
Leaked Uber financials from 2012 to 2014 - prostoalex
http://recode.net/2015/08/05/yes-uber-lost-a-lot-of-money-and-it-will-lose-more/
======
joshjkim
Basic rundown of Rev / Loss from reports:

Q1.12: 1.4M / 3.4M Q2.12: 2.1M /2.3M Q3.12: 4.3M / 5.4M Q4.12: 8.2M / 7.0M
Q1.13: 12.9M / 7.3M Q2.13: 19.3M / 8.1M 2013 (total): 104M / 56M Q1.14: 45.6M
/ 52.2M Q2.13: 56.9M / 108.8M

Rev grew faster than losses consistently all through 2012 and 2013 which is
really amazing (2013 is when Uber jumped from a 330M valuation to a 3.5B
valuation so investors noticed too)...then losses abruptly charged ahead in
2014 (see data pulled below).

Uber launched China in Q1 of 2014 - they are basically betting huge on China /
India, and smartly being very clear to their investors that the $$ is for that
very costly cause, so they can earmark the cash they are burning for
international expansion as "meant to be burned." Also, if the bet goes the
wrong way, they can (sort of) cleanly write it off as a failed (billion
dollar) project, and ask investors to focus on their (hopefully by then) cash-
cow business in the US.

Burn is all about international expansion, which is SUPER expensive,
especially at the rate they are attempting. There is an insane learning curve
that costs a lot of money to get on the other side of (hiring, culture,
regulations, consumers, marketing are all different in each country - not to
mention the fact that local competitors have all those in line already!) -
look at pretty much any major US company that has attempted to succeed in
China.

Good luck!

~~~
andygates
So what happens when they've aggressively expanded into all their target
markets and are still not profitable and have nowhere else to go? Pure
expansion is pretty much the sign of a first-mover bubble company who will
collapse with their advantage being copied by calmer second-movers...

~~~
yummyfajitas
Expansion costs money, running operations is cheaper. So when growth stops,
profit happens almost by default.

Simple math. Suppose opening a city costs $10 (once) and returns $1/year in
revenue.

Year 1: Open 1 city, loss = $10.

Year 2: Open 3 cities, loss = $29 (spending $30 on new cities, gaining $1 from
year 1's city).

Year 3: Open 9 cities, loss = $86.

Year 4: expansion stops, profit = $13.

~~~
forgetsusername
> _So when growth stops, profit happens almost by default._

That's a pretty bubblicious thing to say. Your model depends on the nature of
the costs. Expansion costs aren't 100% and operational costs aren't 0%. I
realize it was just a quick example, but profit will depend on how their costs
are _actually_ distributed. Certainly not automatic.

~~~
yummyfajitas
Yes, I merely meant to illustrate _how_ a business can become profitable
simply by stopping expansion. I didn't mean to imply that this 3 second toy
model proves it always will, though I guess my phrasing wasn't clear.

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rtpg
Wait, so Uber spent $900 million dollars? I thought that considering they
offload so much of the costs of running of the business( EDIT: through having
drivers buy the cars, for example), they wouldn't have such high operating
costs.

Though according to this[1] article, Uber's at 3000 employees worldwide. What
are those employees doing?

EDIT: For reference, Greyhound's 2014 operating costs were 600 million pounds
(50 million in profit).

[1] [http://techcrunch.com/2015/05/28/uber-new-
hq/#.bb69xm:poPo](http://techcrunch.com/2015/05/28/uber-new-hq/#.bb69xm:poPo)

~~~
puranjay
Uber is active pretty much everywhere. They're truly aiming to corner the
entire global transport market. They're putting in $1B in India alone.

When the dust is settled, you're going to get a company that controls the
private transport industry in an area that stretches from San Francisco to
Kolkata

For an industry that was once dominated by small local players, this is truly
mind blowing.

I don't think there is a single startup that is as obsessed with aggressive
growth as Uber

~~~
beagle3
They're spending an awful lot for control of a market that is expected to
disappear within a few years when self driving cars mature.

Of course, they are aware of it and are investing in being a leader in that
market - but they're fighting with global giants over there, not the local
Taxi outfits.

~~~
joosters
'Expected to disappear' within a few years?

Go on, name me a year when there will be significant numbers of driverless
cars on the road.

~~~
danielweber
Okay, 2030.

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Animats
As the article points out, the real question is whether Uber is making money
in mature markets, such as San Francisco. If the mature markets aren't highly
profitable, Uber is way overvalued.

~~~
the_economist
They make 20% of every ride. What costs do they really have in a mature
market? A bit of customer service and maintaining the app. I don't see how it
could possibly do anything but print cash in mature markets.

~~~
untog
Drivers won't be Uber drivers forever - they'll need to keep pushing to hire
new drivers to replace ones that drop out.

And don't write off customer service - it is expensive.

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empressplay
So what's the model? Put the taxis out of business and then jack up the fares
to what the taxis were? Who's winning, then, exactly? Not the consumer...

~~~
danieltillett
In theory if they can lower the costs substantially through innovation over
the current taxi model they can grow the market out of private car usage. This
would mean all parties (except car manufacturers) will benefit.

~~~
friendzis
In transportation business major costs are vehicle
depreciation/maintenance/consumables (fuel, insurance, tires, etc), wages and
you can include domain specific expenses (insurance, driver health chek-ups).

    
    
      * You can't reduce DS expenses. You can offload them to drivers, but that will still be reflected in prices
      * You can reduce wage cost by eliminating administrative load by having tools (apps, backends) do the job. Considering the size of Uber they are just transfering wages from operators to engineers.
      * You can't reduce wehicle depreciation. You can reduce maintenance costs by having own workshop. Taxi companies might have that, for Uber that would be next to impossible due to practical reasons. You can reduce operating costs by buying fuel/insurance/etc in bulk. Agin, easy for cabs, difficult for Uber (not impossible though).
    

The only place I see Uber can compete is having innovative algorithms route
the cars by adjusting for projected demand. Unless they have huge army of
dedicated drivers, drivers driving for multiple companies kind of defeats that
advantage. currently Uber does compete by exploiting legal frameworks and not
labeling their drivers as professionals and their service as transportation.
This is not a major factor in operating costs though.

~~~
whatusername
The valuation for Uber has got to be based on #2. Specifically that you can
drive down wage costs by having a fleet of self driving cars. And that the
current app/business model is just to get the app installed onto as many
phones as possible.

~~~
danieltillett
You mean like how all the horse and buggy companies became highly successful
car manufacturers? I can see the Uber logic - we will sell buggies now since
we don’t have the technology to make cars and when the technology eventually
arrives we will be able sell cars because we have such a great buggy customer
network.

------
dpflan
Uber is certainly aggressive and maintains their attitude throughout. I would
like to see Lyft's financials compared to Uber's considering Uber's global
dominance target and Lyft's decision to focus on US domestic [1].

Source:

[1.] [http://www.mercurynews.com/business/ci_28566633/lyft-
forgoes...](http://www.mercurynews.com/business/ci_28566633/lyft-forgoes-
global-expansion-favor-u-s-market)

------
icpmacdo
I dont think Uber is going anywhere soon. It has such a strong brand. Everyone
I know trusts uber a lot more than there local cab companies.

~~~
puranjay
I do wonder what will happen once Uber starts charging market rates. Right
now, your ride is subsidized by Uber. Once it comes time to turn on the
profits, you'll have to pay more - substantially more in some markets.

Will you still use Uber? Probably. But many who started using Uber instead of,
say, taking their own car or using public transport, just might go back.

~~~
aikah
> I do wonder what will happen once Uber starts charging market rates.

That's an excellent question and the answer is it wont be cheap. That's why,
in countries where Uber operates, a clear legal framework is needed so that
Uber doesn't end up with a monopoly. If Uber is allowed to operate somewhere
then anybody should be able to do that without the need for an army of lawyers
and lobbyists or it's just replacing the old boss with a new boss and in the
end nothing's going to change for the consumer. That's what I hate with the
whole situation.

~~~
sbank
Private monopolies are largely unproblematic as they will be destroyed by more
effective competitors eventually. I'm way more afraid of government monopoly.
Point in case: The protectionism and government interference that has kept the
taxi business shitty for so long.

~~~
wfo
Private monopolies are in some theoretical circumstances unproblematic because
according to extremist free-market ideologues they are destroyed by more
effective competitors. In reality they are broken up by governments, regulated
into the ground, or destroy a nation/society, and they manage to make a
society/market a whole lot worse before this long-term and extreme regulatory
action obliterates them and fixes the problem.

~~~
puranjay
> they manage to make a society/market a whole lot worse

I can imagine this argument holding true for resource-based businesses, say,
oil and gas. I can't imagine a taxi services aggregator having that
substantial an impact on a nation

~~~
wfo
You're right the argument is less strong for a non-natural monopoly, but
Microsoft, say, when they had a monopoly, held back computing by years and
we're still seeing the aftereffects of their monopoly; it has warped an entire
industry in not only the US but the world.

------
kfk
What is interesting is that those volumes put Uber no where close to a
monopoly player in the taxi/"car lifts" market. They are just 1 player and I
think people use them because their app is cooler than calling a taxi by phone
or razing your hand. I don't know, I wouldn't put money on them. Maybe their
app, who knows, could be useful for taxis once uber goes away?

------
coldcode
Ultimately Uber wants to corner the market on providing automated cars. Having
drivers is just the stepping stone. If you are synonymous with providing rides
then when automated transportation is available, everything thinks of you.

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zekevermillion
Of course, Uber could hunker down in one market and start making a profit. But
they are trying to form a global monopoly in all the major urban markets. New
capital is going to dry up pretty soon unless they are prepared to go public.
Either Uber has to lower its sights to limited regional domination, or it has
to go public. Given their MO I would think they are preparing for the latter
option.

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philfrasty
"leaked"

------
curiousjorge
I think Uber thinks lighting piles of cash on fire is somehow a competitive
edge builder, when the more money they burn faster, the bigger the return they
need to make on a razor thin margin, zero barrier to entry market with no
network effects. As soon as they've knocked down the walls of regulation _and_
stretched out thin _and_ begin to make any profit at all, it will signal other
new entrants. The newer entrants are more likely to succeed thanks to the road
that has been paved by Uber. Uber's solution: burn more money acquiring
unprofitable new market threats _if_ they miraculously make enough cash _if_
they get another boatload of naive investors.

Afterall, Uber does not own the cars or drivers. As soon as somebody else is
willing to give them a better cut or or they are able to get more money per
customer, they will always go there.

tl;dr: Uber has absolutely no sustainable long-term economic moat built around
it and lighting cash on fire may drive current competitors out, it will not
work as soon as they attempt to recoup those costs (profit signals market
entrants, uber does not own drivers, cars, or customers due to zero cost of
switching - it's just a fucking app).

~~~
ismail
Note: we built a rideshare matching system so this is from my experience

single person with 1 car has no network effect. 1+ passengers does. See my
post above.

