6 ms·

Offering to buy a $4.5 billion dollar company twelve hours after you’ve laid off thousands of people is kind of a dick move.

jzig 6y ago
but this way they can all be hired back as drivers
toomuchtodo 6y ago
Uber is betting food delivery is here to stay at higher levels than pre-COVID, and is gobbling up market share to reach scale.
- lumost 6y ago
  As an external investor why would you be on that ride for a second time? Uber has demonstrated that they are not able to deploy capital in a sustainable way to acquire market share in ride hailing, or with UberEats. As most companies that grow through acquisition fail to deliver material gains - why would the acquisition of GrubHub fair any better?
  - jlbnjmn 6y ago
    I wonder if it's not a cost cutting move? Buy GrubHub, merge it with UberEats, and then layoff all the redundant roles? Without just looking like a sinking ship?
  - sct202 6y ago
    Probably because Grubhub was marginally profitable until 2018/2019, until both UberEats and Doordash started to barge in throwing fresh VC money. Grubhub never made a lot of money though, so it's a little unclear how much like end state monopoly would be worth. https://www.macrotrends.net/stocks/charts/GRUB/grubhub/net-income https://www.macrotrends.net/stocks/charts/GRUB/grubhub/net-i...
duxup 6y ago
I'm not a fan of how either company treats their non employees, but you still make the business decisions that you need to to try to keep everyone else employed too.
troughway 6y ago
No it isn’t. It’s first and foremost business. Secondly, the people who have been laid off have been given good severance packages. There is no good reason for a company to burn through money by paying people who won’t turn a profit. Equating this, in light of the generous severance pay, to a “dick move” is really myopic on a forum of a business accelerator company. What are you here for exactly? To shitpost any time a company you don’t like does something you don’t like?
- briffle 6y ago
  > There is no good reason for a company to burn through money by paying people who won’t turn a profit. Doesn't Uber lose money on every single ride?
  - bhupy 6y ago
    Yes, and that is why Uber has been on a cost-cutting crusade since it went public.
  - jayparth 6y ago
    No. Why would you think that?
    - nness 6y ago
      Because, historically, the core "ride" part of Uber's business only turned a profit within Q4 2019. Their IPO also indicated that only a few of their operating markets were profitable, many operating at a loss.
- elliekelly 6y ago
  > What are you here for exactly? Are you suggesting I don’t belong?
- seibelj 6y ago
  Some people let their emotions ("Firing bad! Makes me sad!") override the logic ("Uber is more efficient and is using their limited capital most effectively according to its leadership"). This is creative destruction. If the government bans companies from operating independently - responding to price signals, incentives, economic realities - then we start the process of stagnation, and stop creating new business champions.
vmception 6y ago
and also rational. they shouldn't have been trying to inefficiently create uber eats so quickly. so cut out that nonsense, and buy the established player that has probably negotiated better pricing. Uber probably outbid them in a lot of restaurants to get into those restaurants quickly.
vikramkr 6y ago
You can buy a company in all stock, but it's quite a bit harder to buy labor with 100% stock compensation. If Uber is dipping into cash reserves for a deal like this, well, I hope for their sake this deal goes well. And if it is a all stock or majority stock deal, I wonder if Grubhub is going to ask for an even higher premium on their valuation than otherwise considering that 4.5 billion in uber stock with a lockup period of a few years at this time is probably not as valuable as the same amount in cash.
- andrewprock 6y ago
  Uber stock is quite liquid. I would certainly be willing to entertain offers of pure stock compensation for publicly traded companies.
  - vikramkr 6y ago
    A lockup period or vesting schedule would make it a far less liquid asset for you. If it wasn't given with a lockup period, they'd probably have to come up with some staggered way of paying out stocks rather than at the end of every month or every other week so you dont get huge periodic selling spikes as employees sell off enough to cover their tax burden and expenses when the stocks come in. They might also be running foul of minimum wage laws. I think there are a lot of obstacles that make it operationally infeasible, even if employees are willing to accept it.
    - andrewprock 6y ago
      I would be willing to accept a lockup period roughly equivalent to the time it takes to clear a check, maybe one week.
asdkhadsj 6y ago
I hate this. The implication that companies should have any moral behavior here just enables immoral behavior. There is no dick move here. The only reason you call it that is because we have a society (America) built to give almost no support system to workers if they lose their jobs. The company isn't in the wrong for failing to pay users. Our societal structure is. Our lack of social safety nets, and communally focused behavior is. We set up a system prone to Americans getting screwed, and then are annoyed when companies screw them? This is our mess. We need to fix it, and not try to pretend companies should be moral. Doing so will only allow them to be immoral and hurt workers.
- teachrdan 6y ago
  I completely agree with what you said. One important consideration is how companies like Uber have contributed to a lack of support for workers who are laid off. Uber in particular has failed to pay billions of dollars into states' unemployment insurance funds. https://www.kqed.org/news/11812496/uber-and-lyft-arent-paying-for-drivers-unemployment-you-are-confirms-newsom https://www.kqed.org/news/11812496/uber-and-lyft-arent-payin...
- jorblumesea 6y ago
  Large companies have outsized impact on influence public policy, using bribery aka lobbying. Collectively, billions are spent yearly to influence lawmakers. The idea that large companies "just exist" in this system and abide by its rules strikes me as naive. In many cases, companies are making the policies themselves through lobbying efforts. They also influence governing agencies that are supposed to police them. It's called regulatory capture and it's a well established phenomenon. https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture So back to this: > We set up a system prone to Americans getting screwed, and then are annoyed when companies screw them When the companies are the ones advocating for policies that screw workers and stop lawmakers from creating proper protections, yes, annoyance is a mild way of putting it.
  - twblalock 6y ago
    > bribery aka lobbying Nope. Lobbying is simply petitioning the government to do things. It can be used for good or evil. All that privacy legislation people like is a result of lobbying by pro-privacy organizations, for example.
B-Con 6y ago
They decided they didn't benefit from certain job positions and did benefit by buying another company. What's the alternative action for them to take?
lhorie 6y ago
This is a bit like saying buying croissants+coffee for breakfast after throwing out last night's leftover takeout pizza+beer is somehow a character flaw. The layoffs were in customer support, who - if you think about it - were largely twiddling thumbs due to the large loss of ridership (and therefore, of customer support demand). It's not like Uber could just magically take CSRs and somehow turn them overnight into roles that were strategically meaningful for food delivery competitiveness.
twblalock 6y ago
If Uber goes out of business, that is equivalent to laying off 100% of their employees. I can't really fault a company in these circumstances for pivoting toward a model that will enable it to survive the downturn.
bluedino 6y ago
Just think of all the layoffs they'll get to do after they buy Uber!

jzig 6y ago

but this way they can all be hired back as drivers

toomuchtodo 6y ago

Uber is betting food delivery is here to stay at higher levels than pre-COVID, and is gobbling up market share to reach scale.

lumost 6y ago
As an external investor why would you be on that ride for a second time? Uber has demonstrated that they are not able to deploy capital in a sustainable way to acquire market share in ride hailing, or with UberEats. As most companies that grow through acquisition fail to deliver material gains - why would the acquisition of GrubHub fair any better?
- jlbnjmn 6y ago
  I wonder if it's not a cost cutting move? Buy GrubHub, merge it with UberEats, and then layoff all the redundant roles? Without just looking like a sinking ship?
- sct202 6y ago
  Probably because Grubhub was marginally profitable until 2018/2019, until both UberEats and Doordash started to barge in throwing fresh VC money. Grubhub never made a lot of money though, so it's a little unclear how much like end state monopoly would be worth. https://www.macrotrends.net/stocks/charts/GRUB/grubhub/net-income https://www.macrotrends.net/stocks/charts/GRUB/grubhub/net-i...

duxup 6y ago

I'm not a fan of how either company treats their non employees, but you still make the business decisions that you need to to try to keep everyone else employed too.

troughway 6y ago

No it isn’t. It’s first and foremost business. Secondly, the people who have been laid off have been given good severance packages. There is no good reason for a company to burn through money by paying people who won’t turn a profit. Equating this, in light of the generous severance pay, to a “dick move” is really myopic on a forum of a business accelerator company. What are you here for exactly? To shitpost any time a company you don’t like does something you don’t like?

briffle 6y ago
> There is no good reason for a company to burn through money by paying people who won’t turn a profit. Doesn't Uber lose money on every single ride?
- bhupy 6y ago
  Yes, and that is why Uber has been on a cost-cutting crusade since it went public.
- jayparth 6y ago
  No. Why would you think that?
  - nness 6y ago
    Because, historically, the core "ride" part of Uber's business only turned a profit within Q4 2019. Their IPO also indicated that only a few of their operating markets were profitable, many operating at a loss.
elliekelly 6y ago
> What are you here for exactly? Are you suggesting I don’t belong?
seibelj 6y ago
Some people let their emotions ("Firing bad! Makes me sad!") override the logic ("Uber is more efficient and is using their limited capital most effectively according to its leadership"). This is creative destruction. If the government bans companies from operating independently - responding to price signals, incentives, economic realities - then we start the process of stagnation, and stop creating new business champions.

vmception 6y ago

and also rational. they shouldn't have been trying to inefficiently create uber eats so quickly. so cut out that nonsense, and buy the established player that has probably negotiated better pricing. Uber probably outbid them in a lot of restaurants to get into those restaurants quickly.

vikramkr 6y ago

You can buy a company in all stock, but it's quite a bit harder to buy labor with 100% stock compensation. If Uber is dipping into cash reserves for a deal like this, well, I hope for their sake this deal goes well. And if it is a all stock or majority stock deal, I wonder if Grubhub is going to ask for an even higher premium on their valuation than otherwise considering that 4.5 billion in uber stock with a lockup period of a few years at this time is probably not as valuable as the same amount in cash.

andrewprock 6y ago
Uber stock is quite liquid. I would certainly be willing to entertain offers of pure stock compensation for publicly traded companies.
- vikramkr 6y ago
  A lockup period or vesting schedule would make it a far less liquid asset for you. If it wasn't given with a lockup period, they'd probably have to come up with some staggered way of paying out stocks rather than at the end of every month or every other week so you dont get huge periodic selling spikes as employees sell off enough to cover their tax burden and expenses when the stocks come in. They might also be running foul of minimum wage laws. I think there are a lot of obstacles that make it operationally infeasible, even if employees are willing to accept it.
  - andrewprock 6y ago
    I would be willing to accept a lockup period roughly equivalent to the time it takes to clear a check, maybe one week.

asdkhadsj 6y ago

I hate this. The implication that companies should have any moral behavior here just enables immoral behavior. There is no dick move here. The only reason you call it that is because we have a society (America) built to give almost no support system to workers if they lose their jobs. The company isn't in the wrong for failing to pay users. Our societal structure is. Our lack of social safety nets, and communally focused behavior is. We set up a system prone to Americans getting screwed, and then are annoyed when companies screw them? This is our mess. We need to fix it, and not try to pretend companies should be moral. Doing so will only allow them to be immoral and hurt workers.

teachrdan 6y ago
I completely agree with what you said. One important consideration is how companies like Uber have contributed to a lack of support for workers who are laid off. Uber in particular has failed to pay billions of dollars into states' unemployment insurance funds. https://www.kqed.org/news/11812496/uber-and-lyft-arent-paying-for-drivers-unemployment-you-are-confirms-newsom https://www.kqed.org/news/11812496/uber-and-lyft-arent-payin...
jorblumesea 6y ago
Large companies have outsized impact on influence public policy, using bribery aka lobbying. Collectively, billions are spent yearly to influence lawmakers. The idea that large companies "just exist" in this system and abide by its rules strikes me as naive. In many cases, companies are making the policies themselves through lobbying efforts. They also influence governing agencies that are supposed to police them. It's called regulatory capture and it's a well established phenomenon. https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture So back to this: > We set up a system prone to Americans getting screwed, and then are annoyed when companies screw them When the companies are the ones advocating for policies that screw workers and stop lawmakers from creating proper protections, yes, annoyance is a mild way of putting it.
- twblalock 6y ago
  > bribery aka lobbying Nope. Lobbying is simply petitioning the government to do things. It can be used for good or evil. All that privacy legislation people like is a result of lobbying by pro-privacy organizations, for example.

B-Con 6y ago

They decided they didn't benefit from certain job positions and did benefit by buying another company. What's the alternative action for them to take?

lhorie 6y ago

This is a bit like saying buying croissants+coffee for breakfast after throwing out last night's leftover takeout pizza+beer is somehow a character flaw. The layoffs were in customer support, who - if you think about it - were largely twiddling thumbs due to the large loss of ridership (and therefore, of customer support demand). It's not like Uber could just magically take CSRs and somehow turn them overnight into roles that were strategically meaningful for food delivery competitiveness.

twblalock 6y ago

If Uber goes out of business, that is equivalent to laying off 100% of their employees. I can't really fault a company in these circumstances for pivoting toward a model that will enable it to survive the downturn.

bluedino 6y ago

Just think of all the layoffs they'll get to do after they buy Uber!