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Uber Lays Off 400

nytimes.com

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Re: Uber Lays Off 400

#51

Post by knicholes »

twic wrote: post #47
aresant wrote: post #42

Earlier 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…

Have you got the right number of zeroes there? Three billion per year?

I don't see aresant saying "per year" but just in 2018.

Re: Uber Lays Off 400

#52

Post by ForHackernews »

btgeekboy wrote: post #19
Bootwizard wrote: post #15

Does 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?

They’re trading cash to build their moat (keeping out competitors, investing in self-driving). From what I can tell, at least.

That's the theory, but I have no idea what this "moat" is supposed to be. Apps to hail a cab are interchangeable commodities as far as I can tell.

Re: Uber Lays Off 400

#53

Post by duxup »

Someone did a calculation about what they were paying drivers of they were converted to an hourly rate if you averaged it.

IIRC, it was somewhere near minimum wage. If you can't make a profit or are far from profitable and your front line workers are making that little money.... how do you ever without dramatically raising prices?

I really doubt corporate office cuts can achieve it.

Re: Uber Lays Off 400

#54

Post by whatshisface »

cj wrote: post #33
sambroner wrote: post #10

Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hire more marketers -> Cut costs post IPO I'm not arguing it's effective, but it's certainly a reasonable outgrowth of the various goals they've had over the last year or two.

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…

If public markets care about fundamentals why can VCs exit into the public market with fake hockey stick growth?

Re: Uber Lays Off 400

#55

Post by davidivadavid »

the_narrator wrote: post #44
randyrand wrote: post #31

Earlier quoted context omitted.

They do make profit on each ride, but not when you account for administrative overhead (which is huge because of their ridiculous headcount).

Which would mean they do _not_ make a profit on each ride.

Charitable interpretation is that the parent is talking about Uber's gross margin, which is presumably fairly high.

Re: Uber Lays Off 400

#56

Post by twic »

the_narrator wrote: post #44
randyrand wrote: post #31

Earlier quoted context omitted.

They do make profit on each ride, but not when you account for administrative overhead (which is huge because of their ridiculous headcount).

Which would mean they do _not_ make a profit on each ride.

randyrand is talking about gross margin; you're thinking about earnings. You can have a positive gross margin and negative earnings. There's no point arguing about whether this does or does not constitute making a profit in some absolute sense - just understand that both are true.

Re: Uber Lays Off 400

#57

Post by MegaButts »

cj wrote: post #33
sambroner wrote: post #10

Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hire more marketers -> Cut costs post IPO I'm not arguing it's effective, but it's certainly a reasonable outgrowth of the various goals they've had over the last year or two.

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 these days. I am still somewhat young so I have a limited frame of reference - maybe it was always like this.

Obviously you can find examples to support either side. Amazon and Facebook weren't the money making machines (for all the talks of Amazon not making a profit, AWS clearly does and their free cash flow is insane) they are today when they went public. But there are far more companies that didn't turn out that way.

Travis Kalanick was very clear that Uber could not survive without self-driving cars. And that doesn't seem to be panning out.

Re: Uber Lays Off 400

#58

Post by aresant »

twic wrote: post #47
aresant wrote: post #42

Earlier 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…

Have you got the right number of zeroes there? Three billion per year?

Yep - $3.2b is the headline cost of sales and marketing in 2018.

In 2019 that number as of Q1 has shot up to a $4b+ run rate:

https://investor.uber.com/news-events/news/press-release-det...

- -

Even more interesting in that number.

The accounting department came up with a nice way to mask their "unprofitable rides" and call them "customer discounts".

This is the line item for costs where they pay a driver more than they collect from a customer.

So they put the "customer discounts" number, which represented $1,400,000,000 in total expense, into the marketing budget.

Leaving ~$1,800,000,000 spread for all other sales & marketing activities.

I am very in the weeds in the 2-sided logistics marketplace customer acquisition data if you have other questions :).

Re: Uber Lays Off 400

#59

Post by uponcoffee »

twic wrote: post #47
aresant wrote: post #42

Earlier 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…

Have you got the right number of zeroes there? Three billion per year?

They even cited a source

Re: Uber Lays Off 400

#60

Post by EpicEng »

davinic wrote: post #48
MiroF wrote: post #22

Earlier quoted context omitted.

You literally cannot profitably transport people at the prices they're offering. Uber is just one big bet that the price point of transportation will fall significantly with the advent of self driving and they'll be there to make the money off that margin.

Why would they care about self-driving if most of their drivers are making little more than the cost of operating their vehicle?

Economies of scale kick in when you own the fleet. I'm also not sure about the statement "most of their drivers are making little more than the cost of operating their vehicle".
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