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Uber, Postmates Agree on $2.65B All-Stock Deal

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Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#121

Post by Barrin92 »

ThrustVectoring wrote: post #115
mardifoufs wrote: post #8

What's Postmates moat? Having never used it, I don't necessarily see the 2.6b$ value in a smaller delivery app that is only really used in some areas of the US. Though I'm sure there is something I'm missing and 2.6b$ is probably less expensive than the cost of pricing Postmates out of the market especially considering it's an all stocks deal. It's just that delivery seems to be easily scalable and easy to just dump…

Network effects are the moat here, much like for ride hailing apps. More drivers signed up on the app means that the service times for customers are improved, and more customers using the app means less waiting time and dead mileage for drivers.

There isn't much of a network effect at all once you hit a certain, relatively small, size which is why national ride-hailing businesses keep pushing the big ones out of their respective markets, and why there already are quite a lot of them competing profits away.

There's an illusion of network effects due to the investors willingness to burn their own money. Otherwise, like the actual transportation industry it's just a low margin business with tons of competition.

Meaningful network effects don't just make your company marginally better as you get bigger, that's true for virtually any business. It has to be shown that the size actually makes you run away with it instead of just leveling off.

The same is true in the fintech industry with all these much hyped neo-banks running on debt. Internationally they all tend to lose to local competitors because knowing your market and getting the details right is more important than scale.

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#122

Post by untog »

acwan93 wrote: post #34
mardifoufs wrote: post #8

What's Postmates moat? Having never used it, I don't necessarily see the 2.6b$ value in a smaller delivery app that is only really used in some areas of the US. Though I'm sure there is something I'm missing and 2.6b$ is probably less expensive than the cost of pricing Postmates out of the market especially considering it's an all stocks deal. It's just that delivery seems to be easily scalable and easy to just dump…

I use Grubhub most of the time, and I’ve found the thing that keeps me on the platform is 1) The $10 monthly credit on American Express Gold cards and 2) The 2% cash back from the Rakuten portal, which stacks with the 4x points from the Amex card. Of course, a lot of restaurants end up increasing their prices on Grubhub to make up for their fees, and rightly so (I phone in using the number listed on Apple Maps). I st…

Just an FYI, Apple Maps uses Yelp for at least some of its data and they’ve been caught putting fake numbers on their site for Grubhub commission:

https://www.eater.com/2019/8/6/20756799/yelp-grubhub-phone-n...

Not sure if this applies to numbers in Apple Maps, but something to bear in mind.

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#123

Post by Mengkudulangsat »

t-writescode wrote: post #103
Mengkudulangsat wrote: post #68

Earlier quoted context omitted.

I foresee a future where the entirety of listings on food delivery apps will be ghost restaurants - those whose menu and processes are optimized for delivery. Many high street brick-and-mortar restaurants will shut, but those that remain will likely make being "not available on any food delivery app" a unique selling proposition.

You're suggesting that the act of eating out, or walking for takeout is going to stop for a sufficient percentage of the population that regular restaurants are going to disappear? That people are going to pay a premium to have their food always delivered and that people actually want to be in their homes / offices all the time, rather than get out of their current place to go and do something?

Well as an extreme example: I can picture myself subsisting on Soylent every day, ordering from a ghost restaurant every other day, then visiting a restaurant for social fuel once a week.

I don't have a kitchen.

With the time saved I reckon people will find something else to do outside instead of eating.

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#124

Post by pj_mukh »

jhallenworld wrote: post #98

So city dwellers in the ancient Roman world did not have kitchens- possibly they ate out more than we do. So there must have been demand for food delivery... I wonder if they accomplished it with slaves? Well there is some history: https://www.thevintagenews.com/2019/01/08/food-delivery/ The Indian "dabbawala" maybe is where it has to go: some kind of standardized service where one driver can deliver to many people i…

Yea I’m consistently surprised to learn that my Uber Eats driver ISNT making other deliveries. That makes zero sense!

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#125

Post by pfranz »

squeaky-clean wrote: post #106
MattGaiser wrote: post #83

Earlier quoted context omitted.

Yeah, but the delivery companies take 20-30% of the gross food order. So while they aren’t technically vertically integrated, they have the pricing of vertical integration (assuming typical restaurant margins).

> assuming typical restaurant margins I think Domino's margins blow typical restaurant margins out of the water. I don't have hard numbers, but worked a variety of delivery jobs from 2010-2014. Domino's was the only place with the attitude that their food was worth pennies to produce. Most places didn't offer discounts to their employees, not even for food that was mistakenly made and had to be trashed. Domino's was…

I delivered for Pizza Hut a dozen+ years ago. The store I was at only did delivery and take out. We didn't have routing software, but it was really easy to divvy up and group orders looking at a map. I'm sure it would be more difficult if your software wasn't great, volumes weren't high enough, or just not having the vertical integration.

Also, with vertical integration drivers can help cut, box, and confirm orders so staff can focus on other things--or not depending on how busy they are.

I worked Sunday afternoons just me and a manager. I would share responsibilities of cooking, prep, and delivering, they would cover the phone lines, prep, and cook as needed. It would normally be quiet, but we might randomly get a large youth group or party order while also prepping for Sunday evening football rush. The fungibility of labor seemed better than the burstability of delivery, at least in that case.

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#127

Post by mike00632 »

missedthecue wrote: post #120
jhallenworld wrote: post #98

So city dwellers in the ancient Roman world did not have kitchens- possibly they ate out more than we do. So there must have been demand for food delivery... I wonder if they accomplished it with slaves? Well there is some history: https://www.thevintagenews.com/2019/01/08/food-delivery/ The Indian "dabbawala" maybe is where it has to go: some kind of standardized service where one driver can deliver to many people i…

I mean there wasn't a way to remote order in ancient Rome. You'd have to go yourself or send someone.

What's funny is that I didn't even think of that until I read your comment. I totally imagined an ancient Roman calling in their order on their phone.

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#128

Post by [deleted] »

sequoia wrote: post #60
Swizec wrote: post #49

Earlier quoted context omitted.

> Would not be surprised 30y from now most homes won't have kitchen anymore. You'll have an access where a drone can come in an deliver whatever you ordered. I suspect you vastly underestimate how cheap and time effective cooking at home can be. My girlfriend and I just mealprepped 8 meals for $30. Took 15min of active work. The whole week we both get a healthy balanced meal that takes 2min to prepare. No delivery co…

My interest is piqued. What 8 meals did you make in 15 minutes? Did you purchase already cooked food?

[deleted]

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#129

Post by twblalock »

ThrustVectoring wrote: post #115
mardifoufs wrote: post #8

What's Postmates moat? Having never used it, I don't necessarily see the 2.6b$ value in a smaller delivery app that is only really used in some areas of the US. Though I'm sure there is something I'm missing and 2.6b$ is probably less expensive than the cost of pricing Postmates out of the market especially considering it's an all stocks deal. It's just that delivery seems to be easily scalable and easy to just dump…

Network effects are the moat here, much like for ride hailing apps. More drivers signed up on the app means that the service times for customers are improved, and more customers using the app means less waiting time and dead mileage for drivers.

A few things undermine the networking effect: drivers working for multiple delivery/ridesharing companies, and customers using multiple delivery companies.

If Postmates went of out business tomorrow the drivers would just shift to Doordash and Grubhub and Instacart and the others. There is zero moat.

Re: Uber, Postmates Agree on $2.65B All-Stock Deal

#130

Post by ethbro »

saalweachter wrote: post #119
bhl wrote: post #66

Earlier quoted context omitted.

I think a questions that’s going to pop up is, why does delivery work for a company like Dominos’s (vertical integration) but not Postmates (horizontal)?

Well, for one thing, "integration". Domino's is built to deliver pizzas. They have streamlined the process of an order being placed, prepped, and handed off to delivery to try to make each step of the process as efficient as possible. Do "horizontal" delivery companies have similar integration and benefit from similar efficiency? In an ideal delivery situation, you want two things to be true: first, delivery people s…

I suppose the argument goes: if anyone can approach that optimality, it's a company with a large fleet of repurposable drivers.

Being able to dispatch to a driver in motion depends on having a suitable driver available.

I'm still doubtful it can ever work, for the reasons people mentioned above. But the realistic game is that Uber becomes the new Yelp and strongarms restaurants for a share of their profit, in return for customer access / promotion. (Which I have pretty strong feelings about as an ethical business model, but that's just my opinion...)

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