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I think it's more the massive amount of spending they do with little to nothing to show for it. They spent $457m last year on autonomous and flying cars with $0
by jonknee 7y ago
I think it's more the massive amount of spending they do with little to nothing to show for it. They spent $457m last year on autonomous and flying cars with $0 in revenue from those projects. Maybe that will work out, but I bet every penny was ultimately wasted.
Not spending billions a year on R&D certainly makes the financials look nicer. It might not attract as nice of a multiple, but it's not the ride prices that are out of whack at Uber IMO.
- kn0where 7y agoOn the other hand, they spent $0.5 billion on R&D in a year, and lost $5 billion in a quarter, so I don’t think the R&D is nearly as significant an issue as subsidizing rides.
- kgwgk 7y agoThey booked an expense of $3.1bn in R&D last quarter. Even excluding the $2.6bn linked to stock-based compensation it’s $0.5bn per quarter. But of course that includes useful R&D and not just the flying-cars kind.
- paxys 7y ago"R&D" usually includes all engineering expenses on financial reports, which for a company like Uber is the vast majority of operating expenses.
- jonknee 7y agoBut in this case they clearly don't: Operations and support ($864m), Sales and marketing ($1.2b), General and administrative ($1.6b). They have bloated costs all over. Easy to do when you're the hottest VC backed company around, but the clock is ticking and they'll probably trim a lot of fat.
- paxys 7y agoYeah my point was people shouldn't look at it and think "self driving car research". Every engineer at Uber is paid out of that budget.
- kgwgk 7y agoThat’s why I said it included useful R&D.
- kgwgk 7y agoAnd last quarter was somewhat unusual due to the SBC charges allocated mostly to R&D. Looking at Q1: Cost of revenue $1.68bn Operations and support $434mn Sales and marketing $1.04bn Research and development $409mn General and administrative $423mn
- Udik 7y agoCan I ask something that will sound incredibly naive? How complicated needs to be an IT infrastructure that lets you book a taxi via an app and pay the driver? Is it really something to throw billions at each year? Sometimes I feel these companies are throwing billions in IT simply because they're expected to be disruptive technology companies, and not for real technical reasons.
- goatinaboat 7y agoIt doesn’t! You can read here on HN how their large IT staff spends most of its time migrating back and forth between MySQL and Postgres.
- paxys 7y agoUber as a product is very technologically complex, mainly because of the scale it operates at. You can read about some of their tech at https://eng.uber.com https://eng.uber.com.
- AdrianB1 7y agoOnly if you want to have a huge and complex system. If you have small and localized ones, it should be very cheap.
- rightbyte 7y agoYe, like one VM running per city or region. I feel they are just sinking money into software and administration of software.
- fh973 7y agoWhatsApp has shown that you can actually build large-scale system infrastructures very efficiently. And they had global service, Uber could profit from sharding as you suggest.
- conanbatt 7y agoApply for a job at Uber proposing a cut in engineering expenses with your plan and become instantly rich.
- kickopotomus 7y agoR&D is the only way that they survive in the long term. Uber's entire plan is just to keep hemorrhaging money until autonomous vehicles come online. They just did not expect that to be as hard of a problem as it has turned out to be.
- cheriot 7y agoI hope they don't actually think that. Autonomous vehicles will turn a two sided market into a one sided market. Just think about all the companies working on self driving cars that don't currently compete with Uber. As soon as they succeed, they'll build an app, buy thousands of cars, and cut the per ride price to nothing.
- olalonde 7y agoEdit: misread comment. What I meant was that even with autonomous cars, there will probably be a huge market leader (but it won't necessarily be Uber).
- cheriot 7y agoIt doesn't take dozens. GM, Tesla, and Google are already making the expensive part of the investment (developing ai cars in the first place). Will Uber make more money with one competitor or four? I mean, is there a chance these three companies develope autonomous vehicles and decide NOT to compete in ride sharing?
- trca 7y agoWell we already know Tesla (RoboTaxi) and Google (Waymo One) are entering the ride sharing market (Waymo One is currently live), not sure about GM's ambitions.
- jonknee 7y agoThe only way they survive as such a richly valued company perhaps, my point is they could provide the current level of service with vastly lower spending and be a sustainable company. The financial problems aren't they charge too little for rides, it's that they have thousands of people working on bullshit that brings in little to nothing.
- jacquesm 7y ago> They spent $457m last year on autonomous and flying cars with $0 in revenue from those projects. I sincerely hope they weren't expecting any revenue from those for the next decade or two. Anything else would be delusional.
- semi-extrinsic 7y agoI think both Uber, Lyft and (to some extent) Tesla have been working on autonomous cars because it's not an immediately implausible way for them to turn profitable. I personally agree it's a multi-decade (if ever) thing, but if Uber et al. claim they'll have it in 2 years, without facts on the table it boils down to who the investors believe in.
- icedchai 7y agoEven if autonomous cars were 99.99% reliable tomorrow, it would take a decade to get through regulators. Maybe longer.
- xenospn 7y agoCan they sustain 5B losses for a decade? Can any investor?
- KptMarchewa 7y agoSoftbank can.