Uber Is Biggest Loser as SoftBank Counts IPO Returns | Hacker News Reader

Uber Is Biggest Loser as SoftBank Counts IPO Returns

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156 pointsJumpCrisscross118 comments

I never understood the SoftBank investment strategy. It looks like they always invest in something big and popular, prepared to pay a premium price - often much more than it makes sense, i.e. WeWork.

I think the people running it are focusing on management fees over returns. As long as they don’t lose money they can skim quite a bit.

But don't they need to show returns to their investors?

I imagine they just need to not lose too much. The whole thing is set up to buy everything for sale in case oil crashes.

There's a reported annual returns benchmark they need to hit.

per discussions with people in this space, they act like they have money burning a hole in their pocket. Compare to Buffet who will just accumulate cash if he doesn't feel he has a good place to put it.

The Vision Fund is $100 billion dollars, which is ludicrous by VC standards. Investing that sort of money sensibly, particularly if you limit yourself to IT startups (which historically don't need that much capital compared to, say, oil exploration or an iron ore mine), is not easy.

I think I read recently that buffet is sitting on an equivalent amount of cash, waiting for the right investment

At least as recently as May 2017 that was true: https://www.cnbc.com/2017/05/05/warren-buffett-reveals-whats...

Buffet is at 122B now: https://www.google.com/amp/s/markets.businessinsider.com/amp...

But he invests differently - often buying entire, functioning companies.

Warren holding cash is a statement on equity values IMHO. This is not financial advice.

Every big player is sitting on approximately that much cash: MSFT, APPL, GOOG. There is probably literally trillion dollars lying around in mostly liquid assets trying to find better long term opportunity. I think the productivity in last decade had been amazing but no one knows where to invest all these extra earnings they have had.

Buffett did lose billions on Kraft Heinz which we’re huge purchases costing tens of billions.

Forget how the saying goes, but it's something along the lines of:

If you are worth $100M then your goal is to grow that to $1B. If you are worth $1B then your goal is now to lose it.

At some point capital has diminishing returns.

$100B is way too big of a fund to be able to reasonably deploy. But Saudi Arabia needs to invest in something; they're $45B of that $100B.

But WeWork seems like an overly stupid investment to make, no? Uber was a calculated risk. But WeWork?? They better hope they can sell some stock at IPO and WeWork’s stock doesn’t totally tank during the holding period. WeWork could pretty easily result in billions in losses.

WeWork just seems like outright fraud to me with a self-dealing CEO and with a lot of liabilities in the form of long term leases that they will never make a profit from.

Well if there's no inflation.

Now, if we got some inflation, those leases would start to look pretty cheap. Then the debt turns into equity, viola!

See lowering interest rates to 0 is fun.

This comment was downvoted for snark, but the point is accurate. Inflation could double rental prices and then all of Wework leases will be worth a lot.

Aren't leases usually inflation adjusted?

In most places it's usually completely dependent on the contract, if you are a big leaser (such as WeWork) you can leverage a lot of terms just by having money and paying upfront.

I have never seen an inflation adjusted lease in any of the commercial leases I've done.

My guess is that SoftBank believes it has covered the worst case scenario for its WeWork investment through its preferred stock liquidation preference and WeWorks real estate assets (although I believe they mostly have leases). It still seems like a big gamble, but I suppose they think they either can get the company to IPO, or they will end up owning most of the company.

Why is WeWork a stupid investment?

Probably because their margins are roughly -100%.

WeWork the tech company and WeWork the REIT are two forms of the same company. The tech company is high risk. The real estate portion is backed by assets.

WeWork owns very little property. For the most part they rent all the space that they then sublease to other tenants.

https://www.businessinsider.com/wework-ark-fund-to-buy-comme...

The CEO apparently personally owns some properties and self deals them back to WeWork on lease terms. https://www.businessinsider.com/wework-ceo-adam-neumann-offi...

Even if their investments aren't profitable, it's still better for humanity as this money is being invested in innovative ideas.

While Saudis might have invested into building yet another Mosque or Tomb.

In India Taj Mahal reported costed Mugols lack chunk of GDP.

Saudi Arabia doesn’t spend money on tombs.

> Per Islamic tradition, his funeral was held the same day, a public ceremony at the Grand Mosque of Riyadh before burial in an unmarked grave at the Al Oud cemetery. [0]

[0] https://en.wikipedia.org/w/index.php?title=Abdullah_of_Saudi...

> Jan. 23, 2015, 2:49 AM PST / Updated Jan. 23, 2015, 10:22 AM PST

> RIYADH, Saudi Arabia — There were no golden carriages.

> Friday's funeral of Saudi Arabia's King Abdullah was a relatively simple affair in line with the austere form of Islam practiced by one of the world's wealthiest ruling families.

> The body of the former custodian of Islam's two holiest cities, Mecca and Medina, was bathed according to Islamic ritual. The late ruler, whose net worth has been estimated at around $20 billion, was then wrapped in two pieces of plain white cloth — the standard shroud for all Muslims.

> According to tradition, nothing out of the ordinary was to be done to King Abdullah's body. It was taken to the Imam Turki Bin Abdullah Grand Mosque in the capital Riyadh for the funeral prayers at around 3:15 p.m. (7:15 a.m. ET). In line with codes that dictate that a tribal chieftain be accessible to everyone in his community, the ceremony was open to the public. Women were able to attend, sitting in the women's section of the mosque.

> After the funeral, Abdullah's shrouded body was carried on a board and driven across an empty desert to Al Oud cemetery, which is home to raised graves. A black truck bearing Abdullah's body came to a stop, and Saudi royals gathered at his gravesite. His successor, the new King Salman, was dressed in a simple black gown.

> A group of men lowered the pallet containing Abdullah's body to the ground, and gently tipped it toward the unmarked grave. The body was set inside the burial plot, and mourners threw handfuls of yellow-colored soil onto it. That dirt was then covered with a bed of small stones as the mourners look down. They slowly turned away, led by King Salman.

> While public displays of grief are frowned on under the strict form of Wahhabi Islam practiced in the kingdom, tens of thousands are expected to pay their condolences during the three-day period of mourning. Most of the visiting will be held at the king's palace and all the senior royals will be there to receive Salman's subjects and visiting heads of state and dignitaries, including Vice President Joe Biden.

> Visitors will be greeted by a line of royals arranged according to age instead of rank. [1]

[1] https://www.nbcnews.com/storyline/saudi-arabia-succession/sa...

Uber was a bet on a pie in the sky technology (self driven cars) and a bad one at that because Uber wasn’t even the best places to take advantage of self driving cars. Google was probably in the best position (google maps trumps the Uber app any day) followed by the car companies.

Wework on the other hand has a bunch of fairly cheap leases and even better for them, they have become such big tenants for many landlords they can dictate pricing downwards if necessary.

Besides, their brand is much stronger than what Uber’s was when SoftBank invested.

So I’m not convinced wework is a worse investment than Uber which has absolutely no moats.

Edit: Also, the strongest bull case for WeWork is basically that real estate is one of the largest industries in the planet (behind maybe energy). And how many global real estate brands exist? Almost none.

Maybe in the venture capitol market, but Norway's got 1 trillion dollars invested mostly in the public market and they are doing fine [0].

[0]: https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...

The strategy of SoftBank and all long term investments is for the companies and products they invest in to blossom into big money producing engines; they don’t care about short term time horizons, so much as picking 10-20% of their investments that will 10-10000x their initial investments over the next 20-50 years.

But there's no way they're going to see those return on late stage investments? For Uber to 10x from their current market cap, they'd have to be worth ~$700 bn. That seems hard to achieve, let alone multiples in higher orders of magnitude.

You have the stages and return profiles completely mixed up here. What your day is true for early stage. Not the case for late stage

Was Apple late stage enough in 2000?

Your example is an extreme outlier.

Yea the unicorns are always outliers. If one of the company actually ends up being Apple, they'll win.

They are a late stage investor, so their bets are expected to be expensive. They are also not looking for quick returns, but rather counting on their portfolio companies to substantially change the industry that they operate in over the long term. i.e. Uber for driverless cars, semis, logistics, shipping. WeWork for pulling off spaces-as-a-service globally (for offices, apartments, schools, lifestyle services). Slack being able to shift enterprise communication and collaboration away from email and Microsoft products.

And while their top 2-3 investments get all the PR as expected, they are in a ton of different sectors and countries - https://visionfund.com/portfolio.

"A corporate group growing for the next 300 years"

I think that says it all

I think the biggest thing you are missing is that Softbank gets a guaranteed return on IPO. If their shares are < agreed_return Uber issues them shares to make up the difference.

But after the IPO they are on their own. So if the price drops or they hold a huge position it can be a problem.

Its called momentum investing.

That's the only way one can deploy hundreds of billions.

Banks have tons of offices which they want to lease out (property). Therefore investment could be as simple as lending properties.

From their blurb:

>The SoftBank Group has grown by anticipating paradigm shifts in technology and building businesses to take advantage of the next era.

They kind of look where the market is shifting eg ride sharing, co-working and try to invest in the leader eg. Uber or WeWork. I guess the theory is as the world shifts that way they will make profits. Time will tell with Uber and We. They did well with AliBaba and Yahoo in the past.

I worked for a company that took SoftBank money, though I joined after the investment.

As someone else mentioned they are later stage investors, and do look for potentially transformative things. In order to get in they offer large investments and ridiculous valuations, which appeal to entrepeneur’s egos. The dark side of accepting money at high valuations is The Next Round.

If you aren’t profitable by the next time you need money, you better have shown enough growth to not only match the SoftBank investment but to go beyond it to a reasonable investor. Otherwise you don’t have a growth story and investors turn their noses up (or offer shitty down-round terms).

So in a way SoftBank can (and has) torpedo its own investments by its entry strategy and human greed. In the case of my company they eventually sold, but only after a complete pivot and focus on a different market, and ultimately at a lower price.

Uber and lyft are both on the way down. The price at which they need to operate to be profitable is not a price that most americans are ready to pay. As simple as that.

For now they delay this reality by subsidizing rides in order to generate business. In some cities like San Francisco, most incentives were removed and among my friends we all stopped using Uber (unless we really have to). It simply became way too expensive.

This is great because it's so simple, and I always try and explain it but it takes way too long. You've managed to very clearly explain why it will never work to the extent they pretend it will.

It will work, but the market cap is much lower than everyone thinks, and competition will be fierce once the subsidies go away.

edit: typo /s/extend/extent

That's exactly my conclusion as well. Uber and Lyft will adjust their prices close to what taxis used to charge. Their market cap will dramatically go down until self driving reignite the price war.

Self driving as an escape path for Uber makes no sense to me. Right now Uber puts the cost of the fleet on the drivers. If they were to move to self driving they would need to build out both the fleet and the fleet support. That’s an enormous capital expenditure. I think it’s just a distraction for investors.

What you’re saying between the lines is that it won’t be Uber that succeeds in the self-driving space. But that means they’re doomed long-term.

Think of it like this: Most calculations of take-home pay for Uber drivers factoring in all vehicle costs come out to somewhere at or below minimum wage in local markets. That means that if Uber can get rid of human drivers, its potential margin increase including vehicle costs is that same minimum wage in the local market, which is actually respectable. It's probably slightly better than that since Uber as a large-scale fleet operator would get economies of scale for repairs, maintenance, cleaning, fuel/electricity/insurance, etc. that individual drivers don't get.

It's difficult to put real numbers on it, but I'd say a good guess is Uber could drop its ride prices 10% or more from current levels and still turn a profit with driverless cars. Raising enough capital to purchase the vehicles initially would be pretty easy.

I have considered that. My objection is that Uber is very unlikely to be the entity that solves AV and so they will be buying the fleet (assuming one can). At that point, most of the Uber incumbency is of little value. Yes, they could likely raise the capital to transition the company, but others would be doing so without the cannibalism problem.

AVs are not coming soon, in any case. The consensus finally seems to e waking up about this.

A few points on that.

1) Totally agree that Uber will not be the manufacturer of the first wave of true AVs. That's likely to be whichever manufacturer Waymo is partnered with in a few years.

2) The value you assign to AV-enabled Uber is going to be related to whatever value you assign their brand name, gathered data, platform maturity, mindshare, marketing ability, and cash pile. It's technically not all that difficult to spin up a competing dispatch service to Uber, but it is difficult enough and capital intensive enough that there are very few competitors in most markets. Notably absent are the potential AV manufacturers who would basically be starting from scratch unless they grabbed Lyft at a discount or something.

3) It's important to define what "soon" means and what scope you're talking about when making predictions about AVs. Waymo is legitimately looking like they will be ready to launch true driverless vehicles for taxi service in select markets and conditions in under 5 years.

Given the above, the question is can Uber last long enough burning cash every quarter and still remain a market force by the time it's in a position to leverage AVs? I don't think so, but I'm also not shorting the stock.

We saw this during the dot-com era and we've been seeing this play out again over the past decade or so. There are tons of things that middle-class/upper-middle-class people would like to have done for them.

Many of us would probably like daily housekeepers, drivers on call, people to do home maintenance, assistants to handle travel and random appointments (e.g. taking car in for service), etc. (Child care of course if needed.) Sure, we might be fine doing some of those things ourselves just for variety or because they're essentially as easy to do ourselves. However, help on call would be great a lot of the time.

But most of us can't actually afford to employ the equivalent of one or two people full-time even at rates significantly less than we're paid. Some things can work out because of economies of scale--e.g. eating out frequently in dense cities--but mostly people can't afford to have every "menial task" done for them on a day-to-day basis.

...and among households I know who have taken people out of the labour pool full time, 100% of them have chosen a stay-at-home parent before they've chosen a full time driver or housekeeper or nanny.

Making things even less optimistic for Uber, IMHO.

This is pretty much delusional. Most people are dependent on ride sharing in SF for even menial tasks.

Exactly. People saying this are unable to separate growth investment from core profitability. Uber or Lyft can pull out of money losing long tail markets, cut down staff to may be just 500 and would run just fine but would immediately become immensely profitable. However price to pay would be growth stagnation and robustness against future unknowns. For now they are doing the right thing to lose money to win the market share and diversity into other logistic businesses as well as prepare for future where autonomous vehicles would be the norm.

You are generalising the case of San Francisco as if the rest of the world was payed $150K a year and was able to throw wads of cash to buy groceries in Uber cars.

The bubble is quite amazing. Outside of a very small number of cities (and even there it's probably largely confined to the upper end of income), most locals do not routinely take taxis/Uber on a daily, weekly, or probably even monthly basis.

The typical American owns a car that is probably a number of years old and drives to the grocery store to buy food which they cook at home.

It's still amazing to me to see that people don't realize the Bay Area//New York//Seattle are micro bubbles that don't represent the world or even the united states.

Yes, people in those cities are mainly rich Yuppies that don't mind throwing away money. Everywhere else I always try to remember that most people (70% I think) wouldn't be able to cover a 400$ unexpected expense.

Most people in SF or NYC don't own an car. Unlike "yuppies" outside. For them ride-sharing is factored into monthly expenses.

Please be respectful while engaging.

I didn't justify Uber based on SF. I just told the Uber usage patterns I see in the city

Do you seriously believe that the average SF resident is being chauffeured around every day?

Yes. The price for a bus or MUNI is 2.50, if you're lucky that a station is close to you. Average Uber pool prices are around 4 for anything within a 3 mile radius.

we probably don't live in the same city. Everytime I open uber to get anywhere in the city, UberX is in the [12-30] range and UberPool in the [6-20] range. I very rarely see anything less than 6$ nowadays.

So yes, taking muni for 2.50$ or using an electrical scooter for 3-4$ makes sense to me. Or even walking. If it's 2 miles that is about 20-30 minutes which ends up being the same time as a Uber.

Most people don't have MUNI near them. Also try riding scooters on a really windy day

Muni monthly pass for an adult is $85. A round trip commute pays for itself within two weeks not including any other trips. 95% of the city is covered and anything that isn't is within reasonable walking distance. Unlike any business, its nearly guaranteed cities will always subsidize the real cost. The average resident is not as dependent on Uber as you assume.

Yep. Obviously this is anecdotal and limited to my own social circles, but I live in the Bay Area, and almost everyone (90%+) I know in San Francisco does not own a car. The ones that do own cars only use them if they need to get out of the city (within the city they bike/scooter/walk/Uber/Lyft/transit).

When I did the math, if I lived in the city it would be cheaper to use rideshare everywhere and rent cars when needed, than to own a car.

What do you use instead?

In London, cabs are so expensive, even just looking at one is more expensive than 30mins Uber trip... In addition, unless you're in a very touristy area, your wait time for a black cab will be inversely proportional to how urgently you need it; in contrast, I can just magically summon an Uber with the magic wand in my pocket.

In the case of London specifically, there's a pretty good public transit system. Most people also have legs they can exercise.

I'm usually in London a few times a year and I very rarely take a cab (whether black or minicabs); don't think I've ever taken an Uber there. Usually only if I need a very early run to the airport or if I have luggage to transport between two locations where transit isn't super-convenient.

Also in London, Kapten and Bolt are currently undercutting Uber. Ola launches in Sept. You often get almost free rides at the launch to promote take up.

What is stopping those undercutting companies from facing the same fate as Uber/Lyft in a few years?

I want to accuse you that "you don't live in London" but your comment admits as much.

London has a huge sprawl so walking doesn't really make sense. A few biking lanes but not really relevant for most commutes. Public transport is great if you can use it, which generally means if you want to go to/from Central London. Buses are notoriously unreliable and will "change destination" at a moments notice. Yeah, the tube map looks "dense" on the map but see above for sprawl. Good luck commuting in any direction other than radially (unless you happen to be near an Overground line, which is a big if). In addition, most tube lines are closed at night and many have repairs done over the weekend. On top of that, late hours attract drunk / rowdy people, so I often prefer to avoid them.

I'm fortunate to be able to use public transport for my normal daily commute, but I also often use other modes of transport (my favorite is bike, which public bikes make easy... again if you happen to find yourself near a station) over the weekend if I want to get anywhere "interesting".

Fair enough. And, of course, when I'm there I'm usually there for events/activities that are mostly clustered around central London and I plan lodging accordingly.

He's kind of right about public transport/walking. Apart from some outskirts of London, the city has a pretty well developed public transport network. In my case,if Uber will hike up the prices,I'd go back using the buses when shopping or switch back to online ordering.

How did people do before Uber? When I was there about 6-7 years ago (before Uber), none of my well-off friends would use cabs to go around London. We would take the tube + walking. Maybe a cab at night after going out but that would be it.

It is not that bad - there are plenty of minicab companies, and they are all much cheaper than black cabs and many are often cheaper than Uber. The problem is convenience - Uber has a better app, and typically shorter wait times and few competitors in London cover the entire town.

I see Uber as an expensive convenience - my 'local' minicab company is usually cheaper but odds are I will wait 10 minutes instead of 3-4 for a car, and if I'm in another part of town I have to resort to Uber or finding another minicab company anyway.

Right now yeah, Uber and Lyft are cheaper but they are also not profitable for the companies. If they want to be, and choose to do so by raising prices (Which I don't think they will), nobody is going to want to use them

If no one uses them, how would they be profitable? Profit only matters if their revenues are still in the billions. If both of them raised prices by 25% this year and another 25% this year and lowered whatever advertising or marketing they do, they could probably cut down on their losses significantly. And without losing too much revenue.

> In some cities like San Francisco, most incentives were removed and among my friends we all stopped using Uber (unless we really have to). It simply became way too expensive.

Does Uber publish data about SF? That could remove the speculation.

It seemed Uber's long term strategy was to rely on self-driving cars to reduce their margins. Now that we know that's a long way off I'm really not sure what they do.

Maybe split their focus in two: one on luxury (Uber Black already exists, after all) and on shared rides at the other end. I think Via has an interesting model here, using minivans to transport many more riders at once. Of course, the more passengers the longer your ride, but with enough demand and intelligent routing it could be worthwhile.

> minivans to transport many more riders at once

Minivan/microbus routes are pretty common in some places outside the US. It seems as if it would be possible with existing tech to have some sort of hybrid between bus routes and a door-to-door Pool model. Obviously you need some level of density and predictability but it seems like something that could be made to work, including in areas that don't really support conventional bus routes.

The proper term for what you describe is a Share taxi also know as a Jitney or a Dollar Van (because a ride costs $1). They used to be popular in underserved inner-cities (e.g. East New York) and were ran on an ad-hoc basis.

This model is far from new. It just has a nice mobile app frontend.

https://en.wikipedia.org/wiki/Share_taxi#Jitney

Not quite, the Jitneys in NYC have a specified route. The Via shares are dynamically routed according to who is in it and who needs to be picked up. That has both plus sides and down sides.

https://outline.com/xHuVup

SoftBank is not the loser but the various Middle East Wealth funds especially the Saudi Wealth Fund.

They’ve made ~$15B on ~$65B invested. $15B!!! Ignore the sensationalist headline.

Source?

Source is counting revenue as profit, i.e. nonsense

From the article. Investment dollars in and realized + unrealized gains.

How does this article start off with “masterful late-stage investment in Uber Technologies Inc” and then describe all the ways it isn’t masterful?

It's dumb money. A bunch of irrational investors that seem to be influenced by charismatic CEOs more than by actual business models.

Dunno - the investment here is by SoftBank, run by https://en.wikipedia.org/wiki/Masayoshi_Son who doesn't seem too dumb.

Could they not put a collar on their Uber shares? Or is the options market for Uber relatively small?

I can't imagine the option market for Uber has enough depth to cover the multiple billions they would need to cover.

Lockups typically do not allow any sort of options trading.

I’d be long on Uber. Taxis are still a bad experience. A recession is coming too.

Uber isn't very sticky.

It would be very easy for both riders and drivers to switch to a new app.

Agreed, now that they've created a constant supply of drivers and riders, it's much easier to solve the chicken and egg problem by piggybacking on that supply. For a while now, I've been thinking that someone should create a simple smartphone dispatch service that operates as a service to drivers, just takes a very small fixed cut, and allows them to put out ask prices, while riders put out bids. Then, this thing matchmakes and hands the rider off. The experience would likely be more variable/less controlled, but it also seems more likely to be economically sustainable, and give some freedom back to the drivers.

I asked that HN few months ago and was told its a bad idea. I was explained that people want to find a ride quickly and riders only care about stable inflow of riders. I still believe an app that both parties can agree on price (uber for ebay) would be a great third competitor in taxi-riding world.

I think a lot of that assumes that people only use yours, and that price isn’t a significant factor for riders. But I think in a lot of areas they’re still subsidizing riders, and once they jack it up to the true cost everywhere, people will start caring a lot more about the price. In SF I’ve noticed that they’ve bumped the price of express pools up by ~50% since IPO, and it’s gone from a no brainer to not such a no-brainer. If there was a significantly cheaper but less reliably fast option, I’d check it before falling back to the others, similar to how I currently check both Uber and Lyft for pricing.

This app exists, it's called indrive

Didn't we have something very similar with sidecar, and nobody knew about them? They couldn't compete with Uber and Lyft and went under. That's from vague memory...

https://en.m.wikipedia.org/wiki/Sidecar_(company)

Maybe, but I’d say the market is significantly different now.

Why would a recession be good for Uber though? A lot of Uber rides are discretionary spending; even if they could get away with paying drivers less their ridership would go down, no?

Lots of people will drive for Uber during a recession to make an extra buck perhaps the extra supply allows them to reduce subsidies and turn a profit on a per ride basis (in more cities).

So fewer riders, more driver supply. Sounds like it would make the recession hit a service like Uber harder.

I was talking to a taxi driver who noted that leading up to the end of financial year, taxi rides drop significantly, as discretionary spending dries up from the public sector. I wonder if you could gauge the same effect for Uber in public sector heavy cities to get a glimpse at what a financial crisis might look like to such a platform.

As I said, they might be able to pay drivers less during a recession but if total ridership is down they are still going to be in trouble during a recession. If they have problems reaching profitability now I don't understand how a recession will do anything but harm them.

And drivers are probably already somewhere around minimum wage a lot of the time. Recession or not, there's some price floor under which even the relatively desperate are not going to drive for willingly.

If travel is down, young urbanites aren't taking Ubers to dinner, etc., it's hard not to see the business decreasing. Uber may not be a luxury for everyone who uses it, but it is for many.

Seems it’s Chinese investments are doing great. I wonder if they can comeback when byte dance IPOs since it absurdly owns many popular apps and might be next Alibaba level giant

Slack's operating loss send easier to recover from. Uber will have to cut costs massively to come closer to profitability. The drop in stock is before the lock in period had expired. Expect it to drop further after October when all the employees dump their stock.

I'd be interested to know how much of those costs are due to driver incentives and other costs related to expansion into new geographic regions vs. costs for established regions.

It could be that cutting costs is as simple as slowing down or pausing the expansion.

But if they don't continue to expand, are they worth their current value? Does their value have the expansion already baked in?

Both of your points are likely true. Slack probably could become profitable on a near-term basis, but that is not what investors are paying for. I believe Slack is trading around 30x revenue, so the market is expecting continued growth. At the same time, I believe it also has an eight year burn rate at current operating losses and cash on hand so it has a lot of time before it needs to cut expenses. I don't really like how this article fixating on quarterly operating earnings as a proxy for how the Vision Fund is performing while ignoring the investment cost basis.

I think his point is that if they could be profitable by not expanding right now, then it's plausible they could expand to takeover the world and once they have the world and no more expansion is needed they'd be profitable.

I’m just waiting for “The Biggest Loser” Uber memes...

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