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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

#291

Post by TuringNYC »

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…

Isn't it reasonable to think that once you have enough density, the business starts making a lot of sense (e.g., collecting (in the same car) multiple orders simultaneously from the same restaurant -- and delivering multiple orders on the same car to the same building/neighborhood)

I imagine you'd need a local hub/exchange for it to really work. I do question whether the model works outside urban settings though.

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

#292

Post by TuringNYC »

ThrustVectoring wrote: post #114
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)?

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…

Also, in the vertical model, the profit is shared with two parties -- the restaurant and delivery agent. In the horizontal model, there is an extra party which needs to be paid -- Postmate/Uber/DoorDash/etc. Presumably, the app experience makes it worth to pay more for the delivery, to pay this third party, but that has not yet been the case.

Also, once one party owns the relationship (e.g., the app), they can try and take more and more from the other parties while putting more burden/risk on the other parties.

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

#293

Post by TuringNYC »

user5994461 wrote: post #190
squeaky-clean wrote: post #106

Earlier quoted context omitted.

> 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…

A cheap pizza from Aldi is £1. A regular pizza with some toppings and maybe meat is £2-3 in most supermarkets. Could be £4 in higher end supermarkets. You see where this is going. Pizzas are worth nothing, supermarkets are making money on these (it's not allowed to sell an item at a loss in Europe). Domino produces for £1-2 and sell for £10-20. The accepted number in the restaurant industry is that food cost must be…

You are forgetting rent, ovens (energy), staff, and delivery vehicles. Those push the margins down quite a bit.

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

#294

Post by TuringNYC »

schoolornot wrote: post #105

The future of Uber is clearly diversification. Drivers doing everything. I absolutely love that I can order food from distant restaurants because they have driver routes programmed to cover large distances and a business model that supports longer wait times for the customer in exchange for cheaper prices, wider restaurant selection, and of course more customers served. The local establishments can't compete with the…

I'd say the future of Uber is perfecting their crown jewels first.

I'm a huge fan of the business model, but the app crashes, the customer service is non-existent, payments get rejected inexplicably and when you reach customer service they respond "I'm sorry you are having difficultly logging in."

I couldnt make it worse if I tried. Every rule of SWE-UX is violated. Got a problem? No code, no incident ID, you need to call a number with no context and re-contextualize. No follow-thru, nothing.

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

#295

Post by TuringNYC »

baby wrote: post #126

Got a friend on a H1B visa who got fired from Uber due to the coronavirus crisis, funny that they’re spending 2.65B a few weeks later.

Firstly, sorry about your friend. This is a huge issue with big companies where they will spend $1M on McKinsey to figure out why the company is unproductive when -- if they had just spent that $1M on bonuses they would have achieved productivity.

Same with M&A -- at poorly run companies, internal ops will be starved of budget, execs wonder why, and they do M&A to improve things.

It all has to do with poor governance and bad executive incentives.

(Side note, they are not paying cash here, they are paying with inflated sock.)

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

#296

Post by deminature »

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…

>so chances are it's investors are probably the first to make an actual realized profit from food delivery ;)

Grubhub has been profitable for years now, pulling in $23m in income in 2018, see: https://www.cnbc.com/2019/12/13/grubhub-uber-eats-and-doorda...

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

#297

Post by bobobob420 »

nielsole wrote: post #187
wittekm wrote: post #155

Earlier quoted context omitted.

Uber is doing fine without that garbage human.

Downvoted you. Someone may be despicable, but that is no reason to dehumanize them.

how do you downvote people? I only have the option of upvote.

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

#298

Post by marvin »

moneywoes wrote: post #270
marvin wrote: post #225

Earlier quoted context omitted.

Well, they're in the Russell 1000 and others, not to mention a bunch of ETFs that are basically indexes of their own. If you want a properly diversified global index fund portfolio, you wouldn't want to limit yourself to 500 of the largest American companies. Mine contains 4 funds covering ~2500 global companies.

What funds and what is your allocation

You wouldn't know them; the funds themselves are Norwegian. IIRC, the reference indexes amount to 50% MSCI World, 16% MSCI Emerging Markets, 16% MSCI Small Cap and 16% VINX Benchmark (Nordics).

Philosophy is diversification, broad coverage of both developed and developing markets, with both high-tech niche industries (heavily overrepresented in the Nordics) and global growth companies (overrepresented in the Small Cap index). Been considering specifically adding China, but dislike the political risk and human rights of top leadership. You might argue that the USA is still overrepresented in this allocation.

I was probably underestimating the number of companies covered by this; the Small Cap index alone represents more than 4500 companies. Although I doubt that my funds actually own all of them.

Cost is around 0.3% per year.

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

#299

Post by pc86 »

dustingetz wrote: post #287
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…

Will it fall down? When? (The whole global macro climate right now is a wealth transfer scheme, i guess from ultimately third world countries to (eventually) investors)

Honestly it might not. How many of these companies have - or will - simply get acquired then shut down? Or, exist as part of a larger operation a la Uber Eats and could eventually get shut down with little fanfare, or exist as a permanent loss leader?

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

#300

Post by bluedino »

user5994461 wrote: post #261
bluedino wrote: post #259

Earlier quoted context omitted.

You can't really compare a cheap frozen pizza to a chain pizza. They are bigger, for one. I've read before that a Hot-n-Ready from Little Caeser's is sold for $5.55 but costs $3.50 in just ingredients. They don't make any money on those. The breadsticks that they sell for $3.99, the cup of marinara for $1.99, the $13 veggie pizza and the $15 supreme pizza is where the money is made. Do you think there's an extra $10…

That was the price for fresh, not frozen, and they're not small. Smaller than the large £20 pizza from the chain, sure, but not necessarily smaller than the £10-15 one. The link is talking about a $11 pizza, that was briefly on sale for $5 (and still making a profit). It's not a $5 pizza.

Are you familiar with a hot n ready? That is a large one topping pepperoni, they are always $5-6 depending on location. It’s been this way since 1997
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