Ask HN: Why did Uber lay-off thousands of employees

#1

Post by quietthrow » Mon, May 18, 2020, 8:25 PM UTC

Serious question.

I understand that covid-19 has disrupted business for the last 2-3 months in the US and a little more in around the world for global businesses. What I don’t understand is why such a large company that has billions in revenues (even though loss making) could not with stand 2-4 months of distruption and has to lay-off 15% of its workforce.

I am trying to understand what this move by Uber really means? Does it mean that even thought they generate millions or billions in revenue every quarter they are living hand to mouth and hence cannot even withstand 6 months of lower revenues? Surely they can find bridging capital giving hiring is such a expensive activity ?

Or does it mean that this is simply them trying to make things more efficient and using covid as a valid reason/exuse to justify a move thst is overall better for the company in the long run.

Or is this them predicting a very depressed outlook for their business in the medium term that requires them to lay-off rather then seek alternate solutions for short to medium term. If so does this more business will use covid as a forced spring cleaning lever ?

Or something else.

Re: Ask HN: Why did Uber lay-off thousands of employees

#2

Post by purerandomness » Mon, May 18, 2020, 8:36 PM UTC

1. No one knows how long the pandemic will last. It could be 6 months, but it could be longer, after a 2nd and 3rd wave.

2. Even if the pandemic would end in exactly 6 months, no one knows whether consumers, after having lost their jobs, will have the money to spend on such a "luxury" like rides. It might take 2 years for consumers to fully recover from the money lost.

3. Everyone realized they actually don't need that commute, so chances are that car traffic, in general, will decrease, because people who realized the can work from home will do so more often.

4. Similarly, pop-up bike lanes are popping up everywhere, with people switching to bikes (at least here in Germany), so you could argue that permanent mobility shifts will happen.

5. Game theory: If a legislation allows for mass firing like those, you have to justify NOT firing during bad times like these, to the stakeholders whose VC money you're burning, especially since everyone else does it. You'd lose out by not using every one of the tools your legislation gives you. In other legislations (most of Europe), such firings would simply not be possible and couldn't be considered as an option to extend runway.

You use the word "withstand", which carries a very positive meaning, and the idea that the company will "come out stronger" after that.

Sadly, this concept doesn't exist for a company, especially not VC funded ones. There is simple not enough incentive to keep burning VC money, especially when your margins are low, you're not profitable, and the whole game is to take over the market, or go home.

Re: Ask HN: Why did Uber lay-off thousands of employees

#3

Post by schoolornot » Mon, May 18, 2020, 8:42 PM UTC

Never let a crisis go to waste.

Re: Ask HN: Why did Uber lay-off thousands of employees

#4

Post by quietthrow » Mon, May 18, 2020, 9:23 PM UTC

schoolornot wrote: post #3

Never let a crisis go to waste.

Haha. Good one it gave me a laugh as I realized that the clown-in-chief is doing the same. In fact he finds crisis so valuable he creates them on a daily basis if he can find one ready made.

Re: Ask HN: Why did Uber lay-off thousands of employees

#5

Post by quietthrow » Mon, May 18, 2020, 9:28 PM UTC

purerandomness wrote: post #2

1. No one knows how long the pandemic will last. It could be 6 months, but it could be longer, after a 2nd and 3rd wave. 2. Even if the pandemic would end in exactly 6 months, no one knows whether consumers, after having lost their jobs, will have the money to spend on such a "luxury" like rides. It might take 2 years for consumers to fully recover from the money lost. 3. Everyone realized they actually don't need th…

So, per you, This is much less about covid and more about a unprofitable business preparing for fundamental (And so far perceived) shifts in its market. I conclude that because yes we don’t know how long Exactly will covid will last but we do the range (~2-3 years)and after that the their market would return unless that market is now fundamentally changed/smaller etc. which is what their move suggests.

Re: Ask HN: Why did Uber lay-off thousands of employees

#6

Post by tw1912112 » Tue, May 19, 2020, 3:19 AM UTC

quietthrow wrote: post #5

purerandomness wrote: post #2

1. No one knows how long the pandemic will last. It could be 6 months, but it could be longer, after a 2nd and 3rd wave. 2. Even if the pandemic would end in exactly 6 months, no one knows whether consumers, after having lost their jobs, will have the money to spend on such a "luxury" like rides. It might take 2 years for consumers to fully recover from the money lost. 3. Everyone realized they actually don't need th…

So, per you, This is much less about covid and more about a unprofitable business preparing for fundamental (And so far perceived) shifts in its market. I conclude that because yes we don’t know how long Exactly will covid will last but we do the range (~2-3 years)and after that the their market would return unless that market is now fundamentally changed/smaller etc. which is what their move suggests.

There will definitely be massive reduction in business travel + local commute that makes up a huge chunk of Uber business that is not coming back. There is also a risk around politics, as we get into election, Uber is going to be a prime target for the Democrats, the legal bills are going to pile up pretty quickly.