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Comment by austin-cheney | Hacker News Reader

Curiously, how is Uber still in business? After losing tens of billions every single year they finally had their first year of profit at a whopping 1.83 million.

https://qz.com/uber-first-annual-profit-ipo-public-185123420...

How can they possibly recover the near 100 billion they sunk on growth?

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My understanding is that PnL doesn't tell the whole story for a capital-intensive business like Uber. Instead, you want to break it down by city -- for a mature market like SF, I'd expect a healthy profit margin; but for a new city that Uber entered recently, I'd expect it to be a loss for a few years as upfront investments in marketing, ground team, recruiting, etc. take time to pay off.

What would be a bad sign is if Uber continues to lose money, even in its most mature markets.

This is correct. For the most part, you are taking the money from your profit centers to invest in new initiatives. Could be geo's, could also be verticals, etc.

This is not at all unusual for a company where the top line is growing. As a point of comparison, Amazon was founded in 1994 and not profitable until 2003.

Difference with Amazon is the barrier to entry to creating a worldwide distribution business is far, far greater than creating a ride hailing app. Amazon was losing money to invest in valuable real estate and buildings and other big ticket capital items that retain worth, whereas Uber is basically giving away subsidized rides hoping that people will pay more in the future.

Their barrier is definitely not their app.

However, I would not want to own a lot of Uber shares with the way FSD is progressing since v12.

I spoke with an Uber driver about this recently, and one of Uber's barriers to entry is their phenomenal data on roads. As an example, they know for every apartment complex, where you'd drive around inside to drop off food as oftentimes you can't just go to the front. Or which parts of a road have no stopping zones along with the schedules. Bus stops too. And the app will guide you to get a pickup where the Uber driver is actually allowed to stop.

Drivers are interested in those features because it makes them more efficient. And having a critical mass of drivers is what makes it possible to get a ride in a few minutes. There are other upstarts, but they don't have many drivers, and your potential user market doesn't scale linearly with drivers because nobody wants to wait 30 minutes to get a ride (even with crazy discounts).

This was one of my experiences with Uber versus some other ride hailing apps. The Uber app seemed to understand the airport and would help guide me towards a pickup zone and help me relay to the driver what pickup zone I was going to be at, while at least last time I used them other ride hailing apps tended to just try and show wherever I was at the time.

I am an Uber driver. I'm sure they have the things you describe in some places. Where I am, the app regularly tells me to drive off the side of a bridge because it believes there is an at-grade intersection in a highway. Despite my repeated reports of the issue, it persists. All the Uber maps in my area are at least 1-2 years out of date and are nearly useless for navigation. I pretty much ignore them a lot of the time.

Amazon and Uber are definitely different, but in 2003 Amazon's market cap was about $21B, or ~$36B in today's dollars. Uber is actually bigger than that in value today (~$144.11B).

Amazon was far from a dominant player in 2003, and AWS wasn't launched publicly until 2006.

From a product standpoint, as others have stated, Uber is a real-time services marketplace vs Amazon which is more about physical goods (again, excluding AWS, which is technically a service). Most of their value is putting all the work into the ground to keep the marketplace balanced, which is a tricky marketing and econometrics problem. One need not look farther than Lyft to see how hard it is to keep the "5 minutes away or less" guarantee.

Also to those who think the app is a non-trivial technical achievement, I would recommend reading some of the blog posts that go into some of the crazy technical challenges they hit [1]. Specifically in some cases, in order to make the app work in all geo's, they ran up against practical limits to binary size at Apple. Not to mention that geo / waypoint data is a genuine "big-data" problem and not easily reproduced by just any company.

[1] https://blog.pragmaticengineer.com/uber-app-rewrite-yolo/

What makes Uber capital intensive?

I would have thought something like a steel mill would be capital intensive, Uber less so.

Arguably because it’s a two sided marketplace (matching drivers to riders) the network effect is very strong, so to have any success you have to dump a ton of money into marketing to gain enough users to make the app viable.

My understanding is it's this, then having to repeat it over and over for each city (network effects are within a city, mostly).

Because they’re burning money.

"marketing, ground team, recruiting" aren't capital though?

> ...they finally had their first year of profit at a whopping 1.83 million.

It's almost as if your reference was generated by some half-baked AI bot that doesn't know how to contextually interpret comma/period numerical delimiters in financial statements of US companies.

From authoritative source[1], Uber's 2023 bottom line reads $1.887 billion.

[1] https://www.sec.gov/Archives/edgar/data/1543151/000154315124...

All that debt was converted to common stock. It doesn’t need to be paid back.

Now that they almost completely eliminated the competition (by "disrupting" the market with magic money) and have locked in customers, they can begin the 2nd phase, which is jacking up the prices. Classic techno-feudalism.

that sets them up for "disruption". as Uber and Lyft trained users to be happy to download an app to get better prices an N+1. "ridesharing" company can enter the market anytime (for example Bolt or Cabify)

Why do they need to recover anything? The whole market runs on foogazi. Marc Anderson's favorite founder is Adam Neumann.

To be fair Adam Neumann is impressive. I recommend watching interviews with him to get a better sense of him. WeWork may not be a great business but I also doubt whether most people are capable of getting it to where it is.

Many people in large cities spend $300+ per month on Uber instead of owning a car etc

They have to make money on those rides for that to be a plus.

which, between get payments, insurance, and registration, that isn't that bad a trade off.

The don't need to recover it. It was investment, not borrowing.

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