Love to revisit this piece every few years. Why food delivery will never be profitable: "The Food Delivery Death Star" https://medium.com/@review/the-food-delivery-death-star-85f9...
Drone delivery will fix that.
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Uber Lays Off 400
101–110 of 310 posts
Re: Uber Lays Off 400
#102Earlier quoted context omitted.
Uber's marketing / customer acquisition cost is their highest non-driver line item by a significant multiple. They spent ~$3,200,000,000 ($3.2 billion) on sales & marketing in 2018 of which ~$1,800,000,000 is direct media / HR cost to drive customer acquisition. In 2019 this number, as of the first quarter, has gone up substantially to a >$4b run rate. With a burdened cost of $150k/yr for every single member of the 1…
Echoing twic's disbelief here. A quick googling turned up Coca-Cola's global advertising budget as being $4 billion/year [1]. >Coca-Cola has made a yearly commitment to large ad spends. In 2017, the beverage manufacturer spent $3.96 billion, in 2016, $4 billion, and in 2015 $3.96 billion on global advertising. But I'm not sure if that's a comparable figure, as "advertising" is only a subset of "marketing". Still, if…
Also in comparison with Coca-Cola, Uber is supposedly counting discounts and sales to riders in a way that inflates revenue, which does not sound to be the norm. https://www.lctmag.com/news/733960/uber-lyft-use-accounting-...
Re: Uber Lays Off 400
#103Earlier quoted context omitted.
I can understand why every new market requires an operations team on the ground, but marketing ought to be centralized.
I could see there being localization challenges, especially when you start talking about multiple countries. Not just languages; cultural nuance, idioms, and political awareness all matter.
This is precisely why you have regional marketing teams. It's all situational, but IME a dedicated team for a region (APAC, EMEA, etc.) is better at executing than a single centralized global team. Typically the operational aspects can be delegated to the regions who know the individual markets best, while things like branding stay central.
Re: Uber Lays Off 400
#104Earlier quoted context omitted.
Your comment reminds me of something Dan Luu had written about. https://danluu.com/sounds-easy/ > I can't think of a single large software company that doesn't regularly draw internet comments of the form “What do all the employees do?" Granted he's mostly talking about engineers, but I'm sure someone more knowledgable about marketing could write an almost identical essay.
> I can't think of a single large software company that doesn't regularly draw internet comments of the form “What do all the employees do?" I also can't think of a single large software company that doesn't, in the long run, survive by either endlessly buying and extracting all the value out of smaller software companies, or creating a moat that makes it almost impossible for new competitors to emerge. Having worked…
I don't think large companies just "extract value" from the small ones. They prove that the small company had a great idea and make the idea successful by providing sales, marketing and support that the small.company wouldn't be able to provide (if for no other reason than reduced risk and existing customer relations).
Re: Uber Lays Off 400
#105Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?
Drug dealers have been known to sell drugs to someone new cheap (perhaps at a loss) to get them hooked, and then once they are hooked jack the price up. Uber is trying to do that with transport.
Re: Uber Lays Off 400
#106Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?
People like comparing Uber to, say, Amazon. The major difference is that Amazon benefitted from economies of scale - they spent a lot of time in the red building infrastructure and logistics, but now they reap the benefits by having very good infrastructure and logistics, which only get more efficient the more things they sell. Uber's main expense is the driver. The vehicles pretty much always stay the same size so t…
The view that "Uber's main expense is the driver" is essentially backwards. The current economics are more akin to drivers paying Uber to find them business. Drivers pay for all of the physical expenses of a ride (like gas, maintenance, depreciation and financing charges) and provide all of the labor. Since it would almost certainly cost Uber much more to buy the vehicles, pay for the gas and hire the drivers as employees it is fairer to say "Uber's main income source is drivers".
AV only offers a growth story if you believe the drivers' earnings are high enough to more than cover the additional costs to Uber of buying, fueling, and maintaining the AV fleet. With AV prices likely to be significantly higher than traditional vehicles for the foreseeable future and since most studies show drivers' net income near minimum wages this seems pretty unlikely to me.
Re: Uber Lays Off 400
#107> The marketing team had more than 1,200... I fully admit that I'm not in marketing, so there are surely nuances I don't know. But that scale of marketing department is orders of magnitude above any other place I have worked, with the possible exception of IBM in the 90s. Just maybe... this was a reasonable move.
Uber's business model has the same problem as Groupon's, which is that they don't really have economies of scale. Every market requires a new team of people to run promotions to attract drivers and customers and match supply with demand.
Yes. Seems to be a mostly variable cost business. That means you need to lower your per unit cost. This might be their plan.
Re: Uber Lays Off 400
#108Earlier quoted context omitted.
Pizza delivery is profitable. Pizza comes in a shape easy for transportation, the size and value of the delivery is economical for a delivery business and there's an established culture around ordering pizza for delivery. The food delivery companies just need to figure out these problems, which a hard, for non-pizza foods.
Also helps that pizzas themselves are dirt cheap to make. Anything that makes them expensive is chargeable. Continuous production is easy and cheap, so doubling your volume by adding delivery is achievable with the same kitchen.
...and fucking delicious
Re: Uber Lays Off 400
#109Profitability doubts after the IPO? Everyone in the world knew they were never close to profitability pre-IPO, this is just the reality of being a publicly traded not profitable company. Can't funding round yourself out of this one anymore.
Well you can... the terminology is just different They’ll say “saudi investors bought into secondary offering at X share price” instead of “round completed at Y valuation!!!” Which is just X share price of last purchase multiplied by total shares in existence Public companies can do secondary offerings from treasury or from creating brand new shares from nothing (dilution) Liquidity is one of the benefits
Yup, also from selling bonds.
Re: Uber Lays Off 400
#110Can someone with insight into the matter explain, from a high level, what the big concerns are over Ubers ability to run profitably?
In my naive view they are "just running an app" / acting as a mobility marketplace and they make money on each transaction. Given the traction and market dominance they have this sounds like a really attractive business. So how do they manage to run such big losses every year and which items on the expense side are so crucial for the business that nobody at Uber dares to cut into them?