Uber Lays Off 400 • Hacker News Board

Re: Uber Lays Off 400

#281

Post by oarsinsync » Tue, Jul 30, 2019, 10:33 AM UTC

Ntrails wrote: post #267

MegaButts wrote: post #57

Earlier quoted context omitted.

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

> The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit... The VCs are still locked in and haven't been able to sell afaik? The public markets have 6 months to figure out fair price before they get theirs

Softbank has used it's collateral in WeWork & Uber to take out secured loans.

Effectively bypassing the lockup period, and insuring any downside to the share price for the cost of the interest on the loans, while maintaining the opportunity for any upside.

They've effectively done one better than just selling the stock.

Re: Uber Lays Off 400

#282

Post by oarsinsync » Tue, Jul 30, 2019, 10:34 AM UTC

vmurthy wrote: post #254

MegaButts wrote: post #57

Earlier quoted context omitted.

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

> I fear venture capital (and Silicon Valley) is much more about value extraction than value creation these days. If you think about it, most of the venture capital goes in financing duds. That's an unfortunate truth about entrepreneurship. So a VC is more or less forced to extract as much value as possible from the successful ones. Not saying it is right or wrong but stating the way things are working.

Once upon a time, successful businesses were also profitable.

Re: Uber Lays Off 400

#283

Post by HNisCurated » Tue, Jul 30, 2019, 10:59 AM UTC

MegaButts wrote: post #57

cj wrote: post #33

Earlier quoted context omitted.

I mostly agree, except I'd probably frame it a bit differently: > Need more users pre IPO to juice the growth story Or, "VCs tell us we need to spend their investment quickly in whatever areas will generate a hockey stick growth in valuation. We can always fix our business model when we're ready to." > Cut costs post IPO Or, "We no longer answer to our VCs. Now we answer to the public market who cares a lot more abou…

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

This is why I'm staying out of much of tech and the current stock market.

We were taught as children the market returns 7%/yr. People took this too seriously.

This has all the signs of the housing bubble.

Re: Uber Lays Off 400

#284

Post by scarface74 » Tue, Jul 30, 2019, 11:51 AM UTC

brandnewlow wrote: post #278

scarface74 wrote: post #241

Earlier quoted context omitted.

Facebook was already profitable pre-IPO and was forced to go public because of some security law involving the number of investors. But the number of tech startups that go public is small. Only one YC backed company has ever gone public - Dropbox. And it seems to be proving Steve Jobs right. It was never a product, it was a feature. It still doesn’t have a clear road to sustainable profitability. Even out of the few…

PagerDuty (YC S10) is also a public company: https://www.marketwatch.com/story/pagerduty-stock-skyrockets...

And they lost $12 million last year so just like Dropbox. They still aren’t profitable.

Re: Uber Lays Off 400

#285

Post by goseeastarwar » Tue, Jul 30, 2019, 11:52 AM UTC

HNisCurated wrote: post #283

MegaButts wrote: post #57

Earlier quoted context omitted.

I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation t…

This is why I'm staying out of much of tech and the current stock market. We were taught as children the market returns 7%/yr. People took this too seriously. This has all the signs of the housing bubble.

In the meantime, the market is up 20% since January and PE ratios for the largest companies are still reasonable. Uber’s success or failure has no bearing on the broader health of the market.

Re: Uber Lays Off 400

#286

Post by amiga_500 » Tue, Jul 30, 2019, 12:59 PM UTC

amelius wrote: post #264

amiga_500 wrote: post #210

Earlier quoted context omitted.

> market share is the short term goal. Creating a monopoly then jacking up the price. Not doubt shafting drivers and their customers.

But Uber's business model doesn't have lock-in potential. So if a price change happens, people (drivers and customers) will just switch to a different app.

I have sympathy with your view. Do Uber even care about that? It's selling the prospect of a lock-in that got them the IPO.

Re: Uber Lays Off 400

#287

Post by phatfish » Tue, Jul 30, 2019, 1:48 PM UTC

resters wrote: post #164

aresant wrote: post #79

Earlier quoted context omitted.

UBER masks this real number across many of their general line items. EG they put ~$300,000,000 of the "Driver Incentive" cost into "Cost of Revenue" line item that represents: - "Any amount paid to a driver that exceeds the revenue earned by that driver (for instance, if a driver’s earnings from a trip exceed the fare for that trip). Excess driver incentives jumped by about $300 million in 2018 from the previous year…

I am not a shareholder, but I think market share is the short term goal. The incentives can be phased out as prices increase a bit after competition cools off.

To me this only works out if they are a monopoly bribing politicians to allow them to keep being the only smartphone-app-based taxi and food delivery service in town.

As others mentioned, its not hard to clone Uber. They don't even have the network effect of Facebook or Twitter. No one cares if their friend uses Lyft and they use Uber, they just care about the one time they make a journey, and how much it costs (along with safety I suppose, but that is an extra cost Uber try very hard to avoid).

The drivers are free to run whatever apps they want simultaneously, because Uber only works when exploiting them as "contractors" free to choose when and how they work.

I think Travis Kalanick was right, they need self driving cars, now...

Re: Uber Lays Off 400

#288

Post by sjg007 » Tue, Jul 30, 2019, 2:22 PM UTC

grecy wrote: post #147

codingdave wrote: post #18

> 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.

Marketing runs the world now, because we've reached a point where companies really, really have to convince people to spend their money on whatever useless product is being pushed. Ever notice there isn't marketing for potatoes, bread, rice, etc. ? People buy those things anyway. The latest smartphone? gotta convince everyone to buy it. At my last company engineering spent $10m installing fiber into some remote commu…

There's plenty of marketing for potatoes (Idaho), pork, milk, pistachios, avocados, beef, chicken etc... Usually trade groups but still.

Re: Uber Lays Off 400

#289

Post by sjg007 » Tue, Jul 30, 2019, 2:26 PM UTC

UncleEntity wrote: post #219

selectodude wrote: post #203

Earlier quoted context omitted.

100 percent of their income goes to the car until its paid off for that month, and the interest rate they charge to lease the car is downright usury. $200/wk to rent a Hyundai Elantra that Hyundai leases out at under $200/mo.

The difference being that $200/wk covers everything but gas, lease a car direct from Hyundai and you have a lot more overhead to deal with -- maintenance, insurance, going over the "average miles" in a few months, &etc.

Most lease agreements now include maintenance. Why? Because they don't want you to run the car into the ground since then you'll just return it. Modern cars need oil changes at 10k miles. With a 30k lease you are talking 3 oil changes which is like $50 in wholesale cost. Brakes and tires should last the whole 30k.

Re: Uber Lays Off 400

#290

Post by sjg007 » Tue, Jul 30, 2019, 2:35 PM UTC

mruts wrote: post #274

bduerst wrote: post #250

Earlier quoted context omitted.

They've plateaued this past year with negative growth. Is what dominoes was doing a decade ago really relevant?

They have an excess return compared to the S&P 500 of 200% in the last five years. That’s hardly ten years ago, and the story for Domino’s is still very strong. There’s tons of market share left to eat up and many international opportunities. Pizza Hut has already moved into EM markets (like Africa) and is gradually expanding. Domino’s could do the same thing, and probably better with their superior tech stack.

I agree. Pizza is a good market. I live in a small town, <8k people, and we have 5 places that deliver pizza, a take and bake, not to mention gas stations and supermarket pizza.