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>Uber is profitable in established markets however it is costly to incentivize the initial driver pool in a new area to drive around hoping for customers where

>Uber is profitable in established markets however it is costly to incentivize the initial driver pool in a new area to drive around hoping for customers where customers do not expect there to be uber drivers. Is there actually some GAAP-compatible (hopefully audited) document outlining this, or is it purely self-declared?

mrep 8y ago
Considering they are a private company and I don't work for them, no. There are 2 articles (probably same source) that you can read though [0, 1]. Also, while VC's scattershot their investments, I highly highly doubt they pumped 21.7 BILLION FUCKING DOLLARS in a company that wasn't unit economically profitable in local markets [2]. [0]: https://www.ft.com/content/afa1d4de-33bc-11e6-bda0-04585c31b153 https://www.ft.com/content/afa1d4de-33bc-11e6-bda0-04585c31b... [1]: http://fortune.com/2016/06/16/uber-profitable-markets/ http://fortune.com/2016/06/16/uber-profitable-markets/ [2]: https://www.crunchbase.com/organization/uber#section-funding-rounds https://www.crunchbase.com/organization/uber#section-funding...
- daniel_iversen 8y ago
  I assumed they weren’t really profitable anywhere and that they were (recently) waiting for self driving cars to make the business model work and explode!
- mmt 8y ago
  > 21.7 BILLION FUCKING DOLLARS Looks like 8.3 of that is "Secondary market", which, IIUC, is old investors selling to new ones. This would explain why there are two Dec 28, 2017 rounds listed with different dollar amounts and the same lead investor. In fact, SoftBank is listed as the only investor for the non-secondary round on that date. Still, that's 13.4 billion dollars of actual new cash (and 3 very recent line items have no dollar values attached, meaning it could be significantly more), so your point stands.
- wpietri 8y ago
  > I highly highly doubt they pumped 21.7 BILLION FUCKING DOLLARS There's the legend about the Texas oilman who, wanting to distract his competitors, started a rumor that oil'd been found in hell. This worked for a bit, but eventually he heard the rumor enough times himself that he had to go check out hell for himself. I personally wouldn't be shocked to find out Uber never ends up really working as a business. Investors are herd animals, and hate missing out on a hot deal. By your logic, nobody would have given Theranos $1.4 billion fucking dollars without making sure their shit worked. But we now know it was a fraud, and not even a very good one. It's very hard to know if the unit economics for Uber work because there are a lot of things muddying the picture. Uber doesn't own the cars or employ the drivers, so capital costs and expenses are mostly on other people's books. Uber is getting a massive subsidy from investors, but it could also be argued that it's getting a massive subsidy from desperate and/or optimistic drivers who aren't properly valuing their cars, their time, their sanity, or their health. Uber is definitely getting a subsidy from society: they're creating large externalities in terms of pollution, congestion, and carbon emissions. And probably also in terms of short- and long-term draws on the social safety net. Over time, things tend to be properly priced, so Uber's unit economics will likely get worse. We just don't know how much worse. And even if the unit economics end up being positive, Uber has a lot of investors who expect a return. Given that they have a very shallow moat, will they be able to throw off enough profit to satisfy shareholders without competitors coming in and undercutting them? If they're going to give the same kind of return on capital as Apple, I'd guess that will take $1-2/ride on its own. That could be quite an advantage for a scrappy competitor.
  - mrep 8y ago
    > I personally wouldn't be shocked to find out Uber never ends up really working as a business. My other comment in this thread [0] is about how I think waymo has a good chance of eating all of ubers/lyfts market so I totally agree. However, I still think their current unit economics in established markets are profitable and I can see why investors are interested in the market assuming self driving cars do not work out (which i personally don't). > By your logic, nobody would have given Theranos $1.4 billion fucking dollars without making sure their shit worked. I thought up about this a while and I have to agree with you, they could certainly be pulling a theranos or enron especially since they are not public companies which require regular audits (that I know of but I'm not finance guy). That being said, with more private money being invested in a company, I would assume they would do more personal auditing. Are there any VC guys that can comment? [0]: https://news.ycombinator.com/item?id=17791520 https://news.ycombinator.com/item?id=17791520
- dang 8y ago
  Please don't use allcaps for emphasis here, which is basically online yelling. This is in the guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. Your comments were just fine without that!
  - mrep 8y ago
    While I feel allcaps are way more expressive than italics which are barely noticeable when trying to emphasis, I won't use them again. Also, did you really just auto-hide my comment for using allcaps on 3 words?
    - tomhoward 8y ago
      The site has a culture that has developed and been refined over 10+ years. The people who have the best time here are those who seek to respect and improve it, and are gracious when reminded what's expected.

mrep 8y ago

Considering they are a private company and I don't work for them, no. There are 2 articles (probably same source) that you can read though [0, 1]. Also, while VC's scattershot their investments, I highly highly doubt they pumped 21.7 BILLION FUCKING DOLLARS in a company that wasn't unit economically profitable in local markets [2]. [0]: https://www.ft.com/content/afa1d4de-33bc-11e6-bda0-04585c31b153 https://www.ft.com/content/afa1d4de-33bc-11e6-bda0-04585c31b... [1]: http://fortune.com/2016/06/16/uber-profitable-markets/ http://fortune.com/2016/06/16/uber-profitable-markets/ [2]: https://www.crunchbase.com/organization/uber#section-funding-rounds https://www.crunchbase.com/organization/uber#section-funding...

daniel_iversen 8y ago
I assumed they weren’t really profitable anywhere and that they were (recently) waiting for self driving cars to make the business model work and explode!
mmt 8y ago
> 21.7 BILLION FUCKING DOLLARS Looks like 8.3 of that is "Secondary market", which, IIUC, is old investors selling to new ones. This would explain why there are two Dec 28, 2017 rounds listed with different dollar amounts and the same lead investor. In fact, SoftBank is listed as the only investor for the non-secondary round on that date. Still, that's 13.4 billion dollars of actual new cash (and 3 very recent line items have no dollar values attached, meaning it could be significantly more), so your point stands.
wpietri 8y ago
> I highly highly doubt they pumped 21.7 BILLION FUCKING DOLLARS There's the legend about the Texas oilman who, wanting to distract his competitors, started a rumor that oil'd been found in hell. This worked for a bit, but eventually he heard the rumor enough times himself that he had to go check out hell for himself. I personally wouldn't be shocked to find out Uber never ends up really working as a business. Investors are herd animals, and hate missing out on a hot deal. By your logic, nobody would have given Theranos $1.4 billion fucking dollars without making sure their shit worked. But we now know it was a fraud, and not even a very good one. It's very hard to know if the unit economics for Uber work because there are a lot of things muddying the picture. Uber doesn't own the cars or employ the drivers, so capital costs and expenses are mostly on other people's books. Uber is getting a massive subsidy from investors, but it could also be argued that it's getting a massive subsidy from desperate and/or optimistic drivers who aren't properly valuing their cars, their time, their sanity, or their health. Uber is definitely getting a subsidy from society: they're creating large externalities in terms of pollution, congestion, and carbon emissions. And probably also in terms of short- and long-term draws on the social safety net. Over time, things tend to be properly priced, so Uber's unit economics will likely get worse. We just don't know how much worse. And even if the unit economics end up being positive, Uber has a lot of investors who expect a return. Given that they have a very shallow moat, will they be able to throw off enough profit to satisfy shareholders without competitors coming in and undercutting them? If they're going to give the same kind of return on capital as Apple, I'd guess that will take $1-2/ride on its own. That could be quite an advantage for a scrappy competitor.
- mrep 8y ago
  > I personally wouldn't be shocked to find out Uber never ends up really working as a business. My other comment in this thread [0] is about how I think waymo has a good chance of eating all of ubers/lyfts market so I totally agree. However, I still think their current unit economics in established markets are profitable and I can see why investors are interested in the market assuming self driving cars do not work out (which i personally don't). > By your logic, nobody would have given Theranos $1.4 billion fucking dollars without making sure their shit worked. I thought up about this a while and I have to agree with you, they could certainly be pulling a theranos or enron especially since they are not public companies which require regular audits (that I know of but I'm not finance guy). That being said, with more private money being invested in a company, I would assume they would do more personal auditing. Are there any VC guys that can comment? [0]: https://news.ycombinator.com/item?id=17791520 https://news.ycombinator.com/item?id=17791520
dang 8y ago
Please don't use allcaps for emphasis here, which is basically online yelling. This is in the guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. Your comments were just fine without that!
- mrep 8y ago
  While I feel allcaps are way more expressive than italics which are barely noticeable when trying to emphasis, I won't use them again. Also, did you really just auto-hide my comment for using allcaps on 3 words?
  - tomhoward 8y ago
    The site has a culture that has developed and been refined over 10+ years. The people who have the best time here are those who seek to respect and improve it, and are gracious when reminded what's expected.