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Re: The target of UBER EATS this especially interesting news given they will likely be reporting Q3 results soon. - Last quarter of UBER's $1.2b operating loss

Re: The target of UBER EATS this especially interesting news given they will likely be reporting Q3 results soon. - Last quarter of UBER's $1.2b operating loss almost 50% of that is from UBER eats subsidies. They paid $544m more to drivers to deliver food than they took in. Why? (a) It is their fastest growing (by %) division (2) It's arguably the most valuable battleground in logistics - developing a "last mile" delivery network at scale. - Their core business - ridesharing - has improved their gross margin and unit economics quarter-over-quarter to the point that operating and discounting losses here are almost non-material (less than $22m total worldwide this quarter, representing less than 1/2 a percent of total ride sharing revenue). - In addition another area of analyst criticism has been losses in their "other bets" which is almost certainly their freight brokering network at -$50m, and the losses appear to be diminishing. Seems to me like these layoffs are analyst signaling that there are still inefficiencies in those departments, UBER is aware and working on in preparation for Q3 finances. (1) https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Reports-Second-Quarter-2019-Results/default.aspx https://investor.uber.com/news-events/news/press-release-det...

tempsy 7y ago
So are the unit economics any different for DoorDash, which has raised a ton (from SoftBank, no less) at a $12B valuation?
- iamasoftwaredev 7y ago
  > from SoftBank, no less Is this supposed to be evidence of a sound company or a strike against them? After Wework I really can't tell.
  - wcfields 7y ago
    The one area that they're supposed to be good at, mobile telephone networks, they've totally flopped with Sprint.
    - alteria 7y ago
      To be fair, Sprint was doing REALLY poorly, and I'm not sure what could have saved them except a merger. I remember their quarterly calls spending much more time on the accounting maneuvers that generated the cash to cover losses than other parts of the business.
iamasoftwaredev 7y ago
> It's arguably the most valuable battleground in logistics - developing a "last mile" delivery network at scale. But it's also hard to get the prices up enough without people just getting off their lazy asses and buying food. source: price goes up I get up off my lazy ass.
- raz32dust 7y ago
  I don't think they can increase service fee much more. The endgame will be to have enough users and drivers that they don't need to increase prices and can make their share from volume, ads and deals with restaurants. Economy of scale + Winner takes all.
redisman 7y ago
> Their core business - ridesharing - has improved their gross margin and unit economics quarter-over-quarter to the point that operating and discounting losses here are almost non-material (less than $22m total worldwide this quarter, representing less than 1/2 a percent of total ride sharing revenue). That's pretty good. Seems like there's a huge incentive to just start a bunch of big projects when you raise such giant rounds of money.
jacques_chester 7y ago
There's no meaningful moat in the last mile, no economies of scale that you gain by being in more cities. You will always be subject to a race to the bottom in every location, as soon as you stop pouring in capital the competition you drove out will drive right back in. It's a mug's game.
- Traster 7y ago
  If you gain dominance in a city, you've got a real advantage. The reason is because you can aggregate demand and supply. Once you have enough scale the problem turns from "Get one person to deliver one meal to one location" to "Get this person to deliver these 5 meals from this restaurant to these 5 apartments". Suddenly, you're doing 5x the deliveries for only 2x the cost of transportation. The game becomes a matter of how efficiently you can map multiple orders to a single delivery driver and the more demand you have the more likely you are to be able to allocate multiple delivers to a specific driver. The more orders you can allocate to a single driver the more margin you have.
  - jacques_chester 7y ago
    I'm not completely convinced. The argument is due to economies of batching delivery. But restaurants can batch their own deliveries too. That line is the "inventory / order interface" and there's no universal optimal point for it, it will vary according to circumstances. Anyone who sells expensive food may choose to optimise for service, which means delivering themselves. Those who optimise for volume will eventually cut out the expensive middleman. Adding to which, the most profitable markets are the dense cities where there are already strong incumbents, which goes to pouring in capital as a substitute for building a business organically.

tempsy 7y ago

So are the unit economics any different for DoorDash, which has raised a ton (from SoftBank, no less) at a $12B valuation?

iamasoftwaredev 7y ago
> from SoftBank, no less Is this supposed to be evidence of a sound company or a strike against them? After Wework I really can't tell.
- wcfields 7y ago
  The one area that they're supposed to be good at, mobile telephone networks, they've totally flopped with Sprint.
  - alteria 7y ago
    To be fair, Sprint was doing REALLY poorly, and I'm not sure what could have saved them except a merger. I remember their quarterly calls spending much more time on the accounting maneuvers that generated the cash to cover losses than other parts of the business.

iamasoftwaredev 7y ago

> It's arguably the most valuable battleground in logistics - developing a "last mile" delivery network at scale. But it's also hard to get the prices up enough without people just getting off their lazy asses and buying food. source: price goes up I get up off my lazy ass.

raz32dust 7y ago
I don't think they can increase service fee much more. The endgame will be to have enough users and drivers that they don't need to increase prices and can make their share from volume, ads and deals with restaurants. Economy of scale + Winner takes all.

redisman 7y ago

> Their core business - ridesharing - has improved their gross margin and unit economics quarter-over-quarter to the point that operating and discounting losses here are almost non-material (less than $22m total worldwide this quarter, representing less than 1/2 a percent of total ride sharing revenue). That's pretty good. Seems like there's a huge incentive to just start a bunch of big projects when you raise such giant rounds of money.

jacques_chester 7y ago

There's no meaningful moat in the last mile, no economies of scale that you gain by being in more cities. You will always be subject to a race to the bottom in every location, as soon as you stop pouring in capital the competition you drove out will drive right back in. It's a mug's game.

Traster 7y ago
If you gain dominance in a city, you've got a real advantage. The reason is because you can aggregate demand and supply. Once you have enough scale the problem turns from "Get one person to deliver one meal to one location" to "Get this person to deliver these 5 meals from this restaurant to these 5 apartments". Suddenly, you're doing 5x the deliveries for only 2x the cost of transportation. The game becomes a matter of how efficiently you can map multiple orders to a single delivery driver and the more demand you have the more likely you are to be able to allocate multiple delivers to a specific driver. The more orders you can allocate to a single driver the more margin you have.
- jacques_chester 7y ago
  I'm not completely convinced. The argument is due to economies of batching delivery. But restaurants can batch their own deliveries too. That line is the "inventory / order interface" and there's no universal optimal point for it, it will vary according to circumstances. Anyone who sells expensive food may choose to optimise for service, which means delivering themselves. Those who optimise for volume will eventually cut out the expensive middleman. Adding to which, the most profitable markets are the dense cities where there are already strong incumbents, which goes to pouring in capital as a substitute for building a business organically.