5 ms·

By some measures Uber has been fabulously successful, coming from nowhere to the largest privately held company in seven years, and now a $70 billion g/publicly

By some measures Uber has been fabulously successful, coming from nowhere to the largest privately held company in seven years, and now a $70 billion g/publicly traded/private/ company. Uber has done a stunning job of disrupting a crony-capitalist, monopolistic system. If they are still searching for a way to make a profit, surely they'll figure it out before long. * updated to remove publicly traded

sjg007 9y ago
Uber isn't publically traded.
- the_mitsuhiko 9y ago
  Yet. The goal clearly is to rush to an IPO.
  - hluska 9y ago
    Eight months ago, I would have absolutely agreed. Heck, even a few months ago when Travis Kalanick started recruting a COO, I would have agreed that the company is trying to rush to a liquidity event. Today though, I think that rushing to an IPO would be completely irrational and end with Uber trading at a small fraction of their most recent private valuation. Right now, there is a huge vacuum at the CEO/COO/CFO troika. That, combined with the sordid Waymo lawsuit, would give any institutional investor pause before buying a strong position. Consequently, I would argue that Uber needs some strong leadership at the top, and some sort of resolution on the Waymo lawsuit before they can consider going public. I wouldn't be surprised if Uber was acquired, but I would be very surprised if Uber goes public in the next two years.
    - the_mitsuhiko 9y ago
      > Today though, I think that rushing to an IPO would be completely irrational and end with Uber trading at a small fraction of their most recent private valuation. I tend to agree. I don't think that at this point they would try to IPO but if the numbers circulating are correct they will need cash in less than a year time and it might be tricky to raise this.
samastur 9y ago
Surely why?
mikeash 9y ago
It's easy to disrupt a crony-capitalist, monopolistic system by selling your product at a loss, but you can't make a profit that way.
- tedsanders 9y ago
  Uber loses money, but it doesn't sell rides at a loss. Up to 2015 at least (the date of the best finance leak I've seen), Uber's cut of fares was ~18%; and furthermore, that 18% cut more than covered Uber's costs of sales. Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver... Uber actually makes money on each ride - it's just that the gross profit from those rides is short of covering its operating expenses. 12,000 employees are not inexpensive. Based on these financials, if Uber halted most software development and halted subsidies into underdeveloped markets, it seems quite plausible the company would become profitable. Investors might not recoup their whole investments, but the company in zombie could earn back some profits.
  - mikeash 9y ago
    Where is all their money going, then? Seems like a business that should have relatively low overhead.
    - tedsanders 9y ago
      They have 12,000 employees, apparently. Diversity numbers they released earlier this year bucketed those employees into tech, non-tech, and customer support. Their fixed costs probably include R&D (tech) and SG&A (non-tech). Customer support depends on how they do their accounting.
  - stoolpigeon 9y ago
    Maybe I don't understand the charts and the article you linked to but it says that: "Uber passengers were paying only 41% of the actual cost of their trips; Uber was using these massive subsidies to undercut the fares and provide more capacity than the competitors who had to cover 100% of their costs out of passenger fares." To me that sounds like selling rides at a loss.

sjg007 9y ago

Uber isn't publically traded.

the_mitsuhiko 9y ago
Yet. The goal clearly is to rush to an IPO.
- hluska 9y ago
  Eight months ago, I would have absolutely agreed. Heck, even a few months ago when Travis Kalanick started recruting a COO, I would have agreed that the company is trying to rush to a liquidity event. Today though, I think that rushing to an IPO would be completely irrational and end with Uber trading at a small fraction of their most recent private valuation. Right now, there is a huge vacuum at the CEO/COO/CFO troika. That, combined with the sordid Waymo lawsuit, would give any institutional investor pause before buying a strong position. Consequently, I would argue that Uber needs some strong leadership at the top, and some sort of resolution on the Waymo lawsuit before they can consider going public. I wouldn't be surprised if Uber was acquired, but I would be very surprised if Uber goes public in the next two years.
  - the_mitsuhiko 9y ago
    > Today though, I think that rushing to an IPO would be completely irrational and end with Uber trading at a small fraction of their most recent private valuation. I tend to agree. I don't think that at this point they would try to IPO but if the numbers circulating are correct they will need cash in less than a year time and it might be tricky to raise this.

samastur 9y ago

Surely why?

mikeash 9y ago

It's easy to disrupt a crony-capitalist, monopolistic system by selling your product at a loss, but you can't make a profit that way.

tedsanders 9y ago
Uber loses money, but it doesn't sell rides at a loss. Up to 2015 at least (the date of the best finance leak I've seen), Uber's cut of fares was ~18%; and furthermore, that 18% cut more than covered Uber's costs of sales. Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver... Uber actually makes money on each ride - it's just that the gross profit from those rides is short of covering its operating expenses. 12,000 employees are not inexpensive. Based on these financials, if Uber halted most software development and halted subsidies into underdeveloped markets, it seems quite plausible the company would become profitable. Investors might not recoup their whole investments, but the company in zombie could earn back some profits.
- mikeash 9y ago
  Where is all their money going, then? Seems like a business that should have relatively low overhead.
  - tedsanders 9y ago
    They have 12,000 employees, apparently. Diversity numbers they released earlier this year bucketed those employees into tech, non-tech, and customer support. Their fixed costs probably include R&D (tech) and SG&A (non-tech). Customer support depends on how they do their accounting.
- stoolpigeon 9y ago
  Maybe I don't understand the charts and the article you linked to but it says that: "Uber passengers were paying only 41% of the actual cost of their trips; Uber was using these massive subsidies to undercut the fares and provide more capacity than the competitors who had to cover 100% of their costs out of passenger fares." To me that sounds like selling rides at a loss.