End of the Line for Uber | Hacker News Reader

End of the Line for Uber

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49 pointsColinWright40 comments

Given the numbers of this article, we should expect Uber to go bankrupt within the next two years or so. I'm fairly cynical and find it a reasonable prediction, but even if you don't agree with me, please play along. My question then is, when Uber goes bankrupt, what happens then? Would it spook the market? There are after all many other companies that have floated on investor capital. Would this sort of event be enough to cause a big market reckoning?

Of course this is all the sort of speculation that's impossible to predict, but it's just something I've been thinking for a while. Uber failing would be a pretty big failure.

Grab is already leader in Asia, Uber is lacking in Indonesia.

The difference? You have the choice between paying through the app or not (like a prepaid regular taxi). Uber designed its system to look as if drivers were employees, so they will die with the concept of HR fraud they created, but prepaid transport apps will remain.

In some countries, you can pay Uber with cash.

I’ve wondered this because I’ve “just not understood how they can lose money.”

I suppose during bankruptcy someone can buy their matchmaking tech and IP and relaunch without all that debt and overhead. Seems like a good target for someone to just run and pump cash out of as there should be a way to make money out of “market rate” * 15% fee for matchmaking.

I mean taxis were profitable and this is just a better taxi algorithm since the automate the multiple drivers sharing a cab process.

> I suppose during bankruptcy someone can buy their matchmaking tech and IP and relaunch without all that debt and overhead. Seems like a good target for someone to just run and pump cash out of as there should be a way to make money out of “market rate” * 15% fee for matchmaking.

I don't see that happening but do you have examples where that strategy has worked (in tech)?

Iridium networks [0] initially launched with lots of capital and kind of only made it after stuff was sold at bankruptcy prices. Although I don’t think they are phenomenally successful.

I think there were a few dot coms that got bought out of bankruptcy by larger firms, maybe pets.com and toys.com (although toysrus is gone now).

Polaroid [1] too although I think that’s more branding than technology.

[0] https://en.wikipedia.org/wiki/Iridium_Communications [1]

Matchmaking tech is likely cached A*. The rest is duplicated by mapbox and square.

The value is in their user base and driver portfolio. If they're worth anything, it's the contracts they have with drivers and cities to host an automated taxi dispatching service via mobile phones.

They will easily raise more money via debt or equity financing. There is no way they just collapse into bankruptcy.

This article seems to dismiss how deep and liquid capital markets are today and easy it is to raise capital with even a sniff of cash flow..

> They will easily raise more money via debt or equity financing. There is no way they just collapse into bankruptcy.

> This article seems to dismiss how deep and liquid capital markets are today and easy it is to raise capital with even a sniff of cash flow..

I find it hard to share your optimisim in how easy it will be for them to raise more money. Regardless, my thought experiment was _if_ they go bankrupt, what happens then...

> My question then is, when Uber goes bankrupt, what happens then? Would it spook the market?

Which is why Microsoft will buy Uber, to keep up the illusion that Uber is a valuable property.

Dupe:

7 days ago, 311 comments: https://news.ycombinator.com/item?id=28132830

Yesterday, 41 comments: https://news.ycombinator.com/item?id=28197691

Did you flag this thread? I find this idea so strange, that there can't be multiple conversations about the same topic on here. You do realize readership of online forums is global right? Some might have missed earlier threads or will miss this one. Your idea of 'dupe' fails because for whom it is a dupe depends on many factors, and all you're doing by flagging is stifling opportunities for organic conversations because they don't suit your browsing/reading habits. It's pretty frustrating. Please stop flagging and just scroll past next time, ok? It's ok if you don't wanna discuss this topic.

See the site guidelines:

Are reposts ok?

If a story has not had significant attention in the last year or so, a small number of reposts is ok. Otherwise we bury reposts as duplicates.

https://news.ycombinator.com/newsfaq.html

HN moderator dang has made clear that stories which are submitted but don't get traction can be resubmitted after a day or so. This particular item has seen ample discussion.

https://news.ycombinator.com/item?id=8315602

HN has an excellent search functionality, through Algolia. If you're interested in a specific topic, you can look to see if it's been discussed, whether recently or in the deep mists of time.

There's also the "front page" view which allows looking at the top stories of any given day, through history. I use this to catch up on top items from the recent past frequently: https://news.ycombinator.com/front

Traction and front-page status are a highly-variable lottery at best. This particular story's landed at least three times in the past week, though it's been repeats of the original item each time.

I do try hard to encourage what I see as worthwhile and substantive discussions. This includes frequently submitting nominations for "second chance queue" stories. A few of those have spawned rich discussions.

There's a kind of dance that happens in arguments about the post office where somebody points out that the USPS is actually profitable, absent its pension obligations, and then somebody else responds that, yeah, but they actually do have those pension obligations, so you can't erase them from the profitability calculation, but then somebody else argues that, sure, but the point is that it's not critical to the functioning of a mail delivery service that they have so many pension obligations and the point is that such a service could very well be profitable, so it's a little silly to say, "the USPS can't be profitable" when what you mean is that any organization similarly saddled with historical pension obligations couldn't be profitable. You're not really saying anything interesting about mail delivery, in other words.

I feel like there's something similar happening here. It seems fairly clear that Uber's currently structured around burning a bunch of money, but...burning that money isn't critical to the functioning of a rideshare business.

People are just kind of talking past one another on this, I think.

There's a lot of major interests out there that have essentially been at war with Uber from day 1. The cab driver's unions in different cities primarily. All of these interests want nothing more than to see Uber fail and will amplify any projections like these.

My simple question...if Yellow Cab can be profitable, what makes it so hard for Uber or Lyft to be profitable?

Yellow Cab doesn't have to pay hundreds of millions of dollars in executive compensation, nor does it need to hire thousands of developers.

Yellow Cab's annual expenses are probably less than 1 month of Uber's AWS bill.

Uber didn’t invent adjusted EBITDA fwiw… it’s a standard practice for businesses to present GAAP and non-GAAP (pro-forma) earnings that they believe better represent the business. Also, any investor can simply look at Uber’s regular SEC-filed statement of cash flows if they would like to get a clearer view of Uber’s cash flows without those accrual accounting nuances

Non-GAAP is an amusing idea. GAAP stands for Generally Accepted Accounting Practices right? Doesn’t this mean that non-GAAP is pretty shaky since it’s not accepted by the rest of the industry?

Non-GAAP is understood to be biased. It’s the company’s version of their financials. This is not the same version that is audited and required to be submitted on a quarterly basis.

I find it fascinating that the gig economy makes sense. Business 101 is to find economies of scale. In the taxi business, cars are purchased in blocks, maintenance is centralized (and easy since the cars are all the same), gas prices are negotiated, insurance is negotiated. The gig economy pushes all those costs to the driver, who has to buy market rate gas, pay a high market rate for individual insurance, pay Joe the Scammer for repairs...

Push all your business risk to the least sophisticated party. Simple.

There are a few variants of the gig economy concept.

Most seem to be inherently flawed and oppressive.

https://www.newyorker.com/culture/infinite-scroll/what-the-c... (a current HN submission: https://news.ycombinator.com/item?id=28209323)

Onlyfans average earnings: https://xsrus.com/the-economics-of-onlyfans (discussion 9 days ago: https://news.ycombinator.com/item?id=28105011)

While I quite like this post and agree with many of it's points, hasn't this been posted here 2+ times already? And made the front-page each time?

We've had this discussion about this exact text already. Let's agree or disagree with it and move on. Time will tell if Doctorow is right or not, and we can all feel smug when we're proven right then.

I dislike uber, but given that they have meant to gone bankrupt a number of times already, I'm not keen to bet against them anytime soon.

Yes, they should have disappeared in a normal world, but uber didn't because its backed by people with a fucktonne of cash, enough might to distort lots of things about it that should have really killed it years ago.

But then again, in a normal world, Tesla's stock price should be 5% of what it is now, given how much money they loose on making cars.

But we are where we are. I expect uber will thrash about for a number of years yet. However I suspect that if/when uber goes pop, it'll bring lots of tech stocks down with it.

This is where I stand. Just because their current trajectory puts them in the ground, doesn’t necessarily mean that in 6 months they actually will fail.

Considering every startup ever has had a runway (i.e. how many months until we fail), the fact that even some have survived should remove complete confidence that Uber _will_ fail.

Having done work for a few cab company owners, Uber never made sense. Many of these guys, the owners, probably make $75k in a great year - and Uber’s genius path to billions was to undercut them? Just image search “cab company owner” and see if you can find the billions.

If a medallion owner can earn $75K per medallion per year, it seems there's a lot of possible value in trying to take $5-10K/year times the number of full-time medallion equivalents while avoiding the cost of buying the medallion and car [and maintaining the car] in the first place.

They are talking about the owner of the whole cab company making 75k.

No, I don’t think so. That’s earnings for a single medallion.

Cab companies might own hundreds if not thousands of medallions.

For example, a single private equity firm owns about 4,000 New York medallions [0].

Most medallions are owned in pools by private firms.

[0] https://www.ny1.com/nyc/all-boroughs/news/2021/04/01/private...

Medallions sound like a truly bizarre and unfair system.

And if Uber operated exclusively in New York, we could accept they had a profitable-sounding business model: bypassing that system.

But given that Uber has expanded into many other cities and countries, 99% of which don't have medallions, it's pretty clear that merely bypassing the medallion system isn't their business model.

I really just think the play on all these sorts of companies was just to get max amount of money in this era of intense amounts of dumb investor money before it dries up. The math on WeWork etc finding profitability never made sense. The investor money IS the end goal.

I didn’t know things were already this bad for Uber. Looking like a big short on the stock would pay off nicely soon. I’ll leave that to the big guys.

> The investor money IS the end goal.

“But you said you would never betray our customers! —Yes, because the customer is the shareholder.” – You know it’s bad when the series Silicon Valley mocks one’s business model for a joke.

> The math on WeWork etc. finding profitability never made sense.

“Don’t worry, we lose on every unit but we make it up on the quantity.”

Yes, we were in a bubble. More seriously though, Kondratief cycles are very long cycles, 50+ years, and the phase II is land grab. Economics didn’t make sense because investors are betting that they can extort customers later on.

Example: If WeWork succeeded to make building management code as difficult as construction code, they could have evicted all companies who try to maintain their own workspace (“Too bad, he didn’t know every 4th extinguisher has to be blue to be seen in case of red light event”) and WeWork would have rented companies their own workspaces. For that, you need to both dominate and modify the legal framework to prevent small actors from giving birth.

Hadn't heard of Kondratief cycles, it's an interesting idea, thanks for sharing.

> Just image search “cab company owner” and see if you can find the billions.

I keep getting all these photos of Michael Cohen

I’m not sure which cab company owners you are thinking of, but the one I know is worth in the $XXm range from a major US city. Uber has hurt his business a lot, and he’s totally unwilling to acknowledge that maybe taxicab companies offering terrible experiences has something to do with it.

Discussion from last week: https://news.ycombinator.com/item?id=28132830

This is not a thought Guo analysis but a one sided bashing of some of uber’s practices and negative effects.

Uber is here to stay, and the voting on prop 22 has shown how much the population wants it to. Uber is also more than ride sharing and food delivery, with a successful logistics/trucking matching service.