Uber CEO: We Could Be Profitable -- We Just Don't Want To Be (fastcompany.com) 106
Uber CEO Dara Khosrowshahi said he's not worried that his company lost $4.5 billion last year and claimed the company could "turn the knobs" to be profitable if it wanted to -- it just doesn't. From a report: Khosrowshahi made the comments at the Goldman Sachs Technology and Internet Conference in San Francisco this week where he explained that if Uber did turn those knobs to be an immediately profitable company it would "sacrifice growth and sacrifice innovation." He also spoke optimistically about the impact self-driving cars will have on transportation costs.
4.5 Billion? With a B?!? (Score:4, Insightful)
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It didn't look that way nearly two decades ago, almost right after the dot com bubble.
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People exactly like you (probably also specifically you) shit on Amazon for years, and Tesla, and Uber, and every other business you don't understand.
There's a reason why you are poor and a slave to your salary. You think there are these rules that everyone must follow to be successful, and can't comprehend success outside of that arbitrary mind prison.
You don't understand how billions in losses means zero in taxes for the next 20 years. You don't understand how a bankruptcy means a hundred million dollar payday. You're a fucking moron. Accept that, and embrace that this is why you will never be successful.
If you were as successful as you imply you are, you likely wouldn't be shitposting on the Internet. You'd probably have better things to do. Being truly happy and successful means not feeling the need to disparage strangers on the Internet; from an anonymous account no less.
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Ask Bezos...Amazon did it for years!
Not true. https://www.gurufocus.com/fina... [gurufocus.com]
Re:4.5 Billion? With a B?!? (Score:5, Informative)
In its three biggest losing years, Amazon suffered losses of $0.7 billion in 1999, $1.1 billion in 2000, and $0.6 billion in 2001.
https://revenuesandprofits.com... [revenuesandprofits.com]
In fact, Amazon's losses in its first 8 years (1995-2002) together totaled $3.0 billion, which is still less than what Uber lost last year alone.
Amazon became profitable in 2003, nine years after its founding. Uber will be nine years old next month.
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In its three biggest losing years, Amazon suffered losses of $0.7 billion in 1999, $1.1 billion in 2000, and $0.6 billion in 2001.
Amazon was creating an entirely new industry, they had to create a lot of things from the ground up, logistics chains, warehousing systems, stock tracking and management that didn't exist before Amazon did it. Amazon moved into a market that didn't exist when they started... Uber is just an illegal taxi company. They aren't even remotely comparable.
Further more, Amazon had a plan for profitability, Uber doesn't.
But the sooner Uber dies, the better.
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Further more, Amazon had a plan for profitability, Uber doesn't. But the sooner Uber dies, the better.
I don't know, I heard recently that Uber could be profitable tomorrow, but are just choosing not to be.
LOL
Re:4.5 Billion? With a B?!? (Score:5, Insightful)
Reinvesting profits is not the same as losing money. Uber is only surviving on continued flow of investor money. Amazon was was surviving on its own sales revenue.
Re: 4.5 Billion? With a B?!? (Score:2)
Uber is only surviving on continued flow of investor money
Here's a thought: let's not count Uber's business income at all, so you can attempt to make your meaningless point. ;)
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That Uber has income does not negate a thing Mr. Lunix wrote. Take a course in logic some day.
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The moment the venture capitalists stop paying some percentage of my Uber trips is the moment the competitors kill them off.
Uber's competitors can't beat the price, so instead are ramping up other things, like quality of vehicles, security, invoicing, or whatever else. Those things might not be enough to lure the price conscious in, but once price stops being so far different, Uber loses it's edge altogether. It's a bit like a Ponzi scheme right now, so it'll be interesting to see how it plays out. No one c
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In other words, they'll make it up on volume.
It's not just volume. Uber is really two parts. The ride sharing side and the company researching self driving cars side. It would be interesting to see that broken down. My guess is that the ride sharing side would likely be profitable if the R&D side wasn't eating up their profit plus some.
It's kindof a strange combination. A pure ride sharing company without the self driving car R&D could likely operate with fairly high profit margins but when/if self driving cars get here they will either
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Considering that they have to pay drivers significantly less than minimum wage in order to keep the prices down far enough to undercut the taxi companies and fund their R&D, I think it's questionable if they could make a profit even if they wanted to.
In fact, if the authorities weren't so incompetent, they'd be sued for antitrust and minimum wage violations to the point where they'd probably go under from that alone.
My point is that most of that R&D money is being spent on replacing their current business model with self driving cars. Drivers working for less than minimum wage and not being able to cover their own wear and tear actually makes them even more profitable. Their R&D budget is almost entirely devoted to trying to get rid of the driver. They already have a version of Uber that works with human drivers; they don't need to spend money researching that. Their current business model of fleecing drive
Show me Uber's competitive advantage (Score:2)
My point is that most of that R&D money is being spent on replacing their current business model with self driving cars
So what? Google has a HUGE war chest from their ad business to finance the R&D and a big head start. Same with GM and Ford plus they actually make cars. Tesla is in the mix too and while they don't have the cash they do have the technology and know how to make cars. Where is Uber's competitive advantage here? Even if they develop some viable technology they will have to partner with someone else to make it and that sort of joint venture is inherently unstable because it requires splitting the profi
Losing huge money on ride sharing (Score:2)
It's not just volume. Uber is really two parts. The ride sharing side and the company researching self driving cars side. It would be interesting to see that broken down. My guess is that the ride sharing side would likely be profitable if the R&D side wasn't eating up their profit plus some.
Why do you assume that Uber's ride sharing is profitable? There is to my knowledge zero evidence to suggest that Uber's ride sharing is profitable or that it even has a path to profitability. It's not clear they have a cost advantage over their competition and the costs of running a taxi service are largely fixed (fuel, labor, etc) with limited economies of scale. Plus there actually is data out there on how Uber spends their money and it appears their losses mostly are from trying to buy their way into [nytimes.com]
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It's not just volume. Uber is really two parts. The ride sharing side and the company researching self driving cars side.
Who will win the greatest tech race of our time? The largest technology companies, he car manufacturers or the dodgy taxi company? Tune in next week to find out.
Re: Stupid people (Score:1)
Because it's seeking a monopoly (Score:2)
Or an ogolopy.
That's what the big money on Wall Street sees. It sees a future where one or a small number of companies have the public over a barrel in terms of public transport. With few options and fewer publicly owned projects, we will have little choice but to take them up on their charges and fees.
So right now, they will tolerate the so-called loss of a few billion dollars. They can write part of it off as the cost of doing business, they can shuffle more profitable parts of their dealings such that it
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Maybe crack open a dictionary and look up spent, revenue and loss.
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It's called an IPO https://en.wikipedia.org/wiki/... [wikipedia.org]. They just have to survive until a few months after that. So the banksters lend the money in turn for major piece of the company upon the basis, that they will be able to dump it on mug investors at IPO time and rake in billions in profit, this with suitably corrupt PR=B$ to dress up the company for sale, they then bet the company will go bust and make money on the way done. Look not further that Dot.Bomb https://en.wikipedia.org/wiki/... [wikipedia.org]. Why would you
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Because Amazon is a well run company with strong cash flows.
Uber.. are not.
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Because they had revenues of $6.5 billion last year and revenue growth rate is going up faster than the loss rate. Eventually they will make money. How is Amazon the most valuable company in the world, while only having a few profitable quarters?
Uber is a scam. They are losing money on every single trip and no amount of growth can fix that. The growth only serves to back the ponzi-scheme it is to investors.
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They just need market share until they bring self driving cars to market, at which point you can cut the fares in half because you don't need to pay a human to pilot it anymore. That's the end goal. Global transit system that funnels through a single app. You don't have to "get it" because everyone else does and thats why they're willing to wager 100 billion dollars to see it happen and profit from it.
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They just need market share until they bring self driving cars to market, at which point you can cut the fares in half because you don't need to pay a human to pilot it anymore. That's the end goal. Global transit system that funnels through a single app. You don't have to "get it" because everyone else does and thats why they're willing to wager 100 billion dollars to see it happen and profit from it.
No, it is not. While self-driving cars are close, the first generations will be for special roads only and not from endpoint-to-endpoint. Their research into AI is just another part of the scam to get more investors. They will be long dead before we reach level 5 AI.
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"Turn knobs" is a management way of saying "screw drivers out of a larger percentage of their fare".
Re:4.5 Billion? With a B?!? (Score:4, Informative)
Knowing Uber I'm guessing hookers, blow and access to the office sex dungeon for investors.
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Where do people get this idea that company directors are bound by law to make as much profit as possible?
Henry Ford once increased the pay of his line workers, reducing shareholder returns, because, he said publicly, he felt that the workers deserved the money more than the shareholders. The shareholders sued, and Henry Ford lost. The court said that he could increase the wages to improve worker productivity, reduce turnover, reduce the chances of union strikes or violence, etc., but not just because he liked the workers more.
In short, if you cannot justify something to increase shareholder returns (and incr
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Let's face the facts here. The CEO of a publically traded company made a public statement saying they are not interested in making a profit.
I think such a statement would hold up in court.
Uber is not a publicly traded company.
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The way you stay in business despite losing $4.5 billion is to start with a lot more than $4.5 billion in the bank. Uber raised a lot of money and has substantial reserves. The basic idea behind the company has always been to spend heavily developing their brand, expanding their reach, and getting customers used to dealing with them rather than conventional cabs. Once they're well enough established, they'll be able to raise prices and/or pay drivers less to bring themselves to profitability. This kind
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Reinvestment and loans put into the company.
Uber is using the current relatively low interest rates to buy cheap money to spend on things that will bring in more money then the cost of the cash.
Just as long as your investments bring in more then the cost your company can run it debt for eternity, and still pay off all the bills. That said. For most companies they grow to a point where such investments do not pay off as well the cost of money. So the company at some point will need to switch to profits.
For
The old argument (Score:2, Funny)
What's better, revenue, or profit? I worked once for a shop that had profit every single quarter (and tidy bonuses for all of us under the sharing plan), right up to the day they laid us all off and closed down the shop.
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Can someone explain this?
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You can be profitable and have negative cash flow.
Paying down a loan is revenue neutral, as is making a large purchase of capital.
So for ease of math's sake let's say I borrow 1.2 million at 0% interest with a 1 year term.
I receive the debt, and the money, that's 0 revenue (they balance) and I have to pay $100,000/month.
Now I use that money to buy $600,000 of equipment that depreciates over 5 years ($10,000 month)
I now have $600,000 in the bank, $600,000 in equipment, $1.2 million in debt (0 assets).
No I st
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OK,
So how do you definitely profit?
It doesn't sound like in a way you'd legally be able to file taxes, and it's definitely not SAP.
And more interestingly, you you consider taking out a loan as profit?
Because if you consider the taking out of the loan as revenue nuetral, your system has a company that takes out a million dollar loan, and manages to pay it off as losing a million dollars (that'd be fucking awesome for taxes).
The other stupid scenario your logic of paying down loan principal being an profit ne
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Revenue is the cash (or equivalents) that you receive for the services or goods you provide.
Profit is how much of that cash you keep after paying for all of your costs.
So if you're an Uber competitor and you have ten customers, each of whom makes one journey, paying you $10 each, your revenue is $100.
You pay your drivers $3 per journey, so you have $30 in 'Cost of Goods Sold', giving you a 'gross profit' of $70.
Then you have your head office costs, including accountants, HR, your own salary, the office spac
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Likely to be a cash flow thing. A profit on paper doesn't necessarily mean the cash is in your bank account, but you still need to pay suppliers and staff. So you can go out of business through a shortage of cash, even if you're profitable.
It's unusual, although less so if you're not accounting properly: If I sell you a widget for $10 and it costs me $2 then I have $8 in profit. If you don't pay me for a month (pretty standard terms) then for that month I have a loss of $2. So am I profitable or not?
I'm tra
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OP here. The company turned a profit through continual, severe cost-cutting measures to keep it in the black. The last cost to cut was the building, and us.
Re:The old argument (Score:5, Insightful)
What's better, revenue, or profit? I worked once for a shop that had profit every single quarter (and tidy bonuses for all of us under the sharing plan), right up to the day they laid us all off and closed down the shop.
Actually.. It's CASH FLOW that kills more companies that lack of profit. You can make a tidy profit, but if you don't have the cash to pay the bills when they come due it's game over.
You need profit to stay in business long term but Cash flow will kill you today...
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I was waiting for this reply or I was going to post it myself. And for those whom it helps to have it in simile form -- to a business, profits are like nutrition, cash flow is like oxygen.
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That's a big IF you have there. Paying interest can quickly turn a profitable business unprofitable.
But, your point is a good one. IF you can borrow on future profits, cash flow may not be that big of an issue for you... But you have to be profitable enough and have a long enough history that somebody will be willing to lend you money. Many businesses are not so lucky.
However... My point still stands. If you cannot lay your hands on the cash you need to pay your bills today, you are going belly up reg
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cash flow is a core part of business, but the OP is right, if you can't afford cash flow the problem is not actually cash flow, it is the business is fundamentally flawed and not sufficiently profitable to be viable. Any healthy business can handle cash flow problems at minimal cost to the profit margin, it is only poor ones that collapse due to cash flow, cash flow is a symptom of an underlying problem not the problem itself.
Sad Day (Score:2, Informative)
Impressive restraint? (Score:5, Funny)
I'd be more impressed if he said he could take home a wage if he wanted to, but chooses no to.
Amazon (Score:2)
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Easy (Score:2)
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Not if they run long enough at a loss to drive out all competition.
Or if they replace those pesky drivers who demand to get paid with self-driving cars.
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Not if they run long enough at a loss to drive out all competition.
Or if they replace those pesky drivers who demand to get paid with self-driving cars.
The barrier for entry for new competition is an app and a car. Once they raise prices they will lose most of their market share over night.
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... and millions in advertising or no one will know your app exists. ... and enough cars and drivers to make it reliable for people to use your app.
What most of us are thinking: (Score:2)
"We could be moral too!" - We Just Don't Want To Be
Sure Uber we believe you, after having all your executives quit due to discrimination issues within Uber, outright ignoring local city rules, spying on politicians checking out the system. Getting into a massive lawsuit with Google Alphabet where it looks like you poached an engineer and potentially paid him to do industrial espionage. Looking to get self-driving tech to fire all your Uber drivers despite them being paid so little they need to sleep in th
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It works for me at a very reasonable price point; I love the company!!!
That's all I'm worried about....
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I know for some folks it's an inexpensive and easy way to get around town but sometimes one needs to consider the moral values behind a company too. Some great examples are cheap clothes made in India, so cheap in fact working conditions are so bad a factory collapses and killed / maimed a whole bunch of workers for which they almost got no compensation for. Uber's self driving program has also gotten itself into more serious accidents than google has managed probably due to them rushing and pushing the l
I could be skinny again if I wanted to be (Score:2)
We lose money on every trip (Score:2)
But that's okay, we'll make it up in volume!
Sounds familiar (Score:2)
As we used to say in the car sales biz... (Score:2)
taxis (Score:2)
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They want to put taxis out of business...
I have no doubt you're correct, but their problem in my city is that taxis are not the overpriced, dirty, scummy service that some people complain about on slashdot.
My son uses Uber if he's out drinking (because he's a dirty millenial) but pays either the same or more than he would if he called a cab.
The only time I used Uber was last year, and the guy driving me was on his last night, as Uber pays so much less than driving a cab. That trip was my only one with Uber because the trip cost me $45 instead
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Would you have been able to get a $25 taxi that night though? In theory the surge pricing kicks in during high demand. Now, if the demand is only on Uber, there may well have been taxis around, but if it was during some big event all the taxis may have been occupied. So it's possible that your alternative was really to wait for an hour or so, not to get a $25 taxi right then.
Surge pricing makes sense to me, just like variable toll pricing on high use highways. Of course some people are going to complain, bu
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Same here. Been saying so for ages ... (Score:2)
Dear Uber CEO (Score:2)
Dear Uber CEO,
If you're comfortable not making a profit and you'd like to improve the image of your business, why not just give your drivers a little more pay? Passengers would gladly pay more. It's like you're not really competing with taxis at all. You're competing with public transport on price for most shorter journeys. Right now, most people just think you're asshats.
Yours Sincerely,
John and Joan Q. Public.
Competing without having to show a profit (Score:2)
Uber fans like to throw shade at local taxi companies, invariably based on tautologies, anecdotes, and confirmation bias. But it's real hard for a local company that has to show a profit - and pay its workers a living wage - with a corporation that can afford to lose 4+ billion a year.
Like how Amazon operated for a decade on loses, driving local bookstores out of business that weren't able to lose huge amounts of money for long amounts of time.
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Sure, but the fact is in a lot of places taxi were/are a real pain to get, expensive, and often only wanted to take cash. From a user perspective the lower price and convenience are a huge draw. Taxis need to up their game in other ways if they can't compete on price.
The Pee Wee Herman method (Score:2)
half a statement (Score:2)
The old classic... (Score:2)
"Sure I sell them at a loss, but I make it up in volume!"