IPO? No way. They'd have to publish audited numbers. What's leaked out is bad enough. The real numbers have to be worse. Notice that leveraged loan in 2016. All the details of that have to be disclosed in the prospectus for an IPO.
Uber may or may not take over the world at some point, but Uber needs another round of investment in the next 18 months just to survive. If the existing investors refused to play ball, they could kill the next round, which really would kill Uber.
And here's another important moral of this story for founders: Kalanick has a controlling interest in Uber, so on paper, nobody could have removed him as CEO by shareholder vote. But despite complete control over the vote, you don't really own your company if you're dependent on future investment.
No matter what the cap table says, if you're not profitable, it's not really yours yet.
If you look at founder/CEOs who have made that leap, they all tend to be very young (Jobs, Gates, Zuck, etc) and had very strong teams behind them.
Someone like Kalanick - who has run multiple startups to various exits - has been running startups all his professional life. His management style likely works very well at a startup, where failure is assumed so risk tolerance is high. At a startup, you need a field general leading the troops into battle.
But at a large, maturing company, you need a different skill set. Risk tolerance becomes a negative attribute once the company grows so large you can't control the risk anymore. Rather than a field general, you need a therapist capable of massaging the egos of the executive team and the board of directors. The job becomes more strategic and political -- execution is assumed, and failure is no longer an option.
I don't think Kalanick is that guy, and I think the board finally convinced him of that. But if I was an investor, I'd still be happy to listen to his next startup pitch...
And in Jobs' case, it took an absence from the company of more than 10 years…
Edit: Downvotes for simply stating a fact?
Edit: I imagine it's this interview at AllThingsD. Ed jumps into this topic right off the bat.
He was an asshole of monumental proportions before and after. I am so far removed that I am a poor judge, what would be a good place to look into this.
More like "CEO of a growth startup" to "fixer who can pull an over-valued startup out of a nose dive." That's a much tougher leap.
I'd argue that a "mature CEO" is not a fit for Uber which needs to keep growing or die.
The valuation can be quite high if you assume that the value in the exponent is low.
But I personally think that the "autonomous vehicle revolution" is not going to pay off as well for Uber as they had hoped. It's becoming more clear that the market for autonomous vehicles isn't going to look like the market for human-driven ones -- and vehicle manufacturers are going to be looking to build their own self-driving auto services rather than sell self-driving vehicles directly to consumers.
Uber's biggest innovation was their app. Even complex apps like Uber are not hard to clone if you have any sort of budget. There's an assumption a lot of investors make about their brand value: it assumes that another, already strong brand does not enter the same market. Seeing as Tesla has made no secret of their intentions to compete directly with Uber in the ride-hailing space, I don't think that's a fair assumption. Would you rather call an Uber or a Tesla at this point?
And what does buying a Tesla in that scenario even look like? Do you buy a car and rent it out a la Airbnb when you're not using it? How much money do you get for that, and how much of a cut does Tesla get since it's their algorithms actually driving the car?
Don't get me wrong; the brand value is actually really high because hundreds of millions of wealthy customers worldwide know Uber. Even if the company fails spectacularly, someone will buy them for a few billion in a fire sale just for the brand.
You realize that nobody will care as much about most of the things they currently care about when buying a car. Performance? Mileage? Handling? Horsepower? Fucking irrelevant if I'm chilling in the back seat and my car is just getting me to where I need to go.
So what still matters? Price. Comfort. Amenities. The upsell becomes the main sell. At a certain point, Tesla isn't even selling "cars" so much as it's selling mobile offices to one segment, and mobile living rooms to another segment. I could also see Tesla finding a way to place the burden of price elsewhere and offer effectively "free" cars to consumers. For instance, leasing or selling fleets to employers. Or to cities. Or to Uber. Or to Amazon.
Uber, on the other hand, sees a world in which nobody owns a car, nobody drives a car, and everyone hails an automated car whenever and wherever. Like that scene in Minority Report.
Both of their strategies are banking on the idea that cars, as we currently understand and experience them, will eventually become pure commodities. The difference is that Tesla is seeking margin and Uber is seeking volume. The cliche that Tesla is Apple and Uber is Amazon is sort of true in that respect.
That's why ultimately, I feel Uber will end up being the Expedia/Priceline of the self-driving car industry. If you don't control the means of value production, you become a middleman. There's a reason they were working on their own self-driving tech rather than licensing from someone else -- everyone who is actually building this tech likely told them "go shove it, we can recreate what you do far easier than you can recreate what we do".
Sure in large walkable cities with constantly circulating fleets car ownership might go away. For those of us in the suburbs who HAVE to drive everywhere, not so much. Even waiting 5 extra minutes for every errand (optimistic, given that my most recent lyft took 10-15 minutes to arrive) adds up fast. Let alone going out into the rural areas where Uber/Lyft scarcely exist and the nearest human structure can be miles away.
I could, however easily see a model where people rent their self-driving car out to Uber/Lyft when they're not using it. Driver fees would be gone, and they could take a greater cut that might even put them towards profitability.
Anyone who is price sensitive won't want to pay the hourly rate to have a car sit in their garage all day/night doing nothing. Nor will they want to pay the up front cost and/or interest to hold a controlling share in the vehicle.
And configurability means you can take a 2-seater when you are going to work, take a 4-seater to lunch with you coworkers, take a hatchback to the farmers market to pick up your groceries, and then an SUV to the mountains, preconfigured with a roof rack with your ski rentals already on it, sharpened and waxed, and then take a mobile office for the drive home so you can get some work done, and a mobile bedroom for your trip down to LA so you can catch up to sleep.
But yes, the wealthy will still own private cars because they can have it waiting, just like private planes. Also, cooties.
Driving is a day-to-day task. My time's already short, if I have to add an extra 5 minutes waiting for pickup every time I want to go anywhere (once again an optimistic estimate, it would likely be closer to 10), on a busy day that's a minimum extra hour a day of time I've lost just standing on the sidewalk. Margin matters, even an extra 15 minutes a day adds up to over 90 hours a year.
Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car.
But in this scenario I'm losing a minimum 90 hours per year on the margin. If those were work hours, then at my current take-home rate I can decrease that number down to around $1065/year going forward. Given that I'm likely going to make more money as the years go by, these continuous rental services are going to have to be awfully cheap to be worth it for my situation, and I don't think I'm too far from the average.
Now sure, if you're buying a new car every 4 years like some people do then it might be worth it. Or if the cost of insurance is prohibitively high in your given location. Or if your job sucks and you just can't afford a car. Or if you actually need a broad variety of vehicles on a regular basis. There are lots of factors that go into it, but for anyone who's middle class or better I don't think it'll supplant ownership entirely. Or maybe it will and I'll just be with the sour-grapes number-crunchers in the corner ranting about margin to anyone who'll listen. :)
Nope, but they will be commoditized. If you have a car that all you have to do is pass it an API key and a location, there's not much value a ride sharing service can add to that -- which means there will probably be a bunch of them. Which means that the price to the consumer should be something close to [ (marginal cost of ride) + (depreciation cost of ride) ] * 1.03. And the cost side of that will benefit from scale for the business, but not the consumer.
Basically, once it's commoditized, it will cost you more to do it yourself than to pay someone to do it for you. Just like with currently commoditized services like AWS, there can still be good reasons to do it yourself -- but those tend to be special cases rather than the norm.
> But in this scenario I'm losing a minimum 90 hours per year on the margin.
Err, I'll play along. If you were in an autonomous car (or even a current ride-share), you could just work while en route rather than drive. I'm willing to bet you spend more hours sitting in traffic today than you ever would waiting on a car to arrive.
As for the rest, keep in mind we're comparing renting an autonomous car vs owning an autonomous car, not renting an autonomous car vs driving. So the actual rides are equivalent. The time difference is me getting in my car and telling it where to go vs me hailing a car, waiting 5-10 minutes for it to arrive (where my capacity to do any meaningful work is basically nil) and then tell it where to go, a minimum of 3 times a day. Maybe up to 12 times a day on a busy day. That's not an insignificant time loss over the medium/long term.
Granted it's all hypothetical and the actual value of the time lost would be highly situational, but it would be one of those small daily time-sucking inefficiencies, like walking into the other room to get paper towels as opposed to just putting a roll in the kitchen. When you do them every day, those add up.
You'll notice a common thread throughout Elon Musk's "big bets" (Tesla, SpaceX, etc.) He is extremely conservative with operational spending, and all of these companies are very capital-intensive. Just look at the difference between a "Tesla Store" (small, maybe 3 or 4 employees, cars can be stored offsite wherever is cheap) and a normal auto dealership (huge, dozens of employees, majority of expensive real estate is used for parking cars). The Tesla store is very efficient compared to the auto dealer.
When you have high capex, it makes it easier to fund your company through debt rather than equity since those loans/bonds are backed by capital assets with a non-zero liquidation value.
Tesla has a brand value higher than any other car. It's not an app that can be easily replicated. The dynamics are not the same as Uber.
By definition rental is going to be more expensive than ownership.
I don't doubt that companies will have fleets of cars for their employees, etc, but personal vehicles are not going to go away.
> but personal vehicles are not going to go away.
For the vast majority of the population, yes, they will go away.
Look at the quality of the interior of the average cab and you will see why a lot of people would prefer to own.
young people, old people, and homeless people.
Everyone else needs a car frequently.
Mileage is a critical component of cost of operation, and of range without stopping, which are pretty much (along with capacity and comfort) the things that matter most if you aren't driving and the car is just taking you from A to B.
That's even true if you don't own it (even the cost factor, since that—assuming an efficient market—still controls what you'll pay to use it.)
Autonomous cars are a side bet. A few hundred millions in R&D that would also attract good talent and nice PR for Uber.
But I don't think investors were stupid enough to invest billions into Uber based on that bet. Specially considering the fact that anyone who gets that technology first can make it big and Google had a few years of head start.
What has he done besides Red Swoosh? btw, Red Swoosh was sold to Akamai and then later disassembled when they realized there was no "there" there.
Another is that the board could have threatened to sue Kalanick for violating the loyalty and duty obligations that corporate officers have to shareholders - e.g. for suppressing systemic sexual harassment, withholding details about the Otto acquisition, etc.
I also don't think the examples he cited are violations of those duties.
Suppressing systemic sexual harassment violates his duty to report management problems to the board. Same with any meetings with Otto's founder a week prior to them leaving Google and founding Otto.
How does a company so big not make a profit/could possibly go bankrupt?
My current understanding is companies either focus on growth (at a loss) or choose to focus on profit (with the risk of competition overtaking them or decay over time).
But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"?
If there is no "profit mode" ... then why are people investing in the first place?
They are thinking more along the lines of "how can we make 10 billion dollars per year, for the next 150 years." Think General Electric.
That's why they require huge amounts of money from investors, so they can aggressively grow to a size where other companies can't touch them.
The huge amount of capital is sort of like a moat.
When you're larger, you have something called economy of scale. Which means you have enough resources to do stuff the smaller guys can't do.
When you're larger, you also have something called a data advantage. Which means you know so much more about your customers, you can predict things and make decisions the smaller guys can't.
Consider Facebook and Google. Together they're worth over a trillion dollars. Now ask yourself: what's the combined net worth of the second-biggest search engine and the second-biggest social network? Nothing close.
In a business where being second or third place is pretty good, you can switch to profit mode as you please. But Uber's valuation only makes sense to me if it lets them dominate a market like Google or Facebook does, setting prices and terms for the industry. I think that if they switch to profit mode, people will start to value them like a normal business, which would mean a giant drop in valuation.
I presume that's why board members supported an aggressive jerk for so long: Kalanick has been undeniably good at seizing territory, and if one sets aside little things like morals and externalities and long-term consequences, one could argue that aggressive jerkiness is exactly what Uber has needed.
Honestly, this market never struck me as one where dominance was even possible, so the investors' theories never made sense to me. But that's my best guess as to why they've been allowed to keep burning money like this.
Well that they might have to try and do now. But usually it is hard to move to 'profit mode' - you upset your customers when you start to charge double. The idea is that before you do that you have either killed of the competition or your competition 'moat' is so big that everyone wants to keep using you because of $reason and so you can charge what you like.
>If there is no "profit mode" ... then why are people investing in the first place?
Nobody is ever sure if any startup will get to 'profit mode' you simply look at their market / numbers etc and if you decide to invest then you hope the startup can figure it out. This is the investing gamble.
Stay. Wait... wait.... go fetch!
Stop growing maybe, but going bankrupt and shutting down?
Uber's problem is taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level. Which means their either taxi prices are lower and people stop using Uber or they pay drivers more and drivers mostly stop working for Uber.
I would assume that would also depend on how much of their fixed costs they can shed in conjunction with that. Uber may not die quickly but it could still die slowly if they lose the ability to move forward because they had to cut too much of their R&D and sales infrastructure to get to that positive number.
Plus such a massive layoff would be a big red flag to customers too. By Uber's nature, a particular ride isn't a long-term commitment, but I think people would start looking for a stronger-looking horse even so. One of those differences between homo economus, who every time they need a ride rationally examines all their options regardless of the future and realizes that as long as Uber can complete this ride the internal state of Uber doesn't matter, and homo sapiens, who will take into account the fact that Uber doesn't seem to be doing well even if doesn't rationally matter at this particular point.
> someone is going to eat the valuation hit
Liquidation preferences mean earlier investors (and employees holding Common Stock) take the hit of a down round.
Let's say Company X has 9,000 shares of common stock outstanding. It raises $1 million at a $10 million post-money valuation with a 1x non-participating liquidation preference. Its cap table is thus 1,000 shares of Series A preferred stock on top of 9,000 shares of common.
It then raises $10 million at a $50 million valuation with similar preference terms. Its cap table is now 2,500 shares of Series B preferred stock on top of 1,000 shares of Series A preferred stock on top of 9,000 shares of common.
Let's contemplate a $100 million exit. Everyone converts to common at $100 million / 12,500 shares, or $8,000 per share. Series A bought at $1,000 and thus sees an 8x return; Series B bought at $4,000 and thus sees 2x.
Let's contemplate a $50 million exit. Everyone converts at $50 million / 12,500 shares, or $4,000 per share. Series A gets 4x; B comes out flat.
Let's contemplate a $25 million exit. Series B does not convert. Instead, it demands its 1x liquidation preference and gets $10 million. This leaves $15 million on the table, or $1,500 per share. Series A converts and sees its 1.5x return; B comes out flat.
Let's contemplate a $15 million exit. Series B does not convert and gets its $10 million. This leaves $5 million on the table, or $500 per share. Series A does not convert and demands its $1 million. Series A and B come out flat; common gets $4 million / 9,000 shares, or about $444.
Let's contemplate a $10 million exit. Series B gets its $10 million and comes out flat; everyone else gets screwed.
Let's contemplate a Theranos exit. Everyone gets screwed. Turtleneck doesn't go to jail.
TL; DR Later stages are least volatile. They get screwed last, but also see upside last. Lower rungs' returns pay for this safety.
> Can you walk me through the math. How does one arrive at 1K of Series A preferred from 9K of common stock? How is that being derived? I'm not following.
At time t=0 (probably at founding and when hiring its first few employees) Company X issued 9,000 shares of common stock. At time t=1 it decides to issue 1,000 shares in a series A offering (most likely to VCs and outside investors). They are separate events.
1000 shares x $1000/share = $1m raised for the company in the series A.
> Also what is meant by "post-money" valuation? I'm assuming there is a corresponding "pre-money"?
In this case, pre-money valuation of Company X = $10m - $1m = $9m
> Lastly by "coming out flat" you mean made whole again i.e recouped their initial investment?
>"Let's say Company X has 9,000 shares of common stock outstanding. It raises $1 million at a $10 million post-money valuation with a 1x non-participating liquidation preference. Its cap table is thus 1,000 shares of Series A preferred stock on top of 9,000 shares of common."
Can you walk me through the math. How does one arrive at 1K of Series A preferred from 9K of common stock? How is that being derived? I'm not following.
Also what is meant by "post-money" valuation? I'm assuming there is a corresponding "pre-money"?
Lastly by "coming out flat" you mean made whole again i.e recouped their initial investment?
And there aren't too many NYCs in the world.
Uber is far more expensive in NYC than other cities such as Chicago.
Now that Uber has allowed tipping and since there is a rating system, everyone must now tip otherwise risk getting low ratings which effectively makes NYC rides even more expensive than they had been.
Most people don't own cars in Manhattan so that they either have to take mass transit or use Uber/Lyft/Taxi. There are many elderly on fixed incomes that have trouble ambulating (moving around) where lower cost taxi service is important.
In NYC at least, Uber doesn't need all of that corporate overhead and perhaps they should spin it off into some low-overhead operation.
- There is already a rating system for drivers, and riders, so this isn't a "will be" thing, right?
- The rating system is not currently blind, as far as I know. Certainly riders can see drivers rating, and I believe drivers can see riders rating as well.
Even if they cost more I have no idea how I'm going to get around when I travel. The other options are so disgusting I'm not going back to that.
I would use them even if prices went up 30%.
There are a few costs like background checks that may go down when they stop expanding, but fewer than you might think.
Uber demand is definitely elastic.
I don't understand why that would decrease overhead?
I also don't understand why the other aspects of overhead (dispatcher, offices, taxi lots) don't add up to more than Uber (whose only cost is servers and support)
More than a team of four can manage certainly.
It does not, however, take a constant number of engineers to maintain the infrastructure that lets a single engineer push a feature to millions of users. (P/I)AAS can help, but you still need people to monitor performance, find regressions and bugs, and track them down.
Uber only works if there are enough drivers so that I can always get a ride. If I get told that I have to wait 30 minutes for a ride more than a tiny handful of times I'm uninstalling the app. Growing organically in region would be very tough since it would take too long to get enough drivers in place that users could rely on the service and conversely drivers would be unwilling to sign up because not enough users where bothering to use the service.
Those 4 can handle everything backend related too?
There is always demand for Uber/Lyft just because there isn't a taxi cab nearby 24/7. How is that difficult to understand?
There's certainly a market for app/phone jailable cabs because there isn't one within street hail range at all times, but regular cabs have been phone hailable forever (it's the only way to get one outside of a few major urban cores) and are increasingly app hailable. Aside from regulatory supply restrictions (flouting which may not be sustainable) there's no real basis for a market for alt-taxis as anything but interchangeable competitors supplying the same substitutable commodity as regular taxis.
For me, this wasn't particularly true, especially in San Francisco. The dispatch was unreliable and slow.
Other areas, sure!
Now that the idea of phone-trackable dispatch has become commonplace, regular taxi companies are starting to do this too.
With Uber you also get know the fare upfront, the time of arrival, no need to tell them your address, there is a driver reputation filter, passenger insurance and it's safer than normal cabs in many countries.
Not the same thing as a phone call.
Turns out the car service business isn't very sticky at all (even the drivers work for multiple companies...).
Drivers start to leave and the downward spiral begins. They just couldn't get to self driving vehicles fast enough - which may be why they were trying to borrow technology from Google.
When Uber started and raised its first investment rounds, self-driving cars were too far away to be part of a business plan. I doubt the latest investors take that view either - spending billions per year until self-driving cars happen is a way too expensive way to build up a fickle user base who will switch the moment a competitor offers 10% lower rates.
And when self-driving cars do arrive, there is no reason to believe that Uber will have exclusive access to them. Google and other software companies will be licensing the technology to anyone who pays for it, car manufacturers will be selling cars to anyone who pays for it.
It may kill taxi driver as a career, but there is no defensible advantage to Uber compared to Lyft, Hailo, Taxify, and so on.
Uber as a play on driverless cars is a smokescreen to distract people from the fact they have little advantage over other companies and can't for the life of them turn a profit.
At this point why doesn't Uber just lay off a HUGE portion of their staff and kill the R&D. It's hard to imagine if they downsized significantly and quit investing in self driving cars, that they couldn't tip the needle into profitability.
Isn't that a fairly common move for a startup? Burn money to get off the runway, then downsize to stabilize?
And when will that be exactly? This entire thread is overflowing with nothing but fantasies of Uber dying - basically raw emotional hatred - and little else.
Eight years on, they've never had a serious problem with raising capital and there's no evidence to suggest they'll struggle to do so now. The absolute last problem that Uber has right now, is money.
Except that there are no shortage of people who have maintained this view long before Uber's CEO was asked to resign and before Susan Fowler's blog post. Also there are also plenty of people who have commented here that believe Uber's prospect without Travis Kalanick as CEO are not good and also believe he should not have been removed.
>"Eight years on, they've never had a serious problem with raising capital and there's no evidence to suggest they'll struggle to do so now."
You might want to look up the term "irrational exuberance":
"drivers start to leave" where are they leaving to?
The thread link is: https://news.ycombinator.com/item?id=14456973
Not even sure if I installed Uber last month when I got a new iPhone.
So yea when billionaires are paying your taxi fair to try and drive the local taxi firms out of business naturally they're everywhere.
But when that cash runs out the necessary price hike could just as easily drive them out of business. It's not like the drivers have any great loyalty.
We really need pro-competition legislation to stop this sort of predatory capitalism.
$5 per hour per driver goes to Uber
Assume 80,000 drivers (half of # U.S. Uber drivers) drive 8 hours a day, 7 days a week
52 weeks in a year
So about $1.1 billion just in the US. The only expenses are at headquarters (engineering, operations, design, legal, marketing, support) and the tiny field support offices they have in each city (local, entry-level employees).
That's a non-sequitur
This conclusion refers to the idea of VCs(billionaires) subsidizing rides in order to remove the entrenched player(taxis.) How is that a non-sequitur?
I think the confusion stems from saying pro-competition legislation will prevent competition.
As it is, Uber doesn't need to do too much to hit break even. Some central costs cut, and a slight rise on price.
That creates a bit of a puzzle for industries with very thin operating margins that want to make significant investments in R&D. Generally they don't do it. That is why innovation at the Grocery store or in Long Haul trucking is so slow. From an engineering point of view, they are ripe for disruption, until you bring in an accountant to tell you that the disruption doesn't pencil out. Uber, like everything else, said to hell with it we're going ahead anyway. So how can they make things pencil out?
One option is to raise unit revenue in the future, which in an industry that's currently competitive means driving out the competition. IMO Uber was originally targeting this. But it turns out -- and really anyone could have told you -- that what Uber is doing isn't technically difficult. The heavy lifting is smartphones, GPS and Maps, whose availability made Uber/Lyft possible. Uber doesn't own any of the key technologies that make Uber possible, nor do they have a track record of being able to tackle really hard technology problems. They've had huge problems scaling and when Uber started using its own maps, it was a disaster. Bad maps is the #1 problem with Uber. Lots of new competitors have sprung up already that give basically an equivalent user experience, so Uber is not going to get real pricing power.
The next option would be "Lower unit costs in the future", But so far, that means spinning tales about self-driving cars, which is way beyond their technical ability as well as decades out even for those that have the chops to pull it off. IMO this only works because the latter round investors are naive about technology and the current investment climate is conducive to reaching for yield.
So while it's perfectly possible for Uber to continue existing as a concern, I don't think it's possible to satisfy their investors, and this means, unfortunately, that Uber may not make it. Many companies engage in a lot of self-destructive acts to meet unrealistic profit or growth goals set by investors, but in this case, Uber has only themselves to blame for setting these expectations. This is a shame, because I prefer Uber to Lyft and think they've created enormous value for both riders and drivers.
Why "win"? There's no moat. I suppose there will be patents, but those expire or can be worked around.
More likely is that whoever gets there first will make all the mistakes that others can learn from. Every major car company has a self-drive effort now. Apparently Tesla, GM, Ford, and BMW are pretty far along. Lyft has a few partnerships here. It's only a matter of time before most cars drive themselves to some degree.
self driving hardware+software is much more complex than just writing some software... a non player can't trivially get into the game just because someone else have higher advancement
No mass produced self driving appliances that any dumb human can use improperly. The industry won't take that chance of a poor impression and destroy public's confidence all together.
In urban/high density locations, a ride hail company leveraging driverless vehicles can make a killing.
It's not actually dying and it's not going to die.
Routinely skeptics here will point out that Uber is selling a $1 service for $0.75 (or a similar invented sum). Said skeptics then intentionally, comically ignore that Lyft is and has been doing the exact same thing and has radically less capital & valuation to play that game with. The name of the game is: last company standing; that's going to be Uber because they can afford to be and Lyft can't. It's that simple.
The downside of this approach is that Lyft doesn't have anywhere near the upside potential that Uber has. If Uber pulls off all of its ambitions it will be larger than Lyft could ever dream of being. The upside for Lyft's more humble goals is that it's chance of reaching them are much larger.
Unless Uber is willing to change its DNA and scale back its ambition, give up on its long term goals, and stay just a basic ride dispatching service then your analysis is incomplete. However perhaps this scaling back is what the CEO change is fundamentally about.
If internal, I gusss that's true. But we don't hear much about Lyft's internal workings. We don't know the morale of workers or how productive the company is.
About controlling costs - that's why I mentioned losses. Lyft is only in the US yet its losses are worse than Uber. It makes Lyft looks worse to me. Has Lyft said it is profitable anywhere or even break even?
But then Uber's insane valuation is not helping itself. I guess both companies are in bad positions, hard to say which is worse. And I agree it will be interesting to see how Uber does over the next year with new top executives.
Has Lyft said it is profitable anywhere or even break even?
The CEO said in a recent Forbes interview that their losses are currently coming in "under budget" and that they have a definite path to profitability. Make of that what you will.
And yeah agree with Kalanick and Uber by extension seem to be only content with winning everything. They only gave up on China after spending a ton of money and clearly not being able to win. Luckily they were able to get a decent stake in Didi from the merger and leaving China.
The drivers certainly care.
Travis offended and insulted the drivers, while Lyft is chugging along quietly. As long as people have brand loyalty to them (which they sure do), they'll win the ridesharing battle as it's looking like Uber is teetering
Yeah... that's why they have so much investment from car companies... ;-)
I'm blown away that you have to read more than half way down all the comments to get to this observation. It should be an automatic reply every time someone echoes the fantasy that Uber runs out of money and Lyft is magically left to take over. I don't understand the mental gymnastics and contortions one needs to make to arrive at this absurd idea.
Not sure what "its" is, but characterizing Lyft as a lifestyle business seems absurd. It's not as highly leveraged s Uber is, but that's one of the few companies I can think of that one might consider more aggressive.
Well, if you're spending more than your revenue, that is the eventual outcome if money stream from investors dries up.
Uber doesn't really have many physical assets that could be liquidated. Their value is entirely based on profitability. Which is currently negative.
In some cases this lack of maturity is particularly striking.
I think it's far to say you don't have a sustainable business model yet if you're dependent on future investment.
Even a company that is fully owned, with a sustainable and profitable business model, needs to ask the question "can I lose all this?" every day.
If the metric for "you don't have a real company" is you could potentially lose it, then nobody has a real company.
Would wait to see what'll happen to his equity before take a bet, but gonna guess will be sold high and eventually rebought after the crack when K will try to step back in at a better condition, with less stakes and more hard cash.
If there's a next round, it will probably involve a big haircut for the early-stage investors.
No, they could be crammed out by later investors' liquidation preferences. Depends on how down the down is.
Though these two types of events are obviously correlated (a down round makes a smaller exit more likely) they are not the same and should not be confused. A financing at a valuation that is a billion dollars less than the last round would be a down round, but a sale of the company at that same valuation would still far exceed the liquidation overhang.
– Dune, Frank Herbert
- God Emperor of Dune, Frank Herbert (a prescient book on social feedback loops, my favourite in the series)
-- Erich Fromm ( https://www.youtube.com/watch?v=Cu-7UDT0Xe4&t=1m34s )
> The danger of computers becoming like humans is not as great as the danger of humans becoming like computers.
-- Konrad Zuse
And when Picasso said that computers are useless because they only provide answers, was he just being witty, or pointing at an abyss, knowingly or not?
It is what we mean when we claim someone is "incapable of <x>" such as murder. It does not mean they do not physically possess the means, but rather that they lack the psychological impetus to do so.
More relevantly, a person who is both capable and willing to restrict your freedoms, potentially even unto death, has more control over you than a person who doesn't.
This isn't abstract theory. This is a description of "government". Would you pay any attention to the people claiming to be "the government" if they didn't have credible mechanisms for backing up their demands?
It is preferable that government not be solely founded on this power relation. It shouldn't be considered "sufficient" for good government. But it is certainly "necessary".
It's why "non-coercive government" is an oxymoron.
Say you can kill a man, but irregardless of the threat to their life said man would refuse any and all of your orders, who can then be said to have 'control'?
In the end control means the ability to influence outcomes. There are many metrics, and for some choice of metric the capability of destruction is control.
They could smell the liquidity ...
I think they made a huge mistake in pushing Kalanick out, but I'm an outsider. There is surely something dark at play here, that we don't know about.
If true, this seems far more likely to be a cause of Uber's death than Kalanick resigning. That, and the valuation being as insane as it is, which is also Kalanick's fault, which as you point out, makes it hard to find greater and greater suckers.
Perhaps they'll be better off all around without Kalanick, assuming they can get the business side on track and get the burn rate under control, and perhaps make their business sustainable rather than a gigantic handout of VC money.
Also known as losing money on every ride but making it up in volume.
In fact, the central concept of venture capital is premised on the idea that businesses start out unprofitable but become profitable as volumes scale.
To what extent any of this is the case for Uber is worth debating. So feel free to have that debate, and bring forth new information or new arguments that support your thesis.
And if you're subsidising rides below cost because you're trying to grow your market and you have piles of VC cash so you don't care that you're burning through money, then eventually you're going to run out of that money and will be in trouble if you can't raise any more.
Time will tell whether Uber was building a sustainable business or just burning through VC cash.
Winners don't quit, so Uber is dead to capital now: it was always based on maximum evilness and all the stuff about disrupting and ridesharing was mere window dressing.
Note to capital, wherever it is: this is what you get when you go by personality rather than studying the fundamentals of a business. You can't simply pick the most toxic individual or company, claim they're going to kill everybody else, and then prop them up with valuation. The valuation didn't fail but your pet Dr. Evil did, and that was your proxy for maintaining the 'killer' behavior. Unless or until capital can be personified as evil AIs that cannot die, this was never really an optimal strategy for capital.
Particularly not if you can't set up an operation in an Western city with expensive taxi services without losing money on every ride you operate even before centralised overheads are taken into account.
From their 2015 financials, it looks like revenues have been consistently higher than cost of sales.
According to financials from 2015, they have higher revenues than cost of sales:
This suggests to me that marginal rides are profitable, even if they aren't profitable enough to cover fixed costs of software development or investments into new geographic markets.
Quick Forbes link I found https://www.forbes.com/sites/ellenhuet/2014/07/02/ubers-newe...
Nonetheless, my impression is that this is more the exception than the rule, based on the financials I linked to earlier.
I'm not saying this will ever offset their increasing losses, but that is what always seemed the long term goal of monopoly.
> I thought the whole point of subsidizing rides was(as OP comments pointed out) to raise demand, both for drivers and riders, they first entice both ways with the promise of lower rates and higher payoffs, then slowly increase their cut of the pie against the driver's payoff and increase the rates on riders.
Right, and by the logic that decreasing prices raises demand, increasing prices will decrease demand.
That's my point, and the point of critics that are often ignored. Their customers will bail the moment they start getting charged the $25 their $10 ride actually costs. And that increase will be to break even. Not make any money. Just break even.
Uber will never achieve a monopoly. There are buses, bicycles, and used cars for $1500. People aren't going to pay $600 per month on a ride hailing service. I've already ditched Uber, and so have many of my peers, in favor of alternatives that save money. And that's without significant price hikes yet.
The fundamental economics of having a private driver have not changed. An app doesn't change what it costs to pay someone to drive you everywhere. I hate being critical because it's often a waste of time, but Uber is sincerely one of the worst investments that Silicon Valley has ever produced.
Yup, that sounds about right.
This is true for almost any good.
I'm not sure if you're disputing OP's idea that Uber subsidizing rides is (at least in part) of an effort to kill the taxi industry, but my logic is, if you don't have any competition, why wouldn't you raise rates?
While transportation is something everyone needs, I'm (as priviledged as I am in my salary) not going to pay $20 for an uber if it's $2 on the bus.
I'll take uber when it's $10, compared to $2.
They could possibly raise their rates some, but to answer your question specifically: because there are other factors involved in their price/demand/profit/market share equation, besides just competition.
People won't pay to use the service if Uber charges what it actually costs to deliver it. They're heavily subsidizing each ride. When you pay for an Uber, they're basically giving investor money to the driver to cover your fare for you. Investors have been paying for your transportation over the past few years.
At some point, they have to actually make money, and the only way to do that is to raise prices. The issue is no one will stick with the app at higher prices. I've already abandoned Uber/Lyft/others for a $300 bike and a bus pass, because it's much cheaper and much healthier. If they double or triple their prices, which is about what they'd have to do just to break even, lots of people will be following suit.
The self-driving car game was supposed to save them, but I don't think they're guaranteed to win that fight. Tesla seems further along than anyone, and I have far more faith in Musk's ability and track record of executing than I do in Travis (or whatever committee is replacing him). Not to mention every automaker is working on self-driving cars right now to boot.
Uber has no guarantee they'll dominate that market, and considering they can't even break even in their current market, I see them as a ticking time bomb.
Agreed. I'd argue that existing car-sharing companies like Car2Go are better positioned to dominate the "self-driving taxi" market. They've already solved the challenges of owning and maintaining a shared car fleet profitably. The day self-driving technology is ready, they'll already be miles ahead of Uber.
edit: I forgot what green name means... green btw...
Newly created HN accounts are colored green so members can recalibrate before responding to troll-like contributions from new accounts (I think).
I think we need more of it though...
I've yet to see an Uber driver who started rolling in cash after the rates were dropped. 100% of my anecdotal conversations (and that's not 99.9% rounded up, but a straight up 100%) reminisce about the good ole days.
And I have a really hard time believing companies plan to fail.
It's a very clear case of dumping, or whatever it's called in English. Unsustainable low prices, suffocate your competitors, raise prices.
Such a great quote
Sounds like a '90s startup. Companies acting like this en masse was what caused the 2000 crash. Uber isn't going to make it out of this alive, and they're going to take the rest of the industry with them. I think the whole culture of VCs looking for "unicorn startups" is going to go away when the unicorns all die.
Kalanick has serious issues but he's demonstrated unquestionably forceful (and polarizing) leadership that mere "managers" will never be able to replace.
I've been bullish on Uber despite all their mistakes and internal issues because at the end of the day, the guy at the top was irrationally emotionally committed to _winning_. Now I am a bear on Uber.
They are not. There are ways in which being an asshole ay be good for founders (cf Steve Jobs). Kalanick is just an asshole, and even take-no-prisoner ask-forgiveness-later businesses run much better with a bit of attention to human decency.
I'm sort of baffled by seeing someone say this in a comment that's supportive of Steve Jobs. Are there tons of "the human decency of Steve Jobs" stories I've missed? Because I would have said that I've never heard of Jobs showing even a scrap of that, and it worked out pretty well for him.
The things happening under Jobs were different than the things happening under Kalanick, sure. But I don't see where that's a function of anything like decency - it just looks like a cultural difference in what kind of inhumane hostility was happening. Jobs was a perfectionist, but he was also manipulative, cruel, and dishonest in ways totally distinct from that.
I don't think anyone's suggesting that sexually harassing women is good for business.
I've commented all over this thread (as a sister comment points out) because it appears there is a narrative that his attitude towards his employees misbehaviour is at least closely linked to the personality traits that allowed him to be successful. That can be seen, I believe, by the many comparisons to Steve Jobs, for whom it's accepted more widely that it was often hard to work for him because of his perfectionism, but that this was a necessary trait for his success.
The danger here is that people (mis)understand the situation and start excusing inexcusable behaviour, or even imitate it, because they think it's linked to success. It is not. You have to separate the strip-club-going bravado from the other law-breaking, which could at least in theory explain Uber's success.
Honestly, this feels like a white-wash. Jobs was exceedingly demanding, but that's hardly unique. Jobs was also dishonest, secretive, and simply cruel to the people around him. This comes up over and over, even in his non-business interactions.
I agree that it's an error to lionize Kalanick's behavior. But it's also wrong to say that Jobs' behavior was radically different, or that Kalanick's party-boy bravado is clearly separable from his disregard for the law. Realistically, I think we'd be better off admitting that an urge to ignore boundaries usually applies across many topics.
If Jobs was more capable Kalanick, I don't think that was a function of his nastiness somehow being more noble. He seems to have simply brought a lot more skill to his task.
It also is weird that matt4077 repeatedly contrasts Kalanick with Steve Jobs in this thread, despite Apple having been accused many times of mean culture, sexism, harassment and cover-ups too.
Like any good late-stage US capitalist, he outsourced it.
so he was standing over watching with approval as his employees were accosted? I doubt it. I think what's more likely is he didn't know about the extent of harassment (or didn't care, if you want to be cynical) and the initial HR non-response was likely just a really poor quality HR department designed to manage PR rather than solve employee problems. Organisations are more than just their CEO and while you can lay plenty of blame on him for allowing such a poor quality workplace culture to evolve, that doesn't necessarily mean that he's a big fan of sexual harassment in the workplace.
I bet you do, because nobody in their right mind believes that, and you are obviously attempting to cast the notion that a CEO might know what happens in their company as absurd.
Or do you also think that others believe oversight committees on BoDs literally stand over the managers and nod or grimace?
If he didn't know what HR was up to, he was incompetent.
> that doesn't necessarily mean that he's a big fan of sexual harassment
And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.
If he didn't know what HR was up to, perhaps he wasn't the director in charge of HR? You can't expect a CEO to know 100% of what's happening in a larger company.
> And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.
> ... managed HR's nonresponse to it.
your quote seems to imply that he went out of his way to make sure HR did nothing about the harassment. I'd be inclined to argue incompetence (or just a lack of ground-level micromanagement) over malice.
Unless the facts on the ground are very different than what we've heard, Uber HR had a policy of protecting some people accused of harassment because they were highly valued. In other words, a decision somewhere was made that policy was to prefer key-player retention over the risk of lawsuits, because, obviously, that sort of policy is pretty much guaranteed to lead to lawsuits.
I have a great deal of difficulty imagining the HR exec who doesn't realize that - that would be beyond incompetent, well in to senility. I also have difficulty imagining the HR exec who will personally take on the risk of mandating policy about balancing disparate business risks (slowing down by losing productive harassers vs. lawsuits and bad press). That can end careers, and anyone capable of landing a management job at an Uber is exceedingly unlikely to take that risk without taking it up the food chain.
Finally, I find it remarkable that so many people are willing to credit the man with extraordinary genius in business execution while simultaneously arguing his incompetence when it happens to absolve him of shitty behavior.
And with this, I'm done with discussing things I didn't say.
 Moving on to speculation, making that choice makes perfect sense in an environment with a value system emphasizing winning at any cost and burning down anything in the way. If they thought first-mover advantage was literally everything and they thought they had enough money to weather any resulting legal problems, that's the rational choice. And especially if you think you're the smartest guy in the room and can get away with it. Not unlike hypothetically deciding to gaslight regulators or steal IP from competitors or invade medical privacy to discredit opponents. For example.
 I don't know about other states, but in California, HR for firms over some number of employees are legally required to ensure employees have been trained on sexual harassment law. I'm sure it takes other forms, but generally we get to watch these awful law-firm Flash videos of cartoons being either awkward with or awful to each other, and then have to answer questions about which actions are harassment in order to make sure we paid attention.
Nowhere has he said this. You're conflating two very different issues. No one is disputing that he is an asshole, etc. OP was making a different point.
If you peal back the layers, probably most rapid growth, hard driving large companies have left a wake of upset and screwed over people behind it. Nobody "gives" you a hundred billion dollar company.. Uber's leadership was just particularly inept at pivoting from "scorched earth" to a slightly less savage strategy.
This will be an interesting pivot to watch, I've been kind of betting with myself when will the first week come with no news or good news for uber. I thought they'd have spun up the pr machine months ago, talking about co2 saved by carpooling or something. Giant company, currently fixed runway, all eyes on it and damaged culture. If uber doesn't die, the next CEO is a superstar.
For human rights issues, yes, I tend to agree.
Anecdotally, famous Nordic startups include Spotify, Skype, Mojang (behind Minecraft), King (behind Candy Crush, Farm Heroes), Rovio and Supercell.
1. Nordic countries have more über wealthy per capita.
2. Nordic countries are social democracies.
Then he draws the conclusion, with no corroborating evidence, that these two things are inextricably linked. No data to link these two points at all. Nordic countries in general have a high GDP PPP, and that is probably not solely (or at all) due to being social democracies. Scandinavian systems need to be efficient due the nature of their environment, e.g. they have a lot of land and not a lot of population, and fairly harsh climate (e.g. poor farming conditions). I would almost argue that "being cold" is probably a better indicator of national wealth per capita than "being a social democracy" (though admittedly, I haven't done thorough research either). I mean, look at Canada. Look at the non-farming bits of the US vs. the farming bits. Look at North versus South Italy. etc. Industrialization is more efficient and effective in regions where alternative methods of production weren't great in the first place.
For reference, here is the population density of the nations he was comparing (in people per km^2):
Iceland - 3;
Norway - 16;
Sweden - 22;
US - 33;
The US has 11x the population density of Iceland. Easier to have shared wealth when each person in your country can have 11x the land they could have in another country (with the caveat, of course, that this only applies if you are an industrialized nation).
I mean, just look at one of his "indicators" - billionaires per million people. By that metric, iceland is at that top. But there is only a single billionaire in iceland. Statistically, then, it's easier to be a billionaire in iceland. In practice, however, that is not the case. Things like population subsets need to be considered. In the US, you have a very large population, which is obviously going to impact per capita stats. However, you need to ask what proportion of those people are actually pursuing wealth in a way that could ever result in becoming a billionaire. e.g. a grocery bagger, probably never to be a billionaire. A plumber? Same. A hippy in a commune? Same. No data has been shown to adjust for lack of competition. At the end of the day, you have to look not at the total population, but at how many people are actually competing to become uber wealthy. Because, while attaining wealth isn't a zero-sum game, it certainly isn't an "everyone wins" game either.
Scandinavian countries have a very high proportion of jobs that don't really have a cap on upper income, such as software/game development, banking, music production, etc. because they have exceedingly efficient economies (as he actually touches on).
However, there is not clear reason to believe that they are efficient because they have social democracies. In fact, the converse (they became social democracies because they already had efficient economies) is just as likely, if not more so.
Can you elaborate on this supposed link between population density and shared wealth in developed nations? I don't understand the logical underpinnings of your argument. Developed countries almost by definition are less reliant on local geography.
Moreover, I don't see how space metrics are even relevant here. Iceland may technically have a lot of available "land" - but more than half the country lives in Reykjavik. A similarly lopsided urban / rural population distribution holds true in other Nordic countries.
My point about geography and population density needs to be related to my point about industrialization to make any sense.
It is this: Nordic countries have modern economies weighed very heavily towards industrialization/mechanization, but most importantly, they are efficient. As you say, they also have a "lopsided urban / rural population distribution", which is a much better way of saying (thank you) what I was trying to say: Nordic countries have land, but it's not good for the classic wealth generator - farming. This is why the population is focused in urban areas and is not spread out. However, luckily for places like Iceland, modern cities don't really care how good the land is for farming. An oil refinery doesn't care about the health of the soil. A modern factory doesn't care if the terrain is a bit rocky. Solar panels don't care. Mines don't care. etc., etc. Basically all modern industry is fine in a place like Iceland.
This an unexpected and immense boon to making a modern industrialized nation efficient, because on the one hand, you have major population centres with not much in-between (due to the lack of farming), which is in itself efficient, because areas you need to service with public services are greatly reduced. But on the other hand, you have plenty of space to put modern things like factories or new cities or what have you.
Compare this to the US, the country with more arable farmland than any other country on earth. Sure, the US has big population centres, but they are spread out, and many of them are still driven by rural economies. This greatly reduces efficiency, and is generally why the spread out states seem to be further behind the small / densely populated ones.
I've included the percentage of population that is urban below for comparison, according to The World Bank, from 2015. Also, I think it is slightly different when the rural population is doing something like fishing (Nordic) vs farming, but I won't go into that here.
US - 81%
Sweden - 86%
Iceland - 94%
Comparing anything to the US is a little bit silly though, because the US is comprised of 50 states, all of which are quite a bit different from each other. For instance, I bet the uber wealthy per capita in say California or New York is much, much higher than the Nordic countries. So the obvious answer to this video is probably "move to New York or California if you want to make a lot of money". I will say that would probably require more initial capital than a nordic country, but if you have the initial capital, then your chances are probably better. SO THE ACTUAL ANSWER IS: Get a great education and livelihood in Norseland while you're young, get some seed capital, and move to Cali/NYC/etc to really start making bank.
Obviously if you want to become a billionaire, you're not going to move to Plano, TX. Yet Plano is affecting the per capita stats.
Sweden has a population of 9.8 million yet it has produced Skype, Mojang, Spotify, King, Klarna 
Australia has 2.5x the population but only two unicorns. The UK and London market themselves as the capital of unicorns in Europe yet with 6.5x the population they have either the same number of unicorns or just four more (depending how you count them).
That is remarkable for a country like Sweden, especially when considering the strength and size of the Swedish expatriate community in tech around the world (many tend to leave).
In terms of similar results, I think only Singapore is in similar or better unicorn per capita territory.
 "unicorn" isn't the best measure since it is a private valuation and you can get different answers depending on who you ask, but most people would recognize those Swedish startups as being successful.
Skype is Estonian.
We are technically a UK incorporated company, headquartered and half our staff in Sydney and many of our staff and customers in the USA.
I still consider us Australian though.
I see many clever companies where I live in Melbourne - however I am saddened by what I perceive as the neglect the government is showing for the tech sector, especially startups; I'm looking e.g. at how share options are taxed. I believe there's a lot of lost opportunity here.
I'd rather have a real work life balance (it's not so called, it's very real) than any amount of abuse working for a US style startup would throw at me.
Most of my colleague would as well.
To have the disdain for life you seem to display you must live in a very distant place from a sane version of reality.
"Mr. Smith: I move my finger one inch to use my turn signal. Why are these assholes so lazy they can't move their finger one fucking measly inch to drive more safely? You wanna know why?
DQ: Not particularly.
Mr. Smith: Because these rich bastards have to be callous and inconsiderate in the first place to make all that money, so when they get on the road, they can't help themselves. They've gotta be callous and inconsiderate drivers too. It's in their nature."
Edit: you did say 'almost'.
The company is what is pertinent to the discussion :)
Morals are relative.
I don't know how old you are, but public morality towards sexual harassment just in the U.S. has changed in my lifetime. (For the better, although it is currently ugly and messy, as these changes always are.)
Even attitudes about what constitute harassment vary by culture between similar cultures. Compare Italy and Germany.
Look at Google; they're firmly business-minded and have often butted heads with regulators and so forth, but most people like google, not least because of that 'don't be evil' branding and and their habit of giving people Nice Things.
If your margins are razor thin. You have to be ruthless. That permeates to your culture.
Do you things are any better at Amazon, Foxconn or other warehouse places?
That has nothing to do with sexual harassment. And to imply that the two must be linked is false.
Does 'highly demanding environment' == 'Harassment' to you? If yes then you have far bigger problems. Any demanding mission ever might be out of reach to you per your value system.
Work conditions, overall demands of productivity et al will be brutal. And that ultimately gets to cause all sorts of other problems. People who just can't catch up with all the rush ultimately feel discriminated.
Non sequitur. You're also generally espousing some pretty reprehensible ideas. We as a society do not take the view that business success overrides all soft concerns, especially with regard to their employees. If ruthlessness and discrimination is the grist that your mill requires, find another mill.
Also please avoid working in management.
This is obviously wrong. Have you ever bought a iPhone? Or any other Apple product. Have you ever ordered anything from Amazon.
How do you think Walmarts and Targets of the world can sell you things for so cheap? Behind all this there is some guy being sent through some real hard ships.
As a consumer you have already made that choice.
The reader will note that this is a classic example of the 'tu quoque' fallacy.
My answer to that is then there is something fundamentally wrong with your business model. Basically, what is the point in running a business under which such conditions are the norm?
Any demanding mission ever might be out of reach to you per your value system.
This is fallacious. Of course there are times when struggle is necessary. A rewarding life (however you define reward) certainly requires an investment of effort, and at time that effort will be very difficult. Sometimes we are faced with very trying circumstances such as natural disaster or war or serious economic insecurity, and we have to work very ahrd to survive.
But a key word here is sometimes. If you deliberately construct such an environment where survival and advancement are only possible through 'brutal' work conditions and demands of productivity, then you are actively making the world a worse place, because you are establishing such brutal conditions as a norm and implicitly telling people that their life choices boil down to slavery or death. Why would any sane person want to create the conditions of slavery? Slavery is a condition of life that people rationally wish to escape.
There seems to be this attitude that if people are not constantly driven by necessity then they'll get too comfortable and lazy and never do anything. This is not borne out by the evidence. Some people would, not least because they're constantly bombarded with messages to consume, consume, consume whenever they can as a relief from their economic anxiety. But few people are fundamentally motivated by gluttony. Given the opportunity most people opt to develop their capabilities and contribute or create rather than merely consume.
Choosing to promulgate brutal working conditions is essentially promoting brutality as your preferred model of social organization. That's basically a displacement of sadistic and/or masochistic impulses into the economic sphere. You may very well feel that nothing of value happens except under harsh compulsion, but that seems to both ignore all the evidence to the contrary (an irrational bias) and abdicate responsibility for the consequences (since brutality is well-understood to result in wholly avoidable injuries).
It seems to me that your value system rests on some rather extreme assumptions that are not justified by the available evidence, and insofar as it imposes compulsion on others rather than being used to motivate yourself, it's intolerable. Put another way, if you only feel alive and productive under conditions of harsh necessity, that's your business. But as soon as you insist that this is the way of the world and that others must get with it or be cast aside, you're infringing upon the freedom of others. And at a social level, through regulatory process, experience of litigation and so on, we've agreed that the creation of such conditions is not an acceptable means to pursue arbitrary ends.
As usual : 'Value'. All these affordable iPhones and seamless Amazon deliveries happen because they have a work culture that optimizes for every single $. I agree with your premise that these are not for everyone. But this is precisely why we have freedom. Nobody should sign up for a job they think is too hard for them.
As we talk there are doctors who are training by the clock, sleeplessly working towards becoming surgeons. This is necessary for various reasons. If it were any easy, people would become bad doctors with less training. This is bad for society. The fact that work conditions are harsh- that isn't wrong or discrimination or even harassment. The very demands of the job are such.
The top percentage of any profession are this way. That comes with the job. You just don't go and say why don't they make it easy to me to be the next Zakir Hussain. Mr Hussain has set pretty high practice benchmarks practicing his instrument pretty much his whole life. Was it worth for his to have undergone all that pain and punishment to get there? May be that fits into his value system.
If you want to beat Jeff Bezos you have to at least perform at his level or higher. You just have to chose your mission based on the mileage you think you have.
No, but that's not the point. How quickly we forget that we don't need dude bros to create a hostile environment for women. That GitHub situation was created by a woman, one who wasn't even an employee. We really don't give women enough credit.
Toxic work environment is everywhere. Remember the spreadsheet that Googlers started to compare salaries? I'd argue the Apple-Google-X pact to not poach one another is worse than anything Travis could imagine.
If there was crass behavior at Uber, I'm inclined to be more lenient because I think it is at a more primitive level than a well thought out plan to increase shareholder value by illegal collaboration to push down worker cost. If these people who criticize Uber really care about their employees, they will start publishing all details about how much salary and benefits and whatever money each employee makes.
Talk is cheap. Actions speak louder than words.
Here in India, I go by the office cab to home everyday. I generally chat with the drivers as to why they don't drive for Uber/Ola etc. The answer is they need to make a good 1300 rupees on a round trip to be profitable, at a minimum of 6 trips per day. A trip with Uber/Ola etc costs 300 rupees(With pool). But even then!
So that's like these people need to start charging a minimum of 5x extra to make profits. At that price these people are no longer a viable means of transport.
To be profitable you need to back to the yellow taxi medallion thingy all over again.
EDIT: Fix a mistake.
So if the (now edited) original intent was exponential, "more like 10x than 1x (or 100x)", then calling 5x an oom is fine. If the intent was linear, then yes, rounding 5x to 10x is 100 percent error (difference/actual). :)
I'm headed in the opposite direction and reinstalling the Uber app tonight. This is a very convincing capstone to a 180 degree course correction away from everything I disliked about Uber. I also hope Travis can learn and come back and lead the company again in the future.
I'll grab my popcorn, this will be fun to watch.
Traditional firms will generally prefer debt to equity as you will generally get a better shareholder return on debt. VC backed firms do not usually raise debt -- even if it is preferred -- because they are viewed as too risky by banks. When VC-backed firms raise debt it is because they are transitioning out of high risk to the stability of a established and predictable firm.
In some Nobel-winning economic theories the best capital structure is all debt: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo... https://en.wikipedia.org/wiki/Capital_structure
If the only thing about this loan that makes it "leveraged" is its interest rate of 5% then that is probably preferable to equity and not a red flag.
The lender takes the risks as to share value and liquidity. If presented early in Uber's climbing valuation curve, it probably would have looked like a good opportunity to lenders.
It's actually would be a major news point I think. Whether or not Travis sells his shares is what's gonna be decisive of his position in the company and possible future ambitions.
Do you have a source for this?
I suppose there's some tipping point of "very valuable" and "not that badly behaved" where the argument is actually valid (see: all the Steve Jobs references in this thread). But at that point I guess the ethical solution is to make it very clear what new hires are in for, and pay a healthy "dealing with this person" bonus (see: Steve Jobs, again).
What matter are: Cash In Bank, Cash Coming In, Burn Rate.
Counterpoint: businesses in good shape don't just drop CEOs. This move might just help it die slower.
Highly unlikely. Why? Investors who stomach multi-billion dollar annual losses will probably just shrug off the recent bit of trouble. If the choice is to either write off $15 billion or to give another couple to help the company go through a rough patch (what a buying opportunity!) I think I know what investors are going to do.
Kalanick's head has now rolled (not that it really hurts him much personally though, it's probably even a relief for him) but seriously a whole nother level of crap would have to happen with Uber before investors start getting comfortable with the thought of letting go those $15 billion.
Bear in mind that the company's growth has been driven by its ability to run a very, very highly-performant backend -- and that's in turn a matter of getting the very best engineering talent on board.
Some, perhaps most of that talent is already pissed off about the fratty work environment and questionable leadership decisions. Recently, their options exercise window changed from 30 days to 7 years.
Angry employees + management turnover/uncertainty + limited runway + new rule that basically you don't lose your options when you quit = I'm officially an U-Bear.
On a related topic, I think people's schadenfreude for Travis is getting out of control and he's becoming a bit of a totem for everything that's wrong with SV....while his issues are largely self-inflicted ("boob-er" / treating drivers like crap on camera / etc), all the hatred directed toward him seems excessive in context. The guy just lost his mother, maybe cut him some slack?
Agree this is good for Uber employees and I'm happy they have significantly less of an impediment to leaving than most other workers at pre-exit startups.
Uber has been pushing hard on self-driving cars (I mean, in the long term, it strikes me as their only viable business model, so it makes sense). By my best estimates, salary for delivery drivers for Amazon packages run somewhere between $6B and $10B per year (for comparison, if I remember correctly, Amazon's revenue is somewhere around $35B/yr). Automating delivery could be a HUGE deal for them, and an opportunity to scoop up a major player in the autonomous driving space might look very appealing.
Then again, with Washington State throwing the doors open for autonomous testing, Amazon could likely develop their own system on their own turf for less, even if Uber's valuation goes WAY down.
I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.
I'm very optimistic about this change. To me, Kalanick, and the culture he bread, were toxic to Uber.
I'm reminded of how Microsoft's share price jumped by 12% the day Steve Ballmer's retirement plans were announced. Microsoft has been on a major run ever since. Let's hope that we see something similar here.
Nope, This is wrong. Kalanick stood in front in the fight against the City officials and Taxi unions across the globe. Uber could've been done and dusted had it been left as a product to be sold by itself. Kalanick pushed Uber up high against the current of water, which is not exactly similar to running a Social Media Company.
Don't kid yourself, this fight was fought by lawyers and lobbyists.
Uber financed one side of this fight, but seeing as the outcome of this fight was critical to Uber's business model, that wasn't some genius insight, that was self-preservation.
If anything, there's a proportion of people who supported local government rules and existing taxi services over the American interloper, a counter-balance to the anti-union and anti-municipal crowd.
Please be mindful that the American experience does not translate globally, even to other english-speaking western countries!
And regardless of that, it doesn't matter: by the time Uber started operating in Australia (or any non-US country, for that matter), they already had a history of pushing hard against existing norms. Uber would have never even gotten to the point where expanding outside the US would have been possible if it hadn't been for Kalanick.
Sure, he's a jerk, but to claim that he had nothing to do with Uber's expansion after launch is just absurd.
'Software company, Not a taxi company' argument was used extensively to circumvent license and medallion regulations. On top of it they used VC money to drive down the prices by 4x-5x.
Several tens of thousands of drivers in every state in every country they went to got shafted because of these moves.
So yes he was very brutal and ruthless upfront. You can't replace that kind of human quality easily.
Your wages will dilute to a point it will be hard for you to make a decent living.
Haha don't know where to start. Facebook could have gone to shit in so many ways just like all the predecessors like Myspace and Friendster, but they made all the right decisions and won. Same goes for Uber.
This is not the case for 100% Internet based businesses like Facebook.
So they're really completely different models and therefore the competitive landscape can't resemble each other. It's more fair to compare the Uber-Lyft dynamic to rental car businesses like Enterprise-Hertz.
People do move, and the convenience of one app to hail taxis everywhere is appealing. But then again, people don't move that often that installing the local taxi app is too much of an assle.
Kalanick's right decisions are now based on how much he was lying when he said he hadn't divested the slightest bit from Uber. I'm guessing that everyone read his character well, and that he was in fact lying on a massive scale and has many lifetimes worth of stashed-away wealth. Right now, winning for him means avoiding prosecution and jail (probably easy to do) and Uber is over, already.
So Uber lost, and anyone still clinging to Uber has lost (but there will be amazingly few of those). It's the frog and scorpion fable, really. Travis isn't the scorpion, and Uber isn't the frog. Uber is the scorpion and Wall Street is the frog.
I am talking about how execution matters, because parent said Uber just worked on its own to get where they have, just like Facebook worked on its own to get where they have. None of these are true.
My comment has nothing to do with wall street or shorting or whatever concepts you bring up.
Facebook may have won. I think you'll find Uber didn't win, because Wall Street needed Uber to remain the Travis Uber, in spite of any laws or limitations, and that's clearly no longer true.
Nobody would seriously argue that there's no difference between the two because Uber doesn't exist yet in 'stock' terms. They need to translate the initial investor enthusiasm into an IPO, so short/long spells out the likely climate for said IPO.
Uber has lived in Unicorn land thus far. The potential to turn a profit has buoyed them but that cash bubble seems to be running out of fumes. They could sell for 1/10th of what they raised money at. Time will tell.
It's a bad time for Travis to be handing over the reigns because he clearly hasn't built a command team to takeover and the fraternity atmosphere is toxic enough that as these new leaders step in I'm afraid the middle management will view them as "illegitimate" leaders.
Time will tell. I hope for the sake of all the people who hold Uber stock as part of their compensation that they get a pay day but it's a gamble.
We don't know exactly how much influence Zuckerberg had in all the decisions. For example the common theme for years was for there to be uproar after any major feature or change.
Like the news feed that is now ubiquitous. A worse company might have feared the backlash and slowed down on features and growing the news feed.
I assume Zuckerberg was also fundamental in acquiring Instagram and Whatsapp. Instagram is worth tens of billions now. Whatsapp has 1.2B or so monthly users. There were many comments on how overpriced and silly the Whatsapp purchase was. But most of it was in stocks and the cash at the time may have been a lot ($4B), but Facebook gets that much per month now. Whatsapp tripled its users since its acquisition.
A lot of tech people disliked the Messenger split off. But that seems to be working out for the business too. It is becoming its own platform now and can also boast 1B+ users per month.
Maybe anyone would've done all this. I don't know. But I do know it was Zuckerberg in charge when all this occurred.
The irony is that in growing, FB traded down that cachet -- but managed to transition from cohort value to network value fairly successfully.
This is an argument I've made for years, I'm happy to see that I'm not the only one -- danah boyd has mentioned it several times as well.
I'm not saying Zuck didn't execute well -- the advantage still could have been blown (and I've only just learnt of a similar network started IIRC at Columbia University which didn't go as well). But for all the things Zuck can claim, building Harvard's social appeal is not one of them.
It's called execution...
The reason I compared Uber's success to Facebook was because demand for the product was so great, it was viral. It's hard to mess up a product that is so incredibly popular.
Perhaps Instagram would have been a better example to communicate my point. Its initial success was clearly not anticipated even by its founders, and its success continued despite numerous hiccups and screwups in its early days. I posit that its founders ability, which was clearly limited (by their own accounts), had much to do with its success.
But it was a premature optimization because those responsible for turning 'viciously competitive evil guy' into raw capital failed to acknowledge that he'd screw them in turn as soon as he needed an exit strategy. You simply cannot turn to childish human dominance battles as a model for what will work in large systems and interdependent markets.Even propping up your 'pet winner' with near-infinite capital won't save you forever.
Yahoo for example is coasting along at a market cap of 53.40B down from its high of over $125 billion. In 1999 dollars. Is it "dead"?
But if they cut it too much, they'll stop growing.
The problem is they need to sustain their 70 billion dollar valuation for investors to be happy.
To be worth 70 billion they have to be either:
Growing at a very fast rate (which requires a very large burn rate to sustain)
Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.
People will stop using Uber if the wait times get really long, which they will if most of the drivers leave.
Their profitability problem isn't just one of opex. They don't have margin, either.
My main takeway: revenues are higher than their cost of sales. In other words, they are earning money on marginal rides served. Not losing money.
To me, this suggests that profitability is plausibly achievable if they end subsidies into small markets and drastically cut development costs.
How could Uber, barring wholly incompetent leadership, completely implode?
And many/most Uber drivers also drive for Lyft. There's no harm in leaving both apps on and grabbing a more-elusive (but higher) Uber fare when one comes along.
My gut tells me that Uber's financial performance won't change
If they cut ad spend and raise costs, then their growth story stops and other competitors have a window to move.
The go-to reading (at least a few years ago) for handling the difficulties of burn rate at a high-growth company is 'Mastering the Rockefeller Habits' by Verne Harnish, the chapter on cashflow. I think 'The hard thing about hard things' also talks about how this situation can kill your company if you're unlucky or unprepared
They will change the company's current culture. Slow down the pace of growth to try to adjust what is wrong. Probably focus on where they have margin to operate. This is clear in Gary ( Uber Co founder) text on Medium.
"In a highly competitive market it is easy to become obsessed with growth, instead of taking the time to ensure you’re on the right path. Now is that time… to pause"
This is death. I mean, it's sensible talk, in another context it would be seen as enlightened, in a larger sense it's the right answer.
Uber aren't IN another context. They depend completely on Wall Street continuing to think they are the biggest shark that ever sharked, and now that's ruined and the only big investment opportunities are in betting AGAINST Uber. Most likely the smartest money is already out.
This is death. Shouldn't be, in a more sensible context, but it absolutely is. You can't tell Wall Street 'it is time to think sustainability' when they bet on you eating the goddamn world for them.
Companies at this stage in an ultra competitive market (not talking about ride sharing, but self-driving) need their founders to lead and grow. It is just too early and critical to bring in a professional CEO. See Apple.
Just look at the numbers in this article - they need scale economics of two times the cost of the driver of the cab to archive GAAP profitability, which, obviously, is impossible even with self-driving.