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Uber Bonds Term Sheet Reveals $470M in Operating Losses

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Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#91

Tangential to OP: How does HN feel about the "evilness" of Uber? At my school the general feel is that Uber is pretty evil, notably for its attitudes towards its drivers as well as towards Lyft.

There are people who hate Uber for a variety of reasons. The way Uber treats its employees? Pretty evil. The way Uber competes against existing taxi services? Not evil at all in my opinion.

It's pretty damn evil against taxi services.

If you were a taxi driver you wouldn't be happy that you are abiding by the law and a US company comes waltzing in, flouts your countries's laws actively trying to ruin your lifelihood.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#92

Earlier quoted context omitted.

Net positive in terms of utility perhaps, but I'm of the opinion that you can't weigh ethics on that scale

What have they done that's unethical?

It's a guy that out of the blue decided to take people places in his car and get paid for it. But a lot of people are ok with it because it's an app/

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#93
post #78

Earlier quoted context omitted.

I don't think they're doing any 'bogus' things nor do I think the illegality matters. The laws were used to prop up the taxi cartel, I'm glad they are being broken.

If it's okay to break laws you don't personally like, then I'm sure you'll be alright with me opening a live music venue right next to your house.

It's not about what I want. It's the principle of getting rid of laws which are blatantly anti consumer. Your example does not have any relevance in this discussion.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#94
post #92

Earlier quoted context omitted.

What have they done that's unethical?

It's a guy that out of the blue decided to take people places in his car and get paid for it. But a lot of people are ok with it because it's an app/

That's factually incorrect, and very get from the truth. If you'd like to converse please make an argument which relies on the truth.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#95
post #45

Earlier quoted context omitted.

It would be crazy profitable. But it is subsidizing a lot of rides right now, for example "Pool" rides where riders get the discount even if they are the only passenger.

That was the parent's question. If they froze prices with these subsidies, would it continue?

Yup. Alternatively, if they ended the subsidies and raised prices to match costs, would it go back to being a rich people's service?

Don't get me wrong, taxis in many cities (especially SF) aren't serving the public reasonably. But Uber is only part of that conversation because it's price-competitive with taxis. If we thank them for identifying the problem, and then solve it by regularizing Uber's legal status, will the problem come back in three years once uberX and uberPOOL need to be profitable? Should we instead focus legislative effort on making taxis work?

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#96
The concept of Uber (i.e., being able to reliably call a taxi from the phone) has a lot of value but there are significant competitive advantages of being the first to a customer's phone or by being the cheaper option to get adoption.

Hate to simplify it, but in many ways what we saw with Uber was similar to GroupOn. Uber will likely collapse, let's hope it does not take the tech market down with it. Although, I'm all for bubbles bursting and markets normalizing.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#97
post #77
post #67

Earlier quoted context omitted.

>Throughout all of this, they sing a song of "entrepreneurship" and "worker independence" while providing low-quality, low-stability jobs and making long-term plans to put every one of their drivers out of work. So, of the people I know working for Uber... it seems that compared to other unskiled labor jobs open to them? By all accounts, Uber is worlds better than foodservice, unless you count both the lack of disabi…

Uber isn't really a job open to the poor. First, you need to be able to afford a decent car, which is right out for the for a lot of people. Second, if you're poor and living paycheck to paycheck, you're unlikely to have the cash to cover any major repairs. Also, after you deduct vehicle depreciation, insurance, gas, and time driving without a fare, uber doesn't pay all that well per hour. As far as actual driver sta…

> Uber isn't really a job open to the poor. First, you need to be able to afford a decent car, which is right out for the for a lot of people. Second, if you're poor and living paycheck to paycheck, you're unlikely to have the cash to cover any major repairs.

Which doesn't stop people from buying nice cars. Don't get me wrong, the whole recent model car thing is a barrier, you need credit; but have you seen how easy it is to get a car loan lately? It's like subprime mortgages back in the day.

And uber will even give you one of those 'merchant account advance loans' to buy the car where they take their payment out of your earnings; I imagine the income requirements on those are even lower than on a conventional car loan. (though, I imagine if your credit is terrible, you are screwed either way.)

Also, a 2005 model year car is... not a high bar.

Remember, in most parts of America, you need a reliable car for that job at Burger King, too. And once you factor in maintenance and gas, a 2000 model year really isn't all that much cheaper than a 2005

>Also, after you deduct vehicle depreciation, insurance, gas, and time driving without a fare, uber doesn't pay all that well per hour.

I'm comparing it to foodservice; and compared to burger king, from what I hear, it does pay pretty well. And the cost of operating the car (that you are gonna need for that burger king job, too) can (well, it's complicated) be paid for out of pre-FICA (well, pre-tax, but FICA is most of the tax that poor people pay) money, which is a nice benefit you don't get from burger king.

But Yes, I think we're in agreement that it's not very good compared to a middle-class job.

My point is just that it's pretty nice compared to a lower-class job.

>As far as actual driver statistics go, Uber isn't a good employment alternative for the poor, it's a stopgap measure for the unemployed middle class--more than half of drivers have a college degree and more than half work for less than a year.

40% of working-aged Americans, from what I read, have college degrees; I don't think that's an indicator of "not poor" anymore.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#98

Did anyone actually believe that Uber was making a profit? Honestly the question should be: Can you have a $50 billion valuation, while losing money? I'm not saying the the valuation should be zero, because they do have assets, but $50 billion is a lot of money.

The answer to that question is: Amazon.

At various times they've managed around a $100 to $200 billion valuation while losing money. They're an extreme outlier of course.

Salesforce.com hit near a $50 billion market cap recently, and they've never once printed a positive net income result.

If the sales growth and market dominance is there, the valuation will float a lot longer than seems reasonable given the lack of profits. This is especially true in tech, as it's believed that market dominance in tech inevitably leads to later outsized profit. It also helps if the losses are brought under some control, such that they aren't threatening the survival of the business.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#99
post #83
post #38

There was a comment thread earlier today about whether Uber is solving rich-people problems or common-people problems. I wonder the extent to which Uber's pricing is sustainable -- are they subsidizing uberX and uberPOOL pricing out of money they're raising, or are the debts just in the pursuit of growth to new cities? Or put another way, if they ceased all growth, froze prices, and laid off all engineering and marke…

My own impression taking Uber is that same trips would have cost me more than twice if I were to take a regular cab. The reported $470M operating loss on $410 revenue seems to be somewhat in same ballpark. I don't believe current pricing is sustainable. I don't see any cost advantage for Uber other than paying drivers less than the drivers-owners of regular cab service. IMO, Uber may be hoping that once regular cab s…

Besides I don't see why taxi companies can't offer the same value (ordering taxi on a mobile phone app). Here in Moldova we already have that. You can order a taxi from several services at once with a mobile app, and the app is made by the company/companies (I'm not really sure it's only one, but they certainly do business together) behind these services.

Re: Uber Bonds Term Sheet Reveals $470M in Operating Losses

#100
post #89

Earlier quoted context omitted.

Networks that have a larger customer and driver base can link them up quicker. That means that, at no extra cost to the network , the customer will end up waiting 2 minutes for a cab instead of 40, and the driver will end up waiting 2 minutes for a fare instead of 40. Would you pay extra for those 38 minutes as a customer? I would. Would you accept a lower commission as a driver if you spend less time waiting for far…

> Part of the monopoly advantage means that they can covertly punish drivers who choose to use competitors' apps by sending them fewer rides. If it's not already here, this tactic is probably coming very soon. If they try this as a monopoly, the Department of Justice will probably start investigating.

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