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Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

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Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#21

Post by pishpash »

StevePerkins wrote: post #16
albertgoeswoof wrote: post #6

It is strange that private investors are willing to fund my discounted travel.

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? Ther…

Uber's endgame has been making an Uber of everything (e.g. Uber eats), i.e. a platform for the so-called 'sharing economy.' They obtain this by network effects. That and self-driving cars, I don't know. They're basically an R&D operation funded by investors. It may or may not pan out.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#22

Post by sjm-lbm »

StevePerkins wrote: post #16
albertgoeswoof wrote: post #6

It is strange that private investors are willing to fund my discounted travel.

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? Ther…

I honestly think the original vision was something similar to Amazon: bleed money when they are an online bookstore, make it all back when they swing for the fences and go for replacing all of retail. Likewise, Uber might lose money as a taxi service, but the idea would be to make it back in self-driving tech that replaces all transportation with 5 lanes of self-driving Ubers zipping about in all directions.

The problem is that 2017 seems like a major hiccup in this vision. The original visionary is gone. There's been some issues with self-driving technology. Lyft wasn't a huge problem when they were small and had no self-driving tech, now they are much bigger and have a viable self-driving tech partner in Ford... and so on.

It'll be interesting to see if this is actually the case, and, if they are off track enough, how they might change the way they operate.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#23

Post by AndyMcConachie »

StevePerkins wrote: post #16
albertgoeswoof wrote: post #6

It is strange that private investors are willing to fund my discounted travel.

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? Ther…

Exactly. The only thing that keeps me coming back to Uber is their lower cost. And sometimes when $COMPANY is paying I don't even care about that. If I'm at a taxi stand why not take the taxi in front of me.

In economic terms the switching cost for the consumer is low. Really low. I'm not locked in and Uber is not Amazon that is spending their runway on capital investment. They're spending their capital on paying drivers who will leave once they start getting paid more somewhere else.

The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#24

Post by aetherson »

albertgoeswoof wrote: post #18
chollida1 wrote: post #2

Better source, and one that the article references: https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th... At this point, two things are clear to me: 1) Uber will IPO, there's just oo much money and influence behind it to stop that. 2) I'd be really worried if I was an employee about my options and also about my job. Employee's now ahve two large worries hanging over their heads..... What about my job and wh…

Are Uber's costs really in the tech space? It's a complex tech operation for sure, but I wouldn't have thought they could make up much of the 1.5bn USD if they fired a bunch of developers. These bulk of these costs must be in marketing, customer acquisition and discounted fares, right?

So remember that it's not that they burned $1.5B this quarter; they burned $3.5B (net revenue of $2B, $1.5B loss).

If their average employee costs them $500,000 a year (surely a generous estimate), then that's $125k per quarter. A $2B spend on salaries would suggest then that they had 16,000 employees (not counting drivers, who aren't part of this equation -- they're the difference between the $9.7B "gross bookings" and the $2B net revenue).

Uber employs apparently "more than 12,000 people," which is shocking, but salary still can't plausibly be the entire story here.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#25

Post by albertgoeswoof »

StevePerkins wrote: post #16
albertgoeswoof wrote: post #6

It is strange that private investors are willing to fund my discounted travel.

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? Ther…

I would LOVE to develop an Uber clone and pitch it to Governments around the world. We could even link them up so you have one unified account for people who cross borders.

The government and taxpayer could then take any profit (or operate at a loss / break even if they want to subsidise costs for their citizens). The customer acquisition / marketing costs would be almost zero if the government mandates it as the only or preferred ride-hailing app.

I don't really think Uber is going to innovate much from here (e.g .how much has the uber experience changed since UberX was rolled out?) outside of self-driving cars etc. there's no reason why we need a private company to innovate further, and there's almost no risk in doing this.

It would be seen as a natural extension to mass transit, and every government around the world should be providing it for their citizens.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#26

Post by mrgordon »

albertgoeswoof wrote: post #18
chollida1 wrote: post #2

Better source, and one that the article references: https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th... At this point, two things are clear to me: 1) Uber will IPO, there's just oo much money and influence behind it to stop that. 2) I'd be really worried if I was an employee about my options and also about my job. Employee's now ahve two large worries hanging over their heads..... What about my job and wh…

Are Uber's costs really in the tech space? It's a complex tech operation for sure, but I wouldn't have thought they could make up much of the 1.5bn USD if they fired a bunch of developers. These bulk of these costs must be in marketing, customer acquisition and discounted fares, right?

They have around 12,000 employees according to Wikipedia (and a few other sources show a similar figure). If we figure the average employee is 250,000/year in liabilities on the balance sheet (salary + benefits + options/RSUs) then thats $3 billion a year in employee expenses. I don't think $250k is too unrealistic considering the massive capital gains many employees must have on paper as well as the high level of talent Uber has lured away from competitors. They had the creator of Google Maps, the Otto acquisition (and the subsequent legal costs if we want to factor those in), and a whole lot of other experts around mapping / autonomous vehicles.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#27

Post by AnimalMuppet »

JumpCrisscross wrote: post #10

Uber had $6.6bn on hand at the end of June [1]. That means they are down to $5.1bn. Absent cost-cutting, that implies a 9 to 12 month runway. Even if SoftBank injects $1bn, that could only mean a few months’ runway. A large fine in the Waymo case [2] could literally bankrupt them. [1] https://venturebeat.com/2017/08/23/uber-is-still-burning-cas... [2] https://mobile.nytimes.com/2017/11/29/business/waymo-uber-tr...

Waymo won't bankrupt Uber. If Uber loses, they will appeal. Uber will run out of runway for other reasons before they're done with the appeal.

What a loss to Waymo might do is make an Uber IPO much less attractive. It might even be the difference between an IPO happening and not happening. And that might be the difference between Uber getting another year or two of runway and them dying in 2018.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#29

Post by __sha3d2 »

chollida1 wrote: post #2

Better source, and one that the article references: https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th... At this point, two things are clear to me: 1) Uber will IPO, there's just oo much money and influence behind it to stop that. 2) I'd be really worried if I was an employee about my options and also about my job. Employee's now ahve two large worries hanging over their heads..... What about my job and wh…

> And to top it all off, the biggest thing driving their valuation recently, self driving cars, appears to be in serious jeopardy, can anyone make a credible case of Uber having self driving fleet in the next 5 years?

Uber currently sends teams to major cities all over the world to build maps for self driving cars. They outfit cars in those cities with 6 figure camera rigs and enable 'passive collection', where maps are built over the course of normal rides. After that they actively collect any missing pieces and move on to the next city. They've got teams in C / D level cities (which I won't name because I don't want to ID anyone but are the international equivalents of a Baltimore MD or Miami FL).

They are not positioned as well as say Tesla IMO but they also aren't just sitting around waiting for something to happen on this front.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#30

Post by sandworm101 »

mrgordon wrote: post #26
albertgoeswoof wrote: post #18

Earlier quoted context omitted.

Are Uber's costs really in the tech space? It's a complex tech operation for sure, but I wouldn't have thought they could make up much of the 1.5bn USD if they fired a bunch of developers. These bulk of these costs must be in marketing, customer acquisition and discounted fares, right?

They have around 12,000 employees according to Wikipedia (and a few other sources show a similar figure). If we figure the average employee is 250,000/year in liabilities on the balance sheet (salary + benefits + options/RSUs) then thats $3 billion a year in employee expenses. I don't think $250k is too unrealistic considering the massive capital gains many employees must have on paper as well as the high level of ta…

250k may well be an average, but not the type of average that matters. The few high-pay people warp the average. They will not be culled before an IPO as doing so will reduce confidence. Uber needs to keep its headliners. They can only cut from the plebs costing in the 50-100K range. So either they need to fire 4x as many people, or a cull won't solve the problem.
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