5 ms·

Uber gained market cap of $4B since this appeal news broke, already spent $100M to fight AB5, all the while they burnt $2B in their last quarter. And yet their

Uber gained market cap of $4B since this appeal news broke, already spent $100M to fight AB5, all the while they burnt $2B in their last quarter. And yet their argument is they can't afford to spend $300M to cover driver benefits and pay into state unemployment insurance.

creato 6y ago
> And yet their argument is they can't afford to spend $300M to cover driver benefits and pay into state unemployment insurance. You compared global market cap/revenue losses to just the impact of CA. What happens when other markets follow in CA's footsteps?
- r00fus 6y ago
  This argument that local laws can't be followed because "what would other jurisdictions do" doesn't seem to apply to authoritarian places like China who impose pretty onerous requirements for operation (like state ownership). There is another option for Uber/Lyft - to let drivers set their prices and/or routes. Of course, that would make them less of a unicorn and more of a utility and that would crater their valuation.
  - foota 6y ago
    And also make the service much less useful. Or at least very different from what it is now.
  - majormajor 6y ago
    > There is another option for Uber/Lyft - to let drivers set their prices and/or routes. Of course, that would make them less of a unicorn and more of a utility and that would crater their valuation. That isn't enough, is it? Don't they still fail the "core business functionality" part of the test?
  - creato 6y ago
    I'm not making an argument for or against Uber. Just explaining why they didn't just eat the cost of this because it would have been insignificant/cheaper than fighting it.
ffggvv 6y ago
you’re comparing a lot of unrelated numbers and mixing hem up. per barclays the figure for uber is 500M a year not 300. 300 is the figure for lyft market cap is the total value of the companies issued shares. they don’t have access to that money. 100m to fight a law that would cost them 500m/year seems like a good investment. burning 2b last quarter is proof they can’t afford any additional costs as they already aren’t profitable. adding 500m a year would be increasing their quarterly spend by > 10% just to service a single state
donor20 6y ago
I'm in a non-rideshare field. The law here (AB5) has been a disaster, a total mess. One proof point, workers in a TON of fields have absolutely flooded Sacramento to get exception after exception into this law. This is not a normal principles based law. This a law with "principles" that are so ridiculous that everyone then goes let's carve these random folks. Get a grip. Imagine if we had laws like this elsewhere. It's pathetic - really. Some of the carevouts. physicians surgeons dentist podiatrists psychologists veterinarians insurance brokers lawyers architects and engineers private investigators accountants securities broker-dealers and investment advisers direct sales salespeople (often horrible abuse here with door to door sales) marketing professionals travel agents human resources administrators graphic designers grant writers fine artists enrolled agents payment processing agents through an independent sales organizations photographers or photojournalists freelance writers editors newspaper cartoonists and lots more I think gig musicians want to be sure they have a carveout. Fisherman are doing carevouts. I think truckers are getting a carevout. A bunch of beauty industry jobs A ton of contractor and subcontractor work There has got to be some transit union or something pulling strings here - because the law is horribly unworkable even for folks who DO want to do the right thing. Most are resigned to waiting until everything is carved out but uber and lyft.
- jeffbee 6y ago
  Ah yes, the all-powerful bus drivers' union.
renewiltord 6y ago
Am I understanding this correctly? You mentioned the market cap because you're proposing that they leverage their market cap to pay for this by making share offerings available on some short enough cadence to ensure cash flow? Or to collateralize some loan with the current ownership? That's not a conventional strategy but perhaps you can make a good argument for why it will work.
- kinkrtyavimoodh 6y ago
  No, I think they mentioned the market cap because they want to rattle out random unrelated numbers to manufacture outrage.

creato 6y ago

> And yet their argument is they can't afford to spend $300M to cover driver benefits and pay into state unemployment insurance. You compared global market cap/revenue losses to just the impact of CA. What happens when other markets follow in CA's footsteps?

r00fus 6y ago
This argument that local laws can't be followed because "what would other jurisdictions do" doesn't seem to apply to authoritarian places like China who impose pretty onerous requirements for operation (like state ownership). There is another option for Uber/Lyft - to let drivers set their prices and/or routes. Of course, that would make them less of a unicorn and more of a utility and that would crater their valuation.
- foota 6y ago
  And also make the service much less useful. Or at least very different from what it is now.
- majormajor 6y ago
  > There is another option for Uber/Lyft - to let drivers set their prices and/or routes. Of course, that would make them less of a unicorn and more of a utility and that would crater their valuation. That isn't enough, is it? Don't they still fail the "core business functionality" part of the test?
- creato 6y ago
  I'm not making an argument for or against Uber. Just explaining why they didn't just eat the cost of this because it would have been insignificant/cheaper than fighting it.

ffggvv 6y ago

you’re comparing a lot of unrelated numbers and mixing hem up. per barclays the figure for uber is 500M a year not 300. 300 is the figure for lyft market cap is the total value of the companies issued shares. they don’t have access to that money. 100m to fight a law that would cost them 500m/year seems like a good investment. burning 2b last quarter is proof they can’t afford any additional costs as they already aren’t profitable. adding 500m a year would be increasing their quarterly spend by > 10% just to service a single state

donor20 6y ago

I'm in a non-rideshare field. The law here (AB5) has been a disaster, a total mess. One proof point, workers in a TON of fields have absolutely flooded Sacramento to get exception after exception into this law. This is not a normal principles based law. This a law with "principles" that are so ridiculous that everyone then goes let's carve these random folks. Get a grip. Imagine if we had laws like this elsewhere. It's pathetic - really. Some of the carevouts. physicians surgeons dentist podiatrists psychologists veterinarians insurance brokers lawyers architects and engineers private investigators accountants securities broker-dealers and investment advisers direct sales salespeople (often horrible abuse here with door to door sales) marketing professionals travel agents human resources administrators graphic designers grant writers fine artists enrolled agents payment processing agents through an independent sales organizations photographers or photojournalists freelance writers editors newspaper cartoonists and lots more I think gig musicians want to be sure they have a carveout. Fisherman are doing carevouts. I think truckers are getting a carevout. A bunch of beauty industry jobs A ton of contractor and subcontractor work There has got to be some transit union or something pulling strings here - because the law is horribly unworkable even for folks who DO want to do the right thing. Most are resigned to waiting until everything is carved out but uber and lyft.

jeffbee 6y ago
Ah yes, the all-powerful bus drivers' union.

renewiltord 6y ago

Am I understanding this correctly? You mentioned the market cap because you're proposing that they leverage their market cap to pay for this by making share offerings available on some short enough cadence to ensure cash flow? Or to collateralize some loan with the current ownership? That's not a conventional strategy but perhaps you can make a good argument for why it will work.

kinkrtyavimoodh 6y ago
No, I think they mentioned the market cap because they want to rattle out random unrelated numbers to manufacture outrage.