Uber, Postmates Agree on $2.65B All-Stock Deal • Hacker News Board

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

#191

Post by marvin » Mon, Jul 06, 2020, 8:07 AM UTC

TheSpiceIsLife wrote: post #186

cycomanic wrote: post #182

Earlier quoted context omitted.

I've said this in another thread, the business of all these "startups" seems not to be of making a sustainable business, but instead it's more of a pyramid scheme where one set of investors are trying to make money of the next round of investors (up to and after IPO). If we view it like that it makes sense, the merger/acquisition will increase stock prices because it seems like there is a holistic strategy. At some p…

It's a wealth transfer scheme. Wealth is transferred from ordinary folk via the IPO-retirement-fund axis to the plethora of agents involved in the whole scheme, from the employees bashing out code and UX, right through to everyone involved the M&A and IPO and the whole tax / tax agent / government tax agency cadre. It's not trickledown . It's deluge-up economics.

Huh. That's a novel use of stupid index fund money. Just get your shitty investments listed on the stock exchange and cash out. Index fund buyers don't care, they'll swallow it right up and it's free to crash and burn at their expense. You could even do it deliberately, as long as it follows securities regulations. Being a pure momentum strategy, index investing has no intelligence.

At one point this would make index fund investing as a whole significantly less profitable. With all the horror stories we've seen unfold in the last five years, you could begin to suspect that boards actively and knowingly execute this strategy. You can only hope that a money manager would be smart enough to avoid the SoftBanks, Ubers and WeWorks. But I don't know that's a given. Shorting them out of your portfolio isn't an obvious strategy either, due to borrow costs and so on.

Anyone given a significant amount of thought to this?

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

#192

Post by donavanm » Mon, Jul 06, 2020, 8:08 AM UTC

mathieuh wrote: post #175

washicalendar wrote: post #172

Earlier quoted context omitted.

Like the person you responded to said, employees working for those stores can do useful work when they aren’t delivering. Here the Domino’s are delivered by bicyclists and those people are doing work for the store when they’re waiting for deliveries. That work justifies them being paid a wage. For Postmates et al., those drivers aren’t doing anything useful during their downtime. They have nothing to sweep or dishes…

Yes but they said 50% of their income comes from tips and a $1 delivery fee. I assume tips are generally more than $1 (I may be wrong). Maybe it’s just not productive to compare different countries’ eating habits in the end, but it seems to me GP is saying that tips make up a meaningful proportion of delivery drivers’ income.

Yes, tips will be higher then $1. But thats only germane as a way of the deliverer receiving an average income thats higher than the minimum wage. In locales without prevalent tipping Im going to guess thats made up for with a higher wage or work piece pricing. From the competitive business side the real difference is in higher worker productivity & efficiency for the vertically integrated shop.

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

#193

Post by cosmodisk » Mon, Jul 06, 2020, 8:27 AM UTC

mathieuh wrote: post #168

ThrustVectoring wrote: post #114

Earlier quoted context omitted.

I've worked as pizza delivery. The tipping and per-delivery payments to drivers is why it works. Roughly speaking, a delivery driver in my area nearly a decade ago earned roughly $20/hr after gas and car expenses, half in hourly wages @ state minimum and the other half in tips + $1/delivery payment. They also took about 3 deliveries an hour when fully utilized, which wasn't for 100% of their shift. The wait time got…

What about in countries where tipping is not normal? I live in the UK and lots of small family-run fish and chip shops and takeaways offer delivery, along with the bigger chains like Dominos.

Our office is next to a managed kitchen,which cooks for 6-10 different restaurants,who mainly operate online only,via Deliveroo and etc.The service is very popular,so the road is always packed with scooter riders. However, the downtime seems to be substantial for the riders. These are the ones things I'd be going out and observing if I was someone with tons of money to invest in those companies.

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

#194

Post by perf1 » Mon, Jul 06, 2020, 8:27 AM UTC

tyre wrote: post #24

Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…

Maybe they convinced themselves that automated cars will come soon and then delivery will become basically almost free.

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

#195

Post by finolex1 » Mon, Jul 06, 2020, 8:32 AM UTC

tyre wrote: post #24

Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…

It is not impossible to achieve profitability. Seamless (what used to be every Wall Street Banker's go-to service) was profitable for a long while. Granted, they didn't have the same level of competition we see today.

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

#196

Post by cosmodisk » Mon, Jul 06, 2020, 8:34 AM UTC

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…

This is an extremely accurate description of Dominos operations. Very few,if any,can replicate it,unless they also sell products that cost a small fraction of the end price. At least in the UK, their tech is years ahead of any other pizza join, including their biggest competitors.

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

#197

Post by [deleted] » Mon, Jul 06, 2020, 8:35 AM UTC

randomsearch wrote: post #160

tyre wrote: post #24

Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…

Perhaps we’ll look back and say “food delivery was the pet food of the 2020 startup boom/bust.” I think these businesses are awful and probably unethical, but from the outside it would surprise me if a single winner could not make this business model work, once they had so much of the market that delivery schedules could reach high utilisation.

[deleted]

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

#198

Post by mschuster91 » Mon, Jul 06, 2020, 8:36 AM UTC

marvin wrote: post #191

TheSpiceIsLife wrote: post #186

Earlier quoted context omitted.

It's a wealth transfer scheme. Wealth is transferred from ordinary folk via the IPO-retirement-fund axis to the plethora of agents involved in the whole scheme, from the employees bashing out code and UX, right through to everyone involved the M&A and IPO and the whole tax / tax agent / government tax agency cadre. It's not trickledown . It's deluge-up economics.

Huh. That's a novel use of stupid index fund money. Just get your shitty investments listed on the stock exchange and cash out. Index fund buyers don't care, they'll swallow it right up and it's free to crash and burn at their expense. You could even do it deliberately, as long as it follows securities regulations. Being a pure momentum strategy, index investing has no intelligence. At one point this would make index…

> You can only hope that a money manager would be smart enough to avoid the SoftBanks, Ubers and WeWorks

The problem is, no one has much other choice than to go this route and invest into the "next potential unicorn". With classic stocks stagnating and many government bonds in low to negative interest territory, it's hard to make any noticeable profit.

The way to fix this would be to reform pensions to a government-backed system such as Germany or Austria have - that reduces the amount of "dumb money" in the system.

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

#199

Post by washicalendar » Mon, Jul 06, 2020, 8:41 AM UTC

mathieuh wrote: post #175

washicalendar wrote: post #172

Earlier quoted context omitted.

Like the person you responded to said, employees working for those stores can do useful work when they aren’t delivering. Here the Domino’s are delivered by bicyclists and those people are doing work for the store when they’re waiting for deliveries. That work justifies them being paid a wage. For Postmates et al., those drivers aren’t doing anything useful during their downtime. They have nothing to sweep or dishes…

Yes but they said 50% of their income comes from tips and a $1 delivery fee. I assume tips are generally more than $1 (I may be wrong). Maybe it’s just not productive to compare different countries’ eating habits in the end, but it seems to me GP is saying that tips make up a meaningful proportion of delivery drivers’ income.

My bad, I misunderstood, but I’m not sure how tips are relevant.

It seems like the GP(?, the first poster in this chain) was saying that delivery works for places like Domino’s which hires and pays their own couriers a standard wage. That wage is already accounted for in Domino’s pricing, and since that employee has to show up to work even when there aren’t deliveries they can be put to work. Thus, there are no additional costs to Domino’s as everything is presumably priced taking this into account.

When you outsource your delivery, the company being hired takes a cut. That company (Postmates etc) need to use this cut to pay their couriers. Postmates can only ask for so much before the store just says no, it’s not worth it. Those couriers need to be paid enough that it’s worth it for them to keep delivering. So, Postmates scales up to make up for it in bulk by taking losses by offering deals. Those deals don’t last forever, and customers like me only order because of the deals will just go away.

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

#200

Post by throwaway744678 » Mon, Jul 06, 2020, 8:43 AM UTC

perf1 wrote: post #194

tyre wrote: post #24

Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…

Maybe they convinced themselves that automated cars will come soon and then delivery will become basically almost free.

That is probably not so easy: you'd still have to pay for the car (if it retails for $100k, that is a lot of deliveries to make before eating that cost), and it will depreciate over time. And you still have to pay for gas (electricity?), insurance, maintenance, etc.

Not to mention solving the issue of the physical exchange with the customer.