Uber CEO Tells Staff Company Will Cut Down on Costs, Treat Hiring as a 'Privilege' (cnbc.com) 64
Uber will cut back on spending and focus on becoming a leaner business to address a "seismic shift" in investor sentiment, CEO Dara Khosrowshahi told employees in an email obtained by CNBC. From the report: "After earnings, I spent several days meeting investors in New York and Boston," Khosrowshahi said in the email, which was sent out late Sunday. "It's clear that the market is experiencing a seismic shift and we need to react accordingly." [...] To address the shift in economic sentiment, the ride-hailing firm will slash spending on marketing and incentives and treat hiring as a "privilege," Khosrowshahi said. "We have to make sure our unit economics work before we go big," the Uber boss wrote. "The least efficient marketing and incentive spend will be pulled back... We will treat hiring as a privilege and be deliberate about when and where we add headcount," he added. "We will be even more hardcore about costs across the board."
So they will only hire 2nd-rated people? (Score:2)
Or worse? Because all others will tell them a spicy "F**** You" on that attitude.
In other words (Score:5, Funny)
We can't expect investors to keep pouring money down the black hole indefinitely. We have to act like a real company and produce real results.
Some of you may be let go, but that is a sacrifice I'm willing to make for my stock options.
Re:In other words (Score:5, Insightful)
In other words, we're dropping off the cliff into a massive recession and no one wants to admit it.
Re:In other words (Score:5, Insightful)
In other words, 10 years is more than enough time to prove Uber's business model doesn't work.
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A dropping tide lowers all boats. Uber just has a keel lower than most.
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Apt analogy.
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The business model works. What doesn't work is their pricing. of course, if they raise their prices to a profitable level, they'll no longer be competitive to taxis. So I guess their business model doesn't actually work after all.
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In NYC, a big Uber market, the MTA is still operating with only about 60% of normal ridership.
I'd imagine the falloff is even worse for Uber; at the same time, gas prices are high and NYC now also has a congestion charge further increasing prices for New Yorkers.
Can't imagine it's any better in any other part of the country either.
They've also lost money every year they've operated as a public company except for 2018.
Re:In other words (Score:4, Insightful)
I'm betting the business model doesn't work quite as well as you might think.
That was my conclusion, for those who actually read my post, but not for the reasons you believe.
Taxis have a successful business model, and have for decades, despite a medallion costing six (or even seven) figures in places like New York City. Uber loses money because they don't charge enough. Their alleged business model was to undercut the cost of a taxi to build market share, which it has done, but now they (and their riders) too addicted to those low fares to swallow the kind of increase they'd have to implement to be profitable (never mind the outrage among their drivers at not getting a penny of the increase).
All else is fluff. Many things can affect business operations, but in the end, what matters is taking in more than you spend, and they haven't done that.
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I think the original pitch had merit, but not for a big revenue, but a more modest operation.
Originally, the pitch was 'ride sharing'. Take a passenger on as you drive a trip you were going to take anyway, to offset some of the cost of the trip. Larger companies would have a board or mailing list for employees to see about coordinating carpools, but a more generic offering could allow coordination among employees of more companies for their commutes. Facilitating logistics of carpooling and cost sharing, bu
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Uber really struggles to keep drivers because they don't pay anywhere near as well, and there are lots of rideshare type companies competing with them.
It turns out the " the shift in economic sentiment" was the shareholders wondering how long it would keep pissing money away.
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Yeah, but most places in the US aren't extreme urban environment cities....most have VERY little in the way of mass transit to compete with and taxis are a PITA (very slow, dirty and a lot more $$$).
I'm sure covid is still hurting Uber, but in m
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But how could it fail? I mean, it's basically a cab business, just with every driver bearing the full risk and footing the bill for gas and repairs.
How the hell can you sink something like that?
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How the hell can you sink something like that?
The same way you can bankrupt a casino..
Don't know what Uber is on about. They collected plenty from the ongoing quantitative easing to Wall Street
Re:In other words (Score:4, Insightful)
The execs and higher up will always be paid and get golden parachutes. When the company collapses they will have moved on to a new victim.
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Most drivers don't make enough money long term. It's fine until you need major repairs and I would imagine rising gas prices also hit you. And I'm sure Uber wants a significantly larger cut than their work is really worth.
If they had more EV drivers, they actually might do better given their far greater efficiencies. But I've only ever ridden in one.
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How many people who can actually afford EVs would work as uber drivers?
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Clearly not many. I was stunned I got picked up in one. The Model 3 was alright and it made for a fun conversation at least as someone interested in getting an EV at some point.
Kind of surprised though that more of the professional drivers who are just doing Uber/Lyft gigs when they're free don't have them. Probably because of the limited SUV options in the space.
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My cynical little voice opines that the real business model of such companies is sucking all the money out of venture capital, and then out of stock investors. Making a profit is not actually part of the scheme.
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Yes, yes. Maybe this time the always-doomers will be right.
The danger in labeling people as "doomers" is that it can often take a long time for market predictions to play out. Sometimes decades. As Keynes said "markets can stay irrational longer than you can stay solvent." Inflation worries were the domain of always-doomers for over a decade as we pumped trillions into the economy with no CPI inflation in sight.
The big market correction will be when P/E ratios drop back to their 12-14% norms, which would put the S&P500 at about 2600 if it happened today (a 35%
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In other words, we're dropping off the cliff into a massive recession and no one wants to admit it.
The failure of hyper-growth stocks is not an indication of a massive recession. It is an indication of a bear market. A bear market is the result of a declining market, but that doesn't always mean a slowing economy. We have had 26 bear markets since 1929, but only 15 recessions.
Today we have a pretty strong economy, but a massively overvalued market. Arguably this is because inflation has been hiding in asset valuations, and kept low for consumer goods by immigration and highly complex and fragile supply l
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Such a strong correction would be horrible for anyone wanting to retire and needing to rely on a 401k as one of their income streams.
I'm not saying you are wrong, just that if a really deep correction hit, people would lose their jobs, homes and retirement. It would present a spectacular time to buy for anyone with anything left over.
I'm almost hoping it happens sooner then later. Buying the dips is the only real way to get ahead over the long haul. It's how I got my condo (bought 120k in 2010, now it's wor
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Such a strong correction would be horrible for anyone wanting to retire and needing to rely on a 401k as one of their income streams. I'm not saying you are wrong, just that if a really deep correction hit, people would lose their jobs, homes and retirement.
A market correction doesn't impact the economy directly, it is just a change in valuations. But that immediately impacts how much money companies can borrow and the value of retirement nest eggs, which hurts the cashflow of certain companies and individuals. That then has cascading effects if society doesn't step in to provide assistance to those who are being damaged. Society in this case is represented by their government (although individual donations do play a small part).
This is where it comes down to
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Is there something wrong with ensuring that your company has the people it needs, and ONLY the people it needs?
Because there IS something wrong with wasting investor money by paying it to an army of workers that are entirely redundant and probably bored.
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That was my thought, too. Just how many employees does Uber maintain now and exactly what do they DO? Could it be possible they pumped up headcount rapidly to impress investors with how much "growth" they were experiencing, and now they realize they have way more staff than is necessary for operations?
Interesting (Score:5, Funny)
So...as you might have noticed, the business is falling apart due to various "decisions" made by executives.
Please be more careful with all those resources, you underlings.
I am going to prepare my severance package and golden parachute now.
Don't stop working just because I have left the office for the day!
Sense of urgency! Synergy! Metrics!
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I am going to prepare my severance package and golden parachute now.
I am sure he is going for the platinum upgrade.
Since being hired is now a privilege - those who are hired will be expected to Pay The Man in recompense.
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As in, you think there would or should be more ride-sharing and food delivery now if Uber had executed on it better?
To me it not obvious that they got anything big wrong. Their self-driving unit was a flop, but I think they have lost VASTLY more money subsidizing rideshares in hopes of growing the business, which is just what investors sent them money in hopes of doing. To the extent those inves
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To me it not obvious that they got anything big wrong.
A company that spends as much as Uber does on programmers, when they are running a relatively simple software product, has done something big wrong. It's not about "subsidizing rides," they are taking 30% from each ride.
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I am not sure if Uber categorizes all programmers under R&D, but I recall a raft of articles on the fact that Microsoft does [zdnet.com].
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If those parachutes were only made of gold... I'd pay to see them jump.
A company without employees hires folks . . . ? (Score:1)
. . . I thought their whole business model was based on not having any employees at all . . . only gig workers.
Maybe someone could clear me up here . . .
Re:A company without employees hires folks . . . ? (Score:4, Interesting)
That's the elephant in the room that the execs want to put a curtain in front of and hide....
All of these "gig" services only require a bare minimum of employed full-time staff to keep them going. You have the team of software developers who keep updating and patching the code for the smartphone app - and they're the critical piece that makes it go. You have customer service/phone support staff, who are necessary but generally not "high earners" in those help-desk type roles in a call center. You obviously have the owner(s) holding the titles like CEO or President, who are the money and the "vision" behind creating the whole thing in the first place. Anything else is, IMO, purely optional vs outsourcing on an as-needed basis. (EG. Advertising and marketing or legal, for any incidents that come up.)
It seems like almost all of these services, though, suffer from inability to generate a profit, despite being extremely popular with the customers using them and having no shortage of people willing to do the actual gig work involved? At some point, you have to ask how that can be ... and the answer I see repeatedly is that the owners don't really CARE if the venture is profitable on the books. They raked in multiple millions just bringing it to life and letting it become popular. They figure they can always sell it all when things go bad. They walk away rich from it, with plenty of funds to pour into the next big thing.
I can't really imagine how a company like DoorDash or Uber or Lyft or GrubHub needs an office building with more than the call center and dev team in it, and a few "corner offices" for the owners? Even the dev team could essentially work from home if they wanted to structure it that way. All of these gig businesses are far too bloated if they actually had a lot of hiring to "slow down" on.
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Really, the entire thing can be run with WFH and in the cloud. It's an app service. No office space needed. WFH is a perfect drop in for call center as well.
The biggest expense Uber has after driver wages should be advertising, then developing and maintaining then app. After the initial app is developed, does it really need a huge dev team?
I'm not a professional techie, just a hobbist, so some insight to this would be interesting.
re: running it from WFH and the cloud (Score:2)
You're probably right, although I never said a "huge" dev team was ever necessary. I'm sure it could be continuously improved with a good team of maybe 6-8 people, if you wanted to? (I say that just from working at other companies before who developed and supported an in-house cellphone based application they deployed). Maybe you'd want two teams if you're going to support both an iOS and an Android version of said app? Places I'm familiar with were only targeting one platform. But not even sure how neces
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I think you're forgetting sales, marketing (which probably includes recruiting and training drivers), support (for drivers), and ... lawyers. Not just to deal with issues that arrive with individual drivers, but all those legal dust-ups they get into when some municipality or jurisdiction decides they're doing something illegal must surely cost money.
Driving... (Score:3)
The problem (Score:1)
Since when does Uber hire? (Score:2)
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...and then rely on regulator capture to get away with it.
And pouring massive amounts of money into a ballot proposition to maintain their classification (cf: California Proposition 22 that came in reaction to Assembly Bill 5). Unfortunately, they ran into a superior court judge who found unconstitutional the proposition's attempt to lock itself in place with a provision that limited the power of future legislatures to make changes.
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Wrong - the entire business model was bilk investors into pumping up the stock price and making customer acquisition look great by selling rides under cost and paying the drivers (debatable under paying them) with the investment dollars.
The only question was the self-drive stuff ever really designed to succeed or was it just there to be plausible business plan so they scan everyone.
Is it time- (Score:4)
to bring back fuckedcompany.com?
Uber and Lyft (and all the crypto coins) can be the first ones on the list.
Go to TheLayoff.com (Score:2)
Weird wording... (Score:2)
The "hiring as a privilege" jumps out at me.
It seems like Uber has decided the route to profitability is to see employees as liabilities, not assets.
Good luck with that.
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Gas prices shooting up they way they have are just expediting the exit of drivers.
I've stopped driving for them after having delivered for UberEats part-time on weekends for a little extra cash for about 3 years now. Current gas prices make it more economically sensible for me to sit on my couch at home and watch tv now on Friday and Saturday nights.
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Curious how EV drivers would make out. I assume the math works better in their favor but I've only ever ridden in one EV from one of the rideshare services.
The faster they go under, the better. (Score:2)
Their collapse is long overdue. It's time that they stopped exploiting drivers for good.
Proof of Travis Kalanick's genius (Score:2)
Why, that's outrag... that's unreas... um... (Score:2)
...that's correct?
Acting to pull an irresponsibly run organization into fiscal conservatism is the right thing to do.
*waits for black lash and resignation* (Score:1)
"We will treat hiring as a privilege" (Score:4, Funny)
Remote Work is Disrupting Everything... (Score:1)
With few people needing to spend lots of time "out and about" anymore, a lot of businesses have become obsolete. Who needs "ridesharing" when you're not riding all over town anymore?
Context is Important (Score:2)
"We have to make sure our unit economics work..." (Score:2)
"We have to make sure our unit economics work before we go big," wait, really, it took 10 years of burning money to learn that?
Higher interest rates for longer (Score:2)
Ahhh snap! (Score:1)
The techies that, for years now, have been getting rich of the gig-workers' back gonna start getting screwed like peasants, too?
Doh, little SittleCon Valley done gone and growed up. It's just like any other sector, now. Only the folks in the C suite get rich. They way god intended!