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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#41

Post by omarhaneef »

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?

The best way to understand this is to look at their financial statements:

https://investor.uber.com/news-events/news/press-release-det...

Generally, you would go to the 10-K to get a quick snap shot.

I direct you to look at the "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS"

You can see that they made about 1.4B (in Q1) after paying the drivers but then they spent 2.2B on:

Operations and support, Sales and marketing, Research and development, General and administrative

Note, of these categories, Sales and Marketing was the largest and eliminating it completely (not recommending this) would get them to break even.

Re: Uber Lays Off 400

#42

Post by aresant »

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 marketing / customer acquisition cost is their highest non-driver line item by a significant multiple.

They spent ~$3,200,000,000 ($3.2 billion) on sales & marketing in 2018 of which ~$1,800,000,000 is direct media / HR cost to drive customer acquisition.

In 2019 this number, as of the first quarter, has gone up substantially to a >$4b run rate.

With a burdened cost of $150k/yr for every single member of the 1,200 marketing team that makes up $180m of the total.

Uber operates in 600+ international major markets.

1200 employees (5% of organization total) covering and executing nuanced marketplace approaches for a budget of that scale is not out of range.

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

Re: Uber Lays Off 400

#43

Post by dymk »

omarhaneef wrote: post #7
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.

https://www.payscale.com/research/US/Employer=Uber_Technolog...

> Marketing Manager

> Average: $67,935

And that's for a manager. 40k may be a little low, perhaps they're making 50 or 55, but it's not unreasonable for a normal marketing job.

Re: Uber Lays Off 400

#44

Post by the_narrator »

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).

Which would mean they do _not_ make a profit on each ride.

Re: Uber Lays Off 400

#45

Post by choppaface »

smallgovt wrote: post #37
rlanday wrote: post #25

Earlier quoted context omitted.

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.

It might be centralized, but not entirely automated, at least not yet. Thus each city requires headcount.

Re: Uber Lays Off 400

#46

Post by _bxg1 »

smallgovt wrote: post #37
rlanday wrote: post #25

Earlier quoted context omitted.

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.

I could see there being localization challenges, especially when you start talking about multiple countries. Not just languages; cultural nuance, idioms, and political awareness all matter.

Re: Uber Lays Off 400

#47

Post by twic »

aresant wrote: post #42
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 marketing / customer acquisition cost is their highest non-driver line item by a significant multiple. They spent ~$3,200,000,000 ($3.2 billion) on sales & marketing in 2018 of which ~$1,800,000,000 is direct media / HR cost to drive customer acquisition. In 2019 this number, as of the first quarter, has gone up substantially to a >$4b run rate. With a burdened cost of $150k/yr for every single member of the 1…

Have you got the right number of zeroes there? Three billion per year?

Re: Uber Lays Off 400

#48

Post by davinic »

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.

Why would they care about self-driving if most of their drivers are making little more than the cost of operating their vehicle?

Re: Uber Lays Off 400

#49

Post by kaonashi »

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.

> Making robberies into larcenies. Making rapes disappear. You juke the stats, and majors become colonels. I've been here before.

Re: Uber Lays Off 400

#50

Post by Gibbon1 »

DannyBee wrote: post #36
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.

Doesn't really move the needle, chicken feed is chicken feed.

30 million, 60 million, 80 million. Point still stands.

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