A plague on uber and Airbnb. May they both rot.
Btw this is not just troll bait this is my honest opinion. I talk to taxi drivers and use taxi and these people got predated on for a thin profit outcome.
Also traveling around with Uber is a great experience (in countries that didn't ban it) - the service has been consistent across Europe and it's another thing I don't have to worry about when travelling - not having to navigate public transport or roads in a foreign country while also being relatively sure you're not getting ripped off by the local taxi service is amazing.
Like even at current prices an average taxi ride is 2-3x cheaper than it would be 10 years ago when it was basically a government granted cartel. And you were at the mercy of the driver randomly quoting you whatever he though you would pay in a lot of situations. Uber brought a lot of consistency and availability to the market.
But regardless of whether they can pull it off, I’ve always viewed Uber as a wolf in sheep’s clothing. Sure, they’re pro-consumer now, but they absolutely intend to go anti-consumer the moment they’re given a chance.
The barrier of entry to what? Sure, the barrier of entry to autonomous cars without drivers is extremely high, but even if Uber is the only one in the market that possessed the technology, they wouldn't be able to drive market prices for taxis higher than the cost of a drive in a manned car. I don't know about you, but I have no real preference for driving in an unmanned car if the manned option is significantly cheaper.
It is a consumer win, I'd agree with that, but I'd argue that's not to do with cost. Same as Amazon.
Overall, Uber seems to have introduced healthy competition and taxi usage has changed from rare to commonplace.
And that's not even taking about the phone app and its capabilities, which were just out of reach of regular taxis (even the taxi companies that own a large fleet, these are still very small and have no tech capability). IMHO that's another front where the competition was healthy.
On the latter, I don’t know what would happen if they charged monopoly prices. I suspect you’re right, cabs might come back.
If you are from Manchester, UK and you live there, how often do you need a taxi app that works in Bangkok, or NY, or Oslo?
We could, for example, discover that getting the required accuracy outside of areas with specific characteristics is infeasibly hard to solve in general, let alone with the onboard computer.
We could have one or two horrific accidents fuel legal crackdowns that forbid driving AIs for a generation or more.
Self driving cars are coming, sure. But when?
Various regions have been profitable for years and the company has spent a lot on growth and marketing. It seems they're finding an optimal price that is sustainable but still much better than anything that we had before.
Leaving behind what options for short-range travel? If Uber goes bust and in the process, they've killed off both their competition and traditional taxis, what options does that leave for short-range individual commuting where bikes and scooters aren't sensible?
That's because they loose money with every ride?
I mean it really can't be cheap to have your have your personal driver for your daily commute.
In my area (Eastern Europe) Uber matched the prices of other unofficial "taxi" services that existed for 40+ years. However, the convenience of having an app, not dealing with cash, ability to see your driver getting to meet you, etc. boosted the number of taxi riders tenfold.
Many other ridesharing companies are offering apps these days, too. So even when Uber goes bust, the industry won't revert back to cash payments and phone numbers. So like the grandparent said it's a net positive for consumers.
 https://s23.q4cdn.com/407969754/files/doc_financials/2019/sr... (slide 15)
Another thing is: taxi innovation isn't either Uber or nothing. All these improvements Uber boasts about could have been achieved (many were achieved in some places) without tolerating illegal business practices by a thoroughly sociopathic international corporation. Maybe the progress would've been a bit slower, maybe there would be more competition on the market (which is usually considered a good thing). But it would be there, and done the way civilized people do things.
And before someone replies, "but MLK was also doing illegal things!" - which is a response I see surprisingly often in Uber threads - let me remind everyone, that MLK was engaging in civil disobedience to fight for the common people and a just cause. Uber is a for-profit company with long and documented history of antisocial behavior, and one which only cares about dominating their market by dumping any and all externalities onto the society at large.
The real question to me is do Uber's stockholders understand that they own the stock, or ar they indirectly holding them through some sort of pension -> managed fund -> ??? style chain where they are exposed to the madness without realising it.
As long as Uber's owners know who they are, it is on their heads if burning money turns out to be a bad idea. Not a problem for the rest of us, if we can be confident we don't own the company.
Assuming the government doesn't helpfully bail them out at some point.
This, in combination with 'small government' and deregulation, is a recipe for a race-to-the-bottom disaster where everyone gets shafted (including the customer themselves) except the big corporations that run the whole show.
I think it has been sufficiently shown by now that making everything as cheap and abundant as possible, everything else be damned, is a net negative in the long term.
The supply chain flavor of that is playing right in front of us now.
This is the main reason why big companies are never allowed to fail. Why banks and all the traditional giant establishments continue to live. It's also why publicly listed companies that have been dividend paying for some time would rather layoff employees when growth prospects are scarce than to rather maintain them on payroll.
So if your company's stock is ever owned by government/pension funds, you'll have a pretty good argument for getting bailed out until you find your next trick.
That's just refusing to exercise personal responsibility. I'd hope an average consumer is capable of more than that.
People shouldn't assume the free market will somehow optimize for fair play, because it doesn't. The market quite directly optimizes for the things people (in aggregate) use to discriminate between purchase options; unless people vote with their wallets on the conduct of companies, you cannot expect the market to provide your conscience for you.
AirBnB hosts are short-let landlords, same as any other operator of holiday lets.
Uber drivers are minicab drivers, same as any other minicab driver.
They like to pretend otherwise in an attempt to bypass laws designed for consumer and worker protection.
I don't believe this is true for Airbnb, both anecdotally and from Airbnb's own statement about NYC:
> "87 percent of Airbnb hosts in New York share only the home in which they live.”
Notice that 2/3 of rentals are for entire apartments, the hosts that share their own home clearly can't do that very often.
> Most AirBnB hosts and Uber drivers are not just occasionally letting spare space in their homes
> I don't believe this is true for Airbnb, both anecdotally and from Airbnb's own statement about NYC
and provided as evidence:
> "87 percent of Airbnb hosts in New York share only the home in which they live."
> That's misdirection. 87% of hosts, sure, but what percentage of rentals?
My reading is that ric2b's was implying that whilst 87% of _hosts_ might be sharing their own home, if you were to look at rentals then there would be a different picture, presumably on the basis that the other 13% are "sharing" multiple properties.
ric2b's accusation of misdirection was aimed at your 87% claim, because, whilst it was technically accurate (unlike what frobozz said), it "misdirects" from the more important picture, which is that, to quote frobozz opening sentiment:
> Calling it "sharing economy" is doublespeak.
That being the case for aforementioned reasons.
In the US as a whole, 64% were renting out an entire home unit. Obviously, some of those could be owner-occupiers letting their own home whilst on holiday themselves.
I have no trouble believing that Uber and AirBnB may have started out as facilitators of sharing. However, that is not what they have become.
I may be wrong in saying "most hosts". There is a potential long tail of thousands of not-very-active spare-room hosts. However, do such operators count much terms of numbers of stays and money spent?
B) I do not trust AirBnB to not lie or twist the numbers; they have an enormous incentive to do so
C) This does not align with my experience, having both rented and lived near units that were clearly taken off the market for purely short term rental.
Their 2015 NYC stats had several commercial hosts excluded, making it look as though they were still just a way to make a bit of pocket money from your spare room.
The latter I find odd because I can only imagine the impact on local renters, I also assume the ones that draw up the leases are the ones renting this our via airbnb. I bet everyone else has a no sublet clause.
I can't think of a single gig economy company that wasn't an ethical disaster.
I don't think the gig economy has to be an ethical disaster. I'm aware a lot of gig platforms are awful in that regard, but I don't think it simply can't be done well just because it mostly hasn't been done well.
"Ninety percent of everything is crap."
That doesn’t mean that a company that’s genuinely based around providing consumers access to rarely distributed skills and products is necessarily bad. But it’s got to be the kind of service/product that the company couldn’t offer via traditional staffing methods.
> "Ninety percent of everything is crap."
I never seen that applied to ethics before. I so hope it's wrong...
We try a thing, it goes horribly sideways, people freak out over "ethics," which often means large scale, social consequences that weren't necessarily readily apparent before you did the thing.
But the cynical me wants to point out that any particular company doing gig economy/"share" economy/locust economy business has to design and understand their own business model. Many of the ethical issues are already apparent at this stage; when you look at Cost Structure and Revenue Streams segments of your Business Model Canvas, take a stock of regulatory requirements affecting you, you can already what corners you cut and who's going to get a short end of your value proposition stick.
So e.g. I do not believe AirBnB was initially aware of the impact their business will have on the housing market, but I'm rather certain all the evil shenanigans Uber pulled were intentional.
EDIT: also: I know that I'm being an armchair ethicist here, that it's easy to see the larger picture from a high horse, especially when one doesn't need to use said businesses. But to my defense: doing that is a valid market signal on its own; to the extent I don't deal with businesses I consider ethically challenged, and discourage others from dealing with them, this sends a (however small) signal to the free market that those issues are something that matters to some customers, and are worth competing on.
 - I only now remembered this article, https://www.ribbonfarm.com/2013/04/03/the-locust-economy/. Worth pointing out that it was written in 2013, about when the "share economy" hype was at its peak, and everyone wanted to do a startup with this model.
I think the efficiency gains of the gig economy are real and can potentially benefit all parties. The fact that they often don't is something that I tend to "attribute to stupidity rather than malice" as the saying goes.
I'm really short of sleep and maybe that's the problem here, or part of it. I'm happy to discuss this with you, but I wasn't accusing you of anything at all.
I have thought a great deal about this and I run r/GigWorks because I feel strongly that gig work can be "the next industrial revolution."
When I was homeless and began doing gig work, I sometimes made like $1.25/hour, which is terrible. But it was more than I would have otherwise had and it allowed me to build towards something better and it made sense for me.
When I'm having a good a day, I can make more like $20/hour these days. The flexibility mattered to me and I continue to struggle to articulate the very real value of details like that.
We keep raising the bar and raising the bar until you have to have a PhD and be making a mint to have any hope of moving out of your parents basement, so to speak. And that's a problem.
I know you weren't accusing me of anything; it just occurred to me, while writing n-th comment in this thread, that what I write may be perceived as arrogant or pretentious, so I wanted to add a caveat about it. I know you actually depended on gig work, which is a perspective I lack.
The main problem with the gig/platform economy is that in a sense it's the worst of both worlds: those in favor of a laissez-faire economy will see that markets are regulated anyway (not by governments but by corporations); and those in favor of government regulation also lose.
It enabled me and my family to get around. Even if taxis had a consistent app across cities, the quality of the vehicle tends to be much lower and the drivers are not as kind. That may be just because Uber drivers can be reported much more easily than a taxi driver.
For smaller cities with a low taxi density, many Uber drivers treat it as an additional source of income to a primary job and I've had a lot of "stay-at-home" moms pick me up in Rochester NY. In NYC, I've noticed the opposite, with most Uber drivers treating it as a full-time job.
Lastly, without Uber, my wife and I would have had to purchase another vehicle. Thanks to Uber, sharing a single vehicle works great when we can't sync up start/end times for work (pre-quarantine).
Genuinely curious about this cycle of opinion on Hacker news. It's trendy to shit on these companies until it's not.
rides are cheap because Uber is doing actual dumping of taxi industry by operating on a loss. Uber drivers are earning very little + spending money on car maintenance etc. so basically only one benefit is cheap rides but even this is damaging overall system and is not sustainable.
so again.. where is that wealth creation (apart uber itself maybe)?
While I wish this were true, Uber is yet another tax dodging corporation like so many others:
But it's disingenuous to pretend there aren't any benefits for the US as the hundreds of thousands if not millions of people working in tech companies in the US for very high salaries can attest. Very high salaries both for the US and definitely for the rest of the world.
I think you are off by one or two orders of magnitude.
According to various sources the number of software developers in the US is around 3.3 million (https://dqydj.com/number-of-developers-in-america-and-per-st...). Even by a pessimistic estimate, let's say that 25% of these have very high salaries compared to the average or median wage in the US. Either because their seniority or because they work for big companies.
So that would mean something like 0.8 million.
Now, on top of that, add associated engineers working for tech companies, add middle managers (which are generally paid more than individual contributors), etc., and it's easily 1 million highly paid individuals.
Just think about it: Amazon, Microsoft, Google, Apple, Facebook, Cisco, Netflix, Oracle, IBM, Adobe, Uber, HP, Verizon, AT&T, Intuit, ServiceNow, VMWare, Salesforce, Workday, Dell, Intel, Qualcomm, Ebay, Paypal, Activision, and probably another 1000 companies with at least 1000 employees in the US, that I don't know. Plus non-tech companies that have huge tech departments, such as Walmart, and that pay salaries that are competitive with the ones paid by purely tech companies.
On top of that, American software devs have no idea how good they have it. In Europe getting 100k as a fresh grad is impossible even in Switzerland (Switzerland having much higher salaries than the rest of Europe), unless you work for... a US giant (FAANG). And those spots are a minuscule part of the tech world in Europe. And now imagine that Europe is better off than 95% of the rest of the world.
The idea of a regular Joe Developer having a decent shot of having made (made, not saved!) a million by the time they're 35 is frankly ludicrous for most of the rest of the world.
They’re neither slaves nor indentured servants nor necessarily any worse off or better off than your average Café worker. They make the choices they make in exchange for a paycheck, no different than you and I in that regard. The income they receive goes somewhere, and some of that goes to the government in the form of taxes, no different than your or I. Feel free to dig into the numbers yourself to figure out how much, but figure in that some of that is likely going into the car, which means auto shops and car dealers, some of that is going to coffee or tea, some of that is going to their rent, and some of that is going to the food they eat. All of which is eventually ending up in someone else’s paycheck as taxable income for which some will file a W2 and others will file a 1040 whether that’s tomorrow or 20 years from now.
Don't agree with that. It is a new model which have advantages and disadvantages. You would know if you are a foreigner in a remote town and want to get a Taxi. If the model is bad the market will correct it eventually. I think what's bad is the VC's funding or persuading founders to continue to run with loss making business models for cornering the market. These companies then pump huge marketing money without a profitability in near future. That destroys the local competition if any and skew the market towards them for a while. Sometimes it will work out but many times it would fail. Again time will correct the practice if it's not sustainable, we have to wait.
Also Airbnb and Uber have enabled lot of people earn livelihood without having to wait for trade union approvals for sharing taxi stands or getting hotel licences. If the model is sustainable it will go back to old models, but i feel it's gonna stay whether through Uber or other service(s).
>import money to America from the world
What about CocaCola, Pepsi, Amazon (and AWS) Google, Microsoft, Facebook, Nike and hundreds of other brands ?
The "model" of selling leaded gasoline took 90 years to correct. I'd venture to say that the market correcting itself after a lifetime is not what most people want.
Not that I care in this case, just pointing out a flaw in this logic.
I mean, it's such a common failure mode of free markets, it should IMO be taught to kids in schools. If a product/service has damaging side effects that aren't immediately apparent, or the damage is diffuse, or takes a long time to manifest, then the market is blind to those costs. A product that mitigates these side effects is usually more expensive. Such a safer alternative isn't competitive on the market and won't succeed until it becomes as cheap as the less safe one (or cheaper than it).
Conclusion being: don't expect the market to correct against profits on its own. In fact, it will resist correction, so for the change to happen, you need strong regulatory pressure and/or innovation aimed at making the correction more profitable. In reality, you need both.
There were reasons those approvals and licenses existed in the first place, as a lot of cities are learning right now. That said, shortcomings were also revealed.
> but i feel it's gonna stay whether through Uber or other service(s).
I don't mind the other services, in particular ones that can take what works and what doesn't, and do it like civilized people do - by working together with the cities to provide said benefits in a legally above-board framework, and without disastrous externalities.
As for Uber, may it rot in hell.
> What about CocaCola, Pepsi, Amazon (and AWS) Google, Microsoft, Facebook, Nike and hundreds of other brands ?
I don't think any of these brands ever claimed they're a poor upstart fighting the good fight against the Evil Taxi Mafia (whereas in reality, they were VC-backed international corporation, leveraging their deep purse to conquer market after market, extinguishing local competitors).
However it is set up to extract rents from both consumers and drivers, which is a problem for the latter. In effect, it captures profits from transportation markets and sends them to a company in the US.
And that may be both sustainable, since its a platform market, and it may create suffering and poverty for many drivers.
Handily, the existence and further political support for traditional taxis implies that a regulatory approach on competitive misconduct is unlikely. So these companies may not only be economically stable, but even in terms of competition policy.
In any case, I hope you see the difference between companies selling a product, and those selling a platform, for a local economy.
And then they pulled out the bonuses, practically forcing drivers to work 12+ hours/day (some even sleep in their cars) just to make minimum loan payments. No driver I've ever spoken to has been happy driving for Uber, but they do it because they have a car to pay off
Moreover, without Uber's (formerly) juicy carrot, they would never be in the market for a car in the first place
This is oversimplified to a painful degree.
$14.1B - $7.1B - $4.6B = $2.4B
Driver bonuses fall under cost of revenue, and user promotions fall under sales and marketing. It’s only after subtracting other overhead that the company becomes unprofitable.
Other overhead includes operations and support, research and development, and general administrative. If you read the descriptions of these categories it becomes apparent that they are going to need to lay people off if they cut spending there. Sales and marketing also includes a lot of headcount.
All the above math includes both rides and eats. There are other numbers in the annual report that show that rides is making more money overall while other areas are losing more.
Realistically, they need to cut from pretty much everywhere, especially with revenue tanking during COVID. Even without that one-time IPO related payout of about $3.6 billion last year, they still would’ve burnt ~$5 billion. Their losses this year, with massively decreased revenue due to COVID, could probably be $10+ billion (if they didn’t lay people off). That’d be for non-IPO costs staying static while revenue drops ~35%. And I believe their nest egg is only ~$10 billion, so that’s very roughly around 1 year of runway, much too short. They need to cut a LOT of costs.
Marketing is an investment, because the benefits of marketing are in the future and are aimed at increasing business.
It's often useful to think of marketing expenses on a continuum between "upper funnel" and "lower funnel". "Upper funnel" expenses tend to be more like investments (Brand TV advertising).Lower funnel tend to be more like "cost of sales" (promotion to buy more).
Marketing spends on direct user acquisition tends to fall somewhere in the middle and that's where the whole controversy lies. One could argue as many start-ups have done that only if you acquire users aggressively will your future growth come and hence the spend is more "investment like".
One could also argue that consumers are disloyal and will take their business to whatever "good enough" competitor exists that offers better value.
A few decades of academic research in buyer behavior suggests that the latter is the norm in consumer facing industries (soaps, corn flakes, hotels, air tickets...). Purchase behavior in these industries tend to follow very well defined patterns (NBD-Dirichlet) but of course network effects, patents and regulatory capture can up-end this (Google, Facebook Comcast, eInk Corp...)
In many ways, the marketing models of Uber and similar startups are bets that network effects break the patterns.
When investors bring money they don't necessarily need to have profits immediately, it is ok to risk some of it for promise of future benefits (that is very definition of investing).
I understand subsidizing rides might be questionable way of doing this, but do not mistake it for invalid business model.
Employing children from poor asian countries to produce clothes you are selling is questionable but it sure as hell is profitable unless we collectively decide to make it unprofitable by outlawing or penalizing it in some other way.
In the end, if we think rides should not be subsidized or maybe drivers should be paid enough to have a living there is nothing stopping us from electing reputable representatives that can be trusted to do just that.
There's a big difference between "Let's build a viable and sustainable business" and "Let's build a hollow shell of a business by carpet-bombing potential retail investors with metrics management, PR, and brand marketing, and then cash in with an IPO and/or a sale to a Greater Fool."
There's been more of the latter than the former in this round. But the tide has gone out now. (See also WeWork, etc.)
Less rides means less revenue but also less cloud compute cost to serve them, payout to drivers, and certainly no driver subsidies at this point, which during normal times is quite costly. Many of these are variable costs tied to ride volume.
The only major fix costs to operating Uber's ridesharing business is people, office commercial leases, and maintaining IT infrastructure (I believe Uber operates its own cloud, but not 100% sure).
And now it's cutting the "people" part to preserve more cash for the long-haul.
Both cost of revenue and sales and marketing (for simplicity's sake I'll call these "direct costs") grew proportionately to revenue growth year on year from 2018 to 2019, running at 77% of revenue in 2018 and 83% of revenue in 2019. The 5% swing there is almost purely marketing: cost of revenue was 49.8% of revenue in 2018 and 50.9% in 2019, whereas marketing grew from 27.9% to 32.6%. So they could be hiding subsidies (prefer this term to discounts) in marketing costs, although it's not such a significant figure that it loses them money.
It's conceivable that they're still doing some hocus pocus with the treatment of pool revenue, but it would have to be a significant portion of their revenue for it to have an impact. I can't find the disclosures on this if they're in there (although they do disclose that they treat three people pooling as three rides, which seems fair enough).
The business suffered a 2.8x increase in losses from operations -- $8.5bn up from $3bn -- but this appears to mainly be attributable to R&D costs growing from $1.5bn to $4.8bn YOY.
All their AWS costs are probably not ride related, but most probably are, one way or another.
The marginal cost for one more ride, is probably much smaller, but I don't know that that is the right way to think about this.
Edit: done now. Thanks!
probably not the best example of not-invented-here syndrome.
I don't know much of the contributions Uber has made but all I remember is they slammed Postgres as been a bad database because they were trying to open multiple multi hour transactions to do things which is just insane. And then tell us that 'microservices' don't work and they are gonna use this new fandangled 'macroservices' when it sounds like they just didn't make microservices to begin with.
The issue I have with this is people go and read these things and say "oh we shouldn't use postgres cos uber", "we shouldn't do microservices cos uber". There's never any preface to these statements on what they did wrong, they blame the tool or technology instead.
I don't think it can truly be compared to a company built around a single app. Even if that app is very popular.
That figure of 27K total employees is surprisingly high, given that AFAIK, it doesn't include actual drivers. I'd be interested in knowing how these jobs break down by task.
Many people are just tired of seeing glorified sales and taxi companies disguising themselves as tech companies.
The defining feature of a technology firm is reduction of marginal costs at scale. If you're adding human labour with every city you expand into you might have a problem on your hands if your banking on making facebook margins.There is an underlying exhaustion among some people, myself included, who want to see investments into basic research and real technological advances rather than yet another app delivering pizza being valuated at 50 billion dollars.
I think people should recognise that the taxi market has an advantage. It's a distributed system and a market. Taxis organise themselves.
If you're going to replace an entire market with a centrally planned system and a giant electricity and compute eating machine then you better have something to show for it in terms of efficiency.
What's especially interesting to me here is how the landscape has changed since Uber launched 10 years ago. In 2010, you legitimate had to build a lot of your own stuff; at that point Amazon hadn't even launched SNS or Redshift.  Docker didn't exist. Etc, etc.
So the question for me isn't, "Can Uber justify their apparently large infrastructure?" It's more, "If somebody started an Uber competitor today, how much of the work could they get from open source, PaaS, and SaaS providers?"
The only people who care about being able to use the same app in Bangalore that they do in Palo Alto are Uber investors and a tiny handful of globetrotting Davosians too lazy to install a new app or send an SMS.
edit: removed the royal we
Is Netflix a tech company?
Is a company that sells ebooks a tech company? What about scientific journals? Are they tech companies?
Is Instagram a tech company? What about ad brokers?
Hatzichronoglou, Thomas: "Revision of the High-Technology Sector and Product Classification", OECD Science, Technology and Industry Working Papers, No. 1997/02, OECD Publishing, Paris.
Page 7 specifically divides manufacturing industries (it doesn't address services) into four technology levels, high, medium-high, medium low, and low:
High technology: Aerospace, computers, office machinery, electronics-communications, pharmaceuticals.
Medium-high technology: Scientific instruments, motor vehicles, electrical machinery, chemicals, other transport equipment, non-electrical machinery.
Medium-low technoogy: Rubber and plastic products, shipbuilding, other manufacturing, non-ferrous metals, non-metallic mineral products, fabricated metal products, petroleum refining, ferrous metals.
Low-technology: Paper printing, textiles and clothing, food, beverages, and tabacco, wood and furniture.
Given J.S. Mill's wonderful definition of technology, 'the study of effects", there's little in human activity which is completely atechnological. There remains, however, much that is quite some remove from the cutting edge.
In the technology adoption lifecycle, high tech are innovators. An early-adopter firm is itself still not high tech itself.
I don't, either, but then again I never said that. I'm merely wondering how the jobs break down.
Part of it is that the MVP might be easy to create, but scalability and edge cases add a lot of extra complexity. The other part of it is that it's not so much that a company _needs_ every employee it has, but it will keep hiring until the marginal benefit of an employee is no longer positive.
No large organization is going to be 100% efficient with their workforce, but what's more likely? 1) They (and judging by HN comments, every large company) just massively over hired without realizing it or 2) running a global company is more complicated and involves more moving parts than it appears on the surface.
I mean how many corporate employees would you have if you ran Uber?
Uber on the other hand is an app together with some driver administration. The main operation of the taxis are on the drivers.
Then, on top of that, you've got 91 million monthly active users. Assume each one takes only one ride per month, and only 1% of them have some kind of issue that requires them to reach out to support - that's still 30,000 new issues per day many of which will require coordinating between both parties involved in the transaction.
Do they have more employees than they need? Define need. It's easy to hire above what's necessary to sustain operations when the cost of capital is cheap. More people can develop new products and grow margins for the business overall. But Uber is seriously far from "an app together with some driver administration" any more than Amazon is "a website with some seller administration."
That leaves 23,000 people to account for.
- Operations: 12k (+ 2.4k)
- Engineering: 3.8k (+ 700)
- Marketing: 1k
- Finance: 1.2k (+ 1.7k)
- HR: 1k (+ 2.4k)
- Legal: 0.9k (+ 1.2k)
Eats: 2.2k (+ 1k)
Self driving: 1.4k (+ 150)
I'd recommend removing the above orgchart comment, especially since it was extremely easy to figure out who you are. (WebDev at Uber)
Were the virus not to occur, the company was planning to be legitimately profitable by end 2020: https://www.reuters.com/article/us-uber-results/uber-sees-pr...
It doesn't mean "at some point I intend to change some things and hope it makes the business profitable" in the same way "I plan on getting a haircut".
Shares surging by 9% on a vague promise to be profitable in 2 years time sounds like bandwagon behavior. Simple "Good News - Buy, Bad News - Sell" signalling. This is also "Adjusted EBITDA profitability", which is squirrelly, and 2021 means "Q4 of 2021". With recent events, it also seems less likely "The Market" was accurate in its assessment. Honestly that may not be entirely fair given the unprecedented nature, but isn't "The Market" supposed to factor in long-term threats, instead of short-sighted potential profitability proposals? If we were listening to the markets over the last few weeks, the world was either ending or the economy was booming and "nothing was wrong", all depending on what day of the week it was. Lots of sage wisdom being gained there.
Large investors and VCs are more interested in growth than they are in fundamentals because they believe the fundamentals will follow the growth. Often they do, but sometimes they don't. The size and employee counts of those organizations don't always mean much. It's worth being skeptical.
I think you'd have made the same reply if I'd cited Luckin before last week, ya know?
Especially for a company like Uber, whose operating economics have been -- let's just call them bleak. They burned $1B/quarter for years. I really like the write-up from Naked Capitalism (a few years old now, but aging well imo) 
They have lost more money so far than any startup in recent history. But I'm sure genuine profitability is right around the corner ;)
> Furthermore all companies are evil, greedy and nobody wants to build things that develop and grow the world.
Uh... sir, this is a Wendy's. IRL, just because you really deeply want something doesn't mean you'll get it -- or that it was even a good idea to begin with. And it certainly doesn't mean losing a billion dollars per quarter is going to magically generate a profitable business from thin air.
OR, I'm totally wrong! Either way's fine :)
"Burning" cash is already an unfair term which to me implies that analysis is not founded on fair terms.
How can you tell they are "burning" cash and not "investing" it in r&d and expansion which will have effect in the future? If you can differentiate between the two and bring forth a solid reason why it's actually burning, not investing in itself, I might think there's some truth to it.
Certainly there are viable conditions in which it's possible to invest $1B in itself, right? You could certainly prove that with maths, if for example this $1B spent now will mean maybe $1B extra revenue after 5 years?
> They have lost more money so far than any startup in recent history
How can that be an argument? How can you tell it isn't
"They have invested more money so far than any startup in recent history"?
1. There's no economy of scale in moving people from place to place in town. If there was it's likely we'd have national taxi companies by now. In fact, taxi companies recognize better unit economics than an Uber does because they pool their fleet leases and insurance, which not every Uber driver is interested in (or even offered).
2. Starting from a higher cost basis than a taxi means that people would have to pay more than a taxi for a profitable Uber company to exist. There's no evidence people are willing to pay as much as a taxi for their day to day transportation, let alone more than a taxi costs.
3. There's no consumer loyalty so margins are likely to remain razor thin in a race to the bottom commodity product -- only competitive against their incumbents (taxis) when priced at below the cost to deliver.
4. Unlike other startups which sell zero marginal cost products, Uber is selling a negative margin product at scale. There's no clear path toward meaningful margin expansion no matter what scale of ridership Uber achieves.
Or alternatively, if it's not possible to eek out a profit off the back of $65B in rides per year in peak economic conditions as of Q4 2019, how many more rides can you possibly require to turn a profit? Let alone pay back your investors/debt holders $20B of capital.
It's a crap business model, it was crap when they went public with an $85B market cap, and it's crap today with a $50B market cap. They're trading with a market cap of just 2.5X their VC investment -- think about that! You can justify a 5X valuation on your personal savings account when you take out a mortgage.
As a frequent user of these services I would be fine with paying a bit more. What I most enjoy is the ability to get a ride within 1 minute timeframe and very comfortably through the app. Ideal to not lose any daily time when going to work and back. Taxis require more organising and waiting time. There is definite value for me. Are there enough other people who find value in this? I am not sure, but we definitely will find out.
Do you think Uber blindly believes they can ask customer's more money or reduce their costs or are they deceitful?
Regarding starting from higher price point. This seems like a solvable issue. I in general don't think we need specialist drivers or so called taxi to exist unless for niche crowds. It seems a lot more optimal if most people can go in and out when they want and do it. This must be cheaper and optimal due to scale and algorithms ability to select fitting driver's from a huge pool.
One thing unnoted is though future potential for self driving transport.
Right now I will be long on Uber though.
My life has gotten so much easier with ride hailing services (I don't have a car and I find it cheaper to ride hail than to maintain a car anyway) so it definitely makes sense for me to invest in them.
Cars are idle 99% of the time because individuals who just wanna jump in and make a few extra bucks are at work during the day. I don't think Uber even pretends to have an ad-hoc fleet of anything other than professional drivers.
> One thing unnoted is though future potential for self driving transport.
That'll be so much worse for Uber. At best, if they deliver it first, they'll see a temporary first-mover advantage. Then every other automaker in the world will jump into the fray, and likely individuals won't own cars at all and it'll be either more commoditized (or less so) depending on what kind of ride people want.
The automakers may even cut Uber out -- why sell to their competition? I don't think it's a margin improvement play but an existential threat.
FWIW I did point out why it wouldn't be optimal: insurance can't be pooled and depreciation of the personal vehicle may far outstrip any benefits gained from Uber. If average drivers ran the numbers I think they'd be really disappointed.
It's the investment into new ventures like Uber Eats that cuts into the revenue because it' expanding so fast.
At the troughs, Uber was down 48% and Lyft 72%.
This moment --the layoffs and departure-- feels like a capitulation of the private equity valuations. We shouldn't feel good about people losing. But many have been shouting about how insane the blitzscale model is. Maybe it achieves it purposes for early investors -- that peak moment of IPO liquidation. But it certainly is no good for the employees and their morale for carrying on.
Yes- Uber was making loss before. But their ridership was growing and they were giving incentives on the supply side (drivers) to bring more players in. Thus it made sense to continue investing in headcount to grow. Now, though, everything is disrupted. It doesn't matter that they are losing money slower - if the outlook of the business is weak then they cut costs and reduce headcount.
In my estimation, my local restaurants need that 30+% more than public companies.
Delivery people also get lost around here pretty often, and I hate having to track them down. Plus I am leaving extra trips for the restaurant instead of the delivery driver.
I lost the O and Threadgill's in the same week. :(
This is almost as traumatic as when they closed Chiodo's Tavern in Homestead.
But I'm certain you walk literally everywhere you go, wear only second-hand clothes, avoid buying necessities with packaging or that has to be transported far, don't use disposable paper products, compost everything you can, and so on, right?
Because surely only the environmentally saintly would feel entitled to off-topic carp about trivial energy use when they don't know anything about the lifestyle of the person they're trying to call out.
He only walks to some, not all. And I don't live in the US, so if it's incredibly US biased, I just got lucky, I guess.
If you are concerned the logical thing is to cook your own dinner and burn zero gas.
What I do doesn't really effect that.
I probably doubled my budget for food, both takeout and groceries, compared to last year. The wine delivery guy knows my name now.
Rest assured, your neighborhood restaurants would beg to differ.
I think it’s been clear they have been looking to change models, maybe this lines up with that.