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can't they just cut their burn rate? I mean it's not like they own a fleet of cars they need to make car payments on and fill with gas to keep operating.... i

can't they just cut their burn rate? I mean it's not like they own a fleet of cars they need to make car payments on and fill with gas to keep operating.... in theory there's no minimum spend to keep operating, is there? if (hypotehtically) they cut spend to approx. nil, and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur? Yahoo for example is coasting along at a market cap of 53.40B down from its high of over $125 billion[1]. In 1999 dollars. Is it "dead"? [1] http://www.businessinsider.com/yahoo-market-cap-over-time-2016-7 http://www.businessinsider.com/yahoo-market-cap-over-time-20...

OriginalPenguin 9y ago
Yes, they can cut their burn rate. But if they cut it too much, they'll stop growing. The problem is they need to sustain their 70 billion dollar valuation for investors to be happy. To be worth 70 billion they have to be either: Growing at a very fast rate (which requires a very large burn rate to sustain) Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.
- fragmede 9y ago
  Keep in mind that if their leaked financials are to be believed, they made $6.5 billion in net revenue for 2016. Unfortunately total costs exceed revenue, so they are far from profitable, but that's not exactly chump change.
  - namdnay 9y ago
    What are they counting in net revenue? As they bill themselves as a brokerage service (to avoid those pesky employment laws...), I would imagine they only count their commission in net revenue? 6.5 billion is pretty impressive then!
    - georgespencer 9y ago
      They included all of the revenue (i.e. gross revenue) from Uber Pool in that figure.
PhasmaFelis 9y ago
> and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur? People will stop using Uber if the wait times get really long, which they will if most of the drivers leave.
- freyir 9y ago
  If 95% of their customers left, then 5% of their customers would remain and... Well, if they shut off 95% of their servers... Are we profitable yet?
  - dfcowell 9y ago
    Nope. They're subsidizing most trips in order to keep prices low. Their profitability problem isn't just one of opex. They don't have margin, either.
    - tedsanders 9y ago
      Can you provide a source for this? I'm honestly very curious. I've seen this claim bandied about for years, but I've never seen a source that verifies it. Is Uber really losing money on a marginal basis in developed markets?
      - dfcowell 9y ago
        Here's an article with citations from November of last year. Note that it does use data from 2015, since at the time that was the most recent publicly-available published data. http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html#_edn4 http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
        tedsanders 9y ago
        Thanks, this is terrific. My main takeway: revenues are higher than their cost of sales. In other words, they are earning money on marginal rides served. Not losing money. To me, this suggests that profitability is plausibly achievable if they end subsidies into small markets and drastically cut development costs.

OriginalPenguin 9y ago

Yes, they can cut their burn rate. But if they cut it too much, they'll stop growing. The problem is they need to sustain their 70 billion dollar valuation for investors to be happy. To be worth 70 billion they have to be either: Growing at a very fast rate (which requires a very large burn rate to sustain) Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.

fragmede 9y ago
Keep in mind that if their leaked financials are to be believed, they made $6.5 billion in net revenue for 2016. Unfortunately total costs exceed revenue, so they are far from profitable, but that's not exactly chump change.
- namdnay 9y ago
  What are they counting in net revenue? As they bill themselves as a brokerage service (to avoid those pesky employment laws...), I would imagine they only count their commission in net revenue? 6.5 billion is pretty impressive then!
  - georgespencer 9y ago
    They included all of the revenue (i.e. gross revenue) from Uber Pool in that figure.

PhasmaFelis 9y ago

> and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur? People will stop using Uber if the wait times get really long, which they will if most of the drivers leave.

freyir 9y ago
If 95% of their customers left, then 5% of their customers would remain and... Well, if they shut off 95% of their servers... Are we profitable yet?
- dfcowell 9y ago
  Nope. They're subsidizing most trips in order to keep prices low. Their profitability problem isn't just one of opex. They don't have margin, either.
  - tedsanders 9y ago
    Can you provide a source for this? I'm honestly very curious. I've seen this claim bandied about for years, but I've never seen a source that verifies it. Is Uber really losing money on a marginal basis in developed markets?
    - dfcowell 9y ago
      Here's an article with citations from November of last year. Note that it does use data from 2015, since at the time that was the most recent publicly-available published data. http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html#_edn4 http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
      - tedsanders 9y ago
        Thanks, this is terrific. My main takeway: revenues are higher than their cost of sales. In other words, they are earning money on marginal rides served. Not losing money. To me, this suggests that profitability is plausibly achievable if they end subsidies into small markets and drastically cut development costs.