
Uber Plans to Go Public in 18-24 Months, According to Leaked Presentation - zhuxuefeng1994
http://techcrunch.com/2015/08/21/uber-plans-to-go-public-in-12-18-months-according-to-leaked-presentation/
======
alopecoid
Dumb question:

Since Google Ventures invested in Uber, does that mean that owning Google
stock indirectly translates to a [small] pre-IPO investment in Uber?

[http://www.quora.com/What-percentage-of-Uber-does-Google-
own](http://www.quora.com/What-percentage-of-Uber-does-Google-own)

"Google Ventures invested $258M at $3.7B post-money valuation in 2013, so they
bought 6.8% of the company. Depending on whether or not they have taken pro-
rata investment rights in Uber's subsequent financings they either own the
same percentage or a slightly diluted stake. Let's say somewhere between 6.0%
and 6.8% as of Q1 2015."

~~~
matthewmcg
It's hard to say.

Google Ventures actually invests through various funds organized as limited
partnerships. These are separate entities and Google, Inc. would only receive
a return from this investment to the extent that it was a partner in the fund
that invested in Uber or if it had a side agreement with that fund to give it
a share of the return.

You can tell from various GV SEC filings that Google, Inc. may have the right
to vote shares held by the GV funds, but the filings don't disclose Google's
share of the proceeds of a sale of the shares.

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countrybama24
Considering their track record, I wouldn't be surprised if they have no
intention whatsoever of going public. Uber has to convince investors they will
be able to exit their investment and the total pool of investors willing to
try their luck in the secondary market is likely much smaller than those
looking for traditional IPO or trade sale liquidity events. Not that they
would have difficulty raising money, but they are certainly pushing the limits
of the terms they can receive. Someone else pointed out this would also be a
useful tactic in recruiting pitches.

Is it really worth it to go public? The reporting burdens for public companies
are well documented. But also this management team has used some pretty shady
tactics in the past. I can't imagine they love the idea of the scrutiny that
comes with being public. You can always sell your share of the company in one
of these financing rounds if you wanted to diversify your wealth.

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brohee
> This year, the firm expects to clock $10.84 billion in revenue which —
> calculating the 20 percent commission that it takes — should bring in around
> $2 billion in revenue for the year. Its projection for next year comes in at
> $26.12 billion, which could generate over $5 billion in take-home money.

So, is it eleven or is two billions in revenue... Techcrunch...

~~~
GauntletWizard
I'm guessing those are "Gross" vs "Net", or "Revenue" vs "Profit", depending
on how you define your terms.

~~~
rajivtiru
Definitely not $2B "Profit" since they would have to subtract all other
overhead costs like salaries etc.

I think the article mentions that actual profit might be negative.

~~~
GauntletWizard
A business can report one business unit (The bit that hires drivers and sends
them out) is 'profitable', and also have an overall in-the-red because other
business units aren't. I've not read the presentation, but it may be that Uber
is trying to show their engineering costs and operations costs as two business
units to better represent how the business scales (Engineering costs go up
only logarithmically, while operations go 1:1 with revenue).

------
languagehacker
Claims of a plan to go public are very often more of an employee retention
tactic than an actual concrete plan coming from the CFO.

Don't be surprised if they reuse these slides in three years to a largely
fresh-faced crew of engineers with stars in their eyes about their stock
options.

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lquist
One data point in support of this actually happening vs being a
retention/recruiting tactic:

A financial analyst friend of mine was hired at Uber ~6M ago as part of a team
to help with the accounting/etc. for Uber to go public.

~~~
wdewind
You may want to be careful pointing that out. Uber is big, but it's possible
that description only matches one person, and you've just implied that person
did something they definitely shouldn't have by telling you Uber was going to
go public soon.

~~~
lquist
Good point, but I've changed enough of the specifics that I don't think he/she
will be outed.

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ameyamk
Uber's valuation is now starting to makes sense if this is true. Marginal cost
of revenue for uber is very very low. You can argue that gross margins can run
as high as 60-70% of revenue. Giving uber gross profit of over 3B for 2016.
Given how aggressive uber is in driving growth premium on valuation is making
sense.

Side note: I was in Chicago last week - and I am noticing almost every cab
driver now has uber app open. There are 13k uber drivers in chicago alone.
Anecdotal evidence suggests Uber is winning.

~~~
shs
The issue is whether any of that will matter if self-driving cars come into
the picture sooner rather than later. Uber's key advantage is that there's a
huge network effect that's hard to overcome with humans. Drivers want to use
the app that riders are using. Riders want to use the app that drivers are
using.

If a company could go out and finance a few hundred self-driving vehicles, it
would be easy to build up market share for competing services with lower
margins. Where I am, Uber has far better coverage than competing services. But
if it were easy for alternatives to cover equally and with lower margins,
riders would easily check the cheaper services.

While Uber is certainly employing robotics engineers, so are the auto
manufacturers, Google, and possibly others. I think people use Uber for the
same reason that people use Facebook - it's hard to get all the other humans
to use other services when the value of those other services is how many
people are using it. But when self-driving cars allow anyone with enough money
to finance enough vehicles that they're offering comparable wait times, Uber's
network effect disappears. Sure, it will still have brand recognition and some
amount of loyalty. But it won't have the kind of barrier to entry that it has
today.

Uber is winning, but it's also subject to a huge disruption by self-driving
cars. If one can purchase and operate a self-driving car for $500/mo., you
only need to do $17 worth of rides per day for that to pay you back. If Uber
tries to keep its margins up, there's no reason someone isn't going to come
into the market with some VC and drive those margins down quite a bit. Lyft,
Sidecar, Split, and others all face a huge challenge of getting drivers to
work for their service before they have riders and getting riders for their
service before they have drivers. If they could just grab some VC to pay the
finance charges on the vehicles until ridership picks up, that's a game
changer.

Uber goes from Facebook with a wonderful network-effect moat to Amazon who has
to make sure that margins stay razor thin to maintain a quarter of the market.
I'm not saying that Amazon can't do good things, just that Amazon doesn't get
high margins and if it tried to up its margins 10%, many people would shop
elsewhere. With self-driving cars, someone is going to have near-zero margins
and if Uber is 20% above that, people will switch. In fact, if Uber had
margins of 60-70%, why wouldn't Amazon (who has a reasonable amount of
robotics expertise with Kiva and their drone research) step into the market at
significantly cheaper prices?

Heck, Amazon could have an automated delivery fleet of cars with drones
handling the car-to-door problem and then Amazon could use their "excess
capacity" much like they did with EC2 to drive people Uber-style. During the
10-4 day (when there's less demand for vehicles), they could deliver Amazon
packages. From 7:30-9:30am and 5-7pm they could do rush-hour and 7pm-4am do
restaurant and bar patrons. That's probably a lot more use out of those
vehicles than one could get simply from people wanting an Uber and that would
lead to lower prices.

Sitting here in the cheap seats, I guess I wonder how Uber would fare against
that business plan. Amazon accepts thin margins and has a giant use case for
their vehicles for the hours that self-driving Ubers sit idle. I'm not saying
that Uber isn't filled with smart people. The issue is simply that Uber's
current success is probably mostly due to the network effect. They might still
have future success, but it's going to be tempered by the fact that
competition will be a lot easier.

~~~
minthd
You're forgetting ride sharing(i.e. uber's UberPool). by sharing rides , one
can save 40% (or maybe more, inc case sharign with 3 passenger is available)
of cost. And that creates a powerful network effect with the possibility of
disrupting the private car.

Since this lower cost sharing dynamic might be appealing to passengers also in
a world with self-driving cars, and such network effects would be a powerful
effect against commodization for the self-driving car company - it's
understandable why the SDC company might be willing to share profits with UBER
, just to lock the market.

Of course that's one scenario, but in general, one would guess that UberPool
will have some influence on the self driving car market.

~~~
nugget
That is one network effect that Uber will maintain but I wonder how cheap self
driving car services can become - cheaper cars, cheaper energy, no human
drivers - we are looking at an extreme amount of price deflation down to
levels where the additional discount of pooling might not make sense for most
people.

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dataker
I wonder if 'leaked' could've been replaced by 'announced'

~~~
simonebrunozzi
Well said. This has cleary been fed to Techcrunch by Uber itself.

~~~
toephu2
Reuters, not Techcrunch.

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joshmn
And they're still losing an exceptional amount of money.

This will be interesting.

~~~
taxigy
Think Twitter. Their stock performed (relatively) well until May 2015, for two
and a half years (which could make some of the stock owners rich enough, think
investors). Standing at some point at company valuation and actually earning
money are like two different worlds.

------
paulsutter
Pretty much all late-stage startups are planning to go public in "18-24
months". Most have expected an 18-24 month IPO for several years now. When
they say it, they add, "but really for sure this time"

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vonnik
Planning to go public 18-24 months from now is like planning to get married
before you've met your significant other.

The window for IPOs opens and shuts, and sometimes it stays shut for a long
time. Especially for companies like Uber, which are new and unprofitable,
albeit large and growing fast.

Rather than reading this plan as referring to actual events in the future, we
should read it as Uber selling itself to bigger and bigger investors, since
those investors are unlikely to see profit any other way.

------
Cacti
"leaked"

~~~
joezydeco
Well, the global markets are tanking this week. Gotta do something to keep
investors interested.

------
acd
Anyone reflecting over the high valuation of these startups which does not yet
make money and that it could be a bubble?

Nobody considered the Tulips bulbs mania in Amsterdam a bubble until after it
burst.
[https://en.wikipedia.org/wiki/Tulip_mania](https://en.wikipedia.org/wiki/Tulip_mania)

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bsder
Gotta get the next layer of the pyramid when you're losing that much money.

~~~
mhartl
Uber is only losing money right now because it's in a land-grab situation [1].
Barring some cataclysm, someday Uber will be insanely profitable. Their
investors understand this, and their valuation reflects it.

[1]:
[http://www.joelonsoftware.com/items/2010/02/14.html](http://www.joelonsoftware.com/items/2010/02/14.html)

~~~
toomuchtodo
> Barring some cataclysm, someday Uber will be insanely profitable.

As long as their funding holds on long enough for the to possibly develop
self-driving cars before Google or Tesla, and if transportation laws change in
their favor.

Good luck disrupting when the roads vital to your survival aren't owned by
you.

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rconti
According to the leaked presentation, it could be next year. Or it could be in
2016.

