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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#31

Post by randyrand »

MiroF wrote: post #22
Bootwizard wrote: post #15

Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?

You literally cannot profitably transport people at the prices they're offering. Uber is just one big bet that the price point of transportation will fall significantly with the advent of self driving and they'll be there to make the money off that margin.

They do make profit on each ride, but not when you account for administrative overhead (which is huge because of their ridiculous headcount).

Re: Uber Lays Off 400

#32

Post by aresant »

xmprt wrote: post #17
aresant wrote: post #12

Earlier quoted context omitted.

In a two sided marketplace customer acquisition and marketing are absolutely fundamental. Uber operates in >600 major cities across the world at this point. 1200 employees would indicate about 1 person per market per side of the market.

Which is exactly their point. Why localize your marketing when you can build a much more centralized message. This way they spend less on marketing and have a better global brand identity.

I'm not going to fight this one to the death but I have direct experience in this marketplace.

It is much more nuanced than "let's be centralized" and the idea of handing it all over to an agency is a joke.

Marketing / customer acquisition is literally their highest non-driver line item by a gi-fucking-gantic amount.

Sales & Marketing represents $3 - 4billion dollar cost vs a total marketing payroll of ~$165,000,000

There are absolute returns to pull out of each market by having localized expertise and control.

The fact that even on HN the consensus to my thread is that this should be outsourced indicates the degree to which UBER has masked their real DNA - this is one of the world's largest direct response marketing agencies with a ride-sharing platform attached!

If the CEO is taking head shots at marketing you can be absolutely sure that under-performers in the rest of the organization are on notice.

https://www.cbinsights.com/research/report/how-uber-makes-mo...

https://qz.com/1592971/uber-ipo-filling-reveals-how-it-spend...

Re: Uber Lays Off 400

#33

Post by cj »

sambroner wrote: post #10

Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hire more marketers -> Cut costs post IPO I'm not arguing it's effective, but it's certainly a reasonable outgrowth of the various goals they've had over the last year or two.

I mostly agree, except I'd probably frame it a bit differently:

> Need more users pre IPO to juice the growth story

Or, "VCs tell us we need to spend their investment quickly in whatever areas will generate a hockey stick growth in valuation. We can always fix our business model when we're ready to."

> Cut costs post IPO

Or, "We no longer answer to our VCs. Now we answer to the public market who cares a lot more about the fundamentals of our business. Now we need to improve our fundamentals to push our market cap upward."

Re: Uber Lays Off 400

#34

Post by paxys »

It was expected to happen, now that they have to scale down on aggressive expansion and focus on making their existing markets profitable instead.

Re: Uber Lays Off 400

#35

Post by Tiktaalik »

Bootwizard wrote: post #15

Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?

It's a grift that will never be profitable.

Re: Uber Lays Off 400

#36

Post by DannyBee »

itchyouch wrote: post #5

400 people at say 40k salaries or around 80k with benefits is around 32 million. Definitely a significant chunk of change, but barely scratching the surface for offsetting 1B in losses.

The all in cost is almost certainly 150-200k.

Re: Uber Lays Off 400

#37

Post by smallgovt »

rlanday wrote: post #25
codingdave wrote: post #18

> The marketing team had more than 1,200... I fully admit that I'm not in marketing, so there are surely nuances I don't know. But that scale of marketing department is orders of magnitude above any other place I have worked, with the possible exception of IBM in the 90s. Just maybe... this was a reasonable move.

Uber's business model has the same problem as Groupon's, which is that they don't really have economies of scale. Every market requires a new team of people to run promotions to attract drivers and customers and match supply with demand.

I can understand why every new market requires an operations team on the ground, but marketing ought to be centralized.

Re: Uber Lays Off 400

#38

Post by ronaru »

bobthepanda wrote: post #29
Bootwizard wrote: post #15

Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?

People like comparing Uber to, say, Amazon. The major difference is that Amazon benefitted from economies of scale - they spent a lot of time in the red building infrastructure and logistics, but now they reap the benefits by having very good infrastructure and logistics, which only get more efficient the more things they sell. Uber's main expense is the driver. The vehicles pretty much always stay the same size so t…

Amazon was cash flow positive after few years of existence. Uber, as far as I under stand, is still isn't. https://www.reuters.com/article/us-uber-ipo-breakingviews/br...

Re: Uber Lays Off 400

#40

Post by aetherson »

randyrand wrote: post #31
MiroF wrote: post #22

Earlier quoted context omitted.

You literally cannot profitably transport people at the prices they're offering. Uber is just one big bet that the price point of transportation will fall significantly with the advent of self driving and they'll be there to make the money off that margin.

They do make profit on each ride, but not when you account for administrative overhead (which is huge because of their ridiculous headcount).

Let's split the difference:

They make profit from some rides. And the amount of profit matters, too.

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