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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#111

Post by bduerst »

rolltiide wrote: post #14
ProAm wrote: post #4

Profitability doubts after the IPO? Everyone in the world knew they were never close to profitability pre-IPO, this is just the reality of being a publicly traded not profitable company. Can't funding round yourself out of this one anymore.

Well you can... the terminology is just different They’ll say “saudi investors bought into secondary offering at X share price” instead of “round completed at Y valuation!!!” Which is just X share price of last purchase multiplied by total shares in existence Public companies can do secondary offerings from treasury or from creating brand new shares from nothing (dilution) Liquidity is one of the benefits

But then what's the planned payout for those secondary investors? Liquidating on the market would plummet.

Re: Uber Lays Off 400

#113

Post by bduerst »

mdorazio wrote: post #109
rolltiide wrote: post #14

Earlier quoted context omitted.

Well you can... the terminology is just different They’ll say “saudi investors bought into secondary offering at X share price” instead of “round completed at Y valuation!!!” Which is just X share price of last purchase multiplied by total shares in existence Public companies can do secondary offerings from treasury or from creating brand new shares from nothing (dilution) Liquidity is one of the benefits

Yup, also from selling bonds.

Raising debt is just as visible on public filings as burning the cash, and gets baked into the market price. It's also hard to do with as few of assets as Uber has.

Re: Uber Lays Off 400

#114

Post by ghaff »

mevile wrote: post #74
fluxic wrote: post #39

Love to revisit this piece every few years. Why food delivery will never be profitable: "The Food Delivery Death Star" https://medium.com/@review/the-food-delivery-death-star-85f9...

Pizza delivery is profitable. Pizza comes in a shape easy for transportation, the size and value of the delivery is economical for a delivery business and there's an established culture around ordering pizza for delivery. The food delivery companies just need to figure out these problems, which a hard, for non-pizza foods.

Well, Chinese food is also a commonly delivered item in many places--including but not limited to cities. So I'm not sure pizza is all that unique.

That said, a lot of food delivery is some high school kid driving his car around mostly working for tips. You start tacking on the costs of a large delivery-as-a-service company and your costs go up a lot without all that much economy of scale.

Re: Uber Lays Off 400

#115

Post by nabla9 »

SilasX wrote: post #63
aresant wrote: post #42

Earlier quoted context omitted.

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…

Echoing twic's disbelief here. A quick googling turned up Coca-Cola's global advertising budget as being $4 billion/year [1]. >Coca-Cola has made a yearly commitment to large ad spends. In 2017, the beverage manufacturer spent $3.96 billion, in 2016, $4 billion, and in 2015 $3.96 billion on global advertising. But I'm not sure if that's a comparable figure, as "advertising" is only a subset of "marketing". Still, if…

Uber blew as much as $3.2 billion on advertising alone in 2018 on its way to one of the biggest US IPOs on record https://www.businessinsider.com/uber-shelled-out-31-billion-...

Re: Uber Lays Off 400

#116

Post by aresant »

noego wrote: post #70
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.

Your comment reminds me of something Dan Luu had written about. https://danluu.com/sounds-easy/ > I can't think of a single large software company that doesn't regularly draw internet comments of the form “What do all the employees do?" Granted he's mostly talking about engineers, but I'm sure someone more knowledgable about marketing could write an almost identical essay.

A really simple way to think about this.

The promise of software at scale is that the marginal costs of selling one single additional unit are basically $0.00

As a result if your product sells for $500 you can spend $495 and still make money.

This leads to all sorts of adventures in driving that additional marginal unit sale such as:

- Localization - eg Microsoft Office is available in 102 languages! So now we need a local market product manager, sales team, distribution team, translator, QA, etc, etc.

- Enterprise - Huge swaths of money spent on conferences, thought leadership, any bullshit you can think of to potentially get a decision maker CTO to befriend somebody on your sales team.

- Government! - Selling to the gov't is extremely profitable but extremely long and complex sales cycle. Now we're hiring lobbyists, contract specialists, etc, etc.

- Support - Happy users are your mostly likely next buyers

etc etc

Re: Uber Lays Off 400

#117

Post by mr_crankypants »

muro wrote: post #104
mr_crankypants wrote: post #99

Earlier quoted context omitted.

> I can't think of a single large software company that doesn't regularly draw internet comments of the form “What do all the employees do?" I also can't think of a single large software company that doesn't, in the long run, survive by either endlessly buying and extracting all the value out of smaller software companies, or creating a moat that makes it almost impossible for new competitors to emerge. Having worked…

I don't think large companies just "extract value" from the small ones. They prove that the small company had a great idea and make the idea successful by providing sales, marketing and support that the small.company wouldn't be able to provide (if for no other reason than reduced risk and existing customer relations).

It might depend. In the case I experienced, sales, marketing and support were already in place and quite successful beforehand, and the acquiring company did an admirable job of teaching all three how to do less with more.

To take the example of support, pre-acquisition, the support team had a reputation for being one of the best and most knowledgeable in the industry. That reputation went up in smoke rather quickly when the acquiring company decided to merge support into their existing support vertical and adopt its existing policies, including things like requiring the support and the product development teams to communicate through JIRA instead of using informal channels like instant messages or (in exceptional cases) pulling a developer into the call.

The end result was that the mean time to find a resolution for the non-routine issues went from hours to days. Ironically, while management claimed this would reduce disruption for the development team, it actually increased the time that developers had to spend on supporting the support team, since it made communication so much more difficult. Which, in turn, means that it slowed down both customer support and product development by bogging them both down with paperwork.

Re: Uber Lays Off 400

#118

Post by SilasX »

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.

>You literally cannot profitably transport people at the prices they're offering

That's not my understanding of the figures, which say that they're charging plenty enough to cover the costs associated with the ride, but are blowing lots of money on aggressive marketing. The transportation costs (i.e. driver pay and customer service) are not what's killing them.

Re: Uber Lays Off 400

#119

Post by bduerst »

mevile wrote: post #74
fluxic wrote: post #39

Love to revisit this piece every few years. Why food delivery will never be profitable: "The Food Delivery Death Star" https://medium.com/@review/the-food-delivery-death-star-85f9...

Pizza delivery is profitable. Pizza comes in a shape easy for transportation, the size and value of the delivery is economical for a delivery business and there's an established culture around ordering pizza for delivery. The food delivery companies just need to figure out these problems, which a hard, for non-pizza foods.

Is it though?

Most pizza delivery is an ancillary service to the restaurant itself. Are there very many profitable pizza-delivery only businesses?

Also you could argue that for the genre of restaurants where delivery is profitable as an ancillary service (pizza, chinese, etc.), they already offer delivery and there isn't any profitable market for the restaurants where they didn't have it before.

Re: Uber Lays Off 400

#120

Post by cosmodisk »

rsp1984 wrote: post #110

Can someone with insight into the matter explain, from a high level, what the big concerns are over Ubers ability to run profitably? In my naive view they are "just running an app" / acting as a mobility marketplace and they make money on each transaction. Given the traction and market dominance they have this sounds like a really attractive business. So how do they manage to run such big losses every year and which…

It's not just an app. Apart from employing tons of highly paid engineers in Bay area and the rest of the world,they have to deal woth less glamorous,offline part of the business: local "recruitment" centres,where drivers have to be recruited,trained,etc.This is the probably in most larger cities.Also, the cost of acquisition of customers is in the tune of $billioms every year.Ads, subsidies, initiatives and etc. Uber absolutely can be profitable, however it feels like im order for it to be one it'd have to sack 70% of their back office,reduce the number of driver and agree to heavily adjusted valuation..
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