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Comment by dfabulich | Hacker News Reader

You're right, but I think that's exactly how/why Uber's investors were able to convince Kalanick to step down.

Uber may or may not take over the world at some point, but Uber needs another round of investment in the next 18 months just to survive. If the existing investors refused to play ball, they could kill the next round, which really would kill Uber.

And here's another important moral of this story for founders: Kalanick has a controlling interest in Uber, so on paper, nobody could have removed him as CEO by shareholder vote. But despite complete control over the vote, you don't really own your company if you're dependent on future investment.

No matter what the cap table says, if you're not profitable, it's not really yours yet.

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I dunno, my guess is that he was too set in his ways to make the leap from "CEO of a growth startup" to "CEO of a mature company".

If you look at founder/CEOs who have made that leap, they all tend to be very young (Jobs, Gates, Zuck, etc) and had very strong teams behind them.

Someone like Kalanick - who has run multiple startups to various exits - has been running startups all his professional life. His management style likely works very well at a startup, where failure is assumed so risk tolerance is high. At a startup, you need a field general leading the troops into battle.

But at a large, maturing company, you need a different skill set. Risk tolerance becomes a negative attribute once the company grows so large you can't control the risk anymore. Rather than a field general, you need a therapist capable of massaging the egos of the executive team and the board of directors. The job becomes more strategic and political -- execution is assumed, and failure is no longer an option.

I don't think Kalanick is that guy, and I think the board finally convinced him of that. But if I was an investor, I'd still be happy to listen to his next startup pitch...

> I dunno, my guess is that he was too set in his ways to make the leap from "CEO of a growth startup" to "CEO of a mature company". If you look at founder/CEOs who have made that leap, they all tend to be very young (Jobs, Gates, Zuck, etc) and had very strong teams behind them.

And in Jobs' case, it took an absence from the company of more than 10 years…

Jobs got fired from apple.

Edit: Downvotes for simply stating a fact?

Apple is an electronics company.

And then got rehired because Apple needed him

That is why he was absent.

Precisely. And then he was brought back, and in retrospect, many of his skills the second time around (charisma, design instinct, product focus) were the same that he had brought to Apple originally, but in the meantime, he had learned to temper his worst personal flaws (largely by learning to trust and listen to a small group of people who could counteract them).

I saw Ed Catmull (Pixar) give a post-Jobs death talk on youtube about how Jobs had completely changed during his 10 year hiatus and was far more empathic.

Any chance there is a recording of this available online?

Very interested in this as well. Parent says it was on Youtube?

Edit: I imagine it's this interview at AllThingsD[1]. Ed jumps into this topic right off the bat.

1. https://youtu.be/U8kH5eZdIqA

In his book "Creativity, Inc" there is also a chapter "The Steve we knew" talking about this.

so empathetic he didnt want to give Pixar employees even a cent of equity before the IPO.

I'd say down votes because it wasn't clear whether Apple would have fallen if Jobs remained. He pushed the same vision when he came back as when he was fired.

Yeah but he was less of an asshole when he came back.

Was he?

He was an asshole of monumental proportions before and after. I am so far removed that I am a poor judge, what would be a good place to look into this.

Uber's valuation is still based on its growth. Therefore, it still needs to be a startup to justify this valuation and burn.

I'd argue that a "mature CEO" is not a fit for Uber which needs to keep growing or die.

Some business models are fundamentally broken, then the growth is eventually no longer effective in selling the story that one day the company will be profitable.

Uber's valuation is based on a formula that looks something like (raw brand value in an autonomous car world) - (burn rate)^(number of years until autonomous cars are widespread).

The valuation can be quite high if you assume that the value in the exponent is low.

But I personally think that the "autonomous vehicle revolution" is not going to pay off as well for Uber as they had hoped. It's becoming more clear that the market for autonomous vehicles isn't going to look like the market for human-driven ones -- and vehicle manufacturers are going to be looking to build their own self-driving auto services rather than sell self-driving vehicles directly to consumers.

Uber's biggest innovation was their app. Even complex apps like Uber are not hard to clone if you have any sort of budget. There's an assumption a lot of investors make about their brand value: it assumes that another, already strong brand does not enter the same market. Seeing as Tesla has made no secret of their intentions to compete directly with Uber in the ride-hailing space, I don't think that's a fair assumption. Would you rather call an Uber or a Tesla at this point?

And what does buying a Tesla in that scenario even look like? Do you buy a car and rent it out a la Airbnb when you're not using it? How much money do you get for that, and how much of a cut does Tesla get since it's their algorithms actually driving the car?

Don't get me wrong; the brand value is actually really high because hundreds of millions of wealthy customers worldwide know Uber. Even if the company fails spectacularly, someone will buy them for a few billion in a fire sale just for the brand.

I don't think Uber's valuation is based on autonomous cars. That would be a really stupid bet for investors.

Autonomous cars are a side bet. A few hundred millions in R&D that would also attract good talent and nice PR for Uber.

But I don't think investors were stupid enough to invest billions into Uber based on that bet. Specially considering the fact that anyone who gets that technology first can make it big and Google had a few years of head start.

Uber's valuation has to be based on an anticipation of autonomous vehicles. Otherwise, whether self-driving cars arrive in 5 years or 10, investors are putting money into a horse-and-buggy company.

Not necessarily. If your projection is that widespread autonomous vehicles don't arrive for 30 years, there is a lot of money in the meantime to be made being a horse-and-buggy company.

Tesla's taking a very long view. They are thinking about what the world will look like when autonomous cars are ubiquitous, and then working backwards from some of the pretty gnarly realizations that sink in when you do that sort of thinking.

You realize that nobody will care as much about most of the things they currently care about when buying a car. Performance? Mileage? Handling? Horsepower? Fucking irrelevant if I'm chilling in the back seat and my car is just getting me to where I need to go.

So what still matters? Price. Comfort. Amenities. The upsell becomes the main sell. At a certain point, Tesla isn't even selling "cars" so much as it's selling mobile offices to one segment, and mobile living rooms to another segment. I could also see Tesla finding a way to place the burden of price elsewhere and offer effectively "free" cars to consumers. For instance, leasing or selling fleets to employers. Or to cities. Or to Uber. Or to Amazon.

Uber, on the other hand, sees a world in which nobody owns a car, nobody drives a car, and everyone hails an automated car whenever and wherever. Like that scene in Minority Report.

Both of their strategies are banking on the idea that cars, as we currently understand and experience them, will eventually become pure commodities. The difference is that Tesla is seeking margin and Uber is seeking volume. The cliche that Tesla is Apple and Uber is Amazon is sort of true in that respect.

I think Tesla also understands that once autonomous cars are ubiquitous, you won't own one: you'll just rent one for whatever needs you have in that moment. I think the best analog for the market dynamics that this will create is the airline industry -- a fleet of vehicles will be a massive investment, and ongoing maintenance, government oversight, etc. will be similarly cumbersome. But the job of the airline (actually operating the plane) is being done by the company creating the algorithms. That's a market control point that can be leveraged.

That's why ultimately, I feel Uber will end up being the Expedia/Priceline of the self-driving car industry. If you don't control the means of value production, you become a middleman. There's a reason they were working on their own self-driving tech rather than licensing from someone else -- everyone who is actually building this tech likely told them "go shove it, we can recreate what you do far easier than you can recreate what we do".

I suspect Tesla will be the next major story of burn rate fueled firms confronting reality...

That's what many said about Facebook when they had their crazy valuation. The same was said of Google before they figured out ads.

Tesla has a brand value higher than any other car. It's not an app that can be easily replicated. The dynamics are not the same as Uber.

Tesla is a different story entirely. Uber is burning cash by subsidizing operations (aka buying customers); Tesla is spending it on capital assets and R&D. Money spent on operations generally won't benefit you beyond the current quarter; but capital assets (including intellectual property as the result of R&D) retain value over time and often pay for themselves in a relatively short period of time.

You'll notice a common thread throughout Elon Musk's "big bets" (Tesla, SpaceX, etc.) He is extremely conservative with operational spending, and all of these companies are very capital-intensive. Just look at the difference between a "Tesla Store" (small, maybe 3 or 4 employees, cars can be stored offsite wherever is cheap) and a normal auto dealership (huge, dozens of employees, majority of expensive real estate is used for parking cars). The Tesla store is very efficient compared to the auto dealer.

When you have high capex, it makes it easier to fund your company through debt rather than equity since those loans/bonds are backed by capital assets with a non-zero liquidation value.

I keep hearing this, but why wouldn't you own one? Part of the reason to own a car is the immediacy of use. I don't want to have to do the equivalent of waiting for a lyft/uber every time I want to run to the grocery store.

Sure in large walkable cities with constantly circulating fleets car ownership might go away. For those of us in the suburbs who HAVE to drive everywhere, not so much. Even waiting 5 extra minutes for every errand (optimistic, given that my most recent lyft took 10-15 minutes to arrive) adds up fast. Let alone going out into the rural areas where Uber/Lyft scarcely exist and the nearest human structure can be miles away.

I could, however easily see a model where people rent their self-driving car out to Uber/Lyft when they're not using it. Driver fees would be gone, and they could take a greater cut that might even put them towards profitability.

1) Cost

2) Configurability

Anyone who is price sensitive won't want to pay the hourly rate to have a car sit in their garage all day/night doing nothing. Nor will they want to pay the up front cost and/or interest to hold a controlling share in the vehicle.

And configurability means you can take a 2-seater when you are going to work, take a 4-seater to lunch with you coworkers, take a hatchback to the farmers market to pick up your groceries, and then an SUV to the mountains, preconfigured with a roof rack with your ski rentals already on it, sharpened and waxed, and then take a mobile office for the drive home so you can get some work done, and a mobile bedroom for your trip down to LA so you can catch up to sleep.

But yes, the wealthy will still own private cars because they can have it waiting, just like private planes. Also, cooties.

Plane travel isn't a day-to-day event, even for those wealthy enough to afford private jets. You still have to pack, travel to an airport, get on the plane, crew has to be made ready, flight plan has to be filed, etc. It's a high-impact event that occurs at most every few days, even for frequent flyers.

Driving is a day-to-day task. My time's already short, if I have to add an extra 5 minutes waiting for pickup every time I want to go anywhere (once again an optimistic estimate, it would likely be closer to 10), on a busy day that's a minimum extra hour a day of time I've lost just standing on the sidewalk. Margin matters, even an extra 15 minutes a day adds up to over 90 hours a year.

Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car.

But in this scenario I'm losing a minimum 90 hours per year on the margin. If those were work hours, then at my current take-home rate I can decrease that number down to around $1065/year going forward. Given that I'm likely going to make more money as the years go by, these continuous rental services are going to have to be awfully cheap to be worth it for my situation, and I don't think I'm too far from the average.

Now sure, if you're buying a new car every 4 years like some people do then it might be worth it. Or if the cost of insurance is prohibitively high in your given location. Or if your job sucks and you just can't afford a car. Or if you actually need a broad variety of vehicles on a regular basis. There are lots of factors that go into it, but for anyone who's middle class or better I don't think it'll supplant ownership entirely. Or maybe it will and I'll just be with the sour-grapes number-crunchers in the corner ranting about margin to anyone who'll listen. :)

> Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car.

Nope, but they will be commoditized. If you have a car that all you have to do is pass it an API key and a location, there's not much value a ride sharing service can add to that -- which means there will probably be a bunch of them. Which means that the price to the consumer should be something close to [ (marginal cost of ride) + (depreciation cost of ride) ] * 1.03. And the cost side of that will benefit from scale for the business, but not the consumer.

Basically, once it's commoditized, it will cost you more to do it yourself than to pay someone to do it for you. Just like with currently commoditized services like AWS, there can still be good reasons to do it yourself -- but those tend to be special cases rather than the norm.

> But in this scenario I'm losing a minimum 90 hours per year on the margin.

Err, I'll play along. If you were in an autonomous car (or even a current ride-share), you could just work while en route rather than drive. I'm willing to bet you spend more hours sitting in traffic today than you ever would waiting on a car to arrive.

Well hey if it somehow costs less than then I spend on car ownership in a year, then sure! All just depends on how much my time's worth/how much these services charge if/when they come around. But right now the sum total of rides per year, whatever the cost model, would basically have to be sub $1000 per year to make sense for me. Cheaper if I end up making more money as time goes on. If scale and commoditization can accomplish that then I'll happily embrace a new golden age of transportation.

As for the rest, keep in mind we're comparing renting an autonomous car vs owning an autonomous car, not renting an autonomous car vs driving. So the actual rides are equivalent. The time difference is me getting in my car and telling it where to go vs me hailing a car, waiting 5-10 minutes for it to arrive (where my capacity to do any meaningful work is basically nil) and then tell it where to go, a minimum of 3 times a day. Maybe up to 12 times a day on a busy day. That's not an insignificant time loss over the medium/long term.

Granted it's all hypothetical and the actual value of the time lost would be highly situational, but it would be one of those small daily time-sucking inefficiencies, like walking into the other room to get paper towels as opposed to just putting a roll in the kitchen. When you do them every day, those add up.

I don't think so. I'd much rather pay the cost of ownership than rental every time I wanted to move about.

By definition rental is going to be more expensive than ownership.

I don't doubt that companies will have fleets of cars for their employees, etc, but personal vehicles are not going to go away.

Why should rental be more expensive by definition? A fleet of autonomous vehicles can operate 24/7. Your own personal car gets a trip to work and a trip back home every day and maybe another round trip to an activity or chore.

That depends on how much do you need to use a car. If you dont need it that frequently, renting is cheaper.

who in the world doesn't need a car that frequently?

young people, old people, and homeless people.

Everyone else needs a car frequently.

Those who live in Europe. Or anywhere with decent infrastructure.

That's short sighted and incorrect. Rental is only going to cost more than ownership if multiple people aren't sharing the cost, but the whole point of autonomous cars defeats that idea, renting will be vastly cheaper than buying.

> but personal vehicles are not going to go away.

For the vast majority of the population, yes, they will go away.

If that was true everyone would live in hotels. Renting rides only makes sense in cities where the cost and inconvenience of parking are high.

Look at the quality of the interior of the average cab and you will see why a lot of people would prefer to own.

That's not good analogy (living in hotels), better would be to compare how many people own their flat/house and how many rent it. Which would imply that a lot of people will still own their car ...

Owning a car and the freedom to travel whenever wherever for whatever reason is a fundamental American value that won't go away.

Sure it will, when cars are available on demand anytime you want one for however long you want it at the press of a button. Convenience changes values, and ownership sucks when that kind of convenience exists.

Maybe something like Will Smith's car in I,Robot movie is what I imagined while reading this. Faster than a bullet train and automated.

> You realize that nobody will care as much about most of the things they currently care about when buying a car. Performance? Mileage? Handling? Horsepower? Fucking irrelevant if I'm chilling in the back seat and my car is just getting me to where I need to go.

Mileage is a critical component of cost of operation, and of range without stopping, which are pretty much (along with capacity and comfort) the things that matter most if you aren't driving and the car is just taking you from A to B.

That's even true if you don't own it (even the cost factor, since that—assuming an efficient market—still controls what you'll pay to use it.)

Uber isn't a mature company. They're not profitable and are burning cash like crazy.

More like "CEO of a growth startup" to "fixer who can pull an over-valued startup out of a nose dive." That's a much tougher leap.

So Uber is walking down the Twitter path you think?

Melissa Mayer is looking for a job. ;)

I think you mean Marissa Mayer, no?

Melissa, whoever she is, probably has a better track record turning around nose dives of high profile firms.

> who has run multiple startups to various exits

What has he done besides Red Swoosh? btw, Red Swoosh was sold to Akamai and then later disassembled when they realized there was no "there" there.

That's one probable story.

Another is that the board could have threatened to sue Kalanick for violating the loyalty and duty obligations that corporate officers have to shareholders - e.g. for suppressing systemic sexual harassment, withholding details about the Otto acquisition, etc.

This would never have happened.

How do you know that?

Have you ever seen a Board sue a CEO in a similar situation?

I also don't think the examples he cited are violations of those duties.

He may not, but I have seen a board threaten a CEO in a situation like that. It never came to a lawsuit, the CEO stepped down but this sort of thing definitely can happen depending on how bad the situation is.

Investors sue all the officers all the time. United Airlines, Ebay/Craigslist, Skype, non-profits, etc.

Suppressing systemic sexual harassment violates his duty to report management problems to the board. Same with any meetings with Otto's founder a week prior to them leaving Google and founding Otto.

Indeed. The CEO of Sears was recently sued by investors:

http://www.businessinsider.com/sears-ceo-will-pay-40-million...

Can you explain how these large companies operate, explained like I'm a golden retriever?

How does a company so big not make a profit/could possibly go bankrupt?

My current understanding is companies either focus on growth (at a loss) or choose to focus on profit (with the risk of competition overtaking them or decay over time).

But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"?

If there is no "profit mode" ... then why are people investing in the first place?

Companies in burgeoning industries at this scale are concerned with longevity, specifically outlasting their competitors. Not short term profits.

They are thinking more along the lines of "how can we make 10 billion dollars per year, for the next 150 years." Think General Electric.

That's why they require huge amounts of money from investors, so they can aggressively grow to a size where other companies can't touch them.

The huge amount of capital is sort of like a moat.

When you're larger, you have something called economy of scale. Which means you have enough resources to do stuff the smaller guys can't do.

When you're larger, you also have something called a data advantage. Which means you know so much more about your customers, you can predict things and make decisions the smaller guys can't.

>But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"?

Well that they might have to try and do now. But usually it is hard to move to 'profit mode' - you upset your customers when you start to charge double. The idea is that before you do that you have either killed of the competition or your competition 'moat' is so big that everyone wants to keep using you because of $reason and so you can charge what you like.

>If there is no "profit mode" ... then why are people investing in the first place?

Nobody is ever sure if any startup will get to 'profit mode' you simply look at their market / numbers etc and if you decide to invest then you hope the startup can figure it out. This is the investing gamble.

As best I understand it, Uber's play was for dominance.

Consider Facebook and Google. Together they're worth over a trillion dollars. Now ask yourself: what's the combined net worth of the second-biggest search engine and the second-biggest social network? Nothing close.

In a business where being second or third place is pretty good, you can switch to profit mode as you please. But Uber's valuation only makes sense to me if it lets them dominate a market like Google or Facebook does, setting prices and terms for the industry. I think that if they switch to profit mode, people will start to value them like a normal business, which would mean a giant drop in valuation.

I presume that's why board members supported an aggressive jerk for so long: Kalanick has been undeniably good at seizing territory, and if one sets aside little things like morals and externalities and long-term consequences, one could argue that aggressive jerkiness is exactly what Uber has needed.

Honestly, this market never struck me as one where dominance was even possible, so the investors' theories never made sense to me. But that's my best guess as to why they've been allowed to keep burning money like this.

Here boy! Sit. Siiit. Sit!

Stay. Wait... wait.... go fetch!

You guys are talking about Uber dying, but I cannot fathom how this is possible from just the user's perspective. Uber seems to be everywhere, people take Ubers or driver for Ubers every day. How could a company this big fail?

Stop growing maybe, but going bankrupt and shutting down?

It's easy to grow when you sell dollars for 70c each. But, when you suddenly need to sell them for 1.01+$ nobody wants to buy.

Uber's problem is taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level. Which means their either taxi prices are lower and people stop using Uber or they pay drivers more and drivers mostly stop working for Uber.

Uber is profitable in certain cities, e.g. New York City [1]. They could turn cash-flow positive if they just gave up useless market share.

[1] http://www.businessinsider.com/ubers-revenue-profit-and-loss...

Their valuation is based upon the assumption that they can maintain market share and raise profitability in those other markets. We all know this isn't going to happen though, so eventually someone is going to eat the valuation hit but the game of musical chairs to decide that question is still being played.

I don't think their valuation makes sense. I'm more replying to the gist of this thread, which seems to be saying they're dead because they aren't profitable. They could be if they needed to prioritise that.

> someone is going to eat the valuation hit

Liquidation preferences mean earlier investors (and employees holding Common Stock) take the hit of a down round.

I thought liquidation preference mostly served VCs which could be earlier "earlier" investors no?

Disclaimer: this is not investment advice. Do not make investment decisions based off my Internet comments.

Let's say Company X has 9,000 shares of common stock outstanding. It raises $1 million at a $10 million post-money valuation with a 1x non-participating liquidation preference. Its cap table is thus 1,000 shares of Series A preferred stock on top of 9,000 shares of common.

It then raises $10 million at a $50 million valuation with similar preference terms. Its cap table is now 2,500 shares of Series B preferred stock on top of 1,000 shares of Series A preferred stock on top of 9,000 shares of common.

Let's contemplate a $100 million exit. Everyone converts to common at $100 million / 12,500 shares, or $8,000 per share. Series A bought at $1,000 and thus sees an 8x return; Series B bought at $4,000 and thus sees 2x.

Let's contemplate a $50 million exit. Everyone converts at $50 million / 12,500 shares, or $4,000 per share. Series A gets 4x; B comes out flat.

Let's contemplate a $25 million exit. Series B does not convert. Instead, it demands its 1x liquidation preference and gets $10 million. This leaves $15 million on the table, or $1,500 per share. Series A converts and sees its 1.5x return; B comes out flat.

Let's contemplate a $15 million exit. Series B does not convert and gets its $10 million. This leaves $5 million on the table, or $500 per share. Series A does not convert and demands its $1 million. Series A and B come out flat; common gets $4 million / 9,000 shares, or about $444.

Let's contemplate a $10 million exit. Series B gets its $10 million and comes out flat; everyone else gets screwed.

Let's contemplate a Theranos exit. Everyone gets screwed. Turtleneck doesn't go to jail.

TL; DR Later stages are least volatile. They get screwed last, but also see upside last. Lower rungs' returns pay for this safety.

Thanks for your detailed explanation. I had a couple questions if you don't mind. You stated:

>"Let's say Company X has 9,000 shares of common stock outstanding. It raises $1 million at a $10 million post-money valuation with a 1x non-participating liquidation preference. Its cap table is thus 1,000 shares of Series A preferred stock on top of 9,000 shares of common."

Can you walk me through the math. How does one arrive at 1K of Series A preferred from 9K of common stock? How is that being derived? I'm not following.

Also what is meant by "post-money" valuation? I'm assuming there is a corresponding "pre-money"?

Lastly by "coming out flat" you mean made whole again i.e recouped their initial investment?

Thanks.

Responding to Bogomipz:

> Can you walk me through the math. How does one arrive at 1K of Series A preferred from 9K of common stock? How is that being derived? I'm not following.

At time t=0 (probably at founding and when hiring its first few employees) Company X issued 9,000 shares of common stock. At time t=1 it decides to issue 1,000 shares in a series A offering (most likely to VCs and outside investors). They are separate events.

1000 shares x $1000/share = $1m raised for the company in the series A.

> Also what is meant by "post-money" valuation? I'm assuming there is a corresponding "pre-money"?

https://en.wikipedia.org/wiki/Pre-money_valuation

In this case, pre-money valuation of Company X = $10m - $1m = $9m

> Lastly by "coming out flat" you mean made whole again i.e recouped their initial investment? Thanks.

Yes.

Thanks, the t=0 and t=1 and these being discrete events cleared this up for me. Cheers.

What is there to liquidate? Some espresso machines and office furniture? The software isn't worth much; it's been copied by several others already.

Isn't part of the reason end users use Uber is for its ubiquity? If it was only available in a handful of cities that I won't be visiting, I wouldn't bother with it.

I mean, running a livery service in NYC is a fine business and there's no reason you couldn't make money at it. But it is certainly not the scale of ambition Uber was pitching.

Is the profitability in NYC before or after we discovered they were cheating their drivers out of money?

And there aren't too many NYCs in the world.

If Uber was successful only in NYC, London, and Tokyo, someone would make the business work in every other city on earth.

"Uber is profitable in certain cities, e.g. New York City [1]. They could turn cash-flow positive if they just gave up useless market share."

I would assume that would also depend on how much of their fixed costs they can shed in conjunction with that. Uber may not die quickly but it could still die slowly if they lose the ability to move forward because they had to cut too much of their R&D and sales infrastructure to get to that positive number.

Plus such a massive layoff would be a big red flag to customers too. By Uber's nature, a particular ride isn't a long-term commitment, but I think people would start looking for a stronger-looking horse even so. One of those differences between homo economus, who every time they need a ride rationally examines all their options regardless of the future and realizes that as long as Uber can complete this ride the internal state of Uber doesn't matter, and homo sapiens, who will take into account the fact that Uber doesn't seem to be doing well even if doesn't rationally matter at this particular point.

Yes, but that would tell the investors to forget about any pay day justifying the valuation.

In NYC, the Yellow cabs have a huge, huge overhead because of Taxi Medallions that used to cost $1.2 million each which effectively added $125 or so for a 12 hour shift. The value of the medallions are now < $700K, but I don't know if the $125 overhead is still in force.

Uber is far more expensive in NYC than other cities such as Chicago.

Now that Uber has allowed tipping and since there is a rating system, everyone must now tip otherwise risk getting low ratings which effectively makes NYC rides even more expensive than they had been.

Most people don't own cars in Manhattan so that they either have to take mass transit or use Uber/Lyft/Taxi. There are many elderly on fixed incomes that have trouble ambulating (moving around) where lower cost taxi service is important.

In NYC at least, Uber doesn't need all of that corporate overhead and perhaps they should spin it off into some low-overhead operation.

Tipping with rating basically equates to a shakedown. You have to now guess at the subjective price that the driver "feels" is deserved instead of what was agreed upon.

It's not like it was impossible to tip before. Now you just don't need to carry cash.

On Lyft, the driver doesn't know that you tipped or how much. I fail to see why this would be any different.

I don't use Uber myself, but doesn't the driver not find out what tip you gave them until after they've rated you?

It has been assumed that the rating system will be blind, meaning the drivers will not be able to see tips before leaving their rating. There is still the social pressure to leave a tip, but it likely will not be quite as rude as not tipping a traditional cab driver.

Can you elaborate on what you mean when you say, "It has been assumed that the rating system will be blind"...

- There is already a rating system for drivers, and riders, so this isn't a "will be" thing, right?

- The rating system is not currently blind, as far as I know. Certainly riders can see drivers rating, and I believe drivers can see riders rating as well.

Blind was not the best term to use. I meant the rating will have to be made by the driver before he can see the tip given by the passenger, so they cannot leave a lower rating because of what they deem to be not enough of a tip.

Ahh ok, that makes sense. Hopefully they will do it that way.

I'm guessing tipping is only available in NYC for Uber. I didn't see that option here in the Washington DC area.

I received an email from Uber yesterday. They're slowly rolling out the tipping service, starting in a few cities at first to test it out. It will eventually be everywhere.

Of course they can be profitable. Uber doesn't have overhead. There are no Uber factories or millions of rotting vehicles in a warehouse. At the core it is a iOS/Android app (4 guys could maintain this), a call center (India), and a law firm (outsource it). They would have to cut their staff, remove the ping pong tables and get real but profitability is there. They are on a land grab.

> iOS/Android app (4 guys could maintain this)

Those 4 can handle everything backend related too?

it's also a massive recruiting and advertising campaign, since they have no product without hiring huge numbers of drivers

That's the point. Their technology costs are pennies per ride, revenues dollars per ride. They are only spewing cash trying to grow faster by buying more drivers in more countries. They could hire organically for much less.

They could hire organically for much less.

Uber only works if there are enough drivers so that I can always get a ride. If I get told that I have to wait 30 minutes for a ride more than a tiny handful of times I'm uninstalling the app. Growing organically in region would be very tough since it would take too long to get enough drivers in place that users could rely on the service and conversely drivers would be unwilling to sign up because not enough users where bothering to use the service.

Especially when there are competitors. Its what seemed to happen with Lyft in my area. A lot of people I know preferred using Lyft, because of the morally shady nature of Uber, but Lyft would take 15-20 minutes for a ride, and Uber would have one in 5. Pretty quickly everyone (myself included) just started checking Uber first.

Sure, which is why Uber has invested so much in driver acquisition in expanding it's territories. But once those territories are established they should be able to spend far less. If driver times start to become longer, it means existing drivers have a higher utilization and will make more money, drawing more drivers to drive for uber, and solving the problem in a virtuous circle.

You really don't know what you're talking about. There's more to Uber than just an app. There is a large set of backend services responsible for everything from authorization to billing, promotions, logging, road directions, ETA forecasts, driver portals and so much more. I've never worked there but ventures like this tend to be very complicated with lots of moving pieces.

More than a team of four can manage certainly.

Maybe but this still seems like something that could be run out of one well maintained data center. Certainly fewer than 6,700 could manage it?

Scale, payment processing, and customer service all take manpower.

OK customer service I get, but why the first two? I mean yeah you'd need an IT staff obviously but certainly not that many.

Just dealing with the different laws about taxi services in different countries/cities itself would require a staff that size or more. And there's a lot more than that behind the scenes, like security checks on drivers, managers for each city to decide incentive plans for drivers etc. It's a very massive endeavour, and the size of the company is justified.

It takes a constant number of engineers to push a single feature, no matter the number of users.

It does not, however, take a constant number of engineers to maintain the infrastructure that lets a single engineer push a feature to millions of users. (P/I)AAS can help, but you still need people to monitor performance, find regressions and bugs, and track them down.

Call center in India ? But but but ... you guys said Indians are taking jobs away from the US. Why cant business be profitable with call center in the US itself. Greedy corps wants profits, outsource it and then innocent Indian employees gets the flak for it. Just wow !

> Uber's problem is taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level.

There is always demand for Uber/Lyft just because there isn't a taxi cab nearby 24/7. How is that difficult to understand?

Well, Uber, Lyft, or some other livery service.

> There is always demand for Uber/Lyft just because there isn't a taxi cab nearby 24/7.

There's certainly a market for app/phone jailable cabs because there isn't one within street hail range at all times, but regular cabs have been phone hailable forever (it's the only way to get one outside of a few major urban cores) and are increasingly app hailable. Aside from regulatory supply restrictions (flouting which may not be sustainable) there's no real basis for a market for alt-taxis as anything but interchangeable competitors supplying the same substitutable commodity as regular taxis.

>regular cabs have been phone hailable forever

For me, this wasn't particularly true, especially in San Francisco. The dispatch was unreliable and slow.

Other areas, sure!

Now that the idea of phone-trackable dispatch has become commonplace, regular taxi companies are starting to do this too.

> but regular cabs have been phone hailable forever

With Uber you also get know the fare upfront, the time of arrival, no need to tell them your address, there is a driver reputation filter, passenger insurance and it's safer than normal cabs in many countries.

Not the same thing as a phone call.

I travel a lot for work. Uber works in a lot of places where mass transit sucks and taxi service is nonexistent.

Even if they cost more I have no idea how I'm going to get around when I travel. The other options are so disgusting I'm not going back to that.

I would use them even if prices went up 30%.

me too

To be profitable the prices would need to go up for more than 30% on average, because 30% only get's them to break even if you assume zero changes in ridership.

There are a few costs like background checks that may go down when they stop expanding, but fewer than you might think.

And I used uber or lyft to ride back and forth to work every single day because it's so cheap. ~9 bucks compared to a 3 dollar metro ride (and I typically save 20 minutes). If it's 15 dollars I'd ride less often and I'd probably try to hail a cab first.

Uber demand is definitely elastic.

Oh it's definitely elastic. I used to take Uber everywhere, until they (apparently) removed the restriction on driver's to use nice/current cars. Once drivers starting showing up in 10 year old beat down cars, my riding plummeted.

> taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level

I don't understand why that would decrease overhead?

I also don't understand why the other aspects of overhead (dispatcher, offices, taxi lots) don't add up to more than Uber (whose only cost is servers and support)

Uber doesn't make enough from fares to be profitable, they use investors' money to heavily subsidize them. Once the investor money runs out, Uber won't be able to pay drivers unless they jack up prices considerably. Once they are no longer price competitive, customers will move to other services.

Turns out the car service business isn't very sticky at all (even the drivers work for multiple companies...). Drivers start to leave and the downward spiral begins. They just couldn't get to self driving vehicles fast enough - which may be why they were trying to borrow technology from Google.

Ha, nice use of "borrow".

Come on, self driving cars was never a solution for Uber in the medium term. Cabs are in the midst of normal traffic, not even highway or anything. No way this will work good enough within the next 15 years

"Uber is a play on self-driving cars" is a misleading but often repeated story.

When Uber started and raised its first investment rounds, self-driving cars were too far away to be part of a business plan. I doubt the latest investors take that view either - spending billions per year until self-driving cars happen is a way too expensive way to build up a fickle user base who will switch the moment a competitor offers 10% lower rates.

And when self-driving cars do arrive, there is no reason to believe that Uber will have exclusive access to them. Google and other software companies will be licensing the technology to anyone who pays for it, car manufacturers will be selling cars to anyone who pays for it.

It may kill taxi driver as a career, but there is no defensible advantage to Uber compared to Lyft, Hailo, Taxify, and so on.

Yeah. The whole driverless car thing with Uber is such a load of crap. It wasn't even in the plan until they started hemoraging money and had to come up with some excuse to keep investors on board. And by that point they were late to the game.

Uber as a play on driverless cars is a smokescreen to distract people from the fact they have little advantage over other companies and can't for the life of them turn a profit.

> they have little advantage over other companies and can't for the life of them turn a profit.

At this point why doesn't Uber just lay off a HUGE portion of their staff and kill the R&D. It's hard to imagine if they downsized significantly and quit investing in self driving cars, that they couldn't tip the needle into profitability.

Isn't that a fairly common move for a startup? Burn money to get off the runway, then downsize to stabilize?

not in the medium term, but maybe some investment thought they were going to have it in the long term and now - given legal issues - nobody is going to think that.

Borrow or steal, it is all the same, until the courts rule otherwise...

> Once the investor money runs out

And when will that be exactly? This entire thread is overflowing with nothing but fantasies of Uber dying - basically raw emotional hatred - and little else.

Eight years on, they've never had a serious problem with raising capital and there's no evidence to suggest they'll struggle to do so now. The absolute last problem that Uber has right now, is money.

>"This entire thread is overflowing with nothing but fantasies of Uber dying - basically raw emotional hatred - and little else."

Except that there are no shortage of people who have maintained this view long before Uber's CEO was asked to resign and before Susan Fowler's blog post. Also there are also plenty of people who have commented here that believe Uber's prospect without Travis Kalanick as CEO are not good and also believe he should not have been removed.

>"Eight years on, they've never had a serious problem with raising capital and there's no evidence to suggest they'll struggle to do so now."

You might want to look up the term "irrational exuberance":

http://www.investopedia.com/terms/i/irrationalexuberance.asp

Uber has been a fantastic means to lose billions, so far. It's not clear that they have a way to profitability. Are you going to invest in them? Do you trust their numbers? If so you might want to explain why.

"no longer price competitive" to who?

"drivers start to leave" where are they leaving to?

If the unit economics don't stack up, then the bigger it is, the faster it'll go out of business without external investment. Pervasiveness doesn't mean it's profitable, it means it's popular. If I had a network of people giving away $1 for $0.90 it'd be super popular.

As it is, Uber doesn't need to do too much to hit break even. Some central costs cut, and a slight rise on price.

I agree, but investors don't want to break even. The fundamental tension here is high operating margins -- 60% not being uncommon operating margins for a software company -- are incompatible with a highly competitive industry. But it's those fat margins that justify massive R&D investment. Although software companies have enormous operating margins, they generally are not more profitable, because of huge fixed investment.

That creates a bit of a puzzle for industries with very thin operating margins that want to make significant investments in R&D. Generally they don't do it. That is why innovation at the Grocery store or in Long Haul trucking is so slow. From an engineering point of view, they are ripe for disruption, until you bring in an accountant to tell you that the disruption doesn't pencil out. Uber, like everything else, said to hell with it we're going ahead anyway. So how can they make things pencil out?

One option is to raise unit revenue in the future, which in an industry that's currently competitive means driving out the competition. IMO Uber was originally targeting this. But it turns out -- and really anyone could have told you -- that what Uber is doing isn't technically difficult. The heavy lifting is smartphones, GPS and Maps, whose availability made Uber/Lyft possible. Uber doesn't own any of the key technologies that make Uber possible, nor do they have a track record of being able to tackle really hard technology problems. They've had huge problems scaling and when Uber started using its own maps, it was a disaster. Bad maps is the #1 problem with Uber. Lots of new competitors have sprung up already that give basically an equivalent user experience, so Uber is not going to get real pricing power.

The next option would be "Lower unit costs in the future", But so far, that means spinning tales about self-driving cars, which is way beyond their technical ability as well as decades out even for those that have the chops to pull it off. IMO this only works because the latter round investors are naive about technology and the current investment climate is conducive to reaching for yield.

So while it's perfectly possible for Uber to continue existing as a concern, I don't think it's possible to satisfy their investors, and this means, unfortunately, that Uber may not make it. Many companies engage in a lot of self-destructive acts to meet unrealistic profit or growth goals set by investors, but in this case, Uber has only themselves to blame for setting these expectations. This is a shame, because I prefer Uber to Lyft and think they've created enormous value for both riders and drivers.

The reason it's so big is they're burning VC cash to subsidize rides.

So yea when billionaires are paying your taxi fair to try and drive the local taxi firms out of business naturally they're everywhere.

But when that cash runs out the necessary price hike could just as easily drive them out of business. It's not like the drivers have any great loyalty.

We really need pro-competition legislation to stop this sort of predatory capitalism.

> We really need pro-competition legislation to stop this sort of predatory capitalism.

That's a non-sequitur

>"We really need pro-competition legislation to stop this sort of predatory capitalism."

This conclusion refers to the idea of VCs(billionaires) subsidizing rides in order to remove the entrenched player(taxis.) How is that a non-sequitur?

It sounds like the parent poster is saying that "pro-competition legislation" would prevent a new company (funded by VCs) from competing with an entrenched industry (taxis).

I think the confusion stems from saying pro-competition legislation will prevent competition.

What's bad about VC billionaires giving cheap rides to other people?

It wasn't my comment. I was just commenting on it not being a non-sequitur.

billionairs can get burned too

Yes, but the ill effects are wildly out of proportion.

People keep saying Uber is burning cash, but their core business model is sound:

$5 per hour per driver goes to Uber

Assume 80,000 drivers (half of # U.S. Uber drivers) drive 8 hours a day, 7 days a week

52 weeks in a year

5x8x80000x7x52=$1,164,800,000

So about $1.1 billion just in the US. The only expenses are at headquarters (engineering, operations, design, legal, marketing, support) and the tiny field support offices they have in each city (local, entry-level employees).

As far as I know, Uber loses money on driver incentives and stuff like pool/share options, where they pay the driver the amount over the discount granted to the customer. I'm assuming a lot of such tricks are how they keep their drivers, and this is what they spend money on.

It's a relished fantasy that Uber is dying or is going to die, because so many people in tech circles hate Uber and Kalanick.

It's not actually dying and it's not going to die.

Routinely skeptics here will point out that Uber is selling a $1 service for $0.75 (or a similar invented sum). Said skeptics then intentionally, comically ignore that Lyft is and has been doing the exact same thing and has radically less capital & valuation to play that game with. The name of the game is: last company standing; that's going to be Uber because they can afford to be and Lyft can't. It's that simple.

Lyft seems to be a fundamentally different company in two ways that gives them an advantage over Uber. First of all they are much happier to partner with local players and don't feel a need to 'own' the entire world in the way Uber does. Secondly Lyft seems happy being a ride dispatching service and don't see it as a temporary stepping stone towards much grander transportation ambitions.

The downside of this approach is that Lyft doesn't have anywhere near the upside potential that Uber has. If Uber pulls off all of its ambitions it will be larger than Lyft could ever dream of being. The upside for Lyft's more humble goals is that it's chance of reaching them are much larger.

Unless Uber is willing to change its DNA and scale back its ambition, give up on its long term goals, and stay just a basic ride dispatching service then your analysis is incomplete. However perhaps this scaling back is what the CEO change is fundamentally about.

Regardless of what you're saying, Lyft lost $600M on $700M in revenue in 2016. Those numbers are awful. And worse than Uber. Lyft isn't in any better shape than Uber in terms of needing more funding almost every year to sustain the company.

True. However I personally don't think either company can do too much about revenues at this point and it's all about controlling costs. From an outsider point of view it seems that Lyft is in a better position, culturally if nothing else, to do this. At least when compared to a Kalanick run Uber. It will be very interesting to see what priorities the next CEO will have.

Internal culture or external? The vast majority of people have little idea of Uber's issues and if they do have some idea, they don't care. I'm not saying that's how everyone is. Just most people. Especially outside of circles like HN.

If internal, I gusss that's true. But we don't hear much about Lyft's internal workings. We don't know the morale of workers or how productive the company is.

About controlling costs - that's why I mentioned losses. Lyft is only in the US yet its losses are worse than Uber. It makes Lyft looks worse to me. Has Lyft said it is profitable anywhere or even break even?

But then Uber's insane valuation is not helping itself. I guess both companies are in bad positions, hard to say which is worse. And I agree it will be interesting to see how Uber does over the next year with new top executives.

By culture I meant how they think internally about growth vs profitability. Uber under Kalanick feels like they wanted to dominate every market or die trying and Kalanick didn't strike me as the sort of person who would be happy running fairly successful company making modest profits. Lyft however seems like they'd be content with being number 2 as long as they're profitable. This is of course pure conjecture on my part.

Has Lyft said it is profitable anywhere or even break even?

The CEO said in a recent Forbes interview that their losses are currently coming in "under budget" and that they have a definite path to profitability. Make of that what you will.

I've seen Lyft saying those sorts of things for some time now when I skimmed around while replying to you. It seems like Lyft has been saying this sort of thing since around 2015/2016. For now I don't believe them. But I'll take that back if they do show what the CEO said when financial info is revealed for this year.

And yeah agree with Kalanick and Uber by extension seem to be only content with winning everything. They only gave up on China after spending a ton of money and clearly not being able to win. Luckily they were able to get a decent stake in Didi from the merger and leaving China.

> The vast majority of people have little idea of Uber's issues and if they do have some idea, they don't care. I'm not saying that's how everyone is. Just most people. Especially outside of circles like HN.

The drivers certainly care.

Agreed, but they'll get more funding. the big thing is, keep the support of your constituents and you'll keep getting funding.

Travis offended and insulted the drivers, while Lyft is chugging along quietly. As long as people have brand loyalty to them (which they sure do), they'll win the ridesharing battle as it's looking like Uber is teetering

> Secondly Lyft seems happy being a ride dispatching service and don't see it as a temporary stepping stone towards much grander transportation ambitions.

Yeah... that's why they have so much investment from car companies... ;-)

Correct, if Lyft and Uber IPO tomorrow. Most of these people are going to put money on Uber. Lyft is a lifestyle business its. Uber is a public utility.

Public utility? That's funny.

> Lyft is a lifestyle business its.

Not sure what "its" is, but characterizing Lyft as a lifestyle business seems absurd. It's not as highly leveraged s Uber is, but that's one of the few companies I can think of that one might consider more aggressive.

> Said skeptics then intentionally, comically ignore that Lyft is and has been doing the exact same thing and has radically less capital & valuation to play that game with.

I'm blown away that you have to read more than half way down all the comments to get to this observation. It should be an automatic reply every time someone echoes the fantasy that Uber runs out of money and Lyft is magically left to take over. I don't understand the mental gymnastics and contortions one needs to make to arrive at this absurd idea.

There is nothing that differentiates Uber from lyft, or another ride hail company. Drivers could easily switch between the companies. Driverless tech will be the differentiation. Whoever gets there first, even in limited urban centers will win the taxi industry

> Whoever gets there first, even in limited urban centers will win the taxi industry

Why "win"? There's no moat. I suppose there will be patents, but those expire or can be worked around.

More likely is that whoever gets there first will make all the mistakes that others can learn from. Every major car company has a self-drive effort now. Apparently Tesla, GM, Ford, and BMW are pretty far along. Lyft has a few partnerships here. It's only a matter of time before most cars drive themselves to some degree.

yeah expiring patents, and effective partnerships, give enough cushion for one company to get far ahead enough to dominate the business.

self driving hardware+software is much more complex than just writing some software... a non player can't trivially get into the game just because someone else have higher advancement

Competitors won't have to develop this stuff on their own. They just need to buy a self driving car that has an API. Trying to vertical integrate the self driving software is a moonshot.

guarantee you that for the initial years, self driving car will take the form of proprietary units, used for specific purpose, in isolated locations. Akin to self driving rail transportation.

No mass produced self driving appliances that any dumb human can use improperly. The industry won't take that chance of a poor impression and destroy public's confidence all together.

In urban/high density locations, a ride hail company leveraging driverless vehicles can make a killing.

I think you meant "exclusive" partnerships, similar to how the iPhone was exclusive to the at&t network on launch and for a few years thereafter.

Anecdotally, I've personally taken Lyft almost exclusively lately. Among my peers, I've noticed similar trends. I've even heard shifting in language -- rather than say "call an Uber", I've heard "call a Lyft"., Plural of anecdote is obviously not data, but those are my data points.

We've made the shift in NYC to Lyft or JUNO.

Not even sure if I installed Uber last month when I got a new iPhone.

Same. Juno in NYC, RideAustin in Austin, and Lyft everywhere else if there's not another local(ish) tnc

This conversation was had in a thread a week or two ago. The consensus was that the Lyft or other alternative anecdotes are far and few between. Like saying call a Lyft has to be rare and probably just in certain small circle. Most people are on Uber.

The thread link is: https://news.ycombinator.com/item?id=14456973

My data points are that I've been taking Uber exclusively, because Lyft can't seem to figure out how to operate outside of the US. :-)

> going bankrupt and shutting down?

Well, if you're spending more than your revenue, that is the eventual outcome if money stream from investors dries up.

Uber doesn't really have many physical assets that could be liquidated. Their value is entirely based on profitability. Which is currently negative.

The drivers don't suddenly cease to exist when Uber shuts down.

You don't have a company yet if you're dependent on future investment.

This is an unpopular sentiment around here, but needs to be said more. You're still a child playing with other people's money until you're actually self sufficient.

In some cases this lack of maturity is particularly striking.

Eh, I think that's taking it a bit too far.

I think it's far to say you don't have a sustainable business model yet if you're dependent on future investment.

Yes yes, clearly there are points in time where there is a real entity that exists as a company. But in the context of "can I lose all this?" where you are a founder building something, you don't just not have control, you don't have anything when you are dependent on future investment.

I would argue that _every_ company needs to be worried about the question "can I lose all this?"

Even a company that is fully owned, with a sustainable and profitable business model, needs to ask the question "can I lose all this?" every day.

If the metric for "you don't have a real company" is you could potentially lose it, then nobody has a real company.

Given K ruthless record I'd say he bailed before the crack more than stepped down to see it flourish.

Would wait to see what'll happen to his equity before take a bet, but gonna guess will be sold high and eventually rebought after the crack when K will try to step back in at a better condition, with less stakes and more hard cash.

If the existing investors refused to play ball, they could kill the next round, which really would kill Uber.

If there's a next round, it will probably involve a big haircut for the early-stage investors.

I think you mean a big haircut for the later stage investors. Even if Uber has a down round, the earliest investors will probably still have positive returns (at least on paper).

Haircut does not imply that they will have negative returns. It could mean that instead of a 50x ROI, they end up with a 5x ROI.

> Even if Uber has a down round, the earliest investors will probably still have positive returns

No, they could be crammed out by later investors' liquidation preferences. Depends on how down the down is.

You are confusing a down round with a small exit event (here and in other places in this thread). Liquidation preferences don't come into effect until a sale of the company - so no one is "crammed out" by them in a down round.

Though these two types of events are obviously correlated (a down round makes a smaller exit more likely) they are not the same and should not be confused. A financing at a valuation that is a billion dollars less than the last round would be a down round, but a sale of the company at that same valuation would still far exceed the liquidation overhang.

How much interest does he actually control right now?

“He who can destroy a thing has the real control of it.”

– Dune, Frank Herbert

Ironically applies to both Kalanick & the investors!

"The machines themselves condition the users to employ each other the way they employ machines."

- God Emperor of Dune, Frank Herbert (a prescient book on social feedback loops, my favourite in the series)

> Our main way of relating ourselves to others is like things relate themselves to things on the market. We want to exchange our own personality, or as one says sometimes, our "personality package", for something.

-- Erich Fromm ( https://www.youtube.com/watch?v=Cu-7UDT0Xe4&t=1m34s )

> The danger of computers becoming like humans is not as great as the danger of humans becoming like computers.

-- Konrad Zuse

And when Picasso said that computers are useless because they only provide answers, was he just being witty, or pointing at an abyss, knowingly or not?

Any of us could inflict real damage or destruction on our surroundings especially while driving but that doesn't mean we have "control" over them.

Insofar none of us would want to suffer the consequences of such acts we cannot truly say we are capable of carrying them out.

It is what we mean when we claim someone is "incapable of <x>" such as murder. It does not mean they do not physically possess the means, but rather that they lack the psychological impetus to do so.

So a person who is psychologically capable of murdering has more control over me than one who isn't, and both are less in control than, say, a tsunami? Maybe, but neither can get at things I give freely to a friend? Control is the incapability of either friendship or self-defense, in my opinion, so yes, in a way always it requires numbing or killing something or someone. Leashes transform those on both ends.

The original quote does fall apart, as most quotes do, upon closer inspection.

Say you can kill a man, but irregardless of the threat to their life said man would refuse any and all of your orders, who can then be said to have 'control'?

In the end control means the ability to influence outcomes. There are many metrics, and for some choice of metric the capability of destruction is control.

The original Dune quote makes perfect sense in context. Paul was talking about destroying the spice supply by making Arrakis barren of sandworms. "Control" in this context is control of the spice, specifically being able to control there being none at all.

"So a person who is psychologically capable of murdering has more control over me than one who isn't,"

More relevantly, a person who is both capable and willing to restrict your freedoms, potentially even unto death, has more control over you than a person who doesn't.

This isn't abstract theory. This is a description of "government". Would you pay any attention to the people claiming to be "the government" if they didn't have credible mechanisms for backing up their demands?

It is preferable that government not be solely founded on this power relation. It shouldn't be considered "sufficient" for good government. But it is certainly "necessary".

Relevant wikipedia article on the subject:

https://en.wikipedia.org/wiki/Monopoly_on_violence

It's why "non-coercive government" is an oxymoron.

Note: downvotes are not a rebuttal. Not that I think that it's possible to dispute that statement by means other than "I'd like the world to work differently", but if someone were prepared to offer an argument, that would redound far more to their credit. And if you think I'm wrong, don't let me dangle in ignorance, otherwise I'm liable to keep saying such things.

He's "Amazon profitable", Uber has profits if you neglict investments for market dominance.

The investors would have had to pay up given size of previous investments. The VCs just timed it "well" with Traviss personal tragedy. /smh

They could smell the liquidity ...

Are you implying he's being strong armed into selling some of his shares?

That's insanity. Why would existing investors refuse to play ball? They're basically locked into it. Uber's massive valuation is built on its potential and to anything they do that hurts Uber's access to capital hurts them.

I think they made a huge mistake in pushing Kalanick out, but I'm an outsider. There is surely something dark at play here, that we don't know about.

Liquidation preferences, senior equity, and debt-like terms, perhaps? If Uber is valuable enough in liquidation, it'd be a great opportunity to zero out the common stockholders and go home with a pile of cash.

you are absolutely right depending on liquidation preferences terms cascade it could be a great deal to force an IPO or another type of exit for later investors.

Hidden Cap Table Secrets

https://aleph.vc/hidden-cap-table-secrets-bd6c4e9e780e

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