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Uber Says Sales Growth Outpaces Losses

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Re: Uber Says Sales Growth Outpaces Losses

#81

Post by kjksf »

sogen wrote: post #74
hackuser wrote: post #35

Earlier quoted context omitted.

> There is zero lock-in. If Lyft is cheaper this week, I'm riding Lyft. It makes sense, but I'm not sure it works out that way. Many web services have zero lock-in (not including those with a network effect such as Twitter and Facebook) and competitors are a URL away, yet the first ones to gain (mindshare? marketshare?) seem to keep it: Google search, Amazon, etc.

Just a note: There were many search engines with a lot of market share before Google (i.e Lycos).

Yes, but not really.

Google search was the first one to find a business model for pure search (adsense i.e. advertising based on your search terms).

That allowed them to build the best pure search experience they could and was so profitable that they could spend more money building it than anyone else. That's a virtuous cycle.

Their competition at the time was moving away from pure search (because it was unprofitable for them) into yahoo-like portals, because that's where the money was (also ads but non-contextual display ads).

Which is why that's not a good analogy for uber.

In U.S. there's really Uber and Lyft. Every time Uber is discussed, "no lock-in" comes up but why no one even tries to compete with Uber and Lyft in US?

It does seem like people who actually have the money to potentially mount an attack on Uber or Lyft came to the conclusion that it would be a foolish waste of money.

Uber and Lyft have a clear business model: they are better and cheaper than taxis and have global presence (while taxi companies are historically local and don't have the capital to go global).

Customers in this market do care about price and better service, so it's rather obvious that Uber and Lyft will win over taxis (arguably they already won given that they're 100x bigger than any taxi company).

Both Uber and Lyft are still in the phase of aggressive expansion and growth, they still enter new markets, subsidize the service to increase usage density (which makes the user experience better), they experiment with things like Uber Pool, being alternative to busses etc.

None of the above is cheap so it's understandable that they loose money today.

But at some point the growth will stop, their costs will go down and one of them (or even both) will be very profitable companies.

The only thread for Uber and Lyft are self-driving cars (i.e. Google, Tesla, GM) because they'll drive costs down by 5x. Whoever wins that race wins the taxi business, which is why Uber spent $680 million on Otto and GM $1billion on Cruise and Google was apparently paying $120 million to a single individual in charge of self-driving cars.

Re: Uber Says Sales Growth Outpaces Losses

#82

Post by JohnJamesRambo »

InclinedPlane wrote: post #75
georgespencer wrote: post #33

Earlier quoted context omitted.

The naivety on HN is staggering sometimes. Imagine your parents give you a $10 loan to start a lemonade stand. You think you need six years to make them an above market return on their investment of 2x. You're gonna buy cups, lemons, sugar, and water. In the first year you think you're going to spend $3 and make $0. So you have $7 in the bank. In the second year you think you're gonna spend $2, and make $1. So you ha…

The naiveté on HN is staggering sometimes. Imagine your parents give you a 10 dollar loan to start a lemonade stand. It costs you $3 to buy the lemons, sugar, water, and cups to make 10 cups of lemonade, that you sell for ten cents each. In the first day you spend $3 and make $1. In the second day you spend 3 more dollars and make one dollar. In the third day you spend $3 and make another $1. In the fourth day you ag…

This is the much better analogy for the Uber business model.

Re: Uber Says Sales Growth Outpaces Losses

#83

Post by Denzel »

monkmartinez wrote: post #59
jacquesm wrote: post #51

Earlier quoted context omitted.

Well, there are some examples of such loss leaders becoming successful but not in a market like this. Tesla is a good example of a company that did this.

And there are people that think Tesla is doomed. You can't run losses forever and expect to keep the lights on. I don't know what is so hard to understand, it is simple math. They, Tesla, are not "successful" in any sense of the word as it relates to financial stability.

You're conflating the basic unit economic principles of fixed vs. variable costs. And you're ignoring the breakeven point.

A company that loses money on every unit sale has no breakeven point (Uber). A company that makes money on every unit sale has a breakeven point (Tesla). Because Tesla's fixed costs are very high, their breakeven point is out there, and thus they must operate at a loss for a period of time.

Now this is a simplistic one product view. When you add multiple products and release timing to the model, the complexity increases. Not only does the complexity increase, we don't have enough external financial numbers to break apart the data per product.

Don't get me wrong, Tesla has execution risk. But financially, I'm not at all concerned. They won't fail for lack of profitability or demand, they'll fail because they couldn't execute if anything. And... well... they've been slowly but surely derisking their execution risk as well.

So we shall see.

Re: Uber Says Sales Growth Outpaces Losses

#84

Post by pfarnsworth »

codecamper wrote: post #48
pfarnsworth wrote: post #34

Earlier quoted context omitted.

Don't worry, don't lose too much sleep over it. You forget that Uber was the last one to market with ridesharing. Lyft and Sidecar were out there faster. The reason why Uber is huge is because it was the first company to take all its money and go all-in into growth, by any means necessary. They spent and grew and got more funding until they were global within a few years, unlike most other companies. Their growth str…

I think there are some strategies that may still work. FWIW, back then my friends sounded a lot what you are saying. Oh it's too hard. Oh you'll be up against big boys. And I didn't do it b/c I'm a bit of a perfectionist. Uber did it. And, from what I understand, they did it by hiring someone off an offshore programming website. MVP. And they built the human pyramid. That's what you need to do to retire. Build a huma…

I'm troubled by the things that you say and your tone. I think you should talk with a therapist.

Money is not everything. You don't have to be a millionaire to have children. You don't need to be filthy rich to retire.

But you also have to accept that you would never, ever have built Uber. The growth strategy was executed perfectly, so far. So don't feel bad that you didn't finish the app, it wouldn't have made a difference.

So please move on, have a family, stop thinking about money.

Re: Uber Says Sales Growth Outpaces Losses

#85

Post by pfarnsworth »

aetherson wrote: post #7
pdog wrote: post #2

> Uber said it uses generally accepted accounting principles. Revenue includes only the portion Uber takes from fares, except in the case of its carpooling service; the company counts the entire amount of an UberPool fare as revenue. Does this mean Uber technically recognizes more revenue from from a $6 UberPool ride than a $20 UberX ride?

This is probably basically about the fact that driver portion is more complicated in UberPool than in the rest of their services. It's to Uber's credit that on an ordinary ride, they don't try to claim that they have revenue equal to the entire fare. That would be an easy way for them to make their top-line financials look way more palatable than they actually are (ie, that they lost about $3B on $20B, rather than $3…

Probably not to their credit, it's something their auditors wouldn't accept because it's fairly straightforward accounting.

Re: Uber Says Sales Growth Outpaces Losses

#88

Post by iaw »

ryanworl wrote: post #8
pdog wrote: post #2

> Uber said it uses generally accepted accounting principles. Revenue includes only the portion Uber takes from fares, except in the case of its carpooling service; the company counts the entire amount of an UberPool fare as revenue. Does this mean Uber technically recognizes more revenue from from a $6 UberPool ride than a $20 UberX ride?

Yes, and they would take a corresponding gross margin hit as the driver's payment comes from revenue rather than being accounted for before it. I do not think this a shell game to make the revenue number larger. The way drivers are paid while driving UberX vs. Uber Pool is different, and that probably has accounting rule impact.

GAAP doesn't have to include stock based compensation as a normal expense. If you throw in the fact that Uber compensates at 50% in stock this is probably a shell game.

Re: Uber Says Sales Growth Outpaces Losses

#90

Post by iaw »

georgespencer wrote: post #33
acchow wrote: post #6

“We’re fortunate to have a healthy and growing business" $2.8bn "adjusted net loss" on $6.5bn revenue is healthy?

The naivety on HN is staggering sometimes. Imagine your parents give you a $10 loan to start a lemonade stand. You think you need six years to make them an above market return on their investment of 2x. You're gonna buy cups, lemons, sugar, and water. In the first year you think you're going to spend $3 and make $0. So you have $7 in the bank. In the second year you think you're gonna spend $2, and make $1. So you ha…

> The naivety on HN is staggering sometimes.

This is pretty arrogant given that you're trying to prognosticate something that historically isn't predictable, the financial outcome of a company.

What you neglect to acknowledge in your post is that the there is a lot of signaling from Travis about his ethics being questionable, existing investors want to get their money out so there's no assurances they're being ethical, it's not impossible that Uber will come out as playing Enron accounting games.

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