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Uber Bonds Term Sheet Reveals $470M in Operating Losses

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Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#71

Post by dylanjermiah »

colechristensen wrote: post #16
cheriot wrote: post #5

Earlier quoted context omitted.

I'm still surprised that Uber is entering such competitive markets. I mean, in much of the western world, they're using a mobile app to side step cab hailing laws and break long standing taxi oligopolies. Does anyone know what market flaws they're solving in India and Asia?

I don't like how uber flaunts the law in so many places, but their competitive advantage doesn't come from non-compliance. The service is plainly better. The cars are better, the drivers are rated, payment is easier, hailing is easier, knowing where your cab is and how long it will be and how much is will cost before you start your ride ... is better. I live in the Twin Cities ... not a place where cabs are dense eno…

If flaunting the law results in an all round better service perhaps the laws don't do what they're supposed to.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#72

Post by colechristensen »

dylanjermiah wrote: post #71
colechristensen wrote: post #16

Earlier quoted context omitted.

I don't like how uber flaunts the law in so many places, but their competitive advantage doesn't come from non-compliance. The service is plainly better. The cars are better, the drivers are rated, payment is easier, hailing is easier, knowing where your cab is and how long it will be and how much is will cost before you start your ride ... is better. I live in the Twin Cities ... not a place where cabs are dense eno…

If flaunting the law results in an all round better service perhaps the laws don't do what they're supposed to.

There is a difference between trying to behave reasonably outside the law starting up while trying fix regulations fairly and in good faith when you get enough attention ... and ostentatious defiance, which is how many would describe Uber's behavior in many circumstances.

'flaunting' was a carefully chosen word.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#73

Post by 2anon4this1 »

soup10 wrote: post #58
geofft wrote: post #38

There was a comment thread earlier today about whether Uber is solving rich-people problems or common-people problems. I wonder the extent to which Uber's pricing is sustainable -- are they subsidizing uberX and uberPOOL pricing out of money they're raising, or are the debts just in the pursuit of growth to new cities? Or put another way, if they ceased all growth, froze prices, and laid off all engineering and marke…

They solved the "hail a taxi by pressing a button on your smartphone problem". It's not really subsidized, if they weren't setting piles of money on fire trying to grow really fast(and taking moonshots on autonomous cars), they would definitely be profitable.

In many cities uber is paying drivers a guaranteed $40 per hour to drive regardless of fares during peak times.

In many places uber is currently an unsustainable, heavily subsidised operation which would fail in free market conditions, but because of their big stash of VC $$ they are able to survive while eating away at taxi driver market share.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#74

Post by mrweasel »

Did anyone actually believe that Uber was making a profit?

Honestly the question should be: Can you have a $50 billion valuation, while losing money? I'm not saying the the valuation should be zero, because they do have assets, but $50 billion is a lot of money.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#75

Post by dylanjermiah »

colechristensen wrote: post #72
dylanjermiah wrote: post #71

Earlier quoted context omitted.

If flaunting the law results in an all round better service perhaps the laws don't do what they're supposed to.

There is a difference between trying to behave reasonably outside the law starting up while trying fix regulations fairly and in good faith when you get enough attention ... and ostentatious defiance, which is how many would describe Uber's behavior in many circumstances. 'flaunting' was a carefully chosen word.

There is no behaving 'reasonably' outside the law. It's clear that if they had not won over the consumers, the people who the law is supposed to help, Uber would not exist.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#76

Post by joshjkim »

geofft wrote: post #38

There was a comment thread earlier today about whether Uber is solving rich-people problems or common-people problems. I wonder the extent to which Uber's pricing is sustainable -- are they subsidizing uberX and uberPOOL pricing out of money they're raising, or are the debts just in the pursuit of growth to new cities? Or put another way, if they ceased all growth, froze prices, and laid off all engineering and marke…

It would be profitable, but assuming the situation your describe, it would primarily come down to (1) driver churn and (2) costs associated with any adverse legal rulings/judgments.

1. Cost of recruiting drivers is relatively high - probably around $50-$100 per driver. This cost is composed of background check (probably $10-20), the ad that got them in the door ($5-10 for that click), the overhead cost of recruiting staff and onboarding staff and 1099 paperwork ($2-$5). Let's be nice and say $50 is the cost. Again, being generous, if the average ride is $20, and Uber takes 20% ($4), that means that each driver needs to perform 13 rides for Uber to make their $$ back. I don't know for sure, but anecdotally most drivers I've ridden with likely exceeded this, so I'd say they are good on this front.

2. In reading the recent CA administrative decision, the main damages were for reimbursement for mileage, at $0.56 per mile. So this means that IF a state were to determine either that (a) drivers are employees or (b) drivers are not employees but some "third-option hybrid" for whom Uber still needs to reimburse miles, this would great eat into their margins and drag profitability down.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#77

Post by learc83 »

lsc wrote: post #67
wpietri wrote: post #40

Earlier quoted context omitted.

Having worked for financial traders I won't call them the very worst company in the world. But if my choices were working for them or quitting the industry, I wouldn't blink. For me it's more the accumulation of awfulness. They started out as a scheme to time-share limos among young entitled dudebros. They entered the market with the black cars, exploiting a status-good dynamic. They've shifted all of the capital cos…

>Throughout all of this, they sing a song of "entrepreneurship" and "worker independence" while providing low-quality, low-stability jobs and making long-term plans to put every one of their drivers out of work. So, of the people I know working for Uber... it seems that compared to other unskiled labor jobs open to them? By all accounts, Uber is worlds better than foodservice, unless you count both the lack of disabi…

Uber isn't really a job open to the poor. First, you need to be able to afford a decent car, which is right out for the for a lot of people. Second, if you're poor and living paycheck to paycheck, you're unlikely to have the cash to cover any major repairs.

Also, after you deduct vehicle depreciation, insurance, gas, and time driving without a fare, uber doesn't pay all that well per hour.

As far as actual driver statistics go, Uber isn't a good employment alternative for the poor, it's a stopgap measure for the unemployed middle class--more than half of drivers have a college degree and more than half work for less than a year.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#78

Post by beedogs »

dylanjermiah wrote: post #68
beedogs wrote: post #54

Earlier quoted context omitted.

"It's better than a taxicab so that excuses literally all of the bogus, often illegal shit Uber is doing." Riiiiiiight.

I don't think they're doing any 'bogus' things nor do I think the illegality matters. The laws were used to prop up the taxi cartel, I'm glad they are being broken.

If it's okay to break laws you don't personally like, then I'm sure you'll be alright with me opening a live music venue right next to your house.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#79

Post by HappyTypist »

wpietri wrote: post #40
personjerry wrote: post #3

Tangential to OP: How does HN feel about the "evilness" of Uber? At my school the general feel is that Uber is pretty evil, notably for its attitudes towards its drivers as well as towards Lyft.

Having worked for financial traders I won't call them the very worst company in the world. But if my choices were working for them or quitting the industry, I wouldn't blink. For me it's more the accumulation of awfulness. They started out as a scheme to time-share limos among young entitled dudebros. They entered the market with the black cars, exploiting a status-good dynamic. They've shifted all of the capital cos…

Sometimes local laws are not worth complying. Taxi medallions are one example - they artificially limit supply and break the market. The argument that a limit on taxis is needed to prevent congestion ignores the whole concept of 'supply and demand'. Too many taxis? The market will correct itself, just like what's happening with Uber drivers (I know many are quitting due to the excess supply).

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#80

Post by Aloisius »

prawn wrote: post #66
geofft wrote: post #38

There was a comment thread earlier today about whether Uber is solving rich-people problems or common-people problems. I wonder the extent to which Uber's pricing is sustainable -- are they subsidizing uberX and uberPOOL pricing out of money they're raising, or are the debts just in the pursuit of growth to new cities? Or put another way, if they ceased all growth, froze prices, and laid off all engineering and marke…

Maybe their plan is just to subsidise drivers until self-driving cars arrive, by which time they will have brand dominance and can carry on merrily.

It seem highly unlikely that they're planning on waiting 20+ years it will take before fully autonomous vehicles are able to reliably navigate busy city streets and are licensed to do so without a driver behind the wheel.
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