6 ms·

New Uber CEO Says Company Could Go Public in 18 Months

40 points by uptown 9y ago

sillysaurus3 9y ago
What a surprise. Can we break down the numbers on how much they'd likely receive from an IPO vs their burn rate? It's hard to imagine that an IPO would deal with most of their problems. https://news.ycombinator.com/item?id=15116399 https://news.ycombinator.com/item?id=15116399 is a good analysis. Also, non-paywalled article: http://archive.is/hOt4v http://archive.is/hOt4v (Thanks to philippnagel for pointing out this trick.)
fosk 9y ago
That was the plan all along. Travis didn't want to IPO so soon.
benlorenzetti 9y ago
This is wonderful news. This is how capitalism is supposed to work. I wonder if the recent uproar around uber could have mitigated by publicizing this earlier.
- frgtpsswrdlame 9y ago
  Capitalism is supposed to work this way? VCs investing billions of dollars in an unprofitable company which continues to be unprofitable for years after the fact. A company which has two real paths to profitability: (1) achieving autonomous vehicles and ending the jobs of tens of thousands of people or (2) obtaining enough market power to raise prices from their current, subsidized level. A company which only exists in the first place because they trampled all over local laws. This is a fun-house mirror version of capitalism.
  - benlorenzetti 9y ago
    Disagreeing with capitalism is different from disagreeing about what it is. If autonomous vehicles are within the realm of possibility, they are going to be enormously successful and beneficial to humanity. Well functioning capitalism is about giving everybody a chance to participate (or not) in a piece of the new pie.
    - frgtpsswrdlame 9y ago
      No, actually some of the biggest free marketers possible don't agree that predatory pricing is possible under capitalism. Google predatory pricing friedman (you won't get a quote from friedman but his name gets all the good stuff) and you'll find lots of people arguing that predatory pricing is a myth. You can also google friedman monopoly and find huge proponents of capitalism arguing that monopolies are only possible through state intervention. >Well functioning capitalism is about giving everybody a chance to participate (or not) in a piece of the new pie. Maybe... but everyone disagrees on what well functioning actually means.
      - benlorenzetti 9y ago
        We are talking past each other. I think that autonomous cars are a great idea and would like to invest in autonomous car companies more directly than is currently possible. I gather from reading about predatory pricing and your prior comment that you think Ubers' business model is a dud and that automating these jobs is bad. This variance is the essence of capitalism though. In a well functioning capitalist society I am free to make a stupid investment in Uber and you are free to wisely not. Its about having a degree of private wealth ownership and freedom and choice in your investments. This is what I meant by well functioning: the choice of investing directly in Waymo, Uber, etc is not really there yet for average citizens. > Capitalism is supposed to work this way? VCs investing billions of dollars in an unprofitable company which continues to be unprofitable for years after the fact. [...] (1) achieving autonomous vehicles and ending the jobs of tens of thousands of people [...] A company which only exists in the first place because they trampled all over local laws. Yes the freedom to make dumb investments...yes replacing error prone human labor with safe, tireless machines using greed and ambition as motivation...yes the freedom to open a business without bribing government officials. Yes, these are all basic tenets of capitalism.
askafriend 9y ago
I'm going to re-post one of my previous comments on this topic because I think it's relevant: "In my opinion, all they need is someone who is demonstrably competent and experienced to stabilize the ship and steer it towards an IPO. There's no need for the candidate to be a visionary or meddle drastically with something that's already working extraordinarily well. That part is largely done - the Uber machine is mature and chugging along. A seasoned operator needs to come in to provide PR cover, put in some basic organizational guardrails and rebuild the executive ranks to get the company IPO ready. Hiring a CFO is probably top priority as well as getting PR back on track. Those two moves alone would suppress external distractions and start the IPO process by having someone working on it full-time (CFO)." Original comment here: https://news.ycombinator.com/item?id=15113953 https://news.ycombinator.com/item?id=15113953 ---- So I think this is pretty much par for course. Dara will likely be laser focused on removing distractions and kicking off the IPO process and shepherding it along. In fact, there's probably a clause in his employment contract that gives him some kind of large bonus for successfully delivering an IPO within XYZ timeframe.
- culturalzero 9y ago
  Good point. From the outside it does appear Travis go caught up in himself more than focusing on his real role.
  - fosk 9y ago
    Seems to me he was more focused on building and growing the business, while at the same time preventing existential long-term threats (although with hiccups along the way), than wasting time preparing for an IPO . Uber is still at risk to lose their current monopolistic world market share, everybody knows it (Travis too), and they need to work and fight hard 24/7 to retain it. IPO is a distraction.
    - deleted 9y ago
      [deleted]
    - frgtpsswrdlame 9y ago
ProAm 9y ago
IPO would really just be a way to cash out investors with no real return on the horizon for the new shareholders? Speaking from their current burn rate, lawsuit, potential new technology/driverless cars.
- bhouston 9y ago
  At much as you may hate Uber it is an unstoppable juggernaut. Being profitable is not impossible and settling everything is just a question of money, and fairly small sums at that. It may not be worth $100B, but it is going to be worth a ton.
  - davidcbc 9y ago
    Their plan for profitability so far has been "invent a ground breaking technology that will change the world before we run out of money in a couple years". That sounds more like delusions of grandeur than unstoppable juggernaut. Hopefully that changes under Khosrowshahi. Uber may well yet become an unstoppable juggernaut, but they could just as easily flame in spectacular fashion.
    - smileysteve 9y ago
      See salesforce and amazon.
  - thematt 9y ago
    It's far from unstoppable. They might have market share in the US because of their first mover advantage, but they ceded to Didi in China and to Yandex in Russia.
    - deleted 9y ago
      [deleted]
  - ProAm 9y ago
    Is that true though? They are still subsidizing 60% of the cost on all rides no? Eventually there will be a reckoning and will really determine if this is a viable company.
Bretts89 9y ago
It's about time their investors get a massive liquidity event. I tend to think the lack of an near term exit strategy was one of many reasons Travis got the boot.
- tyingq 9y ago
  18 months isn't much time to present financials that would support a high IPO price though, is it? I assume the current financials still show pretty big losses due to the subsidized pricing.
  - kingnothing 9y ago
    https://www.axios.com/exclusive-uber-financials-2475912645.html https://www.axios.com/exclusive-uber-financials-2475912645.h...
    - tyingq 9y ago
      Right, so rosy language, but still $500 to $600 million of loss per quarter, presumably from subsidies. I guess you have to believe either in self driving cars happening somewhat soon, or cutting subsidies doesn't cut demand too much.
      - kingnothing 9y ago
        From the article: "Uber's global ride-share business was margin positive last quarter"
        tyingq 9y ago
        Also from the article: "Adjusted net loss fell almost 9% quarter-over-quarter to $645 million" So they probably mean gross margin. They did reduce the losses as a qoq comparison. But, it's still $645M lost in a quarter.
uberemployee 9y ago
Guys this is somewhat fake news. The question was what his thoughts were on IPO. He basically said it's up to the board, but 18 to 36 months seemed reasonable. It wasn't like he's actually planning on IPOing in 18 months, it was an off-the-cuff response and gave a ballpark figure. That's all, don't read too much into it he hasn't even officially started yet.
- CodeWriter23 9y ago
  The real news is this is precisely why TK was ousted. He was categorically opposed to taking Uber public, and that went against the wishes of big investors who want an IPO payday.
  - uberemployee 9y ago
    He wasn't opposed to taking Uber public, he wanted to delay IPO as long as possible because going public places restrictions on how the company is run. Dara said the same comment. But 18-36 months doesn't go against anything TK said.
  - mahyarm 9y ago
    Profitability is usually a good idea before you IPO.
    - smileysteve 9y ago
      Why do you need to raise money if you are profitable?
      - mahyarm 9y ago
        Employee & investor liquidity, who are the majority stockholders of these kinds of companies. And the value of a stock does far better when something is profitable vs not. Past history shows it's usually a bad idea to be a public company and be in the red for many quarters.
jonmc12 9y ago
Uber ICO? Please speculate on possibilities and help the press to collect data points so they can mash together 2 of their favorite narratives. Bonus points for looping in autonomous vehicles.
otakucode 9y ago
Do not invest in Uber. It would be downright stupid to do so. What is their product? Providing rides? No, that's what drivers do. Ubers product is running a bunch of servers, a mobile app, and bearing the first-mover disadvantage of fighting with all the regulators about ridesharing. The problem with this is that those servers and that app? The thing that collects the money for Uber? No one needs Uber for that. Tomorrow someone could launch a fully peer to peer version of the software that runs in distributed fashion across all devices it gets installed upon, cutting them completely out of the loop, making rides cheaper and making drivers more money. And if Uber perfects self-driving cars if they are deluded enough to think they can replace their human drivers with a roving fleet of such... oh how childish and stupid that would be. I would give it 10 days before someone would introduce GUber which lets individuals with self-driving cars to time share them out when not in use via an app, destroying Uber swiftly and making every self-driving car they own (and maintain) a liability. The only way I could see them remaining interesting for more than a couple more years would be if they developed an awesome self-driving car - and gave it away for free. With anyone who accepted one obligated to permit the thing to be time-shared out by Uber to provide rides when its not being used with X number of hours of availability given per month. That would be hard to compete with, whether through peer to peer or individuals renting their self-driving cars...
- soperj 9y ago
  Their product is automated dispatch. Dispatch is what other cab companies do too.
- neosat 9y ago
  That's incredibly naive. There's a lot of accumulation of design and technology knowhow in various capabilities like dispatch, operations etc. "Tomorrow someone could launch a fully peer to peer version of the software that runs in distributed fashion across all devices it gets installed upon, cutting them completely out of the loop, making rides cheaper and making drivers more money." Why haven't they if it is as easy as you make it sound? It is definitely plausible that someone will do this but it is FAR from easy and won't happen 'tomorrow' as you put it.
- ProAm 9y ago
paulsutter 9y ago
There are hundreds of startups planning to IPO in 18 months. Many have held steady with this plan for 5 years or more. For as long as four years they've been saying, "but this time, really, 18 months"
dkimmer 9y ago
When it comes to Uber's future, there's good news and bad news. The good news is that none of the "scandals" we've heard so much about matter. Not the culture, not the lawsuits, not even the firing of the CEO. None of those things would be able to sink the company, assuming that the company has a strong business model. And that's where we get to the bad news: Uber doesn't HAVE a business model. Nothing about Uber makes hired car rides fundamentally cheaper than anything before it. Cars still cost the same amount of money to buy/rent and operate. That cost hasn't gone away, even in the iPhone era. If Uber is not paying those costs directly, then someone is. In the Uber model, it's just been transferred to the driver, for whom driving is as a result less profitable. So much for the car. The other component of a ride service is the driver himself. A driver's undivided time costs the same, whether he's driving for Uber or for an Uber clone or for a local taxi company. Human labor hasn't suddenly gotten cheaper just because you can hail them on your iPhone. And you don't even want the cheapest possible labor here, for the sake of your own safety. Oh, but you say, if the drivers were to be entirely replaced with self-driving cars, then Uber's margins would be amazing right? Yes, they would be. But self-driving cars are not coming anytime soon. Just ask the people most invested in Uber: the investors. They want you to wait for self-driving cars to fix Uber's non-existent business model, while they themselves can't wait to cash out as soon as possible. Even if it does happen many years from now, it doesn't put Uber in a good position. The self-driving car technology will be a commodity. There will be no barrier preventing anyone else from launching their own fleets. Uber's product also has no network effect and is not sticky. Its customers are not buying an experience, they are buying a utility (a ride from point A to point B at the lowest possible cost). As a result, customers have zero loyalty and are happy to switch to the lowest cost competitor. Uber has hugely impressive numbers though right? Yes, tons of revenue and no profits. Because who would pass up a private car ride from San Francisco to Palo Alto for $45 when a taxi would cost $125? As long as VC's subsidize rides, customers will continue to buy them.
- benlorenzetti 9y ago
  Uber (in the past) made hired car rides fundamentally cheaper than everything before it by bullying local monopolies into bankruptcy. I know your post is evaluating Uber's future, not past, but past successes may color our judgment of their future potential. https://www.cnbc.com/2017/07/15/uber-lyft-take-down-not-just-cab-drivers-but-also-lenders.html https://www.cnbc.com/2017/07/15/uber-lyft-take-down-not-just...

40 points by uptown 9y ago

What a surprise. Can we break down the numbers on how much they'd likely receive from an IPO vs their burn rate? It's hard to imagine that an IPO would deal with most of their problems. https://news.ycombinator.com/item?id=15116399 https://news.ycombinator.com/item?id=15116399 is a good analysis. Also, non-paywalled article: http://archive.is/hOt4v http://archive.is/hOt4v (Thanks to philippnagel for pointing out this trick.)

fosk 9y ago

That was the plan all along. Travis didn't want to IPO so soon.

benlorenzetti 9y ago

This is wonderful news. This is how capitalism is supposed to work. I wonder if the recent uproar around uber could have mitigated by publicizing this earlier.

frgtpsswrdlame 9y ago
Capitalism is supposed to work this way? VCs investing billions of dollars in an unprofitable company which continues to be unprofitable for years after the fact. A company which has two real paths to profitability: (1) achieving autonomous vehicles and ending the jobs of tens of thousands of people or (2) obtaining enough market power to raise prices from their current, subsidized level. A company which only exists in the first place because they trampled all over local laws. This is a fun-house mirror version of capitalism.
- benlorenzetti 9y ago
  Disagreeing with capitalism is different from disagreeing about what it is. If autonomous vehicles are within the realm of possibility, they are going to be enormously successful and beneficial to humanity. Well functioning capitalism is about giving everybody a chance to participate (or not) in a piece of the new pie.
  - frgtpsswrdlame 9y ago
    No, actually some of the biggest free marketers possible don't agree that predatory pricing is possible under capitalism. Google predatory pricing friedman (you won't get a quote from friedman but his name gets all the good stuff) and you'll find lots of people arguing that predatory pricing is a myth. You can also google friedman monopoly and find huge proponents of capitalism arguing that monopolies are only possible through state intervention. >Well functioning capitalism is about giving everybody a chance to participate (or not) in a piece of the new pie. Maybe... but everyone disagrees on what well functioning actually means.
    - benlorenzetti 9y ago
      We are talking past each other. I think that autonomous cars are a great idea and would like to invest in autonomous car companies more directly than is currently possible. I gather from reading about predatory pricing and your prior comment that you think Ubers' business model is a dud and that automating these jobs is bad. This variance is the essence of capitalism though. In a well functioning capitalist society I am free to make a stupid investment in Uber and you are free to wisely not. Its about having a degree of private wealth ownership and freedom and choice in your investments. This is what I meant by well functioning: the choice of investing directly in Waymo, Uber, etc is not really there yet for average citizens. > Capitalism is supposed to work this way? VCs investing billions of dollars in an unprofitable company which continues to be unprofitable for years after the fact. [...] (1) achieving autonomous vehicles and ending the jobs of tens of thousands of people [...] A company which only exists in the first place because they trampled all over local laws. Yes the freedom to make dumb investments...yes replacing error prone human labor with safe, tireless machines using greed and ambition as motivation...yes the freedom to open a business without bribing government officials. Yes, these are all basic tenets of capitalism.

askafriend 9y ago

I'm going to re-post one of my previous comments on this topic because I think it's relevant: "In my opinion, all they need is someone who is demonstrably competent and experienced to stabilize the ship and steer it towards an IPO. There's no need for the candidate to be a visionary or meddle drastically with something that's already working extraordinarily well. That part is largely done - the Uber machine is mature and chugging along. A seasoned operator needs to come in to provide PR cover, put in some basic organizational guardrails and rebuild the executive ranks to get the company IPO ready. Hiring a CFO is probably top priority as well as getting PR back on track. Those two moves alone would suppress external distractions and start the IPO process by having someone working on it full-time (CFO)." Original comment here: https://news.ycombinator.com/item?id=15113953 https://news.ycombinator.com/item?id=15113953 ---- So I think this is pretty much par for course. Dara will likely be laser focused on removing distractions and kicking off the IPO process and shepherding it along. In fact, there's probably a clause in his employment contract that gives him some kind of large bonus for successfully delivering an IPO within XYZ timeframe.

culturalzero 9y ago
Good point. From the outside it does appear Travis go caught up in himself more than focusing on his real role.
- fosk 9y ago
  Seems to me he was more focused on building and growing the business, while at the same time preventing existential long-term threats (although with hiccups along the way), than wasting time preparing for an IPO . Uber is still at risk to lose their current monopolistic world market share, everybody knows it (Travis too), and they need to work and fight hard 24/7 to retain it. IPO is a distraction.
  - deleted 9y ago
    [deleted]
  - frgtpsswrdlame 9y ago

ProAm 9y ago

IPO would really just be a way to cash out investors with no real return on the horizon for the new shareholders? Speaking from their current burn rate, lawsuit, potential new technology/driverless cars.

bhouston 9y ago
At much as you may hate Uber it is an unstoppable juggernaut. Being profitable is not impossible and settling everything is just a question of money, and fairly small sums at that. It may not be worth $100B, but it is going to be worth a ton.
- davidcbc 9y ago
  Their plan for profitability so far has been "invent a ground breaking technology that will change the world before we run out of money in a couple years". That sounds more like delusions of grandeur than unstoppable juggernaut. Hopefully that changes under Khosrowshahi. Uber may well yet become an unstoppable juggernaut, but they could just as easily flame in spectacular fashion.
  - smileysteve 9y ago
    See salesforce and amazon.
- thematt 9y ago
  It's far from unstoppable. They might have market share in the US because of their first mover advantage, but they ceded to Didi in China and to Yandex in Russia.
  - deleted 9y ago
    [deleted]
- ProAm 9y ago
  Is that true though? They are still subsidizing 60% of the cost on all rides no? Eventually there will be a reckoning and will really determine if this is a viable company.

Bretts89 9y ago

It's about time their investors get a massive liquidity event. I tend to think the lack of an near term exit strategy was one of many reasons Travis got the boot.

tyingq 9y ago
18 months isn't much time to present financials that would support a high IPO price though, is it? I assume the current financials still show pretty big losses due to the subsidized pricing.
- kingnothing 9y ago
  https://www.axios.com/exclusive-uber-financials-2475912645.html https://www.axios.com/exclusive-uber-financials-2475912645.h...
  - tyingq 9y ago
    Right, so rosy language, but still $500 to $600 million of loss per quarter, presumably from subsidies. I guess you have to believe either in self driving cars happening somewhat soon, or cutting subsidies doesn't cut demand too much.
    - kingnothing 9y ago
      From the article: "Uber's global ride-share business was margin positive last quarter"
      - tyingq 9y ago
        Also from the article: "Adjusted net loss fell almost 9% quarter-over-quarter to $645 million" So they probably mean gross margin. They did reduce the losses as a qoq comparison. But, it's still $645M lost in a quarter.

uberemployee 9y ago

Guys this is somewhat fake news. The question was what his thoughts were on IPO. He basically said it's up to the board, but 18 to 36 months seemed reasonable. It wasn't like he's actually planning on IPOing in 18 months, it was an off-the-cuff response and gave a ballpark figure. That's all, don't read too much into it he hasn't even officially started yet.

CodeWriter23 9y ago
The real news is this is precisely why TK was ousted. He was categorically opposed to taking Uber public, and that went against the wishes of big investors who want an IPO payday.
- uberemployee 9y ago
  He wasn't opposed to taking Uber public, he wanted to delay IPO as long as possible because going public places restrictions on how the company is run. Dara said the same comment. But 18-36 months doesn't go against anything TK said.
- mahyarm 9y ago
  Profitability is usually a good idea before you IPO.
  - smileysteve 9y ago
    Why do you need to raise money if you are profitable?
    - mahyarm 9y ago
      Employee & investor liquidity, who are the majority stockholders of these kinds of companies. And the value of a stock does far better when something is profitable vs not. Past history shows it's usually a bad idea to be a public company and be in the red for many quarters.

jonmc12 9y ago

Uber ICO? Please speculate on possibilities and help the press to collect data points so they can mash together 2 of their favorite narratives. Bonus points for looping in autonomous vehicles.

otakucode 9y ago

Do not invest in Uber. It would be downright stupid to do so. What is their product? Providing rides? No, that's what drivers do. Ubers product is running a bunch of servers, a mobile app, and bearing the first-mover disadvantage of fighting with all the regulators about ridesharing. The problem with this is that those servers and that app? The thing that collects the money for Uber? No one needs Uber for that. Tomorrow someone could launch a fully peer to peer version of the software that runs in distributed fashion across all devices it gets installed upon, cutting them completely out of the loop, making rides cheaper and making drivers more money. And if Uber perfects self-driving cars if they are deluded enough to think they can replace their human drivers with a roving fleet of such... oh how childish and stupid that would be. I would give it 10 days before someone would introduce GUber which lets individuals with self-driving cars to time share them out when not in use via an app, destroying Uber swiftly and making every self-driving car they own (and maintain) a liability. The only way I could see them remaining interesting for more than a couple more years would be if they developed an awesome self-driving car - and gave it away for free. With anyone who accepted one obligated to permit the thing to be time-shared out by Uber to provide rides when its not being used with X number of hours of availability given per month. That would be hard to compete with, whether through peer to peer or individuals renting their self-driving cars...

soperj 9y ago
Their product is automated dispatch. Dispatch is what other cab companies do too.
neosat 9y ago
That's incredibly naive. There's a lot of accumulation of design and technology knowhow in various capabilities like dispatch, operations etc. "Tomorrow someone could launch a fully peer to peer version of the software that runs in distributed fashion across all devices it gets installed upon, cutting them completely out of the loop, making rides cheaper and making drivers more money." Why haven't they if it is as easy as you make it sound? It is definitely plausible that someone will do this but it is FAR from easy and won't happen 'tomorrow' as you put it.
ProAm 9y ago

paulsutter 9y ago

There are hundreds of startups planning to IPO in 18 months. Many have held steady with this plan for 5 years or more. For as long as four years they've been saying, "but this time, really, 18 months"

dkimmer 9y ago

When it comes to Uber's future, there's good news and bad news. The good news is that none of the "scandals" we've heard so much about matter. Not the culture, not the lawsuits, not even the firing of the CEO. None of those things would be able to sink the company, assuming that the company has a strong business model. And that's where we get to the bad news: Uber doesn't HAVE a business model. Nothing about Uber makes hired car rides fundamentally cheaper than anything before it. Cars still cost the same amount of money to buy/rent and operate. That cost hasn't gone away, even in the iPhone era. If Uber is not paying those costs directly, then someone is. In the Uber model, it's just been transferred to the driver, for whom driving is as a result less profitable. So much for the car. The other component of a ride service is the driver himself. A driver's undivided time costs the same, whether he's driving for Uber or for an Uber clone or for a local taxi company. Human labor hasn't suddenly gotten cheaper just because you can hail them on your iPhone. And you don't even want the cheapest possible labor here, for the sake of your own safety. Oh, but you say, if the drivers were to be entirely replaced with self-driving cars, then Uber's margins would be amazing right? Yes, they would be. But self-driving cars are not coming anytime soon. Just ask the people most invested in Uber: the investors. They want you to wait for self-driving cars to fix Uber's non-existent business model, while they themselves can't wait to cash out as soon as possible. Even if it does happen many years from now, it doesn't put Uber in a good position. The self-driving car technology will be a commodity. There will be no barrier preventing anyone else from launching their own fleets. Uber's product also has no network effect and is not sticky. Its customers are not buying an experience, they are buying a utility (a ride from point A to point B at the lowest possible cost). As a result, customers have zero loyalty and are happy to switch to the lowest cost competitor. Uber has hugely impressive numbers though right? Yes, tons of revenue and no profits. Because who would pass up a private car ride from San Francisco to Palo Alto for $45 when a taxi would cost $125? As long as VC's subsidize rides, customers will continue to buy them.

benlorenzetti 9y ago
Uber (in the past) made hired car rides fundamentally cheaper than everything before it by bullying local monopolies into bankruptcy. I know your post is evaluating Uber's future, not past, but past successes may color our judgment of their future potential. https://www.cnbc.com/2017/07/15/uber-lyft-take-down-not-just-cab-drivers-but-also-lenders.html https://www.cnbc.com/2017/07/15/uber-lyft-take-down-not-just...