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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#181

Post by AJ007 »

resters wrote: post #164
aresant wrote: post #79

Earlier quoted context omitted.

UBER masks this real number across many of their general line items. EG they put ~$300,000,000 of the "Driver Incentive" cost into "Cost of Revenue" line item that represents: - "Any amount paid to a driver that exceeds the revenue earned by that driver (for instance, if a driver’s earnings from a trip exceed the fare for that trip). Excess driver incentives jumped by about $300 million in 2018 from the previous year…

I am not a shareholder, but I think market share is the short term goal. The incentives can be phased out as prices increase a bit after competition cools off.

The big question is driver retention and how much Uber subsidizing drivers is required. Maybe Uber spends 0 extra, drivers drop out of the system, ride prices increase, and drivers return as riders stop using Uber, bringing it to some sort of equilibrium. Maybe not.

These retention numbers, for any business that needs returning customers or service providers pretty much make or break all the customer/provider acquisition economics.

Re: Uber Lays Off 400

#182

Post by ummonk »

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 is possible that consumer demand would greatly reduce if they had to pay prices that are sufficient to cover the cost at which drivers are willing to drive.

My general impression is that Uber and Lyft have artificially inflated the size of the ride sharing market by subsidizing rides with investor money.

Re: Uber Lays Off 400

#183

Post by themagician »

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.

Marketing is all they are.

The driver aren't employees. The cars in the fleet aren't their assets. The insurance is handled by someone else and there is no licensing.

Uber, itself, is just an app with a giant marketing department. The app itself isn't even that different than it was in 2011. 99% of the functionality that people actually use is exactly the same as it was when they started.

Re: Uber Lays Off 400

#185

Post by chrisbroadfoot »

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”?

Read this sentence as "600+ major markets, internationally".

A "major market" is basically a city/metro.

Re: Uber Lays Off 400

#186

Post by duskwuff »

cortesoft wrote: post #126
dalbasal wrote: post #64

Earlier quoted context omitted.

Since we're talking about tech startup marketing budgets, it's a good time to reread http://www.paulgraham.com/yahoo.html By 1998, Yahoo was the beneficiary of a de facto Ponzi scheme. Investors were excited about the Internet. One reason they were excited was Yahoo's revenue growth. So they invested in new Internet startups. The startups then used the money to buy ads on Yahoo to get traffic. Which caused yet more r…

Makes me think of my days working on a facebook app in 2007-8... every single app had the same revenue stream - selling installs to other apps. The price per install was crazy high, and this was before Facebook started enforcing rules about shady practices, so every app would do things like "Install this other app, and we give you these perks in our app" It was ridiculous. There was no real money, just app developers…

The same thing has been true of mobile games for a while. A lot of the ad inventory displayed in free games is ads for more free games -- sure, there's some real revenue from in-app purchases, but there's also a lot of money getting passed from hand to hand for ads.

Re: Uber Lays Off 400

#187

Post by muzani »

I had an impression that they hired lots of people at very high salaries to build fast and establish a presence all over the world.

Now that they have something nice built and are all over the world, it's a great time to cut costs. A lot of the people they've hired probably have some equity and so they're probably just fine getting laid off after the IPO.

Re: Uber Lays Off 400

#188

Post by twoheadedboy »

Scoundreller wrote: post #90
mevile wrote: post #74

Earlier quoted context omitted.

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.

Also helps that pizzas themselves are dirt cheap to make. Anything that makes them expensive is chargeable. Continuous production is easy and cheap, so doubling your volume by adding delivery is achievable with the same kitchen.

"When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else: music, movies, microcode (software), high-speed pizza delivery"

Re: Uber Lays Off 400

#189

Post by owaislone »

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 has stalls in popular areas like shopping malls in all major cities. I see at least half a dozen Uber employees trying to sign people up to be drivers all the time. Considering the number of international markets they operate in and the nuances of each market, I don't think it's as that surprising.

Re: Uber Lays Off 400

#190

Post by astrodust »

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.

Localization is a big deal, or you're going to make an epic cultural faux-pas. What if "Uber" means something lewd or offensive in the local language? What if your marketing team cranks out English copy that doesn't translate well, or at all?
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