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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#131

Post by EnFinlay »

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…

I have no insight into the matter.

My guess is that their traction and market dominance are far more fragile than you think. Because their drivers are contractors and not employees, they can't be forced to only work for Uber, so even though they created the pool of drivers, they have not "captured" them. So a huge cost is the ride subsidies which maintain their market position. Once the ride subsidies end, there is no reason that a locally focused company can't compete for the same drivers and riders.

From what I've read, when Uber started their app technology was borderline magical (pushed the boundaries of what smartphones could do), but since that's no longer the case, there is much less of a barrier to entry.

Re: Uber Lays Off 400

#132

Post by cortesoft »

phil248 wrote: post #61
CydeWeys wrote: post #8

Earlier quoted context omitted.

You think Uber employees are only making $40k???

In most of the country $40k/year is a very reasonable salary for a full-time, mid-level office role.

But Uber is in San Francisco, which is not most of the country.

Re: Uber Lays Off 400

#133

Post by andromeduck »

jcims wrote: post #98
Scoundreller wrote: post #91

Earlier quoted context omitted.

There's a network effect component for shared/pooled rides. Upstarts will lose a lot if they offer shared prices without matched riders.

Do that many people share rides with strangers in Uber? I never have.

It's often about a third cheaper and some people get it as part of commuter bennifits in leiu of parking.

Re: Uber Lays Off 400

#134

Post by moksly »

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…

> Uber operates in 600+ international major markets.

Maybe it’s because I’m from a small country, but can a single country have more than one “major international market”?

Re: Uber Lays Off 400

#135

Post by CydeWeys »

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…

They are selling lots of rides at less than the cost to provide said rides. That's how they're losing money.

If the price of the rides were correct, they'd lose market share to competitors, and fewer people would be willing to pay them.

Re: Uber Lays Off 400

#136

Post by martinald »

moksly wrote: post #134
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…

> Uber operates in 600+ international major markets. Maybe it’s because I’m from a small country, but can a single country have more than one “major international market”?

It means cities/metro areas.

Re: Uber Lays Off 400

#137

Post by CydeWeys »

SilasX wrote: post #118
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.

>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.

A lot of these "marketing" costs are clever ways of hiding costs of providing rides as separate line items.

Re: Uber Lays Off 400

#138

Post by user5994461 »

drstewart wrote: post #112
Gibbon1 wrote: post #50

Earlier quoted context omitted.

Doesn't really move the needle, chicken feed is chicken feed. 30 million, 60 million, 80 million. Point still stands.

10% isn't exactly chicken feed.

They probably manage hundreds of thousands of marketing budget, in marketing campaigns that will stop or not be renewed when they are laid off. That's where the costs savings is.

They might also have a small amount of shares as part of their compensation. Paper money that will never leave the Uber accounting book now.

Re: Uber Lays Off 400

#139

Post by bduerst »

paulcole wrote: post #130
bduerst wrote: post #119

Earlier quoted context omitted.

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.

> Most pizza delivery is an ancillary service to the restaurant itself. Are you sure? Seems like the restaurant mostly exists for marketing, awareness, and as a place for people to not come in and eat. 90% of Pizza Hut’s orders are deliveries. 65% of Domino’s are deliveries. Over the entire industry, carry-out and delivery account for over 75% of revenue (delivery alone is 30% or so). • https://www.cnbc.com/2018/12/0…

Is that really profitable though? Your article talks about how Pizza Hut is struggling as it switched to digital delivery.

Also according your statista link, delivery only accounts for 30% of revenue in the pizza industry.

Re: Uber Lays Off 400

#140

Post by jcims »

aianus wrote: post #125
jcims wrote: post #98

Earlier quoted context omitted.

Do that many people share rides with strangers in Uber? I never have.

I can tell you that as a driver, about ~25% of my ride requests in Toronto are Pool requests. We also have Express Pool where you get picked up / dropped off at some walkable distance from your actual origin/destination to make it even cheaper for the consumer and more efficient for drivers. At one point Uber was even competing with the bus / streetcar with a special ride type where you would have to be picked up or…

This is great info, thank you and i agree with your conclusion.
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