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Personal experience, so take it with a grain of salt. I've talked with 2-3 Uber drivers in LA area. They seem to be getting 65% to 75% of what passenger pays.

Personal experience, so take it with a grain of salt. I've talked with 2-3 Uber drivers in LA area. They seem to be getting 65% to 75% of what passenger pays. I think many of the core Uber markets are fairly profitable. This would imply that majority of the burn is focused on growth in new markets. Some potential problems with extrapolating the data: * Small sample size. * Uber rides cost more in California, observed 65% to 75% might not hold in other mature markets.

harryh 10y ago
That is my suspicion as well though I will add that in addition to spending to grow in new markets they are also, quite obviously, spending a lot to develop self driving cars (possibly sometimes through nefarious means!). Unclear if you count that as "growth in new markets" or not.
passivepinetree 10y ago
I think you're misinterpreting what the post and the GP meant. What's at issue here isn't that Uber drivers don't get to take home X% of what the passenger pays, but rather that the cost Uber charges passengers isn't enough to keep the business afloat without a significant amount of VC funding.
- dcosson 10y ago
  I think the point of the comment was as kind of an upper bound. For instance if drivers made 100% (or more) of what the passenger pays, then Uber would be obviously not breaking even. At 65-75% it's feasible that at a certain scale Uber's cut would make them profitable.
  - jsemrau 10y ago
    Feasible but not likely. From this 25% to 35% Uber will still do this 1. Run their operating business - Maintain data centers - Maintain a global web infrastructure - Maintain the app 2. Run campaigns to compete in markets with strong local competition - Europe (Hailo, Car2Go, etc) - Asia (Didi, Ola, Grab, etc) 3. Finance their ongoing operations - Equity financing expensive - Debt financing hard to get at this stage and cost money too 4. Hire and retain top talent 5. Legal fees and licensing 6. Rentals for global offices 7. Fund and maintain fleet businesses 8. Invest in R&D (self-driving technology & talent) 9. Entertain M&A So it looks they have a lot of costs on their plate which their operating business can not cover.
    - Dylan16807 10y ago
      A lot of that is about expansion. You don't need to factor it in to a question of whether they can run a viable business on 30%.
    - LeifCarrotson 10y ago
      Everything in that list, aside from 2 (advertising and expansion), 7 (fleet operations), and 8 (self-driving R&D, which is honestly well outside of their current business) is dirt cheap in comparison to their operating costs - paying drivers, vehicle purchasing, insurance, and maintenance, and buying fuel. Service and hardware businesses have completely different cost structures as compared to tech companies. Think about it - standard deduction is about about 50 cents per mile for vehicle costs, and actually having a human in the seat probably costs more than 50 cents per mile ($ per hour divided by average speed), and the average drive is about 5 miles. We're talking well over $5 in wholesale operating costs for each ride. Times literally a million rides per day. The cost of a few programmers and servers is tiny in comparison.
      - xanderstrike 10y ago
        > vehicle purchasing, insurance, and maintenance, and buying fuel These are all things Uber does not do. It comes out of the cut the driver takes home, not Uber's revenue.
      - freyr 10y ago
        > self-driving R&D, which is honestly well outside of their current business According to the CEO, self-driving cars are "existential" to Uber's success. They may need something that disruptive to meet the company's sky high valuation.
        HenryBemis 10y ago
        as far as it goes for "world domination" I've read before that Uber's plan is to make everyone's (self-driving car) a money making machine for Uber and the car owner. You go to work at 9am and while at work 9.01am to 4.59pm your car drives around making you both money. The same applies for when you return home 6.01pm to 8am the next day. No drivers, only Auto-bots ;) and paying customers! (makes me wonder how much Insurance companies will be making from this setup)(and if they are ready/preparing their numbers for this type of business)

harryh 10y ago

That is my suspicion as well though I will add that in addition to spending to grow in new markets they are also, quite obviously, spending a lot to develop self driving cars (possibly sometimes through nefarious means!). Unclear if you count that as "growth in new markets" or not.

passivepinetree 10y ago

I think you're misinterpreting what the post and the GP meant. What's at issue here isn't that Uber drivers don't get to take home X% of what the passenger pays, but rather that the cost Uber charges passengers isn't enough to keep the business afloat without a significant amount of VC funding.

dcosson 10y ago
I think the point of the comment was as kind of an upper bound. For instance if drivers made 100% (or more) of what the passenger pays, then Uber would be obviously not breaking even. At 65-75% it's feasible that at a certain scale Uber's cut would make them profitable.
- jsemrau 10y ago
  Feasible but not likely. From this 25% to 35% Uber will still do this 1. Run their operating business - Maintain data centers - Maintain a global web infrastructure - Maintain the app 2. Run campaigns to compete in markets with strong local competition - Europe (Hailo, Car2Go, etc) - Asia (Didi, Ola, Grab, etc) 3. Finance their ongoing operations - Equity financing expensive - Debt financing hard to get at this stage and cost money too 4. Hire and retain top talent 5. Legal fees and licensing 6. Rentals for global offices 7. Fund and maintain fleet businesses 8. Invest in R&D (self-driving technology & talent) 9. Entertain M&A So it looks they have a lot of costs on their plate which their operating business can not cover.
  - Dylan16807 10y ago
    A lot of that is about expansion. You don't need to factor it in to a question of whether they can run a viable business on 30%.
  - LeifCarrotson 10y ago
    Everything in that list, aside from 2 (advertising and expansion), 7 (fleet operations), and 8 (self-driving R&D, which is honestly well outside of their current business) is dirt cheap in comparison to their operating costs - paying drivers, vehicle purchasing, insurance, and maintenance, and buying fuel. Service and hardware businesses have completely different cost structures as compared to tech companies. Think about it - standard deduction is about about 50 cents per mile for vehicle costs, and actually having a human in the seat probably costs more than 50 cents per mile ($ per hour divided by average speed), and the average drive is about 5 miles. We're talking well over $5 in wholesale operating costs for each ride. Times literally a million rides per day. The cost of a few programmers and servers is tiny in comparison.
    - xanderstrike 10y ago
      > vehicle purchasing, insurance, and maintenance, and buying fuel These are all things Uber does not do. It comes out of the cut the driver takes home, not Uber's revenue.
    - freyr 10y ago
      > self-driving R&D, which is honestly well outside of their current business According to the CEO, self-driving cars are "existential" to Uber's success. They may need something that disruptive to meet the company's sky high valuation.
      - HenryBemis 10y ago
        as far as it goes for "world domination" I've read before that Uber's plan is to make everyone's (self-driving car) a money making machine for Uber and the car owner. You go to work at 9am and while at work 9.01am to 4.59pm your car drives around making you both money. The same applies for when you return home 6.01pm to 8am the next day. No drivers, only Auto-bots ;) and paying customers! (makes me wonder how much Insurance companies will be making from this setup)(and if they are ready/preparing their numbers for this type of business)