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Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue
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- rubicon33 10y agoAlso on track to have the first self driving car AND a ride hailing application to boot. That can't be cheap.
- sharemywin 10y agoYou mean in the US not the world. http://www.theverge.com/2016/9/22/13019688/singapore-self-driving-car-nutonomy-grab-ride-hail-test http://www.theverge.com/2016/9/22/13019688/singapore-self-dr...
- stuckagain 10y agoI don't know how people get this impression, unless it is by only reading the comments on this site and never reading any primary sources. Uber's "self-driving" tech is currently unable to do things that other companies were doing years ago. Google's car took a blind man to Taco Bell in 2012. Uber's car has two engineers in the front seat and still blows stop lights and can't make a right turn.
- rubicon33 10y agoYea, Google drove a blind man to Taco Bell in 2012 and still hasn't released a self driving car 4 years later. Meanwhile, Uber's been in the self driving car business half that time? They already looks more likely to actually have these things on the road, and, they have the incentive, and cash pool to do it. Another reason people "get this impression" is that Google has a history of interesting projects that never made it to market. Waymo gives me more confidence, but I'm still skeptical.
- stuckagain 10y agoI don't understand how Uber "looks more likely to actually have these things on the road" when Google's cars have been driving people around Mountain View for years. Please explain.
- rubicon33 10y agoI guess I wasn't clear enough. Let me try again. Google has been in the self driving car business since 2009. Uber was FOUNDED in 2009. Google has a history of starting cool projects, which never make it to market (Wave, Video, Glass, etc.)... That alone, doesn't inspire much confidence that their self driving car project will reach production. Uber has the incentive, far more than Google, to actually see this through. If they can cut out drivers, their overhead shrinks significantly and their core business grows.
- zaroth 10y agoNot people. Google Engineers.
- badlucklottery 10y agoHe probably means as a wide release. I also believe Uber will probably go wide first because the risk (people get injured, they possibly go down in flames from legal issues) is worth the reward (they have a chance of surviving as a business by automating human drivers out of the equation). Google has money falling out of their ears and will do a wide release when it's boringly safe. I much prefer companies waiting until it is boringly safe but I don't think that's compatible with the money fire Uber has built.
- tehlike 10y agoas a google employee, this often makes me sad too, but when it comes to human life, it's a bit more nuanced than that. engineers don't have the luxury to do many things they could otherwise do on their server side software. You break a server, you fire-drill it, get the resources, roll back the release or so on. You lose money, sometimes tens of millions of dollars, but not human life. You write your post mortem, and put the protections in place, you learn from it. Noone can afford to lose a life.
- LordHumungous 10y agoUber's self driving tech really seems like a shiny object to distract VC's with.
- freyr 10y ago> Uber's car ... blows stop lights and can't make a right turn. Just like my last few Uber drivers.
- ocdtrekkie 10y agoGoogle's "self-driving" car in 2012, was more like a remote control car on a pre-planned route for a PR campaign. Please stop making up lies about your employer to make it look good.
- nharada 10y agoPresumably this is intentional -- Uber could raise prices and make more money, but right now they're choosing to keep prices very low in order to undercut Lyft and the cab companies with the assumption that having a monopoly will return more profits in the future. At least anecdotally, here in SF Lyft is almost always more expensive than Uber.
- LeoPanthera 10y agoLyft may be more expensive on paper but I always use it instead of Uber where it is available and they send me so many discounts and coupons that I almost never pay the full price.
- realstuff 10y agoOut of curiosity, why do you prefer Lyft?
- aetherson 10y agoI am not the person you're replying to, but I used to switch back and forth between Lyft and Uber and use whichever was cheaper at the moment. But Uber kept sending me drivers who were like 0.5 miles away or more, in SOMA at rush hour, and after the second time I waited ten minutes and then the driver canceled, I decided I was willing to pay a small surcharge to get a drive in less than 5 minutes and for it to, you know, actually happen. I should probably try out Uber again to see if they've resolved their problems with driver supply. This was SOMA (5th & Bryant) at like 5:15-6:00pm, several times over the course of a month.
- trevyn 10y agoWhen you suspect there's going to be an issue with timeliness, just call both an Uber and a Lyft, and whichever one gets there first wins. ;) The cancellation fee only kicks in after 5 minutes.
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- antiviral 10y agoUber is making the rest of us in SV look terrible. 1. Collect a huge pile of money at sky-high valuations from those who really should know better. 2. Ignore any sensible unit economics and undercut local taxi/transport services until those small businesses go bankrupt since they don't have Uber's money pile. 3. Evade local regulations that everyone else follows in the name of 'innovation' even though the reality is they are just taking a free pass on conducting background checks, and skipping safety guidelines. What's the endgame here? When they replace all taxis, do they really think they can just permanently ignore all driving laws?
- 6t6t6t6 10y agoAFAIK, this is called "Dumping the market". And it should not be legal...
- fbreduc 10y agosure it should
- duaneb 10y agoWhy? It appears to have no value to anyone but the immediate consumer. That's not a business, it's a charity. What a collossal waste of cash.
- fisherjeff 10y agoIt only has short-term consumer benefit. Once there's a lack of competition they're free to benefit themselves.
- jpatokal 10y agoDrivers getting paid above the market and riders getting rides below the market would disagree. If anything, it's a bizarre kind of socialism: rich venture capitalists voluntarily redistributing their wealth to the public.
- weremine 10y agoHas there been a startup in recent history that was losing this amount of money per year (planned or not) that ended up going green and successful?
- mikeyouse 10y agoSide note, profitability is generally described as "into the black" not the green. Amazon is probably the best example, their GAAP losses totalled several billion dollars for a decade or so before they flipped the switch.
- user837387 10y agoThat completely got me. I thought he was talking about green technology which did not make much sense to me. Didn't realize he was talking about profitability.
- mikeyouse 10y agoYeah it's usually clear what they mean with "into the green" but a thread about electric vehicles definitely makes that confusing.
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- moxious 10y agoThat's a good question. As far as I know these losses are pretty epic, so it's somewhat uncharted territory. They're also not directly comparable to previous unicorns because of their cost structure. They also can't exactly amp up the website ads to cash in on advertising, like previous big losers who turned things around.
- tehlike 10y agoautonomous driving could potentially cut one of the main expenses (like the driver's fee), which could cut down prices even more, and probably get them enough of a margin to make them profitable. that's probably why it makes sense to dominate the market while they still can.
- readhn 10y agoRIP Uber. Imo it will be gone in less than 24months.
- ylhert 10y agoMy understanding is that in mature markets, Uber is profitable. The issue is that it takes a few years to become profitable in a market and so it's extreme growth pushes out profitability on the whole for a few years
- duaneb 10y agoNot before destroying any competition with cripplingly low rates. That's the problem: I can't hail a goddamn taxi anymore, despite it being cheaper by any back of the envelope calculation for society as a whole.
- MarkPNeyer 10y ago> despite it being cheaper by any back of the envelope calculation for society as a whole. Can you explain this? Not challenging, just curious.
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- monk_e_boy 10y agoYou know.... a monopoly controlling drivers is... um... some how better. In all seriousness, Uber drives down price to a point that no one can really figure out if being an uber driver is profitable. Uber makes money, but none of that proffit is spent in the local economy. Capitalism doesn't work at that scale... look at the loss they can endure, compare that to a local cab firm, or even somewhere like NY.
- flukus 10y agoThe gig economy is going to be terrible for society, everyone is a couple of bad reviews away from the street.
- carb 10y agoWhat's the back of the envelope calculation?
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- Swizec 10y agoSo what's "net revenue" in this context? I always thought revenue was income before costs, and profit was revenue minus cost. Gross revenue would make sense as "total income", but net revenue doesn't make any sense to me. Clearly I'm missing something. Can someone explain?
- bkanber 10y agoIn this context it is revenue after drivers' fees but before anything else, ie HQ, R&D, payroll, etc.
- beedogs 10y agoHopefully this means they won't be around for much longer. I will not miss them when they're gone.
- apapli 10y agoUber: the worlds fastest growing charity.
- moxious 10y agoSo others in this thread are calling it venture capital subsidized transportation. Why does the idea of venture capital charity seem so hilariously backwards?
- apapli 10y agoBecause VCs are using investor money and their investors are looking for a return. Someone along the line will be pissed off of their investments don't pay off. Burning up $800m to subsidise an app with the justification of "market share" decades before self driving vehicles become the norm is totally fine by me, as long as it's not my money being incinerated.
- tomc1985 10y agoWith finances like this, Uber will either collapse in a gigantic, money-fueled fireball, or decimate transport. How long can everyone hold out?
- aedron 10y agoNext, Uber will raise enough money to boil the ocean. Now their self-driving trucks can go from continent to continent, completely obliterating the container shipping business!
- ChuckMcM 10y agoAs others point out this isn't necessarily bad, but it does mean that Uber is extremely vulnerable. If we learned anything in the last bubble it was that attempting to bootstrap through the power curve is exceptionally susceptible to capital constraints. Back in the dot com days a number of 'baby telephone companies' that were building out their networks and spending huge amounts of money on laying out the infrastructure that was going to carry the traffic they would get after their build out, meant that any cash crunch had this amazing multiplicative effect, which resulted in a massive implosion in practically no time (one customer I talked to in 1999 was putting the finishing touches on a $1.2M PO on Monday, and when we showed up for the meeting on Wednesday the doors were locked and the name of an attorney's office was there for questions. Later I found out they were negotiating additional funding and even though their business plan was "solid" once some other companies had gone under, everyone got too skittish to commit. They were already burning through cash to people who were putting in new fiber cables etc. They went upside down (more obligations than cash or revenue) on Tuesday and the bank sent the attorneys (and Sheriff) over to secure the assets before anyone could walk them out of the building that afternoon. Pilots have a term for crashes like this, its called "controlled flight into terrain" where basically right up until the last moment the pilot was flying the plane. So it can be with startups that right up until the day it isn't flying they are in control. Its nice that if Uber does implode (not that they will) that only VC's will lose their money, of course Uber drivers will be out of their jobs as well but they hopefully won't be greatly finanically hurt. And of course a lot of employees that thought they were millionaires will realize that they aren't (been there, done that, got the t-shirt :-() I hope at some point in the not too distant future we can get some more transparency on their financials. I really do consider them the poster child for the 'dynamic' economy (one where service suppliers and service demanders are paired in real time for a fee). If they can't make it work it will really call into question if it is even possible to make it work.
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- dwightgunning 10y ago> Its nice that if Uber does implode (not that they will) that only VC's will lose their money... Although don't forget the VC funds' lending partners are often pension funds and other traditional investment vehicles that you or I might use.
- alistproducer2 10y agoHere's what I'm not understanding about Uber. There' nothing they provide that couldn't be cloned. It's clear there's no way to grow into profitability so once the VC subsidies go away Uber will have to significantly raise prices to survive, putting them in the same price range as traditional car services. At that point, what's to stop Yellow Cab from creating their own Uber clone and eating Uber's lunch?
- jartelt 10y agoWell, Yellow Cab could hardly even get credit payments to work in their cabs, so they are not exactly a technology company. It's not going to be easy for a cab company to clone what Uber (or lyft) have built during the last 7 years. Plus Uber has a network of drivers/users that has significant value.
- kalleboo 10y ago> At that point, what's to stop Yellow Cab from creating their own Uber clone and eating Uber's lunch Their own incompetence
- animex 10y agoUber will be a dead Unicorn in the medium future. They've got too many legal pressures, competitors with native advantages (i.e. the automakers), and their expansion plans have them overextended. Here in Edmonton, AB, Canada, regulatory changes have pushed the Uber prices to almost 2x during non-surge times over regular taxis. Taxi's have stepped up. Local competitors have sprouted. Carshares are abounding. It's all too much for them to compete effectively and the drivers are realizing they are making nothing. The driver pool has significantly dwindled here. The Uber model has no barrier to entry and they've lost their first-to-market advantage. Doesn't paint a pretty picture.
- paulddraper 10y agoThey still have the momentum. This isn't a start up trying to figure out how to make money (Twitter) or a company that can't/won't change (Blackberry). This is a company making money that is pursuing a blitzkrieg on the industry. They can sit back any day and rake in billions. I agree there isn't a high entry barrier, but I don't think they've lost the first-to-market advantage.
- danielpatrick 10y agoThe question is whether they will just be able to sit back and take in the billions one day. I have always looked forward to self-driving car networks because of what I perceived to be their ultra-competitive and ultra-low margin nature. Then two years ago everyone started talking about an Uber monopoly and I got super upset. Are we seriously seeing another industry ultra centralize due to technology? But I'm beginning to suspect that this may be a massive miscalculation on the part of Uber and its investors. Maybe it is a low margin, highly competitive industry and Uber will be remembered as that one company that subsidized everybody's rides for a few years until it just faded into the background.
- paulddraper 10y ago> I have always looked forward to self-driving car networks As great as that would be, those are still a decade away from common use, probably much more.
- WhitneyLand 10y agoThe runway is finite. They have about ~5B in cash on hand and are losing ~3B per year. They are putting on the spending brakes somewhat but revenue will have to take off for their valuation to make sense. They've already said no more dilution, so that limits new sources of financing. Tick-tock.
- free2rhyme214 10y agoSpeculating Uber's future is just a silly as speculating the NFL draft. The better question is - how do you provide as much value as Uber?
- untog 10y agoAfter the tens of articles outlining Uber's bad business practices I've been trying to use other apps as much as I can. What's amazed me is how many drivers on Lyft and the like are former Uber drivers who left the service. I'm sure that they've been able to replace those drivers but I wonder if they'll he able to keep this up for the time it takes to introduce self driving cars. I suspect not.
- jeffdavis 10y agoSincere question: what protects Uber from competition enough to imply huge profits in the future? Network effects don't seem that strong. People will download an app to save money, and drivers will download an app to make money. It doesn't cause any major inconvenience. In fact, it seems like a market that may approach perfect competition in a matter of years. There are only two companies now because there are only two companies willing to lose money. After they start making money, that could change quickly.
- deepnotderp 10y agoSelf driving cars change everything.
- jeffdavis 10y agoCan you be more specific? Their self-driving tech is worth $70B? If it's the combination, then I still don't quite get it. Wouldn't any good self-driving tech pretty easily adapt to ride hailing? Let's say it's a best case for Uber: there are only few self-driving techs out there, and Uber is one; and they dominate ride hailing, and start turning a profit. Couldn't another self-driving tech company snap up Lyft and bundle in the ride hailing, too?
- alex- 10y agoI think a lot of people see todays taxi company being tomorrows ground transport ruler, once self driving cars are ubiquitous. The theory being less people will own cars. The savings made on storage/parking, fuel and maintenance will be greater than paying for individual rides (with no labour costs). The car manufactures would no longer be the company the consumer interact with. i.e. How much does the average consumer care if they are picked up in a Lexus or a Toyota for the average ride? This would put the car manufacturers in competition for the taxi companies business commoditizing the car industry. Who knows what will happen? Maybe regulation will prevent self driving cars becoming ubiquitous? or maybe some advance in manufacturing makes it much cheaper to own self driving cars. But speculation that Uber pulls this off is the only way that I can see how Uber is worth over $60Bn (more than ford $50Bn ish, GM $50Bn ish, Nissian $45Bn ish) while making a $0.8Bn loss on $1.7Bn revenue - as a gamble for what might end up owning a $400Bn+ market.
- pfarnsworth 10y agoPeople keep forgetting that Uber didn't have first mover advantage: Lyft did. UberX came after Lyft, but Uber beat Lyft in execution and strategy.
- sqldba 10y agoHow can they make so much money while also losing so much money? Isn't it just an app with some staff and lawyers? Where did all the money go?
- sdenton4 10y agoOH! This explains why they're in so big a rush for self-driving cars that they can't even be bothered to stop at red lights...
- Wissmania 10y agoThere is so much irrationality in this thread and in public opinion in general... it makes we wish I could personally bet on Uber's future success. However, Uber is staying private, so they don't have to cater their long term plans to the whims of random people who have no idea what they are talking about. (I include myself in this category)
- toasted 10y agoOff-topic - but currently in India and the uber experience is absolutely amazing. The handful of times we have used taxi drivers, none of them can find the place where we are staying even with written directions in english and in hindi or even with a hindi speaking person instructing them via the phone. There is always some niggle over pricing and whatever you pay them they claim you are shortchanging them. With uber they go to the right place EVERY TIME, there is no haggling at all, they dont try to angle for tips but are very grateful if they get tipped. It is a complete gamechanger for travel in these areas.
- daughart 10y agoIn Boston it's practically the opposite experience. Cabbies almost always know exactly where I'm going and the fastest way to get there, because they've logged the hours necessary to learn Boston's confusing street system. Uber drivers are usually flipping between at least 2 GPS systems, and frequently get lost, confused, and turned around. The rider experience has really dropped off now that any Joe can make a few bucks as a part-time Uber driver.
- majani 10y agoYes, in 3rd world countries, Uber is an improvement of several orders of magnitude over traditional cabbies and cab companies. Even moreso for tourists. For this reason I think they'll hold steady in these regions even if there is a big change in their economics in the future.
- lobo_tuerto 10y agoThe biggest beef I have with Uber is that they went from a transparent price calculation to an opaque (and basically always more expensive rate). So I always write back to their support team and they usually refund the extra charged money, but it's tiring to have to do this for every long trip I make with them. (I'm talking about Uber in Mexico City).
- rahrahrah 10y agoEconomies of scale guys. Lose a bit in every transaction but make up for it in scale. They're dead.