20 ms·

Uber, Postmates Agree on $2.65B All-Stock Deal

349 points by uptown 6y ago

minimaxir 6y ago
Postmates raised $903M since 2012: https://www.crunchbase.com/organization/postmates https://www.crunchbase.com/organization/postmates Not a 10x exit.
- yalogin 6y ago
  This is one of those cases where the pandemic saved a company. A few companies like post area and this “uncooked food by mail” companies got saved big time.
- bruceb 6y ago
  writing was on the wall when they fired most of their city managers. Hard business.
- mardifoufs 6y ago
  Still surprising that they have managed a ~3x exit. They were raising money at a 1.3b$ valuation as recently as 2018 and to me it seems like Postmates is further behind it's competition in terms of growth and market share than it was 2 years ago.
  - texasbigdata 6y ago
    Not sure you can do the division like that without knowing what percent of the company the contributed capital represented.
    - mardifoufs 6y ago
      Oh, yeah that's an embarassing lapsus.To my defense,it seems like most of the equity is owned by investors and not founders, so the average return of the 900m$ is probably still around 3x~. It also seems like they have never been valued higher than the price Uber paid for them so odds are few investors got really burnt regardless of when they invested.
      - mrnobody_67 6y ago
        Some investors got wiped out when the company had to do a pay to play, I believe.
  - throwaway_12351 6y ago
    Private equity usually higher than 1 liquidation preference, and if they have participation rights then it is barely only 1x.
- nordsieck 6y ago
  > Postmates raised $903M since 2012 ... Not a 10x exit. I suspect that many of the investors are just happy to record a profitable exit.
  - avs733 6y ago
    I wonder how many of those investors are also in to uber.
    - nordsieck 6y ago
      > I wonder how many of those investors are also in to uber. All of them are now: it's an "all-stock deal". I guess it remains to see how many of them will sell.
- habosa 6y ago
  Arguably not even a profitable one considering how 903M invested almost anywhere else since 2012 would have done with far less risk.
  - deleted 6y ago
    [deleted]
DanCarvajal 6y ago
Surely Uber will be profitable with this addition.
- deleted 6y ago
  [deleted]
- chrisjarvis 6y ago
  -increasingly nervous man for the umpteenth time :D
rchandna 6y ago
I don't understand why Uber has been so obsessed with buying another company in the US food delivery market.
- deleted 6y ago
  [deleted]
- rootsudo 6y ago
  Distraction and probably an excuse why they have high liabilities. I don't see the difference, personally.
- manigandham 6y ago
  Increase network, decrease spending to beat out a competitor.
  - rchandna 6y ago
    True, I could see them going down the route of heavy discounting / price promotion.
- uber473453 6y ago
  The CEO is a banker. Naturally he sees M&A, not innovation, as the company's future.
  - Jommi 6y ago
    It's been an M&A company for years now. Just look at its portfolio of ownerships in competing local leaders like Didi, Yandex and Grab. It's a perfect food delivery ride hailing super app investment fund!
    - rswail 6y ago
      Didi and Grab weren't M&A to Uber, Uber in their cities/countries were acquired by Didi/Grab via stock.
mardifoufs 6y ago
What's Postmates moat? Having never used it, I don't necessarily see the 2.6b$ value in a smaller delivery app that is only really used in some areas of the US. Though I'm sure there is something I'm missing and 2.6b$ is probably less expensive than the cost of pricing Postmates out of the market especially considering it's an all stocks deal. It's just that delivery seems to be easily scalable and easy to just dump money in to gain users (free delivery / delivery fees are much stronger factors than brand loyalty in my experience) so why acquire relatively minor players? What's also interesting is that Postmates seems to have raised around 700m$, so chances are it's investors are probably the first to make an actual realized profit from food delivery ;).
- cheeze 6y ago
  That I/random users use it. Why? I don't know. They were early to the game and I stuck with it I guess
  - mardifoufs 6y ago
    But that's the thing though, that's a very small advantage when it comes to a cutthroat sector like food delivery imo. I know I just use whatever app has free delivery or 25% off at that particular moment since it's almost frictionless to switch between apps. Even using different messaging apps is much harder. That applies to all delivery apps and access to capital is really the only determining factor of success in that industry, but Postmates was also lacking in that regard.
- cglong 6y ago
  Of all the services I've tried in this space, only Postmates lets you request items from businesses they aren't partnered with. This was a huge win once when I needed groceries delivered quickly.
  - mardifoufs 6y ago
    So they can go to the restaurant and order for you? That's interesting. I can't imagine it being very efficient or very fast though, how do they manage to not lose tens of minutes per order on non partnered restaurants/stores?
donsupreme 6y ago
They offered $5B for Grubhub who has 30% market share, and now $2.65B for Postmates who has just 8% market share.
- manigandham 6y ago
  Grubhub is mostly big in NYC. Doordash has the most marketshare at around 45% and good coverage in the US. Postmates and Uber Eats were battling for 3rd place. Postmates seems to have more restaurants on board along with branching out into drinks and convenience stores, and I believe general shopping in certain regions.
  - ranman 6y ago
    GrubHub (and seamless) are popular in most urban cities. Sure NYC was popular when they started but I don’t think it’s solely NYC or even solely US.
  - selectodude 6y ago
    GrubHub is huge in Chicago, in fact it was started at University of Chicago and is still based in Chicago.
    - manigandham 6y ago
      Overall Doordash has beat them, especially now with the pandemic. Here's a breakdown: https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/ https://secondmeasure.com/datapoints/food-delivery-services-...
      - skinnymuch 6y ago
        Just bases on recent numbers. How is it Uber and Postmates were battling for 3rd? And 1st and 2nd are close? Seems like Grubhub and Uber Eats are close now. With Doordash and Postmates both far apart.
- mardifoufs 6y ago
0zymandias 6y ago
I am bullish on this as a recent shareholder. We are now in the consolidation phase of delivery service where fewer companies mean less competition, more efficiency and better economics. This is where Dara’s strength is. He has a history of great dealmaking and acquisitions. I expect Uber to thrive as the industry consolidates.
- arcticbull 6y ago
  Remember JUMP? They were acquired for $200M like, a year and a half ago. As far as I can tell, they don't exist anymore.
  - Jommi 6y ago
    Jump bikes still exist. Not sure what you're on about.
    - AlexeyMK 6y ago
      https://www.bbc.com/news/technology-52832791 https://www.bbc.com/news/technology-52832791
    - rrix2 6y ago
      a few thousand of them exist, Uber had over 30000 destroyed: https://www.vice.com/en_us/article/5dz94x/uber-acquisition-jump-bikeshare-destroyed-thousands-of-bikes https://www.vice.com/en_us/article/5dz94x/uber-acquisition-j...
    - drewrv 6y ago
      I'm not sure where you're located, but the Jump bikes in Seattle are now operated by Lime (even though you still rent them in the Uber app for some reason). https://www.geekwire.com/2020/jump-bikes-return-seattle-lime-ownership/ https://www.geekwire.com/2020/jump-bikes-return-seattle-lime...
      - arcticbull 6y ago
        Uber paid $170 million for a stake in Lime haha. The math works.
gigit_phd 6y ago
The only difference between Postmates and Uber Eats is that Postmates customers overwhelmingly tip the delivery driver. The Postmates app and systems is horrifically engineered. Uber Eats is an exceptionally better system.
- kiwidrew 6y ago
  Are you talking primarily about the customer-facing apps? I wouldn't go so far as to call the Uber Eats driver app an "exceptionally better system", it mostly works (modulo some annoying bugs that keep reappearing every few updates) but it's painfully obvious that they don't bother to do any serious QA on it. [They should send Dara out to be a driver for a few days, he'd love it!]
- tuckerconnelly 6y ago
  Postmates has the cleanest API IMO. If you want to see an engineering horror check out DoorDash. Half GraphQL, half REST, random 500s, no SSR.
  - JMTQp8lwXL 6y ago
    Lack of SSR != An engineering horror. Crawlers can handle these pages effortlessly these days. So long as the client-side performance is good, SSR isn't very important.
    - tuckerconnelly 6y ago
      In aggregate it's all a horror, given how easy it is to add SSR with Next.js. I know, I work on crawlers and scrapers professionally, and it's wayy easier, if you want a robot to scrape you, to have a site with SSR disabled. It's just generally faster and and a better experience for the user, and cheap to add. As an aside, Stripe IIRC seems to use half-SSR, half client-side fetching really interestingly to fetch data below-the-fold after load, for even faster load times. That there is excellent engineering.
- sdinsn 6y ago
  > Postmates customers overwhelmingly tip the delivery driver I've never used Uber Eats so I don't know what the app is like- but Postmates forces me to tip before I can order more food.
tyre 6y ago
Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it and keep prices low for the consumer to think it’s worth it. Attracting customers on either side of the market means spending money to undercut your competition. As soon as you stop giving free delivery promotions or introductory no-fee periods for restaurants, they can instantly churn with little to no pain. Not to mention reaching small restaurants is incredibly time consuming. They’re not all just hanging out online. They’re running a business. They take a lot of expensive (human) outreach. Margins are terrible, if they’re ever positive. It’s just a bad business. And yet people keep trying. None of these companies have made a net dollar. But it’s a simple enough pitch and a common enough use-case that investors think, “yeah, that makes sense!” But it doesn’t. It just doesn’t.
- Jommi 6y ago
  I think you'd be surprised how profitable late entrants to the space can actually be. Like you said teaching small businesses is hard, and you need to undercut competition to grow. Well you don't need to teach someone who has been using grubhub and postmates already.
- csours 6y ago
  I saw someone online saying how they didn't get their ranch with their pizza, so they called up customer service and eventually got a whole new pizza out of the deal. I understand it sucks to not get your ranch, but come on...
  - tyre 6y ago
    I had a few friends in customer support. This happened all the time. If you spend too long going back and forth with a customer, the salary-based calculation of what it costs the company doesn’t make sense. So you give it to them free. But then it’s not like you have any margins that those come out of.
cletus 6y ago
What I find interesting about the food delivery business is that there's clearly a market for this but nobody's happy. - Restaurants (rightly) complain that the drivers provide a poor service. For example, pizza delivered cold because the drivers have no heat bags. I've even heard of a pizza box mounted vertically on a delivery bicycle. - Customers are unhappy because food can be delivered cold through no fault of the restaurant. To save money, multiple deliveries can be scheduled at once. You can see this as your assigned driver drives passed the restaurant when your food is ready, clearly they're on another delivery. They come back 20 minutes later and turn what should be a 10-15 minute delivery (from the time the order is ready) to a 45 minute disaster; - And drivers don't seem happy, complaining about low pay. Yet... people want food delivered. Is this really just a case of people not willing to pay what the service truly costs? If so, no consolidation will help. I imagine fairly small delivery areas is really the only thing that can be economical.
- mushufasa 6y ago
  > Is this really just a case of people not willing to pay what the service truly costs? I think so. If a driver spends an hour on delivery, they have to make $15 in NYC or ~$8 elsewhere (USA) to be worth their time. For a single person, that can be the price of the whole meal again. I've run into this when seeing the fees reflected on a final checkout page, and decided to cook for myself instead.
  - zeroonetwothree 6y ago
    A single person isn’t really an efficient use for delivery. When I’m ordering for four people it’s $80+ so paying $20 for delivery is totally fine. And most places I order from are <10min drive.
    - lotsofpulp 6y ago
      Maybe it's due to my childhood, but even as someone who could easily afford a $25+ meal, it would hurt me emotionally to pay that much for delivery. Very few restaurants even offer a meal worth $25 in the first place (compared to what I can make at home), even in SF/NYC/London, and on top of that you don't know how long the driver is going to take, what kind of measures they are taking to keep it warm, and/or if they tamper with the food.
SEJeff 6y ago
The magic of postmates is good integration with google maps and no service charge (for me).
viburnum 6y ago
Clearly private industry has run out of profitable investments. Better to shift spending to public investments (science, education, err, the current public health emergency) than to waste more money on delivery boondoggles.
- AndrewUnmuted 6y ago
  Unfortunately the recent trend of tearing down public statues probably doesn’t instill confidence that these kinds of corporate investments will be properly protected.
  - jemski 6y ago
    If it takes 155 years or so for people to decide they don't like that investment, I'd probably call that a sound investment. You could even put money into things that tend to be quite nice for people. Schools come to mind. Libraries. I'm spitballing. Unless the plan is to build monuments to current day prison wardens. Depends how bad-faith the argument is, I suppose.
    - Kye 6y ago
      Not that it takes away from your point, but they're mostly not 155 years old. Most of the statues were put up during the Jim Crow era and during the Civil Rights movement of the '60s. You can see a graph on the Wikipedia page. https://en.wikipedia.org/wiki/List_of_Confederate_monuments_and_memorials https://en.wikipedia.org/wiki/List_of_Confederate_monuments_...
  - heisbsissi 6y ago
    Yeah and when the rabble ended slavery I sold all my stocks because I knew the stupid libs didn't respect private property.
  - rswail 6y ago
    Hmm, perhaps Wall St M&A activities pumping stock prices isn't considered "core" to Main St's society and economies. It might be time to divest it from society's operations to allow us to focus on our core competencies and comparative advantages?
jboydyhacker 6y ago
You can't take two one legged men and tape em together and win a race. UberEats and Postmates have the worst execution in the space compared to Caviar (owned by DoorDash), DoorDash and Grubhub. Dara is a banker, he doesn't know anything about operations. This will end bad.
- slugiscool99 6y ago
  What specifically do you think UberEats and Postmates aren't doing as well as the competition?
- didibus 6y ago
  What do you mean by execution? As a user, I've used them all, and like Uber Eats overall UX the best. But I suspect you were talking more about business operations?
  - tguedes 6y ago
    If I was an investor, I would be worried that the CEO with no operations or technology experience is also the COO and CTO, is the one leading the operations and technology integration.
jhallenworld 6y ago
So city dwellers in the ancient Roman world did not have kitchens- possibly they ate out more than we do. So there must have been demand for food delivery... I wonder if they accomplished it with slaves? Well there is some history: https://www.thevintagenews.com/2019/01/08/food-delivery/ https://www.thevintagenews.com/2019/01/08/food-delivery/ The Indian "dabbawala" maybe is where it has to go: some kind of standardized service where one driver can deliver to many people in a single traveling-salesman minimized trip. The packaging is designed to keep the food warm for a long time to allow this. But this probably only works for pre-arranged food delivery, not call for food now. https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala
- missedthecue 6y ago
  I mean there wasn't a way to remote order in ancient Rome. You'd have to go yourself or send someone.
  - mike00632 6y ago
    What's funny is that I didn't even think of that until I read your comment. I totally imagined an ancient Roman calling in their order on their phone.
  - emiliobumachar 6y ago
    Have a pyre at your home's roof, and an arrangement with a restaurant to send a meal when they see it on fire. I'm joking, of course.
    - the-dude 6y ago
      They had multistory appartment buildings. What if you didn't live on the top floor?
- pj_mukh 6y ago
  Yea I’m consistently surprised to learn that my Uber Eats driver ISNT making other deliveries. That makes zero sense!
schoolornot 6y ago
The future of Uber is clearly diversification. Drivers doing everything. I absolutely love that I can order food from distant restaurants because they have driver routes programmed to cover large distances and a business model that supports longer wait times for the customer in exchange for cheaper prices, wider restaurant selection, and of course more customers served. The local establishments can't compete with the 1 driver to 1/2/3 customer(s) model.
- TuringNYC 6y ago
  I'd say the future of Uber is perfecting their crown jewels first. I'm a huge fan of the business model, but the app crashes, the customer service is non-existent, payments get rejected inexplicably and when you reach customer service they respond "I'm sorry you are having difficultly logging in." I couldnt make it worse if I tried. Every rule of SWE-UX is violated. Got a problem? No code, no incident ID, you need to call a number with no context and re-contextualize. No follow-thru, nothing.
deleted 6y ago
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baby 6y ago
Got a friend on a H1B visa who got fired from Uber due to the coronavirus crisis, funny that they’re spending 2.65B a few weeks later.
- andromeduck 6y ago
  Spoilers: they're not, it's an all stock deal.
- TuringNYC 6y ago
  Firstly, sorry about your friend. This is a huge issue with big companies where they will spend $1M on McKinsey to figure out why the company is unproductive when -- if they had just spent that $1M on bonuses they would have achieved productivity. Same with M&A -- at poorly run companies, internal ops will be starved of budget, execs wonder why, and they do M&A to improve things. It all has to do with poor governance and bad executive incentives. (Side note, they are not paying cash here, they are paying with inflated sock.)
jameslk 6y ago
I am awaiting a Steve Jobs-like re-entry of Travis Kalanick back into Uber when Uber purchases CloudKitchens to complete its kitchen-to-door vertical integration. It's all very hypothetical, but I give it a 1% chance of happening.
- wittekm 6y ago
  Uber is doing fine without that garbage human.
  - jellevdv 6y ago
    What did he do that made you describe him as a garbage human?
  - nielsole 6y ago
    Downvoted you. Someone may be despicable, but that is no reason to dehumanize them.
    - vernie 6y ago
      They said "human" what more do you want?
    - bobobob420 6y ago
      how do you downvote people? I only have the option of upvote.
      - ckdarby 6y ago
        I think at 500 karma points you get the option to downvote comments.
  - nudgeee 6y ago
    Sure Travis has flaws and has slipped up a number of times, but his heart is generally in the right place. Here’s a fantastic insight into his character: https://youtu.be/9VIlkPeY9Rk https://youtu.be/9VIlkPeY9Rk (2017)
aritraghosh007 6y ago
Looks like a 10% premium on their last valuation of $2.4B. [1] [1] https://news.crunchbase.com/news/postmates-raises-225m-more-at-2-4b-valuation-despite-private-ipo-filing/ https://news.crunchbase.com/news/postmates-raises-225m-more-...
adjkant 6y ago
This feels like another grasp at straws, and one that may backfire quicker than expected based on my experience on the ground. In NYC I've recently noticed that the pandemic has created a much larger focus on delivery and takeout margins, and these platforms are actually losing good restaurants. I for one am happy based on who I see picking them up though: ChowNow. Right now, my 3 most common orders (and more I'm seeing daily) are all on ChowNow. Their model is a flat rate[1], not per delivery, and offer basically a self hosted (but in reality hosted), well designed, simple platform. Payment/address details are shared across restaurants so it's a similar feel to a Grubhub/Seamless/Postmates. They have their own search I just may start using[2], a lot of places around me are on it. I got a postcard in one of my orders telling me prices were cheaper (no middleman tax) on their website (using ChowNow) and a 10% off code too. Another texted me. Worked great, was smooth, and my orders arrived consistently sooner too. Since then I actually think to check direct websites of places I find on Grubhub and found another few using it. Cheaper and quicker for me in all cases so far. I think they may have cracked the code, because delivery is never going to be the profitable aspect no matter how much you could theoretically leverage Uber's cars or some nebulous eventuality of self-driving. But if your ordering system is all in one, it simplifies things dramatically for restaurants. Pickup, delivery, and in person all on the same system and no middleman fees per transaction. Someone mentioned Domino's, and it seems very close to Domino's as a service to some extent. As far as I can tell, the restaurants handle delivery themselves which seems more sustainable too. I am 0% affiliated with them but they seem to be the favorites of my favorite restaurants + a good and sustainable model. I'm wondering if other cities are seeing the same adoption. I think this could take the delivery world by storm and make this acquisition look even worse, quick. PS: I always felt like Postmates and Uber Eats were so interchangeable as is - high overlap of restaurants, nearly the same UI, and same very high fees even compared to other services. The only advantage either had was maybe offering a few more restaurants by doing menu scrape style things earlier and with some big chains before they got in on the delivery game, and that edge is gone now especially. I would expect the pandemic and this shift to motivate Postmates to exit, but I just don't see why Uber would want to realistically buy it. Seems like a play for market share in a market that doesn't work, and a low market share at that. [1] https://get.chownow.com/pricing https://get.chownow.com/pricing [2] https://eat.chownow.com/ https://eat.chownow.com/
didibus 6y ago
The part that's frustrating is that, prior to all these companies, most of the same restaurants I order from had free delivery, but you had to call in, no nice mobile app to go along with ordering, payments, showing the driver on the map, etc. Now, you do get all that nice UX convenience, but you pay extra for it. I feel like in the end, the issue here is that those companies are just a bit of a useless middleman, not providing enough added value.
angusb 6y ago
what does all-stock mean when it's an IPO'd company? I've always thought that a liquid asset like Uber stock is basically as good as cash, so why do they even bother mentioning that it?
- huangbong 6y ago
  There’s probably time restrictions on when you can sell the stock. Also if you cashed out $2.65 billion of Uber stock the price would go way down.
uptown 6y ago
Here's the official press release: https://www.businesswire.com/news/home/20200706005133/en/Uber-Acquire-Postmates https://www.businesswire.com/news/home/20200706005133/en/Ube...
mrnobody_67 6y ago
For insider background info: Postmates had to do a "pay for play" at one point, wiping out investors who wouldn't put more money into the company because it was so desperate for cash. The company also was shopped around for years by Frank Quattrone, who runs the "most" successful M&A advisory business - QATALYST. They didn't get anywhere with a deal, this was led by a different bank after they were fired.
rreichman 6y ago
Weird that people keep saying that food delivery can't be profitable when Grubhub has already been profitable and only became unprofitable due to the Doordash/Uber Eats price user acquisition wars. It's the same thing that happened in ride-hailing, which already proved to be profitable.
mvkel 6y ago
Isn’t this effectively just a “public roll up,” combining market caps to ultimately lift the valuation and multiple for shareholders? There’s a reason it was all-stock. Not a penny to be found.

349 points by uptown 6y ago

Postmates raised $903M since 2012: https://www.crunchbase.com/organization/postmates https://www.crunchbase.com/organization/postmates Not a 10x exit.

yalogin 6y ago
This is one of those cases where the pandemic saved a company. A few companies like post area and this “uncooked food by mail” companies got saved big time.
bruceb 6y ago
writing was on the wall when they fired most of their city managers. Hard business.
mardifoufs 6y ago
Still surprising that they have managed a ~3x exit. They were raising money at a 1.3b$ valuation as recently as 2018 and to me it seems like Postmates is further behind it's competition in terms of growth and market share than it was 2 years ago.
- texasbigdata 6y ago
  Not sure you can do the division like that without knowing what percent of the company the contributed capital represented.
  - mardifoufs 6y ago
    Oh, yeah that's an embarassing lapsus.To my defense,it seems like most of the equity is owned by investors and not founders, so the average return of the 900m$ is probably still around 3x~. It also seems like they have never been valued higher than the price Uber paid for them so odds are few investors got really burnt regardless of when they invested.
    - mrnobody_67 6y ago
      Some investors got wiped out when the company had to do a pay to play, I believe.
- throwaway_12351 6y ago
  Private equity usually higher than 1 liquidation preference, and if they have participation rights then it is barely only 1x.
nordsieck 6y ago
> Postmates raised $903M since 2012 ... Not a 10x exit. I suspect that many of the investors are just happy to record a profitable exit.
- avs733 6y ago
  I wonder how many of those investors are also in to uber.
  - nordsieck 6y ago
    > I wonder how many of those investors are also in to uber. All of them are now: it's an "all-stock deal". I guess it remains to see how many of them will sell.
habosa 6y ago
Arguably not even a profitable one considering how 903M invested almost anywhere else since 2012 would have done with far less risk.
- deleted 6y ago
  [deleted]

DanCarvajal 6y ago

Surely Uber will be profitable with this addition.

deleted 6y ago
[deleted]
chrisjarvis 6y ago
-increasingly nervous man for the umpteenth time :D

rchandna 6y ago

I don't understand why Uber has been so obsessed with buying another company in the US food delivery market.

deleted 6y ago
[deleted]
rootsudo 6y ago
Distraction and probably an excuse why they have high liabilities. I don't see the difference, personally.
manigandham 6y ago
Increase network, decrease spending to beat out a competitor.
- rchandna 6y ago
  True, I could see them going down the route of heavy discounting / price promotion.
uber473453 6y ago
The CEO is a banker. Naturally he sees M&A, not innovation, as the company's future.
- Jommi 6y ago
  It's been an M&A company for years now. Just look at its portfolio of ownerships in competing local leaders like Didi, Yandex and Grab. It's a perfect food delivery ride hailing super app investment fund!
  - rswail 6y ago
    Didi and Grab weren't M&A to Uber, Uber in their cities/countries were acquired by Didi/Grab via stock.

mardifoufs 6y ago

What's Postmates moat? Having never used it, I don't necessarily see the 2.6b$ value in a smaller delivery app that is only really used in some areas of the US. Though I'm sure there is something I'm missing and 2.6b$ is probably less expensive than the cost of pricing Postmates out of the market especially considering it's an all stocks deal. It's just that delivery seems to be easily scalable and easy to just dump money in to gain users (free delivery / delivery fees are much stronger factors than brand loyalty in my experience) so why acquire relatively minor players? What's also interesting is that Postmates seems to have raised around 700m$, so chances are it's investors are probably the first to make an actual realized profit from food delivery ;).

cheeze 6y ago
That I/random users use it. Why? I don't know. They were early to the game and I stuck with it I guess
- mardifoufs 6y ago
  But that's the thing though, that's a very small advantage when it comes to a cutthroat sector like food delivery imo. I know I just use whatever app has free delivery or 25% off at that particular moment since it's almost frictionless to switch between apps. Even using different messaging apps is much harder. That applies to all delivery apps and access to capital is really the only determining factor of success in that industry, but Postmates was also lacking in that regard.
cglong 6y ago
Of all the services I've tried in this space, only Postmates lets you request items from businesses they aren't partnered with. This was a huge win once when I needed groceries delivered quickly.
- mardifoufs 6y ago
  So they can go to the restaurant and order for you? That's interesting. I can't imagine it being very efficient or very fast though, how do they manage to not lose tens of minutes per order on non partnered restaurants/stores?

donsupreme 6y ago

They offered $5B for Grubhub who has 30% market share, and now $2.65B for Postmates who has just 8% market share.

manigandham 6y ago
Grubhub is mostly big in NYC. Doordash has the most marketshare at around 45% and good coverage in the US. Postmates and Uber Eats were battling for 3rd place. Postmates seems to have more restaurants on board along with branching out into drinks and convenience stores, and I believe general shopping in certain regions.
- ranman 6y ago
  GrubHub (and seamless) are popular in most urban cities. Sure NYC was popular when they started but I don’t think it’s solely NYC or even solely US.
- selectodude 6y ago
  GrubHub is huge in Chicago, in fact it was started at University of Chicago and is still based in Chicago.
  - manigandham 6y ago
    Overall Doordash has beat them, especially now with the pandemic. Here's a breakdown: https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/ https://secondmeasure.com/datapoints/food-delivery-services-...
    - skinnymuch 6y ago
      Just bases on recent numbers. How is it Uber and Postmates were battling for 3rd? And 1st and 2nd are close? Seems like Grubhub and Uber Eats are close now. With Doordash and Postmates both far apart.
mardifoufs 6y ago

0zymandias 6y ago

I am bullish on this as a recent shareholder. We are now in the consolidation phase of delivery service where fewer companies mean less competition, more efficiency and better economics. This is where Dara’s strength is. He has a history of great dealmaking and acquisitions. I expect Uber to thrive as the industry consolidates.

arcticbull 6y ago
Remember JUMP? They were acquired for $200M like, a year and a half ago. As far as I can tell, they don't exist anymore.
- Jommi 6y ago
  Jump bikes still exist. Not sure what you're on about.
  - AlexeyMK 6y ago
    https://www.bbc.com/news/technology-52832791 https://www.bbc.com/news/technology-52832791
  - rrix2 6y ago
    a few thousand of them exist, Uber had over 30000 destroyed: https://www.vice.com/en_us/article/5dz94x/uber-acquisition-jump-bikeshare-destroyed-thousands-of-bikes https://www.vice.com/en_us/article/5dz94x/uber-acquisition-j...
  - drewrv 6y ago
    I'm not sure where you're located, but the Jump bikes in Seattle are now operated by Lime (even though you still rent them in the Uber app for some reason). https://www.geekwire.com/2020/jump-bikes-return-seattle-lime-ownership/ https://www.geekwire.com/2020/jump-bikes-return-seattle-lime...
    - arcticbull 6y ago
      Uber paid $170 million for a stake in Lime haha. The math works.

gigit_phd 6y ago

The only difference between Postmates and Uber Eats is that Postmates customers overwhelmingly tip the delivery driver. The Postmates app and systems is horrifically engineered. Uber Eats is an exceptionally better system.

kiwidrew 6y ago
Are you talking primarily about the customer-facing apps? I wouldn't go so far as to call the Uber Eats driver app an "exceptionally better system", it mostly works (modulo some annoying bugs that keep reappearing every few updates) but it's painfully obvious that they don't bother to do any serious QA on it. [They should send Dara out to be a driver for a few days, he'd love it!]
tuckerconnelly 6y ago
Postmates has the cleanest API IMO. If you want to see an engineering horror check out DoorDash. Half GraphQL, half REST, random 500s, no SSR.
- JMTQp8lwXL 6y ago
  Lack of SSR != An engineering horror. Crawlers can handle these pages effortlessly these days. So long as the client-side performance is good, SSR isn't very important.
  - tuckerconnelly 6y ago
    In aggregate it's all a horror, given how easy it is to add SSR with Next.js. I know, I work on crawlers and scrapers professionally, and it's wayy easier, if you want a robot to scrape you, to have a site with SSR disabled. It's just generally faster and and a better experience for the user, and cheap to add. As an aside, Stripe IIRC seems to use half-SSR, half client-side fetching really interestingly to fetch data below-the-fold after load, for even faster load times. That there is excellent engineering.
sdinsn 6y ago
> Postmates customers overwhelmingly tip the delivery driver I've never used Uber Eats so I don't know what the app is like- but Postmates forces me to tip before I can order more food.

tyre 6y ago

Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it and keep prices low for the consumer to think it’s worth it. Attracting customers on either side of the market means spending money to undercut your competition. As soon as you stop giving free delivery promotions or introductory no-fee periods for restaurants, they can instantly churn with little to no pain. Not to mention reaching small restaurants is incredibly time consuming. They’re not all just hanging out online. They’re running a business. They take a lot of expensive (human) outreach. Margins are terrible, if they’re ever positive. It’s just a bad business. And yet people keep trying. None of these companies have made a net dollar. But it’s a simple enough pitch and a common enough use-case that investors think, “yeah, that makes sense!” But it doesn’t. It just doesn’t.

Jommi 6y ago
I think you'd be surprised how profitable late entrants to the space can actually be. Like you said teaching small businesses is hard, and you need to undercut competition to grow. Well you don't need to teach someone who has been using grubhub and postmates already.
csours 6y ago
I saw someone online saying how they didn't get their ranch with their pizza, so they called up customer service and eventually got a whole new pizza out of the deal. I understand it sucks to not get your ranch, but come on...
- tyre 6y ago
  I had a few friends in customer support. This happened all the time. If you spend too long going back and forth with a customer, the salary-based calculation of what it costs the company doesn’t make sense. So you give it to them free. But then it’s not like you have any margins that those come out of.

cletus 6y ago

What I find interesting about the food delivery business is that there's clearly a market for this but nobody's happy. - Restaurants (rightly) complain that the drivers provide a poor service. For example, pizza delivered cold because the drivers have no heat bags. I've even heard of a pizza box mounted vertically on a delivery bicycle. - Customers are unhappy because food can be delivered cold through no fault of the restaurant. To save money, multiple deliveries can be scheduled at once. You can see this as your assigned driver drives passed the restaurant when your food is ready, clearly they're on another delivery. They come back 20 minutes later and turn what should be a 10-15 minute delivery (from the time the order is ready) to a 45 minute disaster; - And drivers don't seem happy, complaining about low pay. Yet... people want food delivered. Is this really just a case of people not willing to pay what the service truly costs? If so, no consolidation will help. I imagine fairly small delivery areas is really the only thing that can be economical.

mushufasa 6y ago
> Is this really just a case of people not willing to pay what the service truly costs? I think so. If a driver spends an hour on delivery, they have to make $15 in NYC or ~$8 elsewhere (USA) to be worth their time. For a single person, that can be the price of the whole meal again. I've run into this when seeing the fees reflected on a final checkout page, and decided to cook for myself instead.
- zeroonetwothree 6y ago
  A single person isn’t really an efficient use for delivery. When I’m ordering for four people it’s $80+ so paying $20 for delivery is totally fine. And most places I order from are <10min drive.
  - lotsofpulp 6y ago
    Maybe it's due to my childhood, but even as someone who could easily afford a $25+ meal, it would hurt me emotionally to pay that much for delivery. Very few restaurants even offer a meal worth $25 in the first place (compared to what I can make at home), even in SF/NYC/London, and on top of that you don't know how long the driver is going to take, what kind of measures they are taking to keep it warm, and/or if they tamper with the food.

SEJeff 6y ago

The magic of postmates is good integration with google maps and no service charge (for me).

viburnum 6y ago

Clearly private industry has run out of profitable investments. Better to shift spending to public investments (science, education, err, the current public health emergency) than to waste more money on delivery boondoggles.

AndrewUnmuted 6y ago
Unfortunately the recent trend of tearing down public statues probably doesn’t instill confidence that these kinds of corporate investments will be properly protected.
- jemski 6y ago
  If it takes 155 years or so for people to decide they don't like that investment, I'd probably call that a sound investment. You could even put money into things that tend to be quite nice for people. Schools come to mind. Libraries. I'm spitballing. Unless the plan is to build monuments to current day prison wardens. Depends how bad-faith the argument is, I suppose.
  - Kye 6y ago
    Not that it takes away from your point, but they're mostly not 155 years old. Most of the statues were put up during the Jim Crow era and during the Civil Rights movement of the '60s. You can see a graph on the Wikipedia page. https://en.wikipedia.org/wiki/List_of_Confederate_monuments_and_memorials https://en.wikipedia.org/wiki/List_of_Confederate_monuments_...
- heisbsissi 6y ago
  Yeah and when the rabble ended slavery I sold all my stocks because I knew the stupid libs didn't respect private property.
- rswail 6y ago
  Hmm, perhaps Wall St M&A activities pumping stock prices isn't considered "core" to Main St's society and economies. It might be time to divest it from society's operations to allow us to focus on our core competencies and comparative advantages?

jboydyhacker 6y ago

You can't take two one legged men and tape em together and win a race. UberEats and Postmates have the worst execution in the space compared to Caviar (owned by DoorDash), DoorDash and Grubhub. Dara is a banker, he doesn't know anything about operations. This will end bad.

slugiscool99 6y ago
What specifically do you think UberEats and Postmates aren't doing as well as the competition?
didibus 6y ago
What do you mean by execution? As a user, I've used them all, and like Uber Eats overall UX the best. But I suspect you were talking more about business operations?
- tguedes 6y ago
  If I was an investor, I would be worried that the CEO with no operations or technology experience is also the COO and CTO, is the one leading the operations and technology integration.

jhallenworld 6y ago

So city dwellers in the ancient Roman world did not have kitchens- possibly they ate out more than we do. So there must have been demand for food delivery... I wonder if they accomplished it with slaves? Well there is some history: https://www.thevintagenews.com/2019/01/08/food-delivery/ https://www.thevintagenews.com/2019/01/08/food-delivery/ The Indian "dabbawala" maybe is where it has to go: some kind of standardized service where one driver can deliver to many people in a single traveling-salesman minimized trip. The packaging is designed to keep the food warm for a long time to allow this. But this probably only works for pre-arranged food delivery, not call for food now. https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala

missedthecue 6y ago
I mean there wasn't a way to remote order in ancient Rome. You'd have to go yourself or send someone.
- mike00632 6y ago
  What's funny is that I didn't even think of that until I read your comment. I totally imagined an ancient Roman calling in their order on their phone.
- emiliobumachar 6y ago
  Have a pyre at your home's roof, and an arrangement with a restaurant to send a meal when they see it on fire. I'm joking, of course.
  - the-dude 6y ago
    They had multistory appartment buildings. What if you didn't live on the top floor?
pj_mukh 6y ago
Yea I’m consistently surprised to learn that my Uber Eats driver ISNT making other deliveries. That makes zero sense!

schoolornot 6y ago

The future of Uber is clearly diversification. Drivers doing everything. I absolutely love that I can order food from distant restaurants because they have driver routes programmed to cover large distances and a business model that supports longer wait times for the customer in exchange for cheaper prices, wider restaurant selection, and of course more customers served. The local establishments can't compete with the 1 driver to 1/2/3 customer(s) model.

TuringNYC 6y ago
I'd say the future of Uber is perfecting their crown jewels first. I'm a huge fan of the business model, but the app crashes, the customer service is non-existent, payments get rejected inexplicably and when you reach customer service they respond "I'm sorry you are having difficultly logging in." I couldnt make it worse if I tried. Every rule of SWE-UX is violated. Got a problem? No code, no incident ID, you need to call a number with no context and re-contextualize. No follow-thru, nothing.

deleted 6y ago

[deleted]

baby 6y ago

Got a friend on a H1B visa who got fired from Uber due to the coronavirus crisis, funny that they’re spending 2.65B a few weeks later.

andromeduck 6y ago
Spoilers: they're not, it's an all stock deal.
TuringNYC 6y ago
Firstly, sorry about your friend. This is a huge issue with big companies where they will spend $1M on McKinsey to figure out why the company is unproductive when -- if they had just spent that $1M on bonuses they would have achieved productivity. Same with M&A -- at poorly run companies, internal ops will be starved of budget, execs wonder why, and they do M&A to improve things. It all has to do with poor governance and bad executive incentives. (Side note, they are not paying cash here, they are paying with inflated sock.)

jameslk 6y ago

I am awaiting a Steve Jobs-like re-entry of Travis Kalanick back into Uber when Uber purchases CloudKitchens to complete its kitchen-to-door vertical integration. It's all very hypothetical, but I give it a 1% chance of happening.

wittekm 6y ago
Uber is doing fine without that garbage human.
- jellevdv 6y ago
  What did he do that made you describe him as a garbage human?
- nielsole 6y ago
  Downvoted you. Someone may be despicable, but that is no reason to dehumanize them.
  - vernie 6y ago
    They said "human" what more do you want?
  - bobobob420 6y ago
    how do you downvote people? I only have the option of upvote.
    - ckdarby 6y ago
      I think at 500 karma points you get the option to downvote comments.
- nudgeee 6y ago
  Sure Travis has flaws and has slipped up a number of times, but his heart is generally in the right place. Here’s a fantastic insight into his character: https://youtu.be/9VIlkPeY9Rk https://youtu.be/9VIlkPeY9Rk (2017)

aritraghosh007 6y ago

Looks like a 10% premium on their last valuation of $2.4B. [1] [1] https://news.crunchbase.com/news/postmates-raises-225m-more-at-2-4b-valuation-despite-private-ipo-filing/ https://news.crunchbase.com/news/postmates-raises-225m-more-...

adjkant 6y ago

This feels like another grasp at straws, and one that may backfire quicker than expected based on my experience on the ground. In NYC I've recently noticed that the pandemic has created a much larger focus on delivery and takeout margins, and these platforms are actually losing good restaurants. I for one am happy based on who I see picking them up though: ChowNow. Right now, my 3 most common orders (and more I'm seeing daily) are all on ChowNow. Their model is a flat rate[1], not per delivery, and offer basically a self hosted (but in reality hosted), well designed, simple platform. Payment/address details are shared across restaurants so it's a similar feel to a Grubhub/Seamless/Postmates. They have their own search I just may start using[2], a lot of places around me are on it. I got a postcard in one of my orders telling me prices were cheaper (no middleman tax) on their website (using ChowNow) and a 10% off code too. Another texted me. Worked great, was smooth, and my orders arrived consistently sooner too. Since then I actually think to check direct websites of places I find on Grubhub and found another few using it. Cheaper and quicker for me in all cases so far. I think they may have cracked the code, because delivery is never going to be the profitable aspect no matter how much you could theoretically leverage Uber's cars or some nebulous eventuality of self-driving. But if your ordering system is all in one, it simplifies things dramatically for restaurants. Pickup, delivery, and in person all on the same system and no middleman fees per transaction. Someone mentioned Domino's, and it seems very close to Domino's as a service to some extent. As far as I can tell, the restaurants handle delivery themselves which seems more sustainable too. I am 0% affiliated with them but they seem to be the favorites of my favorite restaurants + a good and sustainable model. I'm wondering if other cities are seeing the same adoption. I think this could take the delivery world by storm and make this acquisition look even worse, quick. PS: I always felt like Postmates and Uber Eats were so interchangeable as is - high overlap of restaurants, nearly the same UI, and same very high fees even compared to other services. The only advantage either had was maybe offering a few more restaurants by doing menu scrape style things earlier and with some big chains before they got in on the delivery game, and that edge is gone now especially. I would expect the pandemic and this shift to motivate Postmates to exit, but I just don't see why Uber would want to realistically buy it. Seems like a play for market share in a market that doesn't work, and a low market share at that. [1] https://get.chownow.com/pricing https://get.chownow.com/pricing [2] https://eat.chownow.com/ https://eat.chownow.com/

didibus 6y ago

The part that's frustrating is that, prior to all these companies, most of the same restaurants I order from had free delivery, but you had to call in, no nice mobile app to go along with ordering, payments, showing the driver on the map, etc. Now, you do get all that nice UX convenience, but you pay extra for it. I feel like in the end, the issue here is that those companies are just a bit of a useless middleman, not providing enough added value.

angusb 6y ago

what does all-stock mean when it's an IPO'd company? I've always thought that a liquid asset like Uber stock is basically as good as cash, so why do they even bother mentioning that it?

huangbong 6y ago
There’s probably time restrictions on when you can sell the stock. Also if you cashed out $2.65 billion of Uber stock the price would go way down.

uptown 6y ago

Here's the official press release: https://www.businesswire.com/news/home/20200706005133/en/Uber-Acquire-Postmates https://www.businesswire.com/news/home/20200706005133/en/Ube...

mrnobody_67 6y ago

For insider background info: Postmates had to do a "pay for play" at one point, wiping out investors who wouldn't put more money into the company because it was so desperate for cash. The company also was shopped around for years by Frank Quattrone, who runs the "most" successful M&A advisory business - QATALYST. They didn't get anywhere with a deal, this was led by a different bank after they were fired.

rreichman 6y ago

Weird that people keep saying that food delivery can't be profitable when Grubhub has already been profitable and only became unprofitable due to the Doordash/Uber Eats price user acquisition wars. It's the same thing that happened in ride-hailing, which already proved to be profitable.

mvkel 6y ago

Isn’t this effectively just a “public roll up,” combining market caps to ultimately lift the valuation and multiple for shareholders? There’s a reason it was all-stock. Not a penny to be found.