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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#251

Post by bduerst »

cosmodisk wrote: post #123
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.

It's not profitable because every single restaurant does it for itself only.A post office service would never make a dime if it was only covering a small town.Scale it up to the entire city and it becomes very interesting

Yes, I understand economies of scale, but there is a point where the time and resources spent driving take-out around is not profitable. That's what I mean about certain restaurants and cafes not offering delivery, because even with a third party full time delivery service it's not profitable to deliver certain goods.

Re: Uber Lays Off 400

#252

Post by rusticpenn »

MegaButts wrote: post #57
cj wrote: post #33

Earlier quoted context omitted.

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 abou…

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

LabRats is a pretty good book, which talks about this phenomenon

Re: Uber Lays Off 400

#253

Post by adamstober »

saalweachter wrote: post #94
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.

Is it normal to have layoffs a quarter after your IPO?

Layoffs are "more normal" at more tech companies at more lifecycle stages than many people realize.

If you're interested in tech layoff data covering people who work in the San Francisco Bay Area, read an analysis that I published: https://medium.com/layoff-aid-blog/tech-layoffs-are-surprisi...

Re: Uber Lays Off 400

#254

Post by vmurthy »

MegaButts wrote: post #57
cj wrote: post #33

Earlier quoted context omitted.

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 abou…

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

> I fear venture capital (and Silicon Valley) is much more about value extraction than value creation these days.

If you think about it, most of the venture capital goes in financing duds. That's an unfortunate truth about entrepreneurship. So a VC is more or less forced to extract as much value as possible from the successful ones. Not saying it is right or wrong but stating the way things are working.

Re: Uber Lays Off 400

#255

Post by exadeci »

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.

Yeah, Groupon did something similar in France, hired hundreds of sales guys to go to every possible shop in every city then fired them all and kept just a handful in each city and a team of permanent ones only contacting by phone in the main office.

Re: Uber Lays Off 400

#256

Post by vmurthy »

dalbasal wrote: post #64
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.

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…

Thank you for this. Lovely read! :-)

Re: Uber Lays Off 400

#257

Post by yashap »

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.

When you grow as fast as Uber has been, you accumulate a TONNE of fat. Multiple teams hiring people for the same role, creation of roles that have no real value, too many middle managers, etc.

It’s so hard to not get into this state during rapid growth, and to get out of it, and return to being a focused, lean, efficient (and eventually profitable) company, layoffs are basically the only answer. Often LOTS of layoffs. In a few years, I’ll bet many other departments at Uber are hit the way marketing just was.

Re: Uber Lays Off 400

#258

Post by ddalex »

sprafa wrote: post #199
AJ007 wrote: post #181

Earlier quoted context omitted.

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 acquisi…

In London Uber is unravelling already. Here Citymapper is the default transit app and Uber is just one of the options listed. The transfer cost for a customer changing app is 0. We keep saying we’re “not sure” whether Uber will have customer retention... no, of course it won’t! Unless they change their model, they’re the biggest VC folly in recent times. Just proves how overheated the market become when F/A/G acquire…

no VC money anylonger, now it's stock market money, i.e. our pension funds

Re: Uber Lays Off 400

#259

Post by vmurthy »

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...

If fund raising is any indication of this prediction (my bet is yes), look no further than the two big players in India - Swiggy and Zomato [0] and [1]. Losses are in the range of 70 million dollars or so for FY17-18 [2]

[0] https://www.livemint.com/Companies/9cuyxq0GMXuDWaGuMWYsZL/Sw...

[1]https://inc42.com/buzz/zomato-in-talks-for-1bn-war-chest-to-...

[2]https://www.livemint.com/Companies/cjK3T36vZl1easaVBMXVNN/Sw...

Re: Uber Lays Off 400

#260

Post by cryptica »

MegaButts wrote: post #57
cj wrote: post #33

Earlier quoted context omitted.

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 abou…

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

I think that this is correct. The barrier to entry for producing software is very low because in many cases, coding does not require any capital. It should be a highly competitive industry with many alternatives to choose from, but it's not; this is because of VCs.

VCs use their capital and connections to create moats around their investments to make their industry unprofitable for all competitors.

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