that games are won not by superstars doing extraordinary things, but because unsung employees and managers are coached to do their jobs well.
I was hoping it was some kind of pulley metaphor, but apparently it's just about handegg.
http://idioms.thefreedictionary.com/blocking+and+tackling
http://idioms.thefreedictionary.com/blocking+and+tackling
Isnt it pretty obvious what uber needs? They need some one to act like an adult. They need a real business man to either start charging actual fees for service and somehow magically keep customers or start planning and figuring out a graceful way to lower valuation.
Suppose Immelt steps in, stops subsidizing rides, things stabilize and Uber's valuation cuts in half but they find a sustainable place to be. That seems like a job well done and the echo chamber can crap on Immelt for not innovating or destroying "value"
Suppose Immelt steps in, stops subsidizing rides, things stabilize and Uber's valuation cuts in half but they find a sustainable place to be. That seems like a job well done and the echo chamber can crap on Immelt for not innovating or destroying "value"
That's the first thing that Uber needs.
But it's not clear that absent subsidies they have a significant business. Their valuation might not fall by half. It could fall to something much, much smaller: https://ftalphaville.ft.com/2016/09/13/2173631/mythbusting-u...
And that's only in the short to medium term. In the 20-30 year timeframe, their current business will be destroyed by automated cars. Car manufacturers have intrinsic advantages here, and they have deep existing relationships with the bulk of America.
But it's not clear that absent subsidies they have a significant business. Their valuation might not fall by half. It could fall to something much, much smaller: https://ftalphaville.ft.com/2016/09/13/2173631/mythbusting-u...
And that's only in the short to medium term. In the 20-30 year timeframe, their current business will be destroyed by automated cars. Car manufacturers have intrinsic advantages here, and they have deep existing relationships with the bulk of America.
Someone will still need to operate the rental/dispatch fleets. And, as you say, 20 to 30 years. They can worry about that if they're still in business 20 years from now.
Costs need to be looked at and pricing needs to be aligned with those costs. I tend to agree that this could drive ride volumes down significantly as people become less interested in Ubering everywhere if VCs stop subsidizing.
But doesn't it have to get to that point? Neither autonomous cars or anything else are magic talismans just out of reach today that will change everything in an interesting time horizon.
Costs need to be looked at and pricing needs to be aligned with those costs. I tend to agree that this could drive ride volumes down significantly as people become less interested in Ubering everywhere if VCs stop subsidizing.
But doesn't it have to get to that point? Neither autonomous cars or anything else are magic talismans just out of reach today that will change everything in an interesting time horizon.
It's possible both can be bad for different reasons. To be fair, the GP didn't specify what "bad" meant.
Yeah, since he's did such a great job with GE's stock...
Jeff has no real tech credibility, he is a old school boys network business guy with dodgy/bad performance rap.
https://www.forbes.com/sites/adamhartung/2017/03/28/ge-needs...
"At this point, it is probably too late to save GE. By losing sight of the need to grow, and instead focusing on optimizing the old business while selling assets to raise cash for reorganizations, Immelt has destroyed what was once a great innovation engine. Now that the activists have GE in their sites it is unlikely they will let it ever return to the company it once was - creating whole new markets by developing new technologies that people never before imagined. The future looks a lot more like figuring out how to maximize the value of each piece of meat as it's carved off the GE carcass."
Good luck to the folks that work at uber. You are going to need it.