16 ms·

Uber Lays Off 400

515 points by moltensodium 7y ago

berg01 7y ago
http://archive.is/G3a2i http://archive.is/G3a2i
dvt 7y ago
When I was at Edmunds (working on a fairly profitable ad tech product), Uber was actively poaching from our team; a few ex-coworkers (albeit mostly engineers) moved up to SF and hopefully they didn't get axed. We can chalk this up to "business as usual," but let's not forget people's livelihoods are at stake.
- crispyporkbites 7y ago
  If your CV has marketing @ Uber on it, I doubt your livelihood is going anywhere
- luckylion 7y ago
  > but let's not forget people's livelihoods are at stake Meh, but let's also not pretend that they didn't make a lot of money by working for a company that treats the people that provide the actual service, the drivers, like shit.
ProAm 7y ago
Profitability doubts after the IPO? Everyone in the world knew they were never close to profitability pre-IPO, this is just the reality of being a publicly traded not profitable company. Can't funding round yourself out of this one anymore.
- rolltiide 7y ago
  Well you can... the terminology is just different They’ll say “saudi investors bought into secondary offering at X share price” instead of “round completed at Y valuation!!!” Which is just X share price of last purchase multiplied by total shares in existence Public companies can do secondary offerings from treasury or from creating brand new shares from nothing (dilution) Liquidity is one of the benefits
  - mdorazio 7y ago
    Yup, also from selling bonds.
    - bduerst 7y ago
      Raising debt is just as visible on public filings as burning the cash, and gets baked into the market price. It's also hard to do with as few of assets as Uber has.
      - rolltiide 7y ago
        The market price of shares is less consequential than you think, for an issuer.
  - bduerst 7y ago
    But then what's the planned payout for those secondary investors? Liquidating on the market would plummet.
    - H8crilA 7y ago
      Companies do this all the time (issue new bonds or equity). There's really not much of a difference between public and private markets, in principle. Planned payout is, and has been the same ever since limited liability companies were invented by humanity: excessive cash flows plus liquidation value of corporate assets at end of life. Hoping on anything else is speculation (nothing wrong with that, but it is just speculation, i.e. trying to sell to the greater fool).
      - bduerst 7y ago
        Right, but that specific activity is all visible on the financial filings, so how is that the same as the pre-IPO funding rounds that Uber was burning through? If you take out a ton of debt while burning through cash reserves then your market price plummets. Same with issuing new equity, through dilution. At least pre-IPO, the investors could lock in favorable pay outs on their funding rounds - now this is all visible to the public investors.
itchyouch 7y ago
400 people at say 40k salaries or around 80k with benefits is around 32 million. Definitely a significant chunk of change, but barely scratching the surface for offsetting 1B in losses.
- omarhaneef 7y ago
  https://www.payscale.com/research/US/Employer=Uber_Technologies%2C_Inc./Salary https://www.payscale.com/research/US/Employer=Uber_Technolog...
  - dymk 7y ago
    > Marketing Manager > Average: $67,935 And that's for a manager. 40k may be a little low, perhaps they're making 50 or 55, but it's not unreasonable for a normal marketing job.
    - yawgmoth 7y ago
      Marketing manager is often an individual contributor role. "I am managing our content." "I am managing our product marketing material."
      - JMTQp8lwXL 7y ago
        In the context of other roles, one would likely not assume this. For example, considering Engineering Manager. "I am managing our engineering." Could mean you're coding, but usually it means a team of coders.
    - awad 7y ago
      Marketing Manager is not a manager of people but rather an IC role. It is the same as how Account Executive is not an executive in the organizational decision-making sense.
- CydeWeys 7y ago
  You think Uber employees are only making $40k???
aresant 7y ago
From a non-paywalled source (1): 1) These cuts appear to be exclusively in the marketing department taking department from 1,200 to 800 - that is a BIG ASS cut of 33% [EDIT from 25%]. 2) Seems like this was a warning shot by CEO Khosrowshahi who comments "[M] any of our teams are too big, which creates overlapping work, makes for unclear decision owners, and can lead to mediocre results." - I'd be doing my best work @ UBER right now or warming up the resume. 3) Uber has >25,000 FTE worldwide as of article writing. https://www.latimes.com/business/technology/story/2019-07-29/uber-layoffs-marketing-jill-hazelbaker https://www.latimes.com/business/technology/story/2019-07-29...
- tootie 7y ago
  That's 33% actually. And while that's a huge cut, that's also an absurdly large marketing team. There's a reason most big companies hire agencies to do marketing. It's not their core business and you can roll over staff willy-nilly without affecting your head count.
  - aresant 7y ago
    In a two sided marketplace customer acquisition and marketing are absolutely fundamental. Uber operates in >600 major cities across the world at this point. 1200 employees would indicate about 1 person per market per side of the market.
    - xmprt 7y ago
      Which is exactly their point. Why localize your marketing when you can build a much more centralized message. This way they spend less on marketing and have a better global brand identity.
      - aresant 7y ago
        I'm not going to fight this one to the death but I have direct experience in this marketplace. It is much more nuanced than "let's be centralized" and the idea of handing it all over to an agency is a joke. Marketing / customer acquisition is literally their highest non-driver line item by a gi-fucking-gantic amount. Sales & Marketing represents $3 - 4billion dollar cost vs a total marketing payroll of ~$165,000,000 There are absolute returns to pull out of each market by having localized expertise and control. The fact that even on HN the consensus to my thread is that this should be outsourced indicates the degree to which UBER has masked their real DNA - this is one of the world's largest direct response marketing agencies with a ride-sharing platform attached! If the CEO is taking head shots at marketing you can be absolutely sure that under-performers in the rest of the organization are on notice. https://www.cbinsights.com/research/report/how-uber-makes-money/ https://www.cbinsights.com/research/report/how-uber-makes-mo... https://qz.com/1592971/uber-ipo-filling-reveals-how-it-spends-its-money/ https://qz.com/1592971/uber-ipo-filling-reveals-how-it-spend...
sambroner 7y ago
Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hire more marketers -> Cut costs post IPO I'm not arguing it's effective, but it's certainly a reasonable outgrowth of the various goals they've had over the last year or two.
- cj 7y ago
  I mostly agree, except I'd probably frame it a bit differently: > Need more users pre IPO to juice the growth story Or, "VCs tell us we need to spend their investment quickly in whatever areas will generate a hockey stick growth in valuation. We can always fix our business model when we're ready to." > Cut costs post IPO Or, "We no longer answer to our VCs. Now we answer to the public market who cares a lot more about the fundamentals of our business. Now we need to improve our fundamentals to push our market cap upward."
  - whatshisface 7y ago
    If public markets care about fundamentals why can VCs exit into the public market with fake hockey stick growth?
    - ethbro 7y ago
      Because during the initial window of exit, "All companies look like this" is a plausible narrative.
  - MegaButts 7y ago
    I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation these days. I am still somewhat young so I have a limited frame of reference - maybe it was always like this. Obviously you can find examples to support either side. Amazon and Facebook weren't the money making machines (for all the talks of Amazon not making a profit, AWS clearly does and their free cash flow is insane) they are today when they went public. But there are far more companies that didn't turn out that way. Travis Kalanick was very clear that Uber could not survive without self-driving cars. And that doesn't seem to be panning out.
justaguy500 7y ago
What does Uber marketing even do to warrant a 1200 person headcount? I'm from Europe and have never seen any of their marketing, it seems to me that word-of-mouth is more than enough
Bootwizard 7y ago
Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?
- btgeekboy 7y ago
  They’re trading cash to build their moat (keeping out competitors, investing in self-driving). From what I can tell, at least.
  - ForHackernews 7y ago
    That's the theory, but I have no idea what this "moat" is supposed to be. Apps to hail a cab are interchangeable commodities as far as I can tell.
    - criddell 7y ago
      > Apps to hail a cab are interchangeable commodities as far as I can tell. That's what I keep getting stuck on. It's getting easier to compete with Uber and I don't think that's going to change. They have a well known brand but even that feels like it's on verge of becoming genericized.
      - sethhochberg 7y ago
        Right now it wouldn't surprise me if a lot of Uber inertia was specifically because their competitors are smaller and more localized. I live in NYC, and there are half-dozen major rideshare apps here in some form - but I often travel to places where, if there is any major service operating there at all, its Uber... maybe Lyft, but certainly not Via or Juno or Gett or any other smaller names. I don't want to load my phone up with a bunch of different apps and give my data to a bunch of different companies, so guess which app I use even at home where I have plenty of options? Uber. The barrier to entry of getting a new local competitor up and running is small, but the convenience of being able to stick with one provider no matter where you are is big.
codingdave 7y ago
> The marketing team had more than 1,200... I fully admit that I'm not in marketing, so there are surely nuances I don't know. But that scale of marketing department is orders of magnitude above any other place I have worked, with the possible exception of IBM in the 90s. Just maybe... this was a reasonable move.
- rlanday 7y ago
  Uber's business model has the same problem as Groupon's, which is that they don't really have economies of scale. Every market requires a new team of people to run promotions to attract drivers and customers and match supply with demand.
  - smallgovt 7y ago
    I can understand why every new market requires an operations team on the ground, but marketing ought to be centralized.
    - choppaface 7y ago
      It might be centralized, but not entirely automated, at least not yet. Thus each city requires headcount.
    - _bxg1 7y ago
      I could see there being localization challenges, especially when you start talking about multiple countries. Not just languages; cultural nuance, idioms, and political awareness all matter.
      - Twirrim 7y ago
        Does that particular aspect require full time staff in-situ, though?
        Angostura 7y ago
deleted 7y ago
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paxys 7y ago
It was expected to happen, now that they have to scale down on aggressive expansion and focus on making their existing markets profitable instead.
fluxic 7y ago
Love to revisit this piece every few years. Why food delivery will never be profitable: "The Food Delivery Death Star" https://medium.com/@review/the-food-delivery-death-star-85f9a121313 https://medium.com/@review/the-food-delivery-death-star-85f9...
- mevile 7y ago
  Pizza delivery is profitable. Pizza comes in a shape easy for transportation, the size and value of the delivery is economical for a delivery business and there's an established culture around ordering pizza for delivery. The food delivery companies just need to figure out these problems, which a hard, for non-pizza foods.
  - Scoundreller 7y ago
    Also helps that pizzas themselves are dirt cheap to make. Anything that makes them expensive is chargeable. Continuous production is easy and cheap, so doubling your volume by adding delivery is achievable with the same kitchen.
    - mritchie712 7y ago
      ...and fucking delicious
    - twoheadedboy 7y ago
      "When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else: music, movies, microcode (software), high-speed pizza delivery"
duxup 7y ago
Someone did a calculation about what they were paying drivers of they were converted to an hourly rate if you averaged it. IIRC, it was somewhere near minimum wage. If you can't make a profit or are far from profitable and your front line workers are making that little money.... how do you ever without dramatically raising prices? I really doubt corporate office cuts can achieve it.
akeck 7y ago
If a public company open-sources something (as Uber has done on occasion) that gives them a competitive advantage, could they be sued by shareholders for giving away something valuable?
- _delirium 7y ago
  Not successfully unless there's a smoking-gun type thing, like someone involved in the decisions having a clear conflict of interest with a different company they own. Courts generally won't second-guess business decisions, and if Uber says something like "we open-sourced this to build goodwill", a court is going to say fine, weighing the pros and cons of that strategy is their call, and if shareholders disagree with the strategy, they can elect a different board.
deleted 7y ago
[deleted]
beefman 7y ago
They overhired so badly it's an existential threat to the company, and not even from a cost perspective. Should lay off closer to 4000, but that would have negative cultural impact too. So they're stuck. Always slightly underhire so you can be sure you didn't overhire.
- williamDafoe 7y ago
  Companies that perform layoffs have underperforming stock over the next 5 years. so they are trying to lay off a small enough number of people that they don't appear to be the weakening company that they are....
rsp1984 7y ago
Can someone with insight into the matter explain, from a high level, what the big concerns are over Ubers ability to run profitably? In my naive view they are "just running an app" / acting as a mobility marketplace and they make money on each transaction. Given the traction and market dominance they have this sounds like a really attractive business. So how do they manage to run such big losses every year and which items on the expense side are so crucial for the business that nobody at Uber dares to cut into them?
- cosmodisk 7y ago
  It's not just an app. Apart from employing tons of highly paid engineers in Bay area and the rest of the world,they have to deal woth less glamorous,offline part of the business: local "recruitment" centres,where drivers have to be recruited,trained,etc.This is the probably in most larger cities.Also, the cost of acquisition of customers is in the tune of $billioms every year.Ads, subsidies, initiatives and etc. Uber absolutely can be profitable, however it feels like im order for it to be one it'd have to sack 70% of their back office,reduce the number of driver and agree to heavily adjusted valuation..
- sbarre 7y ago
  Literally read the rest of the comments in this thread and that should give you a lot of additional information.
- EnFinlay 7y ago
  I have no insight into the matter. My guess is that their traction and market dominance are far more fragile than you think. Because their drivers are contractors and not employees, they can't be forced to only work for Uber, so even though they created the pool of drivers, they have not "captured" them. So a huge cost is the ride subsidies which maintain their market position. Once the ride subsidies end, there is no reason that a locally focused company can't compete for the same drivers and riders. From what I've read, when Uber started their app technology was borderline magical (pushed the boundaries of what smartphones could do), but since that's no longer the case, there is much less of a barrier to entry.
- CydeWeys 7y ago
squarite 7y ago
Well if any of those 400 are in SF/NY, and are reading this, we're hiring for a marketing manager for my team at Square! PM me or apply here: https://www.smartrecruiters.com/Square/743999690593237 https://www.smartrecruiters.com/Square/743999690593237
- rb808 7y ago
  Link says job has expired
  - squarite 7y ago
    eek thanks! replaced.
UberIsAnnoying 7y ago
I hope it included the people responsible for sending me the most abusive SPAM campaigns I have had in years. 1) I never subscribed to these e-mails 2) The e-mails contain a link to unsubscribe in this format: click.uber.com/f/a/<strings> 3) You get redirected to uber.com/unsubscribe 4) They make you manually fill your e-mail 5) When you press unsubscribe: - It makes a request to uber.com/api/unsubscribe?email=<email-address>&et_job_id=&et_list_id=&et_batch_id=&message_uuid=&content_identifier= - Response is always 404 Not Found (Tested on Firefox, Chrome, IE, Edge)
- spectramax 7y ago
  I am no lawyer but pretty sure this violates: https://en.m.wikipedia.org/wiki/CAN-SPAM_Act_of_2003 https://en.m.wikipedia.org/wiki/CAN-SPAM_Act_of_2003
  - buckminster 7y ago
    Sure it does, but ignoring regulations is Uber's schtick. Using their services is the moral equivalent of buying stolen goods.
- BigJono 7y ago
  Uber's engineering is dodgy across the board. There was a good year or so period where I ran into 4 or 5 critical bugs that stopped me using the service entirely for days or weeks at a time. One of the dumbest was being unable to enter a credit card because the form required a field that wasn't being rendered. 6 months later I switch credit cards and again can't use the app for weeks because it wants a 5 digit postcode even after setting the country to 'Australia', but the server side check was still working and 86'd any combination of bs 5-digit code that was working. Several times I've had something go wrong with the ordering system itself (on the UberEats side). Once an order was put through twice and two meals showed up on my doorstep. Another time I copped a cryptic error message followed by a Javascript crash and my card was charged but no order was logged upon refreshing the page (which indicates to me that something wasn't properly atomic and maybe some business logic was happening on the front end that shouldn't be? Presumably fixed now, I hope) Even right now, as I type this, there's a bug on UberEats introduced in the last few days or weeks that's leaking variable names through to the front-end. I've got 'components.BadgeSoldOut.message' and 'components.CartItemCustomization.upTo' all over the place. I'm sure when that gets fixed another one will crop up next week. 404s and broken systems seem par for the course.
throwaway082729 7y ago
Engineering will be next. Expect this from more companies in the valley as the reality of being a public company looms on the newly public companies.
gionnierob 7y ago
I bet they get to profitability before driverless cars. The alternative is Taxis, which are an awful experience. And ubiquitous driverless cars could be a decade away or more.
muzani 7y ago
I had an impression that they hired lots of people at very high salaries to build fast and establish a presence all over the world. Now that they have something nice built and are all over the world, it's a great time to cut costs. A lot of the people they've hired probably have some equity and so they're probably just fine getting laid off after the IPO.
- kaikai 7y ago
  Not if they're still in the lockup and can't sell off stock in order to cover the taxes from exercising.
  - williamDafoe 7y ago
    The last few years both companies give out stock grants every month after 1 year so if somebody is laid off they don't lose equity because they already own the equity outright. Lyft even allowed people to keep their vested stock options for seven years after they leave.
chiefalchemist 7y ago
> Uber operates in 600+ international major markets. .75 persons per market? While I'm sure that cost ads up, in terms of "human resources" it's relatively minor at best.
codesushi42 7y ago
Good. I hope this is the beginning of the end for this awful tech company. Good riddance.
billpg 7y ago
Uber actually employ people?
deleted 7y ago
[deleted]

515 points by moltensodium 7y ago

http://archive.is/G3a2i http://archive.is/G3a2i

dvt 7y ago

When I was at Edmunds (working on a fairly profitable ad tech product), Uber was actively poaching from our team; a few ex-coworkers (albeit mostly engineers) moved up to SF and hopefully they didn't get axed. We can chalk this up to "business as usual," but let's not forget people's livelihoods are at stake.

crispyporkbites 7y ago
If your CV has marketing @ Uber on it, I doubt your livelihood is going anywhere
luckylion 7y ago
> but let's not forget people's livelihoods are at stake Meh, but let's also not pretend that they didn't make a lot of money by working for a company that treats the people that provide the actual service, the drivers, like shit.

ProAm 7y ago

Profitability doubts after the IPO? Everyone in the world knew they were never close to profitability pre-IPO, this is just the reality of being a publicly traded not profitable company. Can't funding round yourself out of this one anymore.

rolltiide 7y ago
Well you can... the terminology is just different They’ll say “saudi investors bought into secondary offering at X share price” instead of “round completed at Y valuation!!!” Which is just X share price of last purchase multiplied by total shares in existence Public companies can do secondary offerings from treasury or from creating brand new shares from nothing (dilution) Liquidity is one of the benefits
- mdorazio 7y ago
  Yup, also from selling bonds.
  - bduerst 7y ago
    Raising debt is just as visible on public filings as burning the cash, and gets baked into the market price. It's also hard to do with as few of assets as Uber has.
    - rolltiide 7y ago
      The market price of shares is less consequential than you think, for an issuer.
- bduerst 7y ago
  But then what's the planned payout for those secondary investors? Liquidating on the market would plummet.
  - H8crilA 7y ago
    Companies do this all the time (issue new bonds or equity). There's really not much of a difference between public and private markets, in principle. Planned payout is, and has been the same ever since limited liability companies were invented by humanity: excessive cash flows plus liquidation value of corporate assets at end of life. Hoping on anything else is speculation (nothing wrong with that, but it is just speculation, i.e. trying to sell to the greater fool).
    - bduerst 7y ago
      Right, but that specific activity is all visible on the financial filings, so how is that the same as the pre-IPO funding rounds that Uber was burning through? If you take out a ton of debt while burning through cash reserves then your market price plummets. Same with issuing new equity, through dilution. At least pre-IPO, the investors could lock in favorable pay outs on their funding rounds - now this is all visible to the public investors.

itchyouch 7y ago

400 people at say 40k salaries or around 80k with benefits is around 32 million. Definitely a significant chunk of change, but barely scratching the surface for offsetting 1B in losses.

omarhaneef 7y ago
https://www.payscale.com/research/US/Employer=Uber_Technologies%2C_Inc./Salary https://www.payscale.com/research/US/Employer=Uber_Technolog...
- dymk 7y ago
  > Marketing Manager > Average: $67,935 And that's for a manager. 40k may be a little low, perhaps they're making 50 or 55, but it's not unreasonable for a normal marketing job.
  - yawgmoth 7y ago
    Marketing manager is often an individual contributor role. "I am managing our content." "I am managing our product marketing material."
    - JMTQp8lwXL 7y ago
      In the context of other roles, one would likely not assume this. For example, considering Engineering Manager. "I am managing our engineering." Could mean you're coding, but usually it means a team of coders.
  - awad 7y ago
    Marketing Manager is not a manager of people but rather an IC role. It is the same as how Account Executive is not an executive in the organizational decision-making sense.
CydeWeys 7y ago
You think Uber employees are only making $40k???

aresant 7y ago

From a non-paywalled source (1): 1) These cuts appear to be exclusively in the marketing department taking department from 1,200 to 800 - that is a BIG ASS cut of 33% [EDIT from 25%]. 2) Seems like this was a warning shot by CEO Khosrowshahi who comments "[M] any of our teams are too big, which creates overlapping work, makes for unclear decision owners, and can lead to mediocre results." - I'd be doing my best work @ UBER right now or warming up the resume. 3) Uber has >25,000 FTE worldwide as of article writing. https://www.latimes.com/business/technology/story/2019-07-29/uber-layoffs-marketing-jill-hazelbaker https://www.latimes.com/business/technology/story/2019-07-29...

tootie 7y ago
That's 33% actually. And while that's a huge cut, that's also an absurdly large marketing team. There's a reason most big companies hire agencies to do marketing. It's not their core business and you can roll over staff willy-nilly without affecting your head count.
- aresant 7y ago
  In a two sided marketplace customer acquisition and marketing are absolutely fundamental. Uber operates in >600 major cities across the world at this point. 1200 employees would indicate about 1 person per market per side of the market.
  - xmprt 7y ago
    Which is exactly their point. Why localize your marketing when you can build a much more centralized message. This way they spend less on marketing and have a better global brand identity.
    - aresant 7y ago
      I'm not going to fight this one to the death but I have direct experience in this marketplace. It is much more nuanced than "let's be centralized" and the idea of handing it all over to an agency is a joke. Marketing / customer acquisition is literally their highest non-driver line item by a gi-fucking-gantic amount. Sales & Marketing represents $3 - 4billion dollar cost vs a total marketing payroll of ~$165,000,000 There are absolute returns to pull out of each market by having localized expertise and control. The fact that even on HN the consensus to my thread is that this should be outsourced indicates the degree to which UBER has masked their real DNA - this is one of the world's largest direct response marketing agencies with a ride-sharing platform attached! If the CEO is taking head shots at marketing you can be absolutely sure that under-performers in the rest of the organization are on notice. https://www.cbinsights.com/research/report/how-uber-makes-money/ https://www.cbinsights.com/research/report/how-uber-makes-mo... https://qz.com/1592971/uber-ipo-filling-reveals-how-it-spends-its-money/ https://qz.com/1592971/uber-ipo-filling-reveals-how-it-spend...

sambroner 7y ago

Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hire more marketers -> Cut costs post IPO I'm not arguing it's effective, but it's certainly a reasonable outgrowth of the various goals they've had over the last year or two.

cj 7y ago
I mostly agree, except I'd probably frame it a bit differently: > Need more users pre IPO to juice the growth story Or, "VCs tell us we need to spend their investment quickly in whatever areas will generate a hockey stick growth in valuation. We can always fix our business model when we're ready to." > Cut costs post IPO Or, "We no longer answer to our VCs. Now we answer to the public market who cares a lot more about the fundamentals of our business. Now we need to improve our fundamentals to push our market cap upward."
- whatshisface 7y ago
  If public markets care about fundamentals why can VCs exit into the public market with fake hockey stick growth?
  - ethbro 7y ago
    Because during the initial window of exit, "All companies look like this" is a plausible narrative.
- MegaButts 7y ago
  I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation these days. I am still somewhat young so I have a limited frame of reference - maybe it was always like this. Obviously you can find examples to support either side. Amazon and Facebook weren't the money making machines (for all the talks of Amazon not making a profit, AWS clearly does and their free cash flow is insane) they are today when they went public. But there are far more companies that didn't turn out that way. Travis Kalanick was very clear that Uber could not survive without self-driving cars. And that doesn't seem to be panning out.

justaguy500 7y ago

What does Uber marketing even do to warrant a 1200 person headcount? I'm from Europe and have never seen any of their marketing, it seems to me that word-of-mouth is more than enough

Bootwizard 7y ago

Does anyone have any idea why Uber isn't profitable? I never really understood that. It's such a ubiquitous service in a large portion of the world. It seems to me that they have a lot of physical growth, so what is happening to their finances?

btgeekboy 7y ago
They’re trading cash to build their moat (keeping out competitors, investing in self-driving). From what I can tell, at least.
- ForHackernews 7y ago
  That's the theory, but I have no idea what this "moat" is supposed to be. Apps to hail a cab are interchangeable commodities as far as I can tell.
  - criddell 7y ago
    > Apps to hail a cab are interchangeable commodities as far as I can tell. That's what I keep getting stuck on. It's getting easier to compete with Uber and I don't think that's going to change. They have a well known brand but even that feels like it's on verge of becoming genericized.
    - sethhochberg 7y ago
      Right now it wouldn't surprise me if a lot of Uber inertia was specifically because their competitors are smaller and more localized. I live in NYC, and there are half-dozen major rideshare apps here in some form - but I often travel to places where, if there is any major service operating there at all, its Uber... maybe Lyft, but certainly not Via or Juno or Gett or any other smaller names. I don't want to load my phone up with a bunch of different apps and give my data to a bunch of different companies, so guess which app I use even at home where I have plenty of options? Uber. The barrier to entry of getting a new local competitor up and running is small, but the convenience of being able to stick with one provider no matter where you are is big.

codingdave 7y ago

> The marketing team had more than 1,200... I fully admit that I'm not in marketing, so there are surely nuances I don't know. But that scale of marketing department is orders of magnitude above any other place I have worked, with the possible exception of IBM in the 90s. Just maybe... this was a reasonable move.

rlanday 7y ago
Uber's business model has the same problem as Groupon's, which is that they don't really have economies of scale. Every market requires a new team of people to run promotions to attract drivers and customers and match supply with demand.
- smallgovt 7y ago
  I can understand why every new market requires an operations team on the ground, but marketing ought to be centralized.
  - choppaface 7y ago
    It might be centralized, but not entirely automated, at least not yet. Thus each city requires headcount.
  - _bxg1 7y ago
    I could see there being localization challenges, especially when you start talking about multiple countries. Not just languages; cultural nuance, idioms, and political awareness all matter.
    - Twirrim 7y ago
      Does that particular aspect require full time staff in-situ, though?
      - Angostura 7y ago

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paxys 7y ago

It was expected to happen, now that they have to scale down on aggressive expansion and focus on making their existing markets profitable instead.

fluxic 7y ago

Love to revisit this piece every few years. Why food delivery will never be profitable: "The Food Delivery Death Star" https://medium.com/@review/the-food-delivery-death-star-85f9a121313 https://medium.com/@review/the-food-delivery-death-star-85f9...

mevile 7y ago
Pizza delivery is profitable. Pizza comes in a shape easy for transportation, the size and value of the delivery is economical for a delivery business and there's an established culture around ordering pizza for delivery. The food delivery companies just need to figure out these problems, which a hard, for non-pizza foods.
- Scoundreller 7y ago
  Also helps that pizzas themselves are dirt cheap to make. Anything that makes them expensive is chargeable. Continuous production is easy and cheap, so doubling your volume by adding delivery is achievable with the same kitchen.
  - mritchie712 7y ago
    ...and fucking delicious
  - twoheadedboy 7y ago
    "When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else: music, movies, microcode (software), high-speed pizza delivery"

duxup 7y ago

Someone did a calculation about what they were paying drivers of they were converted to an hourly rate if you averaged it. IIRC, it was somewhere near minimum wage. If you can't make a profit or are far from profitable and your front line workers are making that little money.... how do you ever without dramatically raising prices? I really doubt corporate office cuts can achieve it.

akeck 7y ago

If a public company open-sources something (as Uber has done on occasion) that gives them a competitive advantage, could they be sued by shareholders for giving away something valuable?

_delirium 7y ago
Not successfully unless there's a smoking-gun type thing, like someone involved in the decisions having a clear conflict of interest with a different company they own. Courts generally won't second-guess business decisions, and if Uber says something like "we open-sourced this to build goodwill", a court is going to say fine, weighing the pros and cons of that strategy is their call, and if shareholders disagree with the strategy, they can elect a different board.

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beefman 7y ago

They overhired so badly it's an existential threat to the company, and not even from a cost perspective. Should lay off closer to 4000, but that would have negative cultural impact too. So they're stuck. Always slightly underhire so you can be sure you didn't overhire.

williamDafoe 7y ago
Companies that perform layoffs have underperforming stock over the next 5 years. so they are trying to lay off a small enough number of people that they don't appear to be the weakening company that they are....

rsp1984 7y ago

Can someone with insight into the matter explain, from a high level, what the big concerns are over Ubers ability to run profitably? In my naive view they are "just running an app" / acting as a mobility marketplace and they make money on each transaction. Given the traction and market dominance they have this sounds like a really attractive business. So how do they manage to run such big losses every year and which items on the expense side are so crucial for the business that nobody at Uber dares to cut into them?

cosmodisk 7y ago
It's not just an app. Apart from employing tons of highly paid engineers in Bay area and the rest of the world,they have to deal woth less glamorous,offline part of the business: local "recruitment" centres,where drivers have to be recruited,trained,etc.This is the probably in most larger cities.Also, the cost of acquisition of customers is in the tune of $billioms every year.Ads, subsidies, initiatives and etc. Uber absolutely can be profitable, however it feels like im order for it to be one it'd have to sack 70% of their back office,reduce the number of driver and agree to heavily adjusted valuation..
sbarre 7y ago
Literally read the rest of the comments in this thread and that should give you a lot of additional information.
EnFinlay 7y ago
I have no insight into the matter. My guess is that their traction and market dominance are far more fragile than you think. Because their drivers are contractors and not employees, they can't be forced to only work for Uber, so even though they created the pool of drivers, they have not "captured" them. So a huge cost is the ride subsidies which maintain their market position. Once the ride subsidies end, there is no reason that a locally focused company can't compete for the same drivers and riders. From what I've read, when Uber started their app technology was borderline magical (pushed the boundaries of what smartphones could do), but since that's no longer the case, there is much less of a barrier to entry.
CydeWeys 7y ago

squarite 7y ago

Well if any of those 400 are in SF/NY, and are reading this, we're hiring for a marketing manager for my team at Square! PM me or apply here: https://www.smartrecruiters.com/Square/743999690593237 https://www.smartrecruiters.com/Square/743999690593237

rb808 7y ago
Link says job has expired
- squarite 7y ago
  eek thanks! replaced.

UberIsAnnoying 7y ago

I hope it included the people responsible for sending me the most abusive SPAM campaigns I have had in years. 1) I never subscribed to these e-mails 2) The e-mails contain a link to unsubscribe in this format: click.uber.com/f/a/<strings> 3) You get redirected to uber.com/unsubscribe 4) They make you manually fill your e-mail 5) When you press unsubscribe: - It makes a request to uber.com/api/unsubscribe?email=<email-address>&et_job_id=&et_list_id=&et_batch_id=&message_uuid=&content_identifier= - Response is always 404 Not Found (Tested on Firefox, Chrome, IE, Edge)

spectramax 7y ago
I am no lawyer but pretty sure this violates: https://en.m.wikipedia.org/wiki/CAN-SPAM_Act_of_2003 https://en.m.wikipedia.org/wiki/CAN-SPAM_Act_of_2003
- buckminster 7y ago
  Sure it does, but ignoring regulations is Uber's schtick. Using their services is the moral equivalent of buying stolen goods.
BigJono 7y ago
Uber's engineering is dodgy across the board. There was a good year or so period where I ran into 4 or 5 critical bugs that stopped me using the service entirely for days or weeks at a time. One of the dumbest was being unable to enter a credit card because the form required a field that wasn't being rendered. 6 months later I switch credit cards and again can't use the app for weeks because it wants a 5 digit postcode even after setting the country to 'Australia', but the server side check was still working and 86'd any combination of bs 5-digit code that was working. Several times I've had something go wrong with the ordering system itself (on the UberEats side). Once an order was put through twice and two meals showed up on my doorstep. Another time I copped a cryptic error message followed by a Javascript crash and my card was charged but no order was logged upon refreshing the page (which indicates to me that something wasn't properly atomic and maybe some business logic was happening on the front end that shouldn't be? Presumably fixed now, I hope) Even right now, as I type this, there's a bug on UberEats introduced in the last few days or weeks that's leaking variable names through to the front-end. I've got 'components.BadgeSoldOut.message' and 'components.CartItemCustomization.upTo' all over the place. I'm sure when that gets fixed another one will crop up next week. 404s and broken systems seem par for the course.

throwaway082729 7y ago

Engineering will be next. Expect this from more companies in the valley as the reality of being a public company looms on the newly public companies.

gionnierob 7y ago

I bet they get to profitability before driverless cars. The alternative is Taxis, which are an awful experience. And ubiquitous driverless cars could be a decade away or more.

muzani 7y ago

I had an impression that they hired lots of people at very high salaries to build fast and establish a presence all over the world. Now that they have something nice built and are all over the world, it's a great time to cut costs. A lot of the people they've hired probably have some equity and so they're probably just fine getting laid off after the IPO.

kaikai 7y ago
Not if they're still in the lockup and can't sell off stock in order to cover the taxes from exercising.
- williamDafoe 7y ago
  The last few years both companies give out stock grants every month after 1 year so if somebody is laid off they don't lose equity because they already own the equity outright. Lyft even allowed people to keep their vested stock options for seven years after they leave.

chiefalchemist 7y ago

> Uber operates in 600+ international major markets. .75 persons per market? While I'm sure that cost ads up, in terms of "human resources" it's relatively minor at best.

codesushi42 7y ago

Good. I hope this is the beginning of the end for this awful tech company. Good riddance.

billpg 7y ago

Uber actually employ people?

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