It clearly makes a difference as to who is CEO -- on several occasions a succession of bad news stories has effectively removed a tech CEO (Mozilla, GitHub, Uber, ...)
Questions I'd be interested in your thoughts on:
- does it actually change corporate behaviour?
- is it a good thing that press (which it seems is sometimes influenceable) can effectively hire and fire by continued pressure?
(And please note that's not whether this case was wrong, but whether it opens the possibility of intentionally targeted public campaigns to remove someone from a company sponsored by unstated private reasons. And those are genuine, not rhetorical, questions.)
That remains to be seen, obviously. But a constant in the reports about Uber was that unscrupulous behaviour (e.g. obtaining the medical records of a rape victim) was enabled by the CEO. One might presume that a change in leadership will mean better behaviour. It will also probably mean that Uber can start hiring for all the C-level positions that are currently vacant, bringing in fresh blood and a different way of doing things.
> is it a good thing that press can effectively hire and fire by continued pressure
That is an argument that is as old as the oldest printed pamphlet. I'm not going to argue it here, but I'm glad that the press reported on wrongdoing by high-ups at Uber, and I'm glad that users and investors responded to that information.
> - is it a good thing that press (which it seems is sometimes influenceable) can effectively hire and fire by continued pressure?
If it holds people in power accountable for their actions, then yes, it's a good thing. I agree using the press may be a double edged sword, but if businesses and governments fail to keep their executives and personnel from harassing their employees, then what other recourse is there?
There was no conspiracy to undermine Kalanick. Nobody is actually questioning the accusations levelled against him. The press simply followed the story, and people were interested in hearing about it. In doing so, they affected positive change at Uber. Everything worked as designed.
And yes: even as a private company, you're not immune from scrutiny of your action by the public. Your company is part of society, depends on the institutions, and can't ride roughshod over established norms of behaviour without also accepting the consequences.
According to the article 5 different VC firms representing 40% of the voting shares asked him to resign today. Kalanick still controls the majority of voting shares and a board seat.
Most of Kalanick's trouble started with Susan Fowler speaking out. Please believe women when they report harassment in the workplace. Many of their reports may not be as clear cut as Mrs. Fowler's.
Accusers are unlikely to abuse this power in the workplace because it harms them, too. It's embarassing, stigmatizing, and often leads to conflicts with the friends of the aggressor.
I think more appropriate would be to limit the scope of belief to the complainant. Treat them as a person; acknowledge they have experienced something traumatic.
Do not believe every word anyone says as the absolute truth of an event. Evidence, corroboration, attempts to be objective -- these are all the rights of the accused.
Believe the complainant but do not assume they are correct. Our memories are the movies based on real events.
Take measures based as though the complaints are made in good faith.
If you assume them true then you would act as if the investigation has already taken place, and determined that they are true. If you're going to act like that why would you need an investigation?
If complaints or concerns are raised in good faith then you have no need to mistrust the representation and instead can look to the facts and context of the situation.
Believing someone is not important, understanding the sequence of events that led to them speaking up is.
That's more like "take them serious" on the "believe" (i.e. "It's true, do something!") - "take them serious" (i.e. that could very well have happened, let's check this out) - dismiss (i.e. yeah, yeah, let them talk, could never have happened) spectrum.
All three points lead to different actions and the one in the middle seems to be the most appropriate.
>Take measures based as though the complaints are made in good faith.
Which is to say, do more than just investigate. Take action as though the complaints are true, although not necessarily all the action you would take if you knew the complaint to be exactly factual.
You should always investigate, even if (to borrow your formatting)
you believe that
they believe that
their statements are false
and are making a bad faith accusation. It would still be correct to investigate if that was your belief. If you believed that the accusations were entirely factual, then perhaps the immediate step would be to fire someone. But if instead you simply believe that the person is accusing someone of something in good faith, something has already gone wrong and there is a problem. Even if no one did anything wrong.
To put it in terms that might be more familiar, every complaint is an incident and should involve a (blameless) postmortem that asks how the system failed such that someone felt the need to complain. And action should be taken in response. Sometimes, the system failed in such a way that it allowed a malicious actor to do a bad thing, and that malicious actor should be reprimanded, independent of the postmortem.
Believe the accuser when writing the postmortem, and begin incident response as soon as possible. Investigate fully before reprimanding a potential malicious actor.
It was badly worded, restated might be "as though the complaints are made in earnest though cannot be relied on as 100% factual". Which is to say, they should be taken seriously, and immediate action should be taken when possible, but insofar as all memories are fungible and witnesses unreliable, things should be verified when possible before certain measures are taken.
You don't have to assume truth, just believe they mean their account, you assume good faith. Believe them and allow that belief to start the process of uncovering what the truth is.
There's a reason Listen & Believe is a thing and it's not because anyone is saying "you should have unquestioned faith in what someone says".
I'm not sure what you mean here by belief, but it seems like a redefinition that causes the word to lose value.
"Believe" has always implied to me "understands to be true". How can I believe anything based only on the words of a single person? (Except trivial things like believing that they said something to you)
I have primarily heard the phrase "listen and believe" used by people who think it is impossible for certain kinds of people to understand the experiences of other kinds of people.
Following that argument, the claim is that if you assert an experience I am not capable of understanding then I must accept it, for I have no grounds to refute it.
This has always seemed like unquestioned faith to me, for I think any argument should be able to stand on it's own merit. Maybe I am missing some nuance to the argument, or perhaps there is more going on, but in any case 'believe' seems to be the wrong word.
I'm using the usage that social and case workers use when they talk about believing victims.
So... frankly, I don't really care what HN thinks of the usage.
Note, again, that nothing you said is counter to the "good faith" usage. You're assuming they are speaking the truth as they see it. That's all.
That's how any investigation that involves eye witness testimony works.
It's also the recommended practice for improving reporting and investigation so, again, don't really care what HN thinks about the term: the experts in the field recommended it.
Innocent until proven guilty is a great standard for criminal trials but probably not for the workplace, where people who report harassment are usually taking an incredible career risk by doing so.
People can also be very manipulative. Following down this path (i.e. "believing that the accuser is right even before the investigation starts") will only lead to less women being hired for relevant positions.
Here's a relevant scenario: I'm a man, I hold a managerial position and I have to choose between hiring another man or a woman as a one of my direct-reports. Let's say both contenders have the same qualifications, they're both equally fit for the job, but then, I, as a manager, start thinking that if I hire the woman she will then possibly think of filing a sexual harassment complaint down the line in order to take my job. Remember the "believe" part, which means that the sexual complaint doesn't even need to be backed by anything real, because most of the times after the complaint has been made public the damage is already done for me, as a male manager, no matter what the investigation finds (if it manages to find anything). So I choose the man over the woman as my direct-report.
I think it would be more fair to say he would discriminate based on perceived risk to himself. In this case, that risk is based on the sex of the person involved, but his argument can also include, for example, hiring someone with lesser qualifications, who is less likely to be promoted past him, over a more experienced candidate.
The more general point would be, be aware of the second order effects of changes you promote. For example, revocation of innocent-until-proven-guilty would almost certainly reduce the chances of people who have blown the whistle of being hired again, as they would present a much higher risk to prospective companies, regardless of whether their claims were true. The fact that they would blow the whistle at all would serve as a huge red flag.
Of course, I don't actually know the incidence of sexual harassment at workplaces, and have no idea whether false reports are even an issue. I strongly doubt they are, but I can somewhat understand male managers fear of them, given that they can ruin careers and marriages. As much as sexual harassment is a problem, I don't think assumption of guilt is an appropriate or long-term effective solution.
When you introduce irrational events into a mostly rational world (i.e. when you introduce "believe before investigation" into a world run by financial compensation) then you're bound to have irrational responses, such as discrimination, yes.
Assuming other people aren't psychopaths is irrational optimism, while desperate defensive strategies like not hiring high-risk people are perfectly rational.
In a world where no evidence is required before firing, then that would be the sane thing to do. Always hire the sex you are not attracted to and make your sexual preference very clear.
Im sorry, but if you extrapolate that kind of paranoia and self-servedness everything has difficult repercusions. Maybe companies shouldnt have an HR department at all because people might decide the risk of someone complaining about them is so big that they stop hiring anyone.
I've never understood this position. We take a risk too by following innocent until proven guilty in criminal trials, but hundreds of years of the opposite (e.g. "A witch!" -> kill the
'offender', "A child molester!" -> kill the 'offender') have shown us that the risks of a fair trial are better than the risks of ruining peoples life over accusations. Why should this be any different in the work place?
There's a middle ground between innocent until proven guilty and condemned by accusation and we've been using it in a courts of law for many, many years. Sexual harassment is primarily a civil issue, not a criminal one. And civil issues are resolved based on the preponderance of the evidence, not innocent until proven guilty.
Anyone accused of sexual harassment should have a chance to give their side of the story and an investigation should be performed, but the company should act based on what HR believes happened, not just what HR can prove happened. Neither the accuser nor the accused has the presumption of being right or the burden of proof.
Even when the burden of proof is a preponderance of the evidence, the accuser still has the burden the proof. The general rule seems to be more than 50% probability or "more probable than not." This is not a minor issue...if all you have as evidence are the testimonies of the accuser and and accused and no way to impeach either one of them, deference should still be given to the accused.
Also note that it is in general impossible to prove that something did not happen, as opposed to proving it did, as things that did not happen have no evidence of their occurrence by definition...
> "Civil issues are resolved based on the preponderance of the evidence, not innocent until proven guilty." ... "Neither the accuser nor the accused has the presumption of being right or the burden of proof."
This is incorrect. "Innocent until proven guilty" and "preponderance of evidence" are not two levels on one scale. They are distinct legal principles which can be applied at the same time or separately. Both, however, relate to the burden of proof and differ between criminal and civil trials, which is probably the source of the confusion.
Crudely: one standard is about what happens without sufficient evidence, the other is about how much evidence is sufficient.
---
The burden of proof is a general concept of which party in a trial must prove their claims, and to what standard. "Presumption of innocence" is one possible answer to "which party", while "preponderance of evidence" is a possible answer to "what standard".
The party bearing the burden of proof for an issue is the party which must provide evidence. Simply: if everyone at the trial rests without offering any evidence, whoever bears the burden of proof loses. In criminal trials, this is the presumption of innocence you mention. In civil trials, the matter is more complicated, but in effect the plaintiff bears the (initial) burden. In asset forfeiture cases, infamously, the government bears the burden in the initial trial (against the asset), but the owner bears the burden of proof as a third-party claimant if they want their property back.
(It's emphatically not true that neither side has the burden of proof in civil trials. There is always a burden of proof when a claim is being made, to determine what happens if no evidence is provided. However, civil cases frequently involve affirmative defenses, in which each party bears the burden of proof for the claims made by that party. Both, not neither.)
The standard of proof, meanwhile, is the hurdle which must be cleared by whoever bears the burden of proof. It's how convincing their claim must be to be accepted. In civil cases, yes, this is a "preponderance of evidence", interpreted as the claim being more likely than not. In criminal cases, this is "beyond a reasonable doubt" - that's on the same scale as preponderance. Other standards exist outside of trial settings: in various contexts US law employs standards like "some evidence" and "reasonable suspicion".
---
I'm not (just) being pedantic here. If we're talking about borrowing a legal standard for deciding against someone in a dispute, I think it's very important that we're clear on what we mean.
It's possible to vary both the size and placement of the burden. We could believe the accuser (burden on the accused), but hold the accused to a mere "some credible evidence" standard for their defense. We could believe the accused and demand evidence "beyond a reasonable doubt", or lower that to "preponderance of evidence", or even further. Or we could even use some standard not borrowed from the courts.
But right now, almost no one clarifies what they mean. The results of moving the burden will be very different from the results of lessening the burden, and it's important to understand what we're proposing.
The problem is with these "difficult" issues the first thing anyone who is trained to work in this area (even on the employee side) as I am - will tell you is you have to verify what you are being told.
Preponderance of the evidence is the standard that companies should be following because that is the standard that will be followed in any civil suit that follows the company's resolution of the issue, either from the accused or the accuser.
Innocent until proven guilty is the standard for depriving someone of their freedom, not their job. If the harassment rises to the level of sexual assault, it's the standard the prosecutor will use. Otherwise, it's irrelevant in the context of sexual harassment.
>Management and all staff will also be required to take training on a continuous basis.
This is miserable. Unless the definition of sexual harassment changes every 6 months, you should not be forcing employees to retake these training sessions.
Often they are a means of having something to which they can point and say "we were doing our very best to create a safe environment". It's more of "ammo in case of lawsuit" than actual useful training. It may also be to just follow regulations in some places where they ought to have at least X hours/minutes of training on compliance related matters per year/month etc.
People (hopefully) won't get practice on reporting and handling harassment claims. It's good to have a refresher training to both remind employees of the process as well as a gesture to show they are still taking the issue seriously.
Uber's business model reminds me of Zapp Brannigan.
Fry: "I heard one time you single-handedly defeated a horde of rampaging somethings in the something something system"
Brannigan: "Killbots? A trifle. It was simply a matter of outsmarting them."
Fry: "Wow, I never would've thought of that."
Brannigan: "You see, killbots have a preset kill limit. Knowing their weakness, I sent wave after wave of my own men at them until they reached their limit and shut down. Kif, show them the medal I won."
A business culture flows from the top. Reading Susan J Fowler's account told me the whole company must be toxic, for such abhorrent behaviour to be condoned of.
It is to my knowledge that the problems have been around from the start, but you haven't noticed it.
I'm pushed to think that the "media" didn't report on it too much because the problems were economic. But as an average media company, that story doesn't sell, it doesn't interest the average reader, so they don't report it that much. Then the sexual harrasment scandal surfaced and _that_ is when the media jumped on board, because everybody loves getting political and hearing about scandals and feminism and all those kind of controversial topics.
If anything, the scandal damaged Uber's public image, but that is a superficial problem in proportion to their disasterous funding model and general financials.
>Please believe women when they report harassment in the workplace
This meme is often repeated in context of sexual harrassment (workplace or otherwise). How do you square that with the fact that women are as capable of laying and misleading as men are? How do you square that with "innocent until proven guilty" when accusation are leveled against another individual or company.
No. Nobody argues sexual harrassment claims shouldn't be taken seriously. Nobody argues rape claims shouldn't be taken seriously. Nobody. That's not what OP argued. It's a common meme to argue that claims of sexual harrassment and sexual assult should be assumed to be true. That's insane. It upends our entire notion of Justice.
The required burden of proof can and should be much lower in the workplace.
Sure everyone is capable of lying but P(harassment occurred | report of harassment) is much greater than P(harassment did not occur | report of harassment).
>Sure everyone is capable of lying but P(harassment occurred | report of harassment) is much greater than P(harassment did not occur | report of harassment).
Sure. Sexual harassment is worse than a false accusation, so yes, I'm going to err on the side of taking a harassment claim seriously. If the cost is a few people getting fired that might not have, fine.
Standards for the burden of proof in a court of law and in the workplace are and should be different.
Wow. You are callus and uncaring. You probably think it could never happen to you because you're one of the good ones.
I bet if you are ever on the receiving end of a false accusation you will be singing a different tune. You will be shouting from the hilltops about the unfairness of it all, suing the company and accuser for defamation and writing blog posts to tell your side of the story, because even a mere accusation could ruin your entire career and your personal life. Your spouse, kids, neighbours, friends, business partners, customers will see this accusation attached to your name and wonder if there's truth to that.
This situation played out exactly as I described with a noted feminist activist, Richard Carrier, who had the exact perspective you did until he got accused of harrassment.
> I bet if you are ever on the receiving end of a false accusation you will be singing a different tune.
I don't know, I could say the same about women and men who show up to work and just want to do their jobs without coworkers trying to grope them, make lewd comments, withhold promotions or offer interesting work only in exchange for sexual favors. That seems pretty unfair too and we hear about that happening far more often than we hear about people being unjustly accused.
I'm a rich white guy, if someone makes a false accusation against me and I have to leave a company, tough luck; I'll be OK.
Obviously I would prefer if people do not make false accusations, and a company should try in the event of any allegation to determine whether it has a factual basis. But if it's a he said she said situation I am going to side with the accuser.
The wild thing is that the situation you are describing happens literally weekly in tech - prominent women do shout about the unfairness of it all, about reporting harassment and having nothing happen, or being forced out of companies after reporting. Many women choose to leave.
>I'm a rich white guy, if someone makes a false accusation against me and I have to leave a company, tough luck; I'll be OK.
Ah. Isn't that perfect. It's great you're rich and your life could never be ruined by false accusations. Screw everyone else eh?
>But if it's a he said she said situation I am going to side with the accuser
That's insane.
>The wild thing is that the situation you are describing happens literally weekly in tech - prominent women do shout about the unfairness of it all, about reporting harassment and having nothing happen, or being forced out of companies after reporting. Many women choose to leave
You keep saying things like this but at some point you may want to back it up with some real numbers otherwise I'll just assume you're making things up.
Tech industry employs hundreds of thousands of people, and that's California alone. That number gets up into millions if you include the United States ... And your proof are anecdotes??? Random? No. Self-selected to confirm your bias? Yes! Jesus. You have no idea do you? You just feeeel you must be right.
Edit:
I want to add that I'm genuinely interested in knowing if a) there is a problem and b) the scope of the problem. Tech industry is one of the most progressive out there and tech hubs are based in very progressive regions - so what are we talking about here? All I see is people like you who not only have nothing to back up their claims with but also want to push for insane policies based on non-existent evidence ( policies which you admitted will never hurt you due to your wealth ).
According to a 2016 survey 60% of women in tech in SV reported an unwanted advance. Of those, 65% were from a superior (always inappropriate). One third of women reported feeling unsafe at the workplace. This is why I default to believing reports of harassment
Not exactly hard to find. We can quibble about the exact percentages and the methodology but the odds of the real percentage being close to 0 when ~50% of women reported an inappropriate advance from a superior are nil.
You're asking for a completely unreasonable standard to be upheld. If an employee said they got mugged and their laptop was missing, you wouldn't start asking if they were out late at night, were they drinking, "why did you put yourself in that situation," we'll replace your laptop the next time you lose it, etc, you'd say "that's awful" and replace their laptop.
This sort of comment will get you banned here regardless of what you're commenting about. We've warned you about this before. If you don't want to be banned, it's time to post civilly and substantively or not at all.
It should go without saying, but this is independent of how wrong other commenters are. Someone else being wrong does not confer the right to drag the discussion down further.
I should think that common sense would answer this question. You square it like this:
Let's say a person in your company tells you their boss is sexually harrassing them. You're on reasonably good terms with both the accuser and the accused.
Some responses you might make in this case:
- Deflect. Pretend you didn't hear it. Or, if pressed: "This isn't something I know anything about. You'd better take that up with them. Or maybe you could talk to HR?"
- Express skepticism: "Well, I don't know if you're lying or not. Sounds like a he-said she-said situation. Sorry."
- Express emotional support: "That sounds terrible! I'm sorry you're going through this, and I appreciate that it must be very hard for you to talk about this. How can I help?"
- Provide logistical support: "Let's get to the bottom of this."
- Express complete solidarity: "That bastard! We're going to nail them right to the wall for this. Right. To. The. Wall."
- Express complete solidarity for the accused: "How could you say this about them? They're a good person! They would never intentionally harass you. It must be a misunderstanding!"
Now: which responses might fall under the sentiment of "please believe women"? Which wouldn't? Which responses violate your ethical norms?
Seems to me, if you're purely caught up in the legalism of the situation, I'm guessing your response is going to be "skepticism," whether you want it to be or not.
I'm not sure what your argument is. Unless you are part of HR in your made-up hypothetical situation, it's not your job to intervene or seek retribution because you'll just screw it up and you'll make things worse. Personally, if you know both parties well you may very well find yourself skeptical of those claims ... or not - context matters.
All companies will have a process for handling harrassment claims and process for resolving them. Accusations should be directed to HR (or suitable designated party at the company). If the harrassment continues you may have to involve the legal system - that's what it's there for.
So, your answer in this case is: you do not get involved, period. Deflect, maybe some logistical support to direct them to HR, but nothing more?
They go to HR and a week later they're let go – no real explanation given. (Hey, it's at will employment here in CA.) Or, as happens at Uber, nothing happens, and your coworker continues to complain about harrassing behavior (if they're even talking to you at this point). What do you do now?
My point is: the real world is messy, and doesn't come with cut-and-dried definitions and solutions. Processes can help some, but true neutrality comes at a cost. Corrupt and sexist agencies in your company can continue to operate with aplomb. Your relationship will be damaged with coworkers who have had this happen to them – to say nothing of how it damages them when they have this happen and all of their coworkers look nervously away. It can poison your relationship to the company and all the good people that work there.
I read "please believe women" as an invitation to get involved in a constructive way, and I fervently disagree with you that you as a coworker can only make things worse. You can offer emotional support, so your coworker knows you're there for them. If you have pertinent information, you can offer it. You can hold your company's feet to the fire to make sure they're handling it appropriately. And of course – since I didn't specify the gender in the scenario – you can do the same whether the people involved are male, female, or anything in between.
If you go to a police station and report a murder do you think they'll a) investigate your claim or b) ignore you?
That is the sort of belief we're talking about, a serious investigation with the assumption the person reporting it is not lying. The investigation itself could of course result in not sufficient evidence being found. It's really not that complicated.
Not sure who "we" is but far too frequently at tech companies, harassment allegations are ignored. For that matter prominent men sometimes admit to harassment and are acquitted anyway.
There have long been reports from various minority communities in the United States and elsewhere of crime reports being ignored entirely or not taken seriously.
Alternatively, look at the public scrutiny of police shootings. However you personally feel about them, there is a section of the population that sees them as a miscarriage of justice that is playing out in the public square. People look at the extremely low (non-existent?) conviction rate of officers and see either a police force operating without consequences or a remarkably well-mantained and well-monitored police force.
Obviously there should be an investigation, but history tells us that it is very easy to fool ourselves into believing we've done a "fair" investigation which will not look fair to outsiders or victims. No malice is necessary, but it is frequently endemic anyway.
Harrassment is often entirely one person's word against another. Many of these cases are decided by who the jury believes, if the case even makes it to court—because, remember, most victims don't press charges.
Investigations don't help much in these cases. The pressure isn't to find (often non-existent) evidence, it is to commit to the shitty process of trying to get people to care about you a painful part of your life.
The Susan Fowler article greatly accelerated this process and drew a huge amount of (deserved) media attention. However, Uber has a long history of bad behavior in many different ways. The internal culture being rotten was known-about-but-not-talked-about for a long time, and their history of legally gray and unethical business practices was already a major specter on the company's public image.
Please believe women when they report harassment in the workplace
One of the problems with this unilateral statement is that if this becomes the new norm, then women can just level accusations and be believed. Men get fired or have other consequences.
It is never a good idea to have a policy of sweepingly and uncritically believing some category of people over another. That is actually the problem we currently have, only it is generally white men who get believed, no matter what they say, while women and poc get ignored, dismissed, etc. Consider how poorly that is currently serving women and poc and maybe stop to wonder if you would want to be on the receiving end of that.
Your remarks make it clear that you have enormous privilege and you imagine you cannot lose that advantage. Consider the possibility of losing it. Just as a thought experiment. Your smugness is deeply rooted in your assumption that you will always be privileged. And I don't even know where to begin here in telling you how sick and twisted that is.
In a weird way, it deeply reinforces the current sick system. And if you did get your way, you could well lose the thing you currently cannot imagine losing.
I am not for having a Lord of the Flies social order and simply shuffling around who the default victims are. I would like to treat everyone better, not simply make the current victims the next generation of abusive tyrants.
If Uber ends up going down in flames, unable to recover from the scandals and lawsuits, and Lyft prevails, it will be the most incredible change of fate in the business world this century or perhaps longer.
The future of automobiles and transportation is still being swirled about, and it feels like Uber's downfall has blown the game WIDE open, ready for anyone (maybe Uber, maybe Lyft, maybe Tesla, Google, Apple, an automaker) to just step in and take all the riches.
Frankly I don't believe its possible with Arianna Huffington neither.
If you ever worked with her, you will clearly see shes a female type of Kalanick; the only difference he seems to love party, sex and alcohol and couldn't care about sexual harassment at his company; meanwhile Huffington is known for backstabbing employees (co owners too) and always gossiping behind others back just for fun and treat people like crap in general. In both examples, a normal company would not be able to thrive; and also look what happened with Huffington Post under her tensure; even AOL ceo did not want to work with her at some point.
Bottom line -- removing Kalanick is like rearranging seats on Titanic.
I believe that (much) more relevant than that is what regulators do with these services around the world. For the people it doesn't really matter if it's Uber or Lyft. We are already seeing a protectionist wave of regulations getting rid of affordable transportation throughout the developing and the developed world, I can only imagine that when self-driving cars actually hit the market for good it will be on the whole forbidden in some countries...
In Brazil, Uber required drivers to accept cash payment having seen that it was successful in other countries like India. Suddenly carjackers realised that Uber cars were basically cash machines on wheels and so armed robbery, murder and mayhem ensued.
As a counterpoint, Careem, Uber's biggest competitor in the GCC, accepts cash. I love the system as they've handled it well - if the driver has no change, they just add it to your account for use on the next trip, with no pressure to tip. You can even run a negative balance although I'm not sure what the limit is.
Libretaxi sucks. I don't want to negotiate with the driver and I don't want to pay cash. In typical fashion, open source/FS people fail to understand what makes a product popular when they try to clone it.
Nobody gives a fuck about "Libre", I just want to get a fucking ride.
That's too reactive. The point is that there may be services we want (ride) on infrastructure we can inspect and control and we might want to have respect for the operators while we're at it. I see those as features which make execution more expensive and tend to attract less investment and thus not as well done, when done by volunteers in their spare time. That is a incentive problem, not an open source problem.
It's not too reactive at all, it's precisely how I feel as well. I travel a lot in South East Asia and the absolute last thing I want is to have to bargain with the driver (100% of the time they will try to rip me off) or carry bundles of small notes at all times (100% of the time the driver will claim to have no change).
I have no idea who LibreTaxi is for, if anyone, but their marketing page makes me want to run a mile. Uber and grab have been a revelation for me in SEA and I use them exclusively.
I said "something along the lines of libretaxi". Not libretaxi. You can still do libre with a reputation system and without having to bargain for every ride.
I really want to see free/open-source win, but it won't happen as long as people keep thinking that shouting "down with closed systems" is a substitute for a competitive product. Ideological purity isn't enough.
Do we have any data to suggest that Uber is materially weakened? Do the negative headlines and social media posts necessarily translate into significant changes in consumer behavior?
I stopped using Uber about a few months ago in favor of Lyft it's the same shit and easy to do.. I'd be surprised if they weren't losing a decent share
Disclaimer: I'm in the Bay Area and roots in Chicago.
People are not turning in my experience and have never heard of any of these scandals; however, when I bring them up and really get into them I have noticed people without prompt switching to Lyft. I think people who use Apple Maps or Google Maps' ride sharing feature find it especially easy to switch.
You might think they're still strong in operations, but company-destroying risks rise every day the the leadership suite is in turmoil like this. And that's just internal risks: what about their competitors and antagonists?
This is a really interesting point. Uber didn't get its valuation by aiming to be the world biggest taxi company, they got it by aiming to be the infrastructure fabric that underpins everything.
Amazon have started from a very different place, but apart from the user accessible vehicles they are nearly at the same point, with their recent efforts in Prime, groceries, etc.
I wonder whether Amazon will open up that infrastructure further to other companies. Arguably "fulfilled by Amazon" is already starting to do that.
Uber got it by aiming to be the most dominant, demonstrably aggressive and ruthless competitor there could ever be. It almost didn't matter what Uber proposed to do, it was in how they meant to do it and Travis personified that, and all the 'bad behavior' was read as good… by Wall Street standards… because it indicated a sharklike savagery that surely no other company could prevail against. This is why they got their valuation.
With Travis gone, the only people who will believe that's still the case are whatever committee is at the steering wheel. They will think they're great and totally capable of being as ruthless and fierce as Travis, which is why they are creating that situation. No other investors will agree: you can't replace someone like Travis with a committee.
Pardon me for being somewhat rude, but your perspective suggests that you're perhaps relatively young?
IBM's recent demise, Lehman Brothers going down under, Enron, Arthur Anderson / Worldcom, the dismantling of Japanese mega conglomerates by the GHQ, Apple's 90's turnaround, the death of workstation companies, deregulation of US airlines, are all orders of magnitude more impactful than if Uber dies and Lyft prevails.
Excellent examples. To push the point farther, the Dow Jones Industrial Index tracks a basket of 'best in breed' companies. With the exception of General Electric, every company listen in 1896 is no longer listed. That speaks nothing to the many that were listed and removed over the years. Big companies rise and fall, and we often forget the companies that fail all around us.
I'm assuming parent meant IBM's "relatively" recent demise. IBM lost many billions in the early 90s and was close to disaster, at the same time Microsoft (originally an IBM supplier!) was surging.
When I said "change of fate" I meant reversal of fortunes. Not very often the #1 dominant company in an industry sinks and the #2 takes over, which is the scenario I was discussing. Not just a top company declining, but their direct competitor ascending as well.
But has any of the press coverage translated into actual business impact? Uber's been all over the news in Silicon Valley's incestuous little bubble for the last few months, but the general public has a solid track record of continuing to use whatever service is cheapest and/or most convenient, which remains... Uber.
I'm in Pittsburgh. Most of my friends have moved to Lyft due to Uber's "behavior." To be fair, due the trips we are taking are relatively infrequent and when we do, there is little cost difference between the two.
It will also be a tragedy. With Kalanick gone, Uber is already behaving like a conformist, viz. the recent headlines (1) "Uber co-founder: We’ve been too obsessed with growth" (what?); (2) "Uber is (finally) rolling out tipping" (just awful). That sounds just like Lyft and Lyft is not a worthy rival in any sense of the word.
Why Lyft is not worthy rival of uber? Pretty much wherever you can find uber in USA, you can find Lyft. And considering they have taken way less money from investors than uber and still doing as well tells me that Lyft's executives are not doing that bad after all!
If you're in the USA and keeping tabs of the controversies I think it is easy to overestimate Lyft and underestimate Uber.
Uber is in 100 more US cities than Lyft and 81 countries where Lyft isn't. I find that in large parts outside of the USA "Uber" is synonymous with ride sharing.
Uber bookings revenue is doubling each year[0], net revenue growth is outpacing growth in losses[1] and they claim to be profitable on a per-city basis in early markets[2]
Direct comparisons: Countries 82 (Uber) vs 1, Bookings: $20,000M (Uber) vs $1,400M, Growth: 100% (Uber) vs 250% (Lyft), Net revenue: $6,500M (Uber) vs 700M, Losses: $2,800M (Uber) vs $800M (Uber has much better margins and margin growth), Valuation: $70,000M (Uber) vs $6,000M, Revenue/Valuation: Uber 3.5x Lyft 4.28x
Not an insurmountable task, but Lyft have a long way to go and no track record or operations outside of the USA.
Exactly. And this had been coming for years. A transgendered friend of mine starting working there in 2014. She quit within a week. It was only a matter of time.
They could have remained shitty, but taken plausible deniability actions. As with a top exec personally going to India to get a rape victim's health records (?!?!), Uber seems to have no concept of covering their asses.
They just showed a complete lack of care in so many situations... Shows that ignoring the rules can certainly pay off.
Wow, I thought he was just going to step away and take a break. Do we know who might replace him?
It's also interesting that the five shareholders mentioned in the NYTimes article want 2 "truly independent directors". What does that mean? Depending on how many board seats there are, maybe two votes aren't enough?
Haha I thought the same thing, then kicked myself for manifesting that thought into the universe, only because that seems the most probable Silicon Valley knee jerk reaction in this case...
Wow, makes me want to skim over the original Susan Fowler thread to see if anyone predicted this happening [0]. Her allegations of course weren't the only problem Uber faced but it sure seemed to cause other previously overlooked issues and complaints to gain real resonance.
I wonder how things would have gone had Kalanick's family hadn't suffered that horrible tragedy a few weeks ago. That is, whether he would have had the energy/stubbornness to stay as CEO if he wasn't dealing with personal challenges at the same time as professional ones.
I'm sure that was a big factor. Turning a firm's culture around in this case would mean reinventing himself at the same time at the firm, and while that's doable it's a full-time thing. The loss of his mother and serious injuries sustained by his father in the same accident were a cruel twist of fate that would derail many people under the best of circumstances, never mind these more difficult ones.
Hope everyone's paying attention to the identity of these investors behind this horrid behavior. Travis is not without his flaws but he created an awful lot of value for them.
They pressure him into taking a sabbatical, then two days in they pull this cowardly act of firing him remotely. Not only was it a cowardly act, but it was the wrong thing to do for the business. It will lead to an epic destruction of value.
Worst business move since Apple's board (with John Sculley's behind the scenes string pulling) fired Steve Jobs. How well did that work out for Apple's shareholders at the time?
Travis Kalanick needed to change but do you really think that running Uber by committee is going to work? Guess it's time to try Lyft.
I don't (yet) have an opinion on this, but it's important to note the other side of the coin...
> Hope everyone's paying attention to the identity of these investors behind this horrid behavior. Travis is not without his flaws but he created an awful lot of value for them.
He's been very well compensated for the value he's created. You don't keep a job because of what you've done in the past, you keep a job based on what you can do in the future.
Firing founders was tried in the nineties and it always resulted in failure. Guess the Uber VC's need to painfully relearn that lesson?
If Travis had been smart enough to create two classes of stock like Mark Zuckerberg and the Google founders he'd be calling the shots, instead he's out of a job.
Travis was calling the shots. That's why he's getting blamed for the alleged toxic culture (which includes not just sexism, but mistreatment/underpayment of drivers, among other things).
No, they're kicking him out because the public is coming to see it as a moral imperative that Uber needs to be held accountable in some way for their behavior. I don't really care if the investors have or follow their morals, as long as they are in some way strongly incentivized to behave in that manner. We can't make the people have morals, but we can strongly encourage them to act like they do.
The investors could have gotten away with much less, certainly without firing him, from a PR angle. I say this as someone who hates Uber with a passion because of the senior management's sliminess, and who no longer uses Uber because of it.
My guess is that there are also much deeper issues here. And things like the Waymo deal indicate that there may be a whole slew of other slimy behavior that will end up hurting Uber more in the end. My guess is that we don't know the depths of poor decisions at Uber.
Don't kid yourself into thinking that a majority of the public knows or even cares about the things that Uber has done. They use Uber because everyone else uses Uber and to take an "Uber" is to use a "Kleenex" or to "Google" something.
Firstly, I will continue to kid myself. Investors are humans, my friend. Everyone is capable, and should be expected, to put decency above money when the two come into conflict.
Secondly, it doesn't matter. Many people cared about the morality, and it was enough to make a difference.
Most founders. I don't think it had come to that yet. The good he has done immensely outweighs any wrongdoings. There was a degree of penance on his part and it should count for something.
Travis has had to make a lot of hard decisions to get Uber where it is. These decisions have at times cost him goodwill of the public but I think they are (were) worth it for the long term.
Perception is the same as reality here, though. He could be a great leader, but still too controversial to keep at the company. If it wasn't an organizational decision, it was a marketing decision.
Weighing the good vs the bad is something you can only do after a while. It's possible that Uber, which has yet to turn a profit, will effectively go away in a couple of years -- in which case, Kalanick will have spent billions of investors money with nothing to show for it.
> Travis has had to make a lot of hard decisions to get Uber where it is. These decisions have at times cost him goodwill of the public but I think they are (were) worth it for the long term.
For sure. But it will take a few years to know if that's actually a good place; at present, it doesn't look that way (but it's too early to tell for sure either way).
Wow -- I'm amazed to hear this sentiment. I'm personally proud that one of our VCs was involved.
Travis helped build an incredible company, but his disregard for the law, for his employees' well-being, for basic decency threaten to tear all of that down. Just in the past six months:
* Susan Fowler's blog post exposed a terribly broken HR system and a culture of sexual harassment that reached the very top. This has huge legal implications in addition to the obvious moral and ethical ones.
* Waymo's lawsuit could shut down Uber's self-driving car program, into which they have put hundreds of millions of dollars. There may be evidence that Travis colluded with Levandowski to steal Google's self-driving techonology.
* Uber is under investigation at several levels of government for their Greyball program to hide from law enforcement.
* On top of all this, Travis was videotaped cursing at a driver who complained about pay rates.
At this point, Travis had to go. It's going to be hard for Uber to recover from all this, but this is the first step. I hope that this becomes a lesson in SV that there are consequences to this kind of behavior, and that at some point the adults will step in.
Agreed. Whether or not your listed events are the exact same set of reasons for his ousting, it's a good thing for our industry that his brand of unethical leadership is being shown the exit. As if TK is the only leader than can deliver the same type of value. Good riddance! Lyft just got their opportunity, hopefully they learn from Uber's mistakes.
Are you saying someone else can deliver the same value as TK (so Uber is fine), or are you saying Lyft just got their opportunity (so Uber is not fine)?
I don't think these examples are all that damning, aside from the Susan Fowler and HR failure:
- Waymo: the judge has not ruled yet, and there is no evidence revealed to the public which implicates Uber. There is lots of evidence implicating Levadowski.
- Greyball: I can see investors forgiving this as a necessary play to fuel growth.
- Cursing the driver: a private conversation, neither here nor there.
That said, there may be issues that are not public, and the sexual harassment problem alone may be enough. Senior leadership was rapidly leaving. We don't know what the full Holder report said.
Waymo: the judge has not ruled yet, and there is no evidence revealed to the public which implicates Uber. There is lots of evidence implicating Levadowski.
But uber is still lagging behind Waymo/Lyft in the self driving technology. They were desperate to catch up, hence the acquisition of lewandowski's new company in the first place. Now that path is no longer viable regardless of the verdict.
Whoever becomes the new CEO will have to be laser focused to make their auto pilot program work somehow. Without that, Uber has no path to profitability.
They really should have done what lyft did, building partnership with companies like Google/Waymo and GM instead of trying to build their own auto pilot program from scratch.
The problem with getting rid of any leader, a CEO, President, Prime Minister, or even a Dictator even when they seem 'bad' is that you can't be sure the replacement won't be even worse or even more ineffective in meeting objectives. Unless there's a clear and obvious replacement waiting in the wings it's not certain him leaving is a good or bad idea, especially if they end up scrambling to find someone, anyone, to bring in.
Perhaps the most damning piece of evidence against Kalanic as a terrible leader is the complete absence of any kind of serious leadership team or program around him.
Sadly, Uber's board sounds more likely to be the kind of disaster that controlled Yahoo, HP and so many other faded stars from the valley.
Looks like Apple's decision not to invest was well played.
Travis himself has exhibited poor public behavior that was recorded by an Uber driver. That in itself reflects upon the company.
Yes his assertiveness and drive got them where they are, but sometimes companies do need to grow up.
Jobs was a consistent asshole expecting perfection. That is way different than emboldening a climate of harassment, degradation, etc. that took place under his watch. Having recent external c-level hires quit due to the revelations of "culture" speak much.
I hope Uber can continue. As someone who travels internationally on business, it's quite useful. Seeing him go, it's just one more example. Pincus felt screwed through how Tribe.net went through, set himself up in a sheltered position at Zynga and through a combination of "management style" and problems at the company had to step down.
The cultural issues made public between Zynga and Uber are way different, but in both cases you had CEOs that structured the holdings such that they could retain power despite turmoil.
All I see if a bitter, vindictive man try to ambush the CEO of Uber on a night out - who then actually sits down and tries to explain his reasoning to him for several minutes, before giving up, and being "stuff this" and getting out.
And I see the opposite. I see a CEO being confronted by one of the people who actually makes his company work, and the CEO telling him to go get fucked.
Jobs did say that looking back getting fired from Apple was a good thing. So who knows maybe Travis will come back later with a some new perspective in life.
With Apple again, if Jobs had not been fired then we may not have the Jobs that people remember today. When he returned Apple had nothing and the board basically kneeled at his feet. He had complete freedom. Way more than he did before his departure.
Has he though? No one who bought Uber for $70bn right now would ever get their money back, despite that being it's 'value' (I know, I must be new here). This is all just fantastical and silly, a constant game of persuading investors to play along. Unless there is some great master plan for pivoting into a business that's actually feasible as a business, he's no more a great CEO than the Wizard of Oz or Bernie Madoff.
You've been praising Steve Jobs throughout this thread, saying his flaws "served" Apple. We don't know that they did. All we know is that they didn't run it into the ground.
If we are angry about Kalanick sexually harassing people (as we should be), Steve Jobs mentally/emotionally harassing people is as bad. There is no difference, don't make it seem like it is okay or that it was "good for Apple".
I've been doing saying it all over the thread to nip this idea in the butt that sexual assault is in any way a feature of a successful break-the-rules, disrupt-the establishment startup.
I'm not primarily interest in defending Steve Jobs, although I think his reputation may be a bit overblown, and largely based on a few anecdotes from rather early in his career.
But the repeated reference to him shows how people are equating the two, which is just terribly wrong, at least in as far as it concerns the sexism at Uber.
Because from the stories I know about Jobs, a credible case can indeed be made that he was slavedriver in search of perfection, and that his nastiness contributed to his success.
For Kalanick that may also be true in regards to Uber's repeated trouble with local law regarding employment and licensing. But the sexual harassment charges simply have nothing to do with it,
Here's the trick: literally only those actually on the committee will be arrogant enough to think that will work, and that they can replace Travis.
Nobody else is going to buy it, and this is death for Uber.
But the reason anybody's fool enough to trigger the apocalypse is because THEY will be in charge and assume that's the answer. If they were on the outside looking in, they would have a very different opinion.
It was actually pretty different from that. PayPal merged with Elon's X.com and had technical differences with the PayPal founder and they decided to stick with PayPal's tech strategy. There weren't similar scandals. (See Founders at Work).
In Paypal's case, Elon Musk went on his honeymoon trip to Australia and when he landed there he got the news that he had been removed from the position of CEO (See Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future), just like how Kalanick got fired on his sabbatical.
Not unsurprising, as Uber really is trying to grow up, and Travis Kalanik has been the silicon valley poster boy for a bit too long. I still think he did a phenomenal job, not only launching a successful startup, but creating an international cultural movement.
I wonder who will take his place, and, more importantly, I wonder if Uber will continue winning.
Does he deserve to be complimented in any way shape or form?
No... Not in the slightest.
I think the question is can uber continue winning without being toxic to staff (drivers, women, I'm sure there are others), maybe stealing (waymo lawsuit), and building tools to avoid the law....
The answer is I don't know, but it is going to be hard to recover from.
I don't think that's quite fair. He absolutely deserves a lot of criticism for the things that happened under his watch as Uber CEO, but he did create a giant company that has the highest(?) valuation of any SV startup. He deserves some respect and compliments for that.
> but he did create a giant company that has the highest(?) valuation of any SV startup. He deserves some respect and compliments for that.
The only people that benefited from his achivement were the investors. Considering where Uber stands at the moment they might not ever see a return on that.
If creating value gives you some sort of moral pass then we shouldn't have any sort of issues with epipens being more expensive, or martin shkreli jacking up drug prices... after all they did it in the name of creating value.
If you prefer to read what I posted that way, then that's your prerogative. I am simply stating that this isn't some kind of zero sum game or that it's black and white. I even stated (which you conveniently left out) that he does deserve criticism for the issues that happened during his tenure, and I believe he deserves a lot.
The problem is were never going to know how much of the success your praising is tied to the awful behavior that you say we should be critical of.
Were talking about the lance armstrong of CEO's. The collective behavior is corporate doping, lying cheating and stealing to get to the top isn't the path to sustaining success.
I don't agree it's quite that uplifiting. The culture had to be absolutely horrible, all the way up to the top, for Fowler's story to have an impact. Uber was already gearing up their lawyers against her, and if their culture hadn't been so pervasive, and if there weren't a series of other contraversies at the same time, things might have ended poorly for her.
No, but it did cause it to flare up after a lot of smoke and smoldering. I'd say the problems started ~2 years before that, partly from disregarding local regulators with impunity (rather than putting up a show of trying to cooperate) and partly from a strong of poorly-handled customer complaints where the firm seemed unwilling to take any responsibility for screening drivers. Those led to a persistent consumer narrative of indifference to social norms, which is never a good thing to have attached to your brand.
It will be interesting to see Uber's HQ corporate culture shift from the wild-westworld crazy co to one who's cash cow is closely managed by the monied interests who will surely own the company from this point forward to ensure all future scandals are either quashed or kept under wraps...
While your comment puts the high level business model in rather simplistic terms, which I agree with, how is it that "running a mini cab system" costs them 700 million per [time period] and why does said system require 6700 employees as of April 2016 (according to quora)
Laura's post from feb stated that on the ops/sre/infra team alone they had ~126 engineers, though I don't know if that includes managers... but it made it sound like there were many layers of managers, thus all the infighting
Would Marissa Mayer be a good fit for Uber CEO? Given that she just resigned from Yahoo, one would think the board would at least consider her. Unless they're going to choose the next CEO from within the company.
> In recent months, Ms. Huffington has become the public voice of Uber’s board as the company has tried to overcome scandals over its workplace culture. She has forged a friendship with Mr. Kalanick. And behind the scenes, she has been a driving force in recruiting an Uber board member and executives.
Absolutely, you can count on her to destroy Uber gracefully with a topping of PR. And she will end up with a few hundred million at the end of it all. Failing upwards personified.
The article skips over the board entirely, but Travis must have been blindsided by his co-founder Garret Camp and early CEO Ryan Graves for this to have transpired. The board likely threatened to fire him unless he resigned, because there's no way Travis walks away because of this investor letter. It's more than likely the letter just provided the air cover his old friends needed to send him packing.
edit: For those replying that Travis has control of the board, please cite your sources. Being the majority shareholder using dual-class stock is a much different thing. Shareholders elect board members, but you can't remove investors' board seats, that language is boilerplate in financing documents.
Uber does not need the backing of the investors from the letter to remain solvent. With the exception of Fidelity, these aren't big players. Hundreds would take their place immediately given the chance.
The board lacked the power to fire him. He controls most of the company. They had persuasive power, sure. But if he had wanted to dig in and refuse to leave, he could have.
This is the part that I think people are missing. Uber has a tight runway and burns a ton of cash every year. It needs focus, execution, and some more time (aka $$) to push this thing over the edge into profitability and IPO readiness. This means that Uber may need some money in about a year if it isn't IPO ready by then. Someone here mentioned that at their current burn, they have less than a year of runway left.
So while Travis holds the majority of the voting power, he doesn't hold a ton of real-world cachet because of circumstance around the company. Uber is in a relatively fragile period in it's journey and no one at the top can afford to disagree right now so he has to mostly do what the big chunk of investors collectively tell him to do. The hope is that they can stay calm, run on autopilot without Travis for a bit and guide this cruise missile right through an IPO if everything goes according to plan. Since the investors effectively control the supply of additional capital, they are in a unique position of power here relative to Travis.
I think Uber's downfall is a bit exaggerated in the rest of these comments here. They'll go through some troubling times, but they just need to stay calm, and guide the ship. A lot of the pieces are already in place thanks to Travis, but Uber doesn't necessarily need him to oversee the next milestone the same way they needed him the past couple of years of insane growth.
That, and the fact that there's likely a ton of capital senior to Travis's under a liquidation event. If Uber gets revalued below $10B in "we can't get funding and ran out of runway" restructuring, Kalanick's stock is likely getting zeroed out.
That sounded right, but I was curious where that gets quantified. You can find the information in Uber's Articles of Incorporation. Not sure if this is the most recent copy, but here's a version from 2013...
He owns more than 50% of the voting stock. Boards don't operate on one-man-one-vote, they operate on one-share-one-vote. If he had really wanted to stay no matter the consequences, he could simply have voted against his own firing.
That's not usually the case. Boards normally operate on one-person-one-vote. A majority of the current sitting board members can therefore fire the CEO.
Shareholder meetings operate on one-(voting)-share-one-vote, so a majority shareholder ultimately controls the composition of the board. But if one of "his" directors, who his shares elected, breaks ranks and votes to fire him, simply owning the shares doesn't allow him to immediately override that vote. Kalanick could have voted out the board members opposed to him at the next shareholder meeting, and voted in sympathetic ones, who then might rehire him as CEO. But that's a different question than whether he could win any board vote simply by virtue of owning a majority of voting shares. Shares don't directly have board votes, they just elect directors who have board votes, who usually vote with the interests of the shares that elected them, but might not always. Besides exercising their personal judgment, directors also have independent legal responsibilities that may in some cases make it prudent for them to vote to fire even the person who put them on the board.
No, he definitely had and still has a controlling vote on the board. The group of investors representing 40% of the company's ownership has more than enough financial leverage to force his hand, by threatening to close their purses for the next funding round.
His misbehaviour is (in this case) tolerating such behaviour at Uber, something which many seem to consider a strategy to "let boys be boys" and create a great business freed from the oppressive shackles of "political correctness".
But go google and you'll find quite a few anecdotes that do make it seem as if he has a strange hangup with women himself.
I agree with everything you said but he literally did not sexually harass anybody. So saying that he did is just inaccurate. Regardless of how big of an asshole he is.
Do you have an example for such a startup in recent history where the founder left within the first few years and the startup succeeded with a new founder? I don't think we can really value Uber at $70B; that's the headline number for investors getting preferred shares. My main point is that Uber's position is not nearly as strong as the $70B implies; this number exists because Travis was super aggressive at growing revenue, so investors must have had expectations of the company continuing its insane growth trajectory. I don't believe Uber has that strong a moat today, and the leaked numbers imply losses left and right.
Well this comes as a big surprise. I just thought that he'd be taking a break. I also think that he wasn't forced to resign as much as he thought it'd be the best choice for the company (he probably has majority voter control).
Kalanick - because of his super competitive nature - was probably the best person to be CEO during the time he was but maybe its now time for a more matured and seasoned executive to take over. Just my thoughts.
More matured and seasoned executive? Kalanick is 40, has star experience like almost nobody in tech business... I'm wondering who would be more matured for highly unregulated, exploding industry that depends on innovation (solar, self-driving cars)?
With a new seasoned exec, I predict Uber will stabilize, IPO at some point and becomes the Yahoo of the industry. It won't be the next Google, Amazon or Facebook (all led by founder CEOs), that's for sure.
Pushing a founder out is often a bad idea. This might very well be the beginning of Uber's demise. This won't be good for the company.
All CEOs make mistakes even great ones like Gates with antitrust or Zuck calling users dumb-fucks. They weren't kicked out, they instead were allowed to come into their own.
There's a distinct fire that a founder has for the company they founded. You can't hire that. Without this fire at the early stages of a company, the company will likely lose out to competitors like Lyft.
A hiatus is one thing but kicking a founder out is simply bad.
Mark my word and take that to the bank. This was a bad move.
I don't think Uber can go much lower, negativity around it was simply overwhelming. Desperate times require desperate measurements - kicking CEO is like saying: "ok, we did some wrong things - sorry, but we will try to change for a better".
Disagree. I think some of these VCs are just trigger-happy when it comes to dealing with founders. I don't know why this is the case; may be they think it's easy and they know better.
How often do you hear VCs talk about how much they're on the founder's side like Vinod Khosla. At almost every turn, you'll hear Vinod go on about his reverence for founders. He does however add that this is not always the case. Sometimes, he says, founders must be asked to leave. When Vinod tells you to step aside, I think he'd most likely be right because you know his intentions aren't malicious. Do I think it had gotten to that point with Travis? My answer would be no.
It comes down to conviction and courage to follow through. I find it curious that just when he's out, one of the things that he'd fought against for so long has been done i.e. tipping.
The reason it's courage involved in such a situation is because, against all external pressure, he maintained that he thought it would create friction. I can see that and some people may disagree - and those people can use Lyft, but at the end of the day, most people use Uber the way it is because of a certain experience that's possibly inexplicable to them. They just like it. Travis and his team have created this experience.
If there's no courage and conviction, then Uber becomes indistinguishable from Lyft. I honestly don't think the next CEO will have as much courage to say something like, 'we know automation is coming and we have to be on top of it regardless of any negative feedback. If we don't, it won't matter because someone will do it anyway...'
Time will tell and I think it will tell the same story I've told here.
Completely agree. Uber (as a product) will turn into Lyft, rather than what should be the other way around on the merits. Uber is clearly a superior product. That is orthogonal to its quality as a company. I'm not convinced that having a good company culture requires the product to be shittier.
I pretty much can't stumble upon an article about Uber that's not about controversy. I know that kind of news sells better. But in my perception now Uber had the pendulum swung far off center. I've been shocked by their (reported) ethics, to the point of not purchasing their services. I know that consequence is not taken by a majority of people, but I do sense a more than average disgust for Uber's ethics. If you'd asked me, I'd have welcomed their demise. The only thing to turn that around for me is new leadership.
A woman for Uber CEO would be a good signal -- if the best candidate for the job happens to be one. Didn't Marissa Mayer recently resign from her job, and be available?
This may kill Uber. Kalanick is a jerk, but he created that insane valuation. Uber has less than a year of runway left at their current burn rate. Unless they can find a bigger sucker than the sovereign wealth fund of Saudi Arabia,[1] they're going broke in 2018. (That "undisclosed amount" in 2017 isn't a significant investment on Uber's scale.)
IPO? No way. They'd have to publish audited numbers. What's leaked out is bad enough. The real numbers have to be worse. Notice that leveraged loan in 2016.[2] All the details of that have to be disclosed in the prospectus for an IPO.
> Uber has less than a year of runway left at their current burn rate.
If true, this seems far more likely to be a cause of Uber's death than Kalanick resigning. That, and the valuation being as insane as it is, which is also Kalanick's fault, which as you point out, makes it hard to find greater and greater suckers.
Perhaps they'll be better off all around without Kalanick, assuming they can get the business side on track and get the burn rate under control, and perhaps make their business sustainable rather than a gigantic handout of VC money.
Uber bought market share by subsidizing rides. That can't go on forever. Or much longer, without more capital. They're already borrowing heavily, having run out of equity sources. The business model hype is supposed to be that they push taxis out of business, then raise rates. Or self-driving cars will somehow save them. Both are unlikely.
Completely ridiculous. The model was not to raise rates in the future. The whole reason they could raise so much money was that they showed as they reduced rates, they induced more demand. They also had data showing increasing lifetime customer value. I recommend reading Brad Stone's The Upstarts. If they can have higher profits/customer while having lower rates than other companies, then they actually have a moat. I don't think they got to the moat, though.
If you have costs that scale sublinearly with volume, such as software development or idle driver time, then margins really do improve with volume. Many successful businesses use economies of scale as an sustainable competitive advantage against competitors.
In fact, the central concept of venture capital is premised on the idea that businesses start out unprofitable but become profitable as volumes scale.
To what extent any of this is the case for Uber is worth debating. So feel free to have that debate, and bring forth new information or new arguments that support your thesis.
Only if you are in #1 in a pie that isn't getting bigger. Ridesharing is most definitely not a developed market globally. There is a lot of room to increase the size of the pie.
Ridesharing is definitely not a developed market globally because in most of the rest of the world the margins on organising transport around cities are already measured in cents rather than dollars. These markets are not going to be more profitable for Uber than the ones they started in.
Particularly not if you can't set up an operation in an Western city with expensive taxi services without losing money on every ride you operate even before centralised overheads are taken into account.
This suggests to me that marginal rides are profitable, even if they aren't profitable enough to cover fixed costs of software development or investments into new geographic markets.
> If you have costs that scale sublinearly with volume, such as software development or idle driver time, then margins really do improve with volume
And if you're subsidising rides below cost because you're trying to grow your market and you have piles of VC cash so you don't care that you're burning through money, then eventually you're going to run out of that money and will be in trouble if you can't raise any more.
Time will tell whether Uber was building a sustainable business or just burning through VC cash.
Uber was just burning through VC cash based on the idea that 'if you're the biggest jerk on the block in every possible sense, capital will decide you're going to be the winner because you're meaner than everybody else'.
Winners don't quit, so Uber is dead to capital now: it was always based on maximum evilness and all the stuff about disrupting and ridesharing was mere window dressing.
Note to capital, wherever it is: this is what you get when you go by personality rather than studying the fundamentals of a business. You can't simply pick the most toxic individual or company, claim they're going to kill everybody else, and then prop them up with valuation. The valuation didn't fail but your pet Dr. Evil did, and that was your proxy for maintaining the 'killer' behavior. Unless or until capital can be personified as evil AIs that cannot die, this was never really an optimal strategy for capital.
Thanks for the source and the reply. It's good to know that in 2014 they had promos in developed city markets that dropped their gross margins into negative territory.
Nonetheless, my impression is that this is more the exception than the rule, based on the financials I linked to earlier.
If you're losing money on every ride, then your aggregate profit on all rides will be in the negatives. More volume just makes the total loss bigger, because that's more money you've been giving away.
But are they losing money on every ride? I thought the whole point of subsidizing rides was(as OP comments pointed out) to raise demand, both for drivers and riders, they first entice both ways with the promise of lower rates and higher payoffs, then slowly increase their cut of the pie against the driver's payoff and increase the rates on riders.
I'm not saying this will ever offset their increasing losses, but that is what always seemed the long term goal of monopoly.
> I thought the whole point of subsidizing rides was(as OP comments pointed out) to raise demand, both for drivers and riders, they first entice both ways with the promise of lower rates and higher payoffs, then slowly increase their cut of the pie against the driver's payoff and increase the rates on riders.
Right, and by the logic that decreasing prices raises demand, increasing prices will decrease demand.
That's my point, and the point of critics that are often ignored. Their customers will bail the moment they start getting charged the $25 their $10 ride actually costs. And that increase will be to break even. Not make any money. Just break even.
Uber will never achieve a monopoly. There are buses, bicycles, and used cars for $1500. People aren't going to pay $600 per month on a ride hailing service. I've already ditched Uber, and so have many of my peers, in favor of alternatives that save money. And that's without significant price hikes yet.
The fundamental economics of having a private driver have not changed. An app doesn't change what it costs to pay someone to drive you everywhere. I hate being critical because it's often a waste of time, but Uber is sincerely one of the worst investments that Silicon Valley has ever produced.
> Completely ridiculous. The model was not to raise rates in the future.
I'm not sure if you're disputing OP's idea that Uber subsidizing rides is (at least in part) of an effort to kill the taxi industry, but my logic is, if you don't have any competition, why wouldn't you raise rates?
One possibility, because increased rates could result in your user base using your service less often?
While transportation is something everyone needs, I'm (as priviledged as I am in my salary) not going to pay $20 for an uber if it's $2 on the bus.
I'll take uber when it's $10, compared to $2.
They could possibly raise their rates some, but to answer your question specifically: because there are other factors involved in their price/demand/profit/market share equation, besides just competition.
You're exactly right though, and that's the problem.
People won't pay to use the service if Uber charges what it actually costs to deliver it. They're heavily subsidizing each ride. When you pay for an Uber, they're basically giving investor money to the driver to cover your fare for you. Investors have been paying for your transportation over the past few years.
At some point, they have to actually make money, and the only way to do that is to raise prices. The issue is no one will stick with the app at higher prices. I've already abandoned Uber/Lyft/others for a $300 bike and a bus pass, because it's much cheaper and much healthier. If they double or triple their prices, which is about what they'd have to do just to break even, lots of people will be following suit.
The self-driving car game was supposed to save them, but I don't think they're guaranteed to win that fight. Tesla seems further along than anyone, and I have far more faith in Musk's ability and track record of executing than I do in Travis (or whatever committee is replacing him). Not to mention every automaker is working on self-driving cars right now to boot.
Uber has no guarantee they'll dominate that market, and considering they can't even break even in their current market, I see them as a ticking time bomb.
>The self-driving car game was supposed to save them, but I don't think they're guaranteed to win that fight
Agreed. I'd argue that existing car-sharing companies like Car2Go are better positioned to dominate the "self-driving taxi" market. They've already solved the challenges of owning and maintaining a shared car fleet profitably. The day self-driving technology is ready, they'll already be miles ahead of Uber.
You got green name, so I'm gonna reply here too. You already pay for the bus, does not matter if you use it or not (okay there's a surcharge, cause we ain't no commies). Uber has to compete with that! If you thought VC's are good at throwing away capital...
edit: I forgot what green name means... green btw...
They don't have any kind of advantage apart from being first mover in the states so no guarantee they will take all the market share in the short term and in the long term if and when AI driven cars come they will be out muscled by car manufacturers who can put millions of cars on the road in a year when they go all in.
> The whole reason they could raise so much money was that they showed as they reduced rates, they induced more demand.
I've yet to see an Uber driver who started rolling in cash after the rates were dropped. 100% of my anecdotal conversations (and that's not 99.9% rounded up, but a straight up 100%) reminisce about the good ole days.
That was never going to work. With self-driving cars on the horizon they will soon be forgotten about as car manufacturers start rolling out their own apps. The switching cost is too low. If Uber thought they could rely on brand recognition to dominate the market it's because they misjudged what market they were in and who the players were. Regardless of what Uber could do in the next 10 years Mercedes and BMW will still be more recognisable names and as soon as they roll out their self driving fleets and ride hailing apps Uber are history. No one will buy Uber if they can build the same thing for what is, in the grand scheme, essentially free.
At some point, though, every company that wants a sustainable business model needs to make money "on average" on the sum of all items (units of service, e.g. rides) sold. Uber being a local business should be able to do this progressively as its business matures in each city. However, if it is true that they are not profitable in their mature US market where by some accounts they enjoy >80% market share, that implies some substantial flaws in their model. Subsidizing rides in Asia or some smaller city in Europe is ok to gain growth, subsidizing rides in New York or San Francisco is worrying. And autonomous driving implies a completely different business model and economics (driven by the "who owns the car fleet" discussion).
If I'm not mistaken, they were losing money on every ride. If they did not intend to raise the rates in the future, they're basically planning to go bankrupt.
And I have a really hard time believing companies plan to fail.
It's a very clear case of dumping, or whatever it's called in English. Unsustainable low prices, suffocate your competitors, raise prices.
That is exactly my point for a while now [1]. The investors could have easily picked on taxi company handed them several billions, but they chose Uber. Mainly because of the hype created by the senior leadership team. They seem to have overplayed there hand.
"Uber is an example of what happens when central banks attempt to ‘stimulate’ the economy through misguided central planning. By forcing down market prices and essentially moving spending from the future into the present, they’re hoping to stimulate investment in general. But what they forget (or more likely, choose to ignore) is that these ‘investments’ are likely just bad investments."
I agree with the general dynamic there, but the connection to Uber specifically is tenuous. Risk free interest rates of 0.1 vs 0.5% don't lead VCs to be more or less aggressive with creating and capturing new markets.
Sounds like a '90s startup. Companies acting like this en masse was what caused the 2000 crash. Uber isn't going to make it out of this alive, and they're going to take the rest of the industry with them. I think the whole culture of VCs looking for "unicorn startups" is going to go away when the unicorns all die.
But that's nothing new, Uber has been on that shaky ground for months now. "If Kalanick can turn this around" (and his banking on automated to make them viable) were basically the only hail marys the diehard bulls clung to. (Name recognition/network effect being useless for obvious reasons that've been covered here in the past) with this, all their eggs are in automated.
They were run in a way that assumed funding and burning money to get there. If they suddenly need to turn profitable, they can still downsize a lot. Consider their 2000 engineers... That's on an established service. Sure, they would slow down new features and expansion, but they've have expenses they can cut. And prices they can raise.
For an embattled company like this in a fiercely competitive industry, you need committed leadership and not a rotating cast of hired guns looking to make a quick buck.
Kalanick has serious issues but he's demonstrated unquestionably forceful (and polarizing) leadership that mere "managers" will never be able to replace.
I've been bullish on Uber despite all their mistakes and internal issues because at the end of the day, the guy at the top was irrationally emotionally committed to _winning_. Now I am a bear on Uber.
Of course not, but there isn't another option for Uber. Second place isn't good enough, not with their burn rate. You need Ghengis Khan if you want to slaughter and conquer.
Making decisions at the cost of their employees' well-being didn't keep them in first place. Having a toxic work environment for women didn't put them in first place.
> Having a toxic work environment for women didn't put them in first place.
No, but that's not the point. How quickly we forget that we don't need dude bros to create a hostile environment for women. That GitHub situation was created by a woman, one who wasn't even an employee. We really don't give women enough credit.
Toxic work environment is everywhere. Remember the spreadsheet that Googlers started to compare salaries? I'd argue the Apple-Google-X pact to not poach one another is worse than anything Travis could imagine.
If there was crass behavior at Uber, I'm inclined to be more lenient because I think it is at a more primitive level than a well thought out plan to increase shareholder value by illegal collaboration to push down worker cost. If these people who criticize Uber really care about their employees, they will start publishing all details about how much salary and benefits and whatever money each employee makes.
It's this slaughter and conquer mentality that has caused them so many problems. I mean Lyft's main selling point to consumers has been 'Uber without all the attitude.' If Uber had been a little more customer-focused and emollient a few years back, they'd have held onto a much larger slice of the ride-sharing market.
Look at Google; they're firmly business-minded and have often butted heads with regulators and so forth, but most people like google, not least because of that 'don't be evil' branding and and their habit of giving people Nice Things.
Neither did I mention that. Why did you associate those two things?
Does 'highly demanding environment' == 'Harassment' to you? If yes then you have far bigger problems. Any demanding mission ever might be out of reach to you per your value system.
Work conditions, overall demands of productivity et al will be brutal. And that ultimately gets to cause all sorts of other problems. People who just can't catch up with all the rush ultimately feel discriminated.
> People who just can't catch up with all the rush ultimately feel discriminated.
Non sequitur. You're also generally espousing some pretty reprehensible ideas. We as a society do not take the view that business success overrides all soft concerns, especially with regard to their employees. If ruthlessness and discrimination is the grist that your mill requires, find another mill.
>>We as a society do not take the view that business success overrides all soft concerns, especially with regard to their employees.
This is obviously wrong. Have you ever bought a iPhone? Or any other Apple product. Have you ever ordered anything from Amazon.
How do you think Walmarts and Targets of the world can sell you things for so cheap? Behind all this there is some guy being sent through some real hard ships.
If I can reach back to your earlier comment, it seems that your premise is that when margins are razor-thin, 'Work conditions, overall demands of productivity et al will be brutal.'
My answer to that is then there is something fundamentally wrong with your business model. Basically, what is the point in running a business under which such conditions are the norm?
Any demanding mission ever might be out of reach to you per your value system.
This is fallacious. Of course there are times when struggle is necessary. A rewarding life (however you define reward) certainly requires an investment of effort, and at time that effort will be very difficult. Sometimes we are faced with very trying circumstances such as natural disaster or war or serious economic insecurity, and we have to work very ahrd to survive.
But a key word here is sometimes. If you deliberately construct such an environment where survival and advancement are only possible through 'brutal' work conditions and demands of productivity, then you are actively making the world a worse place, because you are establishing such brutal conditions as a norm and implicitly telling people that their life choices boil down to slavery or death. Why would any sane person want to create the conditions of slavery? Slavery is a condition of life that people rationally wish to escape.
There seems to be this attitude that if people are not constantly driven by necessity then they'll get too comfortable and lazy and never do anything. This is not borne out by the evidence. Some people would, not least because they're constantly bombarded with messages to consume, consume, consume whenever they can as a relief from their economic anxiety. But few people are fundamentally motivated by gluttony. Given the opportunity most people opt to develop their capabilities and contribute or create rather than merely consume.
Choosing to promulgate brutal working conditions is essentially promoting brutality as your preferred model of social organization. That's basically a displacement of sadistic and/or masochistic impulses into the economic sphere. You may very well feel that nothing of value happens except under harsh compulsion, but that seems to both ignore all the evidence to the contrary (an irrational bias) and abdicate responsibility for the consequences (since brutality is well-understood to result in wholly avoidable injuries).
It seems to me that your value system rests on some rather extreme assumptions that are not justified by the available evidence, and insofar as it imposes compulsion on others rather than being used to motivate yourself, it's intolerable. Put another way, if you only feel alive and productive under conditions of harsh necessity, that's your business. But as soon as you insist that this is the way of the world and that others must get with it or be cast aside, you're infringing upon the freedom of others. And at a social level, through regulatory process, experience of litigation and so on, we've agreed that the creation of such conditions is not an acceptable means to pursue arbitrary ends.
>>Basically, what is the point in running a business under which such conditions are the norm?
As usual : 'Value'. All these affordable iPhones and seamless Amazon deliveries happen because they have a work culture that optimizes for every single $. I agree with your premise that these are not for everyone. But this is precisely why we have freedom. Nobody should sign up for a job they think is too hard for them.
As we talk there are doctors who are training by the clock, sleeplessly working towards becoming surgeons. This is necessary for various reasons. If it were any easy, people would become bad doctors with less training. This is bad for society. The fact that work conditions are harsh- that isn't wrong or discrimination or even harassment. The very demands of the job are such.
The top percentage of any profession are this way. That comes with the job. You just don't go and say why don't they make it easy to me to be the next Zakir Hussain. Mr Hussain has set pretty high practice benchmarks practicing his instrument pretty much his whole life. Was it worth for his to have undergone all that pain and punishment to get there? May be that fits into his value system.
If you want to beat Jeff Bezos you have to at least perform at his level or higher. You just have to chose your mission based on the mileage you think you have.
That mentality itself hasn't caused Uber's problems. It's just their inability to successfully conceal it, as other big companies do. Kalanick was likely too idealistic and didn't place adequate weight on appearing soft, which allowed the press to rake him over the coals.
Correct. This is why you see almost no billion dollar "tech" companies coming out of Scandinavia or Europe in the past 10 years. The places with so called, work life balance.
It was founded by Niklas Zennström and Janus Friis (Danish) in equal measure. The software was based on Janus Friis' earlier work (the Kazaa p2p network). It was developed by an outsourced team in Estonia.
There was a great scene in a Clive Owen movie - Shoot Em Up - where he goes on a bit of a rant about the correlation between fancy cars, driving like an asshole, and success. I think there's a small level of vague relevance here.
"Mr. Smith: I move my finger one inch to use my turn signal. Why are these assholes so lazy they can't move their finger one fucking measly inch to drive more safely? You wanna know why?
DQ: Not particularly.
Mr. Smith: Because these rich bastards have to be callous and inconsiderate in the first place to make all that money, so when they get on the road, they can't help themselves. They've gotta be callous and inconsiderate drivers too. It's in their nature."
well, unless one suffers from schizophrenia, one's behavior shouldn't change much at work/home/whatever situation (slightly yes, but not significantly). there are only so many masks one can put on themselves and only for so long.
a-holes will remain a-holes, maybe a bit more successful on average, but many times a proper clusterf_ck on others. nothing to envy about
I don't know, during the last decade we've had billion dollar tech companies such as Spotify, King and Klarna come out of Stockholm which isn't the largest hub in Europe.
Europe has plenty of passionate "asshole" founders and other workaholic types. The lower avg valuation of the tech scene has more to do with investors and general aversion to risk, dependency on public sector financing (really awesome but limiting in maneuverability), stronger status quo legislation, reduced VC scene and a more limited early-adopter audience for your products.
That is a spurious relationship at best. Actually you couldn't possibly have chosen a worse example. Scandinavia actually has the highest share of billion-dollar exits compared to the rest of the world (7% of such exits compared to 2% of global GDP and 3% of total European population) http://nordic.businessinsider.com/the-nordics-are-the-best-f...
Anecdotally, famous Nordic startups include Spotify, Skype, Mojang (behind Minecraft), King (behind Candy Crush, Farm Heroes), Rovio and Supercell.
This guy makes claims with 0 evidence. Points he makes:
1. Nordic countries have more über wealthy per capita.
2. Nordic countries are social democracies.
Then he draws the conclusion, with no corroborating evidence, that these two things are inextricably linked. No data to link these two points at all. Nordic countries in general have a high GDP PPP, and that is probably not solely (or at all) due to being social democracies. Scandinavian systems need to be efficient due the nature of their environment, e.g. they have a lot of land and not a lot of population, and fairly harsh climate (e.g. poor farming conditions). I would almost argue that "being cold" is probably a better indicator of national wealth per capita than "being a social democracy" (though admittedly, I haven't done thorough research either). I mean, look at Canada. Look at the non-farming bits of the US vs. the farming bits. Look at North versus South Italy. etc. Industrialization is more efficient and effective in regions where alternative methods of production weren't great in the first place.
For reference, here is the population density of the nations he was comparing (in people per km^2):
The US has 11x the population density of Iceland. Easier to have shared wealth when each person in your country can have 11x the land they could have in another country (with the caveat, of course, that this only applies if you are an industrialized nation).
I mean, just look at one of his "indicators" - billionaires per million people. By that metric, iceland is at that top. But there is only a single billionaire in iceland. Statistically, then, it's easier to be a billionaire in iceland. In practice, however, that is not the case. Things like population subsets need to be considered. In the US, you have a very large population, which is obviously going to impact per capita stats. However, you need to ask what proportion of those people are actually pursuing wealth in a way that could ever result in becoming a billionaire. e.g. a grocery bagger, probably never to be a billionaire. A plumber? Same. A hippy in a commune? Same. No data has been shown to adjust for lack of competition. At the end of the day, you have to look not at the total population, but at how many people are actually competing to become uber wealthy. Because, while attaining wealth isn't a zero-sum game, it certainly isn't an "everyone wins" game either.
Scandinavian countries have a very high proportion of jobs that don't really have a cap on upper income, such as software/game development, banking, music production, etc. because they have exceedingly efficient economies (as he actually touches on).
However, there is not clear reason to believe that they are efficient because they have social democracies. In fact, the converse (they became social democracies because they already had efficient economies) is just as likely, if not more so.
> The US has 11x the population density of Iceland. Easier to have shared wealth when each person in your country can have 11x the land they could have in another country (with the caveat, of course, that this only applies if you are an industrialized nation).
Can you elaborate on this supposed link between population density and shared wealth in developed nations? I don't understand the logical underpinnings of your argument. Developed countries almost by definition are less reliant on local geography.
Moreover, I don't see how space metrics are even relevant here. Iceland may technically have a lot of available "land" - but more than half the country lives in Reykjavik. A similarly lopsided urban / rural population distribution holds true in other Nordic countries.
You are exactly right. I did a poor job of explaining my thinking.
My point about geography and population density needs to be related to my point about industrialization to make any sense.
It is this: Nordic countries have modern economies weighed very heavily towards industrialization/mechanization, but most importantly, they are efficient. As you say, they also have a "lopsided urban / rural population distribution", which is a much better way of saying (thank you) what I was trying to say: Nordic countries have land, but it's not good for the classic wealth generator - farming. This is why the population is focused in urban areas and is not spread out. However, luckily for places like Iceland, modern cities don't really care how good the land is for farming. An oil refinery doesn't care about the health of the soil. A modern factory doesn't care if the terrain is a bit rocky. Solar panels don't care. Mines don't care. etc., etc. Basically all modern industry is fine in a place like Iceland.
This an unexpected and immense boon to making a modern industrialized nation efficient, because on the one hand, you have major population centres with not much in-between (due to the lack of farming), which is in itself efficient, because areas you need to service with public services are greatly reduced. But on the other hand, you have plenty of space to put modern things like factories or new cities or what have you.
Compare this to the US, the country with more arable farmland than any other country on earth. Sure, the US has big population centres, but they are spread out, and many of them are still driven by rural economies. This greatly reduces efficiency, and is generally why the spread out states seem to be further behind the small / densely populated ones.
I've included the percentage of population that is urban below for comparison, according to The World Bank, from 2015. Also, I think it is slightly different when the rural population is doing something like fishing (Nordic) vs farming, but I won't go into that here.
US - 81%
Sweden - 86%
Iceland - 94%
Comparing anything to the US is a little bit silly though, because the US is comprised of 50 states, all of which are quite a bit different from each other. For instance, I bet the uber wealthy per capita in say California or New York is much, much higher than the Nordic countries. So the obvious answer to this video is probably "move to New York or California if you want to make a lot of money". I will say that would probably require more initial capital than a nordic country, but if you have the initial capital, then your chances are probably better. SO THE ACTUAL ANSWER IS: Get a great education and livelihood in Norseland while you're young, get some seed capital, and move to Cali/NYC/etc to really start making bank.
Obviously if you want to become a billionaire, you're not going to move to Plano, TX. Yet Plano is affecting the per capita stats.
I'd rather have a real work life balance (it's not so called, it's very real) than any amount of abuse working for a US style startup would throw at me.
Most of my colleague would as well.
To have the disdain for life you seem to display you must live in a very distant place from a sane version of reality.
That is a bad example - Scandinavia is punching way above it's weight and reputation in terms of number of unicorn startups[1] produced on a per capita basis.
Sweden has a population of 9.8 million yet it has produced Skype, Mojang, Spotify, King, Klarna [0]
Australia has 2.5x the population but only two unicorns. The UK and London market themselves as the capital of unicorns in Europe yet with 6.5x the population they have either the same number of unicorns or just four more (depending how you count them).
That is remarkable for a country like Sweden, especially when considering the strength and size of the Swedish expatriate community in tech around the world (many tend to leave).
In terms of similar results, I think only Singapore is in similar or better unicorn per capita territory.
[1] "unicorn" isn't the best measure since it is a private valuation and you can get different answers depending on who you ask, but most people would recognize those Swedish startups as being successful.
Thanks for your comment! My apologies, no disrespect intended - I should have clarified I meant "left" for the purpose of your IPO. It was and is fantastic to see Australian talent prosper to such heights.
I see many clever companies where I live in Melbourne - however I am saddened by what I perceive as the neglect the government is showing for the tech sector, especially startups; I'm looking e.g. at how share options are taxed. I believe there's a lot of lost opportunity here.
Skype was a started in Sweden, by a Swede and a Dane. They then however set up a dev office in Estonia where the initial client was developed and set up their headquarters in Luxembourg, I'm assuming for tax reasons. They have however always had offices in Stockholm. That being said Microsoft has announced that they're closing the Stockholm Skype office to consolidate the development to Estonia.
So what? Even at Uber, 90% of their employees, the ones who actually made the company as valuable as it is, won't see much in terms of reward for it, and they'll have sacrificed that work-life balance to do so.
I think you mean policing "law" better. Policing "morals" is not possible since as I mentioned morals are relative. It is a dangerous thing if Police or state actors act on moral rather than law.
I can't think of a way to take this statement that makes it true.
I don't know how old you are, but public morality towards sexual harassment just in the U.S. has changed in my lifetime. (For the better, although it is currently ugly and messy, as these changes always are.)
Even attitudes about what constitute harassment vary by culture between similar cultures. Compare Italy and Germany.
It probably doesn't have to come at that cost, it's just not unusual for it to.
If you peal back the layers, probably most rapid growth, hard driving large companies have left a wake of upset and screwed over people behind it. Nobody "gives" you a hundred billion dollar company.. Uber's leadership was just particularly inept at pivoting from "scorched earth" to a slightly less savage strategy.
This will be an interesting pivot to watch, I've been kind of betting with myself when will the first week come with no news or good news for uber. I thought they'd have spun up the pr machine months ago, talking about co2 saved by carpooling or something. Giant company, currently fixed runway, all eyes on it and damaged culture. If uber doesn't die, the next CEO is a superstar.
Being an asshole (in some senses of the word) is necessary, it's just incredibly difficult to compartmentalize the good aspects of being an asshole (holding people to tough promises and standards, being unflinching in stating the truth to people's faces no matter how impolitic or uncomfortable) from the bad aspects of being an asshole (bullying, abuse of power).
Yeah, but winning meant becoming big while loosing money and saddling company with long term problems. Investors likely care about the money thing more.
There is no easy way for these people to make money. Not unless they start charging their customers some multiples of price higher than they are doing currently.
Here in India, I go by the office cab to home everyday. I generally chat with the drivers as to why they don't drive for Uber/Ola etc. The answer is they need to make a good 1300 rupees on a round trip to be profitable, at a minimum of 6 trips per day. A trip with Uber/Ola etc costs 300 rupees(With pool). But even then!
So that's like these people need to start charging a minimum of 5x extra to make profits. At that price these people are no longer a viable means of transport.
To be profitable you need to back to the yellow taxi medallion thingy all over again.
Another definition of 1 oom is anything between sqrt(10) and sqrt(10)*10. Basically 3 to 30. 2 oom, 30 to 300, and so on.
So if the (now edited) original intent was exponential, "more like 10x than 1x (or 100x)", then calling 5x an oom is fine. If the intent was linear, then yes, rounding 5x to 10x is 100 percent error (difference/actual). :)
I'm headed in the opposite direction and reinstalling the Uber app tonight. This is a very convincing capstone to a 180 degree course correction away from everything I disliked about Uber. I also hope Travis can learn and come back and lead the company again in the future.
Please don't further this narrative that sexually harassing women and his general brohaviour are good for business.
They are not. There are ways in which being an asshole ay be good for founders (cf Steve Jobs). Kalanick is just an asshole, and even take-no-prisoner ask-forgiveness-later businesses run much better with a bit of attention to human decency.
has Kalanick himself ever harassed women? I'm genuinely asking, I haven't followed the Uber story closely but I thought the harassment accusations weren't aimed at the CEO.
I don't think anyone's suggesting that sexually harassing women is good for business.
I don't think he has been accused of doing it personally.
It also is weird that matt4077 repeatedly contrasts Kalanick with Steve Jobs in this thread, despite Apple having been accused many times of mean culture, sexism, harassment and cover-ups too.
When another executive (probably illegally) obtained medical records of a woman who was raped by a driver in India, Travis viewed the records and repeatedly aired his belief internally that the whole thing was a setup by a rival company and no rape had occurred.
There are some stories documenting what seems to be a somewhat strange relationship to women, but that's not quite the point. He has, and this seems to be almost undisputed at this point, certainly let far too many serious incidents including sexual harassment and assault go by without taking action.
I've commented all over this thread (as a sister comment points out) because it appears there is a narrative that his attitude towards his employees misbehaviour is at least closely linked to the personality traits that allowed him to be successful. That can be seen, I believe, by the many comparisons to Steve Jobs, for whom it's accepted more widely that it was often hard to work for him because of his perfectionism, but that this was a necessary trait for his success.
The danger here is that people (mis)understand the situation and start excusing inexcusable behaviour, or even imitate it, because they think it's linked to success. It is not. You have to separate the strip-club-going bravado from the other law-breaking, which could at least in theory explain Uber's success.
> it was often hard to work for him because of his perfectionism
Honestly, this feels like a white-wash. Jobs was exceedingly demanding, but that's hardly unique. Jobs was also dishonest, secretive, and simply cruel to the people around him. This comes up over and over, even in his non-business interactions.
I agree that it's an error to lionize Kalanick's behavior. But it's also wrong to say that Jobs' behavior was radically different, or that Kalanick's party-boy bravado is clearly separable from his disregard for the law. Realistically, I think we'd be better off admitting that an urge to ignore boundaries usually applies across many topics.
If Jobs was more capable Kalanick, I don't think that was a function of his nastiness somehow being more noble. He seems to have simply brought a lot more skill to his task.
so he was standing over watching with approval as his employees were accosted? I doubt it. I think what's more likely is he didn't know about the extent of harassment (or didn't care, if you want to be cynical) and the initial HR non-response was likely just a really poor quality HR department designed to manage PR rather than solve employee problems. Organisations are more than just their CEO and while you can lay plenty of blame on him for allowing such a poor quality workplace culture to evolve, that doesn't necessarily mean that he's a big fan of sexual harassment in the workplace.
I bet you do, because nobody in their right mind believes that, and you are obviously attempting to cast the notion that a CEO might know what happens in their company as absurd.
Or do you also think that others believe oversight committees on BoDs literally stand over the managers and nod or grimace?
If he didn't know what HR was up to, he was incompetent.
> that doesn't necessarily mean that he's a big fan of sexual harassment
And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.
I don't think a CEO knows what happens in such a large company at the level of individual employees.
If he didn't know what HR was up to, perhaps he wasn't the director in charge of HR? You can't expect a CEO to know 100% of what's happening in a larger company.
> And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.
> ... managed HR's nonresponse to it.
your quote seems to imply that he went out of his way to make sure HR did nothing about the harassment. I'd be inclined to argue incompetence (or just a lack of ground-level micromanagement) over malice.
This seems like a pretty fruitless discussion. I have no idea why you're so focused on finding claims of malice to argue about. I certainly have said nothing about it. I don't know what's in dude's heart, and frankly don't care. This is about observed behavior.
Unless the facts on the ground are very different than what we've heard, Uber HR had a policy of protecting some people accused of harassment because they were highly valued. In other words, a decision somewhere was made that policy was to prefer key-player retention over the risk of lawsuits, because, obviously, that sort of policy is pretty much guaranteed to lead to lawsuits[1].
I have a great deal of difficulty imagining the HR exec who doesn't realize that - that would be beyond incompetent, well in to senility[2]. I also have difficulty imagining the HR exec who will personally take on the risk of mandating policy about balancing disparate business risks (slowing down by losing productive harassers vs. lawsuits and bad press). That can end careers, and anyone capable of landing a management job at an Uber is exceedingly unlikely to take that risk without taking it up the food chain.
Finally, I find it remarkable that so many people are willing to credit the man with extraordinary genius in business execution while simultaneously arguing his incompetence when it happens to absolve him of shitty behavior.
And with this, I'm done with discussing things I didn't say.
[1] Moving on to speculation, making that choice makes perfect sense in an environment with a value system emphasizing winning at any cost and burning down anything in the way. If they thought first-mover advantage was literally everything and they thought they had enough money to weather any resulting legal problems, that's the rational choice. And especially if you think you're the smartest guy in the room and can get away with it. Not unlike hypothetically deciding to gaslight regulators or steal IP from competitors or invade medical privacy to discredit opponents. For example.
[2] I don't know about other states, but in California, HR for firms over some number of employees are legally required to ensure employees have been trained on sexual harassment law. I'm sure it takes other forms, but generally we get to watch these awful law-firm Flash videos of cartoons being either awkward with or awful to each other, and then have to answer questions about which actions are harassment in order to make sure we paid attention.
You're right. However, the many other worse things Uber did than that sexual harassment case actualy do seem to be good for business - that's why for many years now I was hoping the governments will kill Uber. Unfortunately that did not happen, and it is this fact - not some narrative - that is dangerous, because there will be others willing to try out the "move fast and break laws" business model.
> sexually harassing women and his general brohaviour are good for business
Nowhere has he said this. You're conflating two very different issues. No one is disputing that he is an asshole, etc. OP was making a different point.
> even take-no-prisoner ask-forgiveness-later businesses run much better with a bit of attention to human decency
I'm sort of baffled by seeing someone say this in a comment that's supportive of Steve Jobs. Are there tons of "the human decency of Steve Jobs" stories I've missed? Because I would have said that I've never heard of Jobs showing even a scrap of that, and it worked out pretty well for him.
The things happening under Jobs were different than the things happening under Kalanick, sure. But I don't see where that's a function of anything like decency - it just looks like a cultural difference in what kind of inhumane hostility was happening. Jobs was a perfectionist, but he was also manipulative, cruel, and dishonest in ways totally distinct from that.
People like Steve Jobs weren't successful because they were assholes, they were successful in spite of it. Being manipulative, cruel, and dishonest do not help your business in the long run.
Yes, I agree. But the comment I was replying to seemed to suggest that somehow Kalanick is an asshole in a business-damaging way, while Jobs was an asshole in a necessary, visionary way. It's an idea that's some combination of cultural animus and the Jobs cult of personality - neither of them benefitted from being unpleasant.
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.
> 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.
> 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?
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".
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.
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.
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.
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.
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).
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.
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.
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.
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?
> 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"?
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.
"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.
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 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.
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.
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.
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.
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 !
> 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.
> 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.
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.
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.
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.
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":
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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…
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.
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.
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.
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".
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.
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.
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'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.
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 ...
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.
> 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.)
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.
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.
I concur. This is a very poor decision all of which stems from the snowballing and mob mentality of the outraged.
Companies at this stage in an ultra competitive market (not talking about ride sharing, but self-driving) need their founders to lead and grow. It is just too early and critical to bring in a professional CEO. See Apple.
he could have cleaned ship years ago with all the previous scandals but he was either too stubborn or too arrogant to think any bad news would pull his company down. he was representative of uber's toxic culture and it seems like he should have stepped down right after he was caught bad mouthing a driver FROM HIS OWN COMPANY.
Correct. It's the video where the Uber driver blames Travis personally for him buying cars and his small transportation business failing. I mean, how could an incredibly high interest and high upfront capital car loan into a very speculative and low margin business be risky? It must be Uber and Travis screwing him.
Uber hasn't been able to show a single GAAP-profitable market anywhere, including cities in the US. Rates would have to be more than 100% higher just to archive break even. Scale economics of that magnitude are unheard of with physical products. Self-driving is essentially just a media stunt for them, just like amazons drone delivery news that pop up every year just before christmas.
Just look at the numbers in this article[1] - they need scale economics of two times the cost of the driver of the cab to archive GAAP profitability, which, obviously, is impossible even with self-driving.
can't they just cut their burn rate? I mean it's not like they own a fleet of cars they need to make car payments on and fill with gas to keep operating.... in theory there's no minimum spend to keep operating, is there? if (hypotehtically) they cut spend to approx. nil, and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur?
Yahoo for example is coasting along at a market cap of 53.40B down from its high of over $125 billion[1]. In 1999 dollars. Is it "dead"?
But if they cut it too much, they'll stop growing.
The problem is they need to sustain their 70 billion dollar valuation for investors to be happy.
To be worth 70 billion they have to be either:
Growing at a very fast rate (which requires a very large burn rate to sustain)
Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.
Keep in mind that if their leaked financials are to be believed, they made $6.5 billion in net revenue for 2016. Unfortunately total costs exceed revenue, so they are far from profitable, but that's not exactly chump change.
What are they counting in net revenue? As they bill themselves as a brokerage service (to avoid those pesky employment laws...), I would imagine they only count their commission in net revenue? 6.5 billion is pretty impressive then!
Can you provide a source for this? I'm honestly very curious. I've seen this claim bandied about for years, but I've never seen a source that verifies it. Is Uber really losing money on a marginal basis in developed markets?
Here's an article with citations from November of last year. Note that it does use data from 2015, since at the time that was the most recent publicly-available published data.
obviously the least price-sensitive 5% would remain. it's not like they're running currency exchange or something - people don't have a super set demand curve. maybe 95% of their customers do, but not 100% of their customers... (unlike a currency exchange, for example, which would drop to precisely 0 users worldwide if it increased prices by just 10%, since 100% of any such users are super price-sensitive. likewise if a currency exchange subsidized exchanges by 10% it would have more users the next day - by far - than people on Earth. easily a trillion "users", or whatever the rate limit is for signing up and performing exchanges. try to visualize these two different demand curves and you will see that Uber should still have some users if they raise their prices, because not all of them are completely price sensitive and only use it because it subsidizes rides, and not for any brand or convenience reasons. unlike a commodity currency exchange which exists under ironclad demand curves that drop to 0 if you move along it even slightly. picture these curves.)
It's probably eminently practical for a company of this type to cherry pick the most profitable core areas of the most profitable urban areas. Which is effectively what services like Instacart do. But it's not scalable and won't command a high valuation.
Just making a profit isn't enough; they need to make a big profit. Kalanick could probably turn a profit if he fired the whole company and drove a cab himself, but that's not gonna placate the investors who sunk hundreds of millions into it.
Though not yet proven, wasn't a similar logic used by HR (or higher management) to justify not taking action against "star performers" for their transgressions?
Almost exactly the same, came to mind when I read that also.
I suppose there's some tipping point of "very valuable" and "not that badly behaved" where the argument is actually valid (see: all the Steve Jobs references in this thread). But at that point I guess the ethical solution is to make it very clear what new hires are in for, and pay a healthy "dealing with this person" bonus (see: Steve Jobs, again).
Does anyone think that Amazon could be eying Uber but waiting for them to lose value? Seems like it would be a natural fit for their delivery network especially considering their recent purchase of Whole Foods.
unless uber's logistics is better than amazon's (spoiler: they're not) uber is only valuable as a brand to amazon. brand probably doesn't move the needle for delivering groceries
There's no doubt that Amazon has much more established delivery logistics than Uber at this point, but I wonder if the real value would come from another angle:
Uber has been pushing hard on self-driving cars (I mean, in the long term, it strikes me as their only viable business model, so it makes sense). By my best estimates, salary for delivery drivers for Amazon packages run somewhere between $6B and $10B per year (for comparison, if I remember correctly, Amazon's revenue is somewhere around $35B/yr). Automating delivery could be a HUGE deal for them, and an opportunity to scoop up a major player in the autonomous driving space might look very appealing.
Then again, with Washington State throwing the doors open for autonomous testing, Amazon could likely develop their own system on their own turf for less, even if Uber's valuation goes WAY down.
At this point, sure. In all likelihood, the actual operating business is more fairly priced in a fire sale. Free up overhead by trimming down the "eat the world" grandiose plans, cut growth-for-the-sake-of-fundraising subsidies, add some haircuts on bondholders, and you've got something that will reasonably work.
From a tech perspective, we have developed systems that actually work much better than what Uber has to offer for our use-cases. Their systems have been developed to solve for the "real-time" dispatching scenarios. That's not what we're optimizing for with Flex. Hint: it's the opposite.
Alternate take (not originally mine): the bad state of Uber's financials is the cause of Kalanick's ousting. If the company had a longer runway, or wasn't facing the prospect of a down-round, he could have gotten away with anything.
This seems like the obvious rebuttal. Kalanick could have resisted any simple vote to remove, so this isn't a case of liking the results but not the methods. If Uber had strong financial footing, Kalanick would have been able to stay (and there would have been less interest in removing him).
Uber needs the network effect. Lower usage means fewer uber drivers, which means it's harder for me to get a lift, which makes me use something else. So a relatively small dip can cause a collapse un usage.
Raising prices could include raising (by not as much) payouts to drivers, which could make them more attractive to drive than Lyft. Then again, if too many customers leave, then you have a surplus of drivers who get frustrated because they can't get fares. But perhaps there's a balancing point somewhere in the middle.
And many/most Uber drivers also drive for Lyft. There's no harm in leaving both apps on and grabbing a more-elusive (but higher) Uber fare when one comes along.
I'm curious how much Kalanick has already taken off the table. That may be a motivating factor in his decision. If he has already pocketed hundreds of millions, he may understand that this could well be the death of the company, but just isn't motivated enough to fight these investors and is willing to let them burn the company to the ground. I wouldn't go as far as to say he doesn't care anymore, but being forced out of your job and the potential evaporation of billions in paper wealth isn't such a catastrophe if you already have enough money for several lifetimes in the bank.
I hadn't heard that. When did he state this, and is it still accurate as of today? It's possible he sold shares in the last few weeks during the run-up to this decision. Or maybe he hasn't sold shares, but there are other ways that he could have profited handsomely from Uber already. Cash bonuses, private sale of options (has he said he hasn't sold an option?) etc. I'm just saying if he has enough in the bank, he may have decided it wasn't worth it to fight his investors, the media, and basically everyone else that has jumped on the anti-Kalanik bandwagon.
It's actually would be a major news point I think. Whether or not Travis sells his shares is what's gonna be decisive of his position in the company and possible future ambitions.
Perhaps he pledged a small fraction of his shares to collateralize a non-recourse loan. This is one way to monetize equity without selling it.
The lender takes the risks as to share value and liquidity. If presented early in Uber's climbing valuation curve, it probably would have looked like a good opportunity to lenders.
> Kalanick is a jerk, but he created that insane valuation.
I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.
I'm very optimistic about this change. To me, Kalanick, and the culture he bread, were toxic to Uber.
I'm reminded of how Microsoft's share price jumped by 12% the day Steve Ballmer's retirement plans were announced. Microsoft has been on a major run ever since. Let's hope that we see something similar here.
Microsoft had a storied past with decades of profitability behind it. They were shedding an operational CEO who failed to succeed in Mobile and made expensive mistakes in tablets (Windows RT) along with the Windows Vista debacle happening under his watch.
Uber has lived in Unicorn land thus far. The potential to turn a profit has buoyed them but that cash bubble seems to be running out of fumes. They could sell for 1/10th of what they raised money at. Time will tell.
It's a bad time for Travis to be handing over the reigns because he clearly hasn't built a command team to takeover and the fraternity atmosphere is toxic enough that as these new leaders step in I'm afraid the middle management will view them as "illegitimate" leaders.
Time will tell. I hope for the sake of all the people who hold Uber stock as part of their compensation that they get a pay day but it's a gamble.
> I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.
Nope, This is wrong. Kalanick stood in front in the fight against the City officials and Taxi unions across the globe. Uber could've been done and dusted had it been left as a product to be sold by itself. Kalanick pushed Uber up high against the current of water, which is not exactly similar to running a Social Media Company.
That might be a big deal in America, but it has not been part of Uber's appeal in Australia. Uber here is absolutely focused on the product experience.
If anything, there's a proportion of people who supported local government rules and existing taxi services over the American interloper, a counter-balance to the anti-union and anti-municipal crowd.
Please be mindful that the American experience does not translate globally, even to other english-speaking western countries!
I think you're really just reinforcing the point. He's been willing to do whatever it takes. In the US that meant testing how far he could push and how many regulations he could bend and break before people called him on it. In Australia, apparently, that means first pushing the product experience as far as possible to convince people Uber is much more desirable than taxis.
And regardless of that, it doesn't matter: by the time Uber started operating in Australia (or any non-US country, for that matter), they already had a history of pushing hard against existing norms. Uber would have never even gotten to the point where expanding outside the US would have been possible if it hadn't been for Kalanick.
Sure, he's a jerk, but to claim that he had nothing to do with Uber's expansion after launch is just absurd.
'Software company, Not a taxi company' argument was used extensively to circumvent license and medallion regulations. On top of it they used VC money to drive down the prices by 4x-5x.
Several tens of thousands of drivers in every state in every country they went to got shafted because of these moves.
So yes he was very brutal and ruthless upfront. You can't replace that kind of human quality easily.
As an Australian - I thought Uber's main appeal here was price. The taxi product experience, from everything I've heard, is far worse in the US than here.
Uber's appeal in most markets is exactly that, product and pricing.
Speaking from a place where taxi service was terrible, inefficient, expensive, often corrupt and dangerous, Uber came in like a savior, when the government went after Uber people came to Uber's defense because now we can't go back to the way it was.
To be fair I think that is the same as most places Uber has been to.
> Nope, This is wrong. Kalanick stood in front in the fight against the City officials and Taxi unions across the globe.
Don't kid yourself, this fight was fought by lawyers and lobbyists.
Uber financed one side of this fight, but seeing as the outcome of this fight was critical to Uber's business model, that wasn't some genius insight, that was self-preservation.
> it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.
Haha don't know where to start. Facebook could have gone to shit in so many ways just like all the predecessors like Myspace and Friendster, but they made all the right decisions and won. Same goes for Uber.
No no, you've got it a little bit backwards. Right now, the biggest profits for capital are in being bearish about Uber and shorting Uber. This is in the nature of amoral capitalist investment: all the right decisions are 'supporting and enabling Uber' right up to the point where the bubble of valuation pops and then the only right decisions are 'bailing and running away from Uber'.
Kalanick's right decisions are now based on how much he was lying when he said he hadn't divested the slightest bit from Uber. I'm guessing that everyone read his character well, and that he was in fact lying on a massive scale and has many lifetimes worth of stashed-away wealth. Right now, winning for him means avoiding prosecution and jail (probably easy to do) and Uber is over, already.
So Uber lost, and anyone still clinging to Uber has lost (but there will be amazingly few of those). It's the frog and scorpion fable, really. Travis isn't the scorpion, and Uber isn't the frog. Uber is the scorpion and Wall Street is the frog.
Wouldn't investors be able to look at ownership information to see if Travis's shares decreased? I doubt all of the investors would take him at face value, especially the ones who publicly criticized him.
It's essentially the same mechanism: the terminology is immediately understood. The market is public opinion, in a rather special public. If these people all 'short' Uber, it might not even go public. I guess the equivalent would be trying to take all the VC money back? And obviously the equivalent to a long position would be investing more VC money in Uber.
Nobody would seriously argue that there's no difference between the two because Uber doesn't exist yet in 'stock' terms. They need to translate the initial investor enthusiasm into an IPO, so short/long spells out the likely climate for said IPO.
What do i have a little bit backwards? You are free to talk about your opinion but it's kinda confusing when you just reply randomly to an unrelated thread.
I am talking about how execution matters, because parent said Uber just worked on its own to get where they have, just like Facebook worked on its own to get where they have. None of these are true.
My comment has nothing to do with wall street or shorting or whatever concepts you bring up.
You've said 'Uber and Facebook made all the right decisions and won'. I think you've got that backwards (and was indeed replying to you): I think it only looked like they made right decisions because Wall Street looked at those decisions and went 'hot damn, one of us!'.
Facebook may have won. I think you'll find Uber didn't win, because Wall Street needed Uber to remain the Travis Uber, in spite of any laws or limitations, and that's clearly no longer true.
There doesn't have to be a single global monopolist. There probably won't be.
People do move, and the convenience of one app to hail taxis everywhere is appealing. But then again, people don't move that often that installing the local taxi app is too much of an assle.
Uber and Lyft operate in a space where there's a huge barrier to entry capital-wise.
This is not the case for 100% Internet based businesses like Facebook.
So they're really completely different models and therefore the competitive landscape can't resemble each other. It's more fair to compare the Uber-Lyft dynamic to rental car businesses like Enterprise-Hertz.
My comment that Kalanick didn't have much to do with it seems to be generating a lot of downvotes. This is surprising to me.
The reason I compared Uber's success to Facebook was because demand for the product was so great, it was viral. It's hard to mess up a product that is so incredibly popular.
Perhaps Instagram would have been a better example to communicate my point. Its initial success was clearly not anticipated even by its founders, and its success continued despite numerous hiccups and screwups in its early days. I posit that its founders ability, which was clearly limited (by their own accounts), had much to do with its success.
Kalanick had everything to do with the valuation. This, however, is a problem: what you might think of as premature optimization. Yes, Kalanick is why Uber got an impossibly high valuation from the collective fantasy known as Wall Street: they were operating based on personalities and primitive ideas of conflict, rather than a real understanding of how systems work.
But it was a premature optimization because those responsible for turning 'viciously competitive evil guy' into raw capital failed to acknowledge that he'd screw them in turn as soon as he needed an exit strategy. You simply cannot turn to childish human dominance battles as a model for what will work in large systems and interdependent markets.Even propping up your 'pet winner' with near-infinite capital won't save you forever.
Facebook had a major ace in the hole by starting at Harvard. That's the network pretty much everyone wants to be a part of.
The irony is that in growing, FB traded down that cachet -- but managed to transition from cohort value to network value fairly successfully.
This is an argument I've made for years, I'm happy to see that I'm not the only one -- danah boyd has mentioned it several times as well.
I'm not saying Zuck didn't execute well -- the advantage still could have been blown (and I've only just learnt of a similar network started IIRC at Columbia University which didn't go as well). But for all the things Zuck can claim, building Harvard's social appeal is not one of them.
Facebook did many things right. How many people really thought Facebook would be a $450B company in 2017, good for top 5 most valuable company, and pulling in over a billion in profit a month. Yes most of the money is being made on mobile which likely wasn't the master plan of Zuckerberg or others. But things had to go right up to 2013/2014 to allow Facebook to become huge in revenue and profits with its mobile business.
We don't know exactly how much influence Zuckerberg had in all the decisions. For example the common theme for years was for there to be uproar after any major feature or change.
Like the news feed that is now ubiquitous. A worse company might have feared the backlash and slowed down on features and growing the news feed.
I assume Zuckerberg was also fundamental in acquiring Instagram and Whatsapp. Instagram is worth tens of billions now. Whatsapp has 1.2B or so monthly users. There were many comments on how overpriced and silly the Whatsapp purchase was. But most of it was in stocks and the cash at the time may have been a lot ($4B), but Facebook gets that much per month now. Whatsapp tripled its users since its acquisition.
A lot of tech people disliked the Messenger split off. But that seems to be working out for the business too. It is becoming its own platform now and can also boast 1B+ users per month.
Maybe anyone would've done all this. I don't know. But I do know it was Zuckerberg in charge when all this occurred.
"If you want a higher building, you should build strong columns"
They will change the company's current culture. Slow down the pace of growth to try to adjust what is wrong. Probably focus on where they have margin to operate. This is clear in Gary ( Uber Co founder) text on Medium.
"In a highly competitive market it is easy to become obsessed with growth, instead of taking the time to ensure you’re on the right path. Now is that time… to pause"[0]
Their valuation is entirely and utterly founded on the idea of growth, and that there is no other path. They have absolutely no chance of turning around and telling Wall Street, of all people, that it's time to pause. Wall Street only loved them when they moved fast and broke everything there was to break.
This is death. I mean, it's sensible talk, in another context it would be seen as enlightened, in a larger sense it's the right answer.
Uber aren't IN another context. They depend completely on Wall Street continuing to think they are the biggest shark that ever sharked, and now that's ruined and the only big investment opportunities are in betting AGAINST Uber. Most likely the smartest money is already out.
This is death. Shouldn't be, in a more sensible context, but it absolutely is. You can't tell Wall Street 'it is time to think sustainability' when they bet on you eating the goddamn world for them.
They currently have no CEO, CFO or COO among other unfilled positions. Even once they bring on new people, it will take them time to become acquainted with Uber's massive worldwide operation... All taking place within a rapidly changing industry.
Not every round has to be an up round. They could decrease their valuation significantly and still survive. Surely there's plenty of value left in Uber.
why can't they just stop the burn rate, most drivers won't jump ship and they can have a skeleton crew? or does this prevent them paying back investors?
You'd need to know what the burn rate is composed of: their engineering organisation might be less expensive than the marketing budget in a single major market.
If they cut ad spend and raise costs, then their growth story stops and other competitors have a window to move.
The go-to reading (at least a few years ago) for handling the difficulties of burn rate at a high-growth company is 'Mastering the Rockefeller Habits' by Verne Harnish, the chapter on cashflow. I think 'The hard thing about hard things' also talks about how this situation can kill your company if you're unlucky or unprepared
Being a glorified taxi dispatcher probably isn't Uber's idea of a successful endgame. They desperately want to be a big player in the future of autonomous transportation and are clearly willing to bet the success of their taxi dispatching company to do so. Cutting their burn rate to a skeleton crew means giving up on that ambition and spending the rest of their 'life' as a reasonably successful company, with perhaps some modest profits, dispatching taxis via a phone app, and neither they nor their investors seem to want that.
I may be simplistic or naïve, but if your business isn't profitable, that's what kills it. Travis or no Travis, it doesn't seem like Uber has found a way to cut a profit yet and at some point, profit becomes a requirement.
What software? Their self-driving tech is tainted by Waymo's claim they stole it, so it would have to be very, very good for some company taking the risk of using it. I doubt it is _that_ good, so I don't expect to many buyers for it.
Traditional firms will generally prefer debt to equity as you will generally get a better shareholder return on debt. VC backed firms do not usually raise debt -- even if it is preferred -- because they are viewed as too risky by banks. When VC-backed firms raise debt it is because they are transitioning out of high risk to the stability of a established and predictable firm.
There is a lot of vested interest in this company - it will for sure never go down. Plenty of investors around the world who will buy in. Valuation is a different topic - but this company is here for the long haul.
I agree ... but I wonder if the only reason Uber has grown is the way that it's bullied its drivers and the communities it "serves". I'd say that his personality and drive has caused both the companies successes and its problems. I wish there was a convenient way to short Uber via my discount broker.
Highly unlikely. Why? Investors who stomach multi-billion dollar annual losses will probably just shrug off the recent bit of trouble. If the choice is to either write off $15 billion or to give another couple to help the company go through a rough patch (what a buying opportunity!) I think I know what investors are going to do.
Kalanick's head has now rolled (not that it really hurts him much personally though, it's probably even a relief for him) but seriously a whole nother level of crap would have to happen with Uber before investors start getting comfortable with the thought of letting go those $15 billion.
Your comment is predicated on the fallacy that Uber's success is merely a function of runway / the ability to find new investors.
Bear in mind that the company's growth has been driven by its ability to run a very, very highly-performant backend -- and that's in turn a matter of getting the very best engineering talent on board.
Some, perhaps most of that talent is already pissed off about the fratty work environment and questionable leadership decisions. Recently, their options exercise window changed from 30 days to 7 years[0].
Angry employees + management turnover/uncertainty + limited runway + new rule that basically you don't lose your options when you quit = I'm officially an U-Bear.
On a related topic, I think people's schadenfreude for Travis is getting out of control and he's becoming a bit of a totem for everything that's wrong with SV....while his issues are largely self-inflicted ("boob-er" / treating drivers like crap on camera / etc), all the hatred directed toward him seems excessive in context. The guy just lost his mother, maybe cut him some slack?
It practically eliminates the opportunity-cost of leaving. Having seven years to be able to come up with the liquidity to pay the strike/taxes -- plus, critically, being able to wait several years to get a better understanding of whether the options have value before striking -- completely changes the calculus of whether to depart a company, whether because you're unhappy or because you've found something better elsewhere.
Agree this is good for Uber employees and I'm happy they have significantly less of an impediment to leaving than most other workers at pre-exit startups.
Uber is evil. They always have been. I've been trying to talk my friends into boycotting them for years because of their corrupt practices, and the various scams they've run on their drivers. Their highly-performant backend was used to place "ghost cars" and avoid government officials. The timing on this is, yes, frustratingly arbitrary, but this really is the whirlwind they have sown.
Especially interesting is that Uber may already have been essentially doomed, and now it is will be very easy to make the case what killed Uber was "do the right thing" forced-resignation of the founder by 5 of his investors. That seems like lose/lose for them.
Ever rising valuations can't save the company, so I don't see how Kalanick's departure threatens its prospects for survival. "More of the same" isn't a winning strategy for a company that's not on the right track.
They're spending a lot. If they throttle back to the core business they might be able to squeak by. I do wonder how feasible that is given how bizzare their cap table is.
Seriously, it's mind-boggling what they're burning cash on. Driverless cars. Drone helicopters. Ubereats. Who knows what other pie in the sky tech that is decades away. Why would you burn cash on such things when the core business is not profitable?
Isn't this a little like Madoff being vital to Madoff Securities? Uber's insane market cap is a direct consequence of a whole bunch of unethical, illegal, and barely legal activities.
Just a few years ago, Uber was the place to be, the startup to imitate. How many Uber for X pitches did we see? The entire story makes me sad (not the resignation, that was kind of expected) - Uber was an icon of "disruption" and of challenging the status quo. Now, it's just a sad story and people prefer to not be associated with it.
Without support of his major investors, Uber would struggle to raise additional capital and would probably go bankrupt in 2018-2019 with their burn rate. They asked him to leave, but not nicely.
None of the accusations against Uber and Kalanick are about behaviour that is "good business" in any imaginable way. Uber gains nothing from sexually harassing its employees.
...and if that's a 21st Century thing, so be it.Maybe you should do 21st-century things like being a good guy, considering this is the 21st century.
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[ 2.8 ms ] story [ 401 ms ] threadEdit: HN discussion of Susan J. Fowler's original blog post: https://news.ycombinator.com/item?id=13682022
Questions I'd be interested in your thoughts on:
- does it actually change corporate behaviour?
- is it a good thing that press (which it seems is sometimes influenceable) can effectively hire and fire by continued pressure?
(And please note that's not whether this case was wrong, but whether it opens the possibility of intentionally targeted public campaigns to remove someone from a company sponsored by unstated private reasons. And those are genuine, not rhetorical, questions.)
That remains to be seen, obviously. But a constant in the reports about Uber was that unscrupulous behaviour (e.g. obtaining the medical records of a rape victim) was enabled by the CEO. One might presume that a change in leadership will mean better behaviour. It will also probably mean that Uber can start hiring for all the C-level positions that are currently vacant, bringing in fresh blood and a different way of doing things.
> is it a good thing that press can effectively hire and fire by continued pressure
That is an argument that is as old as the oldest printed pamphlet. I'm not going to argue it here, but I'm glad that the press reported on wrongdoing by high-ups at Uber, and I'm glad that users and investors responded to that information.
If it holds people in power accountable for their actions, then yes, it's a good thing. I agree using the press may be a double edged sword, but if businesses and governments fail to keep their executives and personnel from harassing their employees, then what other recourse is there?
And yes: even as a private company, you're not immune from scrutiny of your action by the public. Your company is part of society, depends on the institutions, and can't ride roughshod over established norms of behaviour without also accepting the consequences.
Most of Kalanick's trouble started with Susan Fowler speaking out. Please believe women when they report harassment in the workplace. Many of their reports may not be as clear cut as Mrs. Fowler's.
That being said, kudos to anyone courageous enough to speak the truth even at the risk of vilification.
That's sounds like giving accusers too much power, especially if it leads to firing. It's not as if people don't lie.
He says on the same line.
Do not believe every word anyone says as the absolute truth of an event. Evidence, corroboration, attempts to be objective -- these are all the rights of the accused.
Believe the complainant but do not assume they are correct. Our memories are the movies based on real events.
Take measures based as though the complaints are made in good faith.
If you assume them true then you would act as if the investigation has already taken place, and determined that they are true. If you're going to act like that why would you need an investigation?
If complaints or concerns are raised in good faith then you have no need to mistrust the representation and instead can look to the facts and context of the situation.
Believing someone is not important, understanding the sequence of events that led to them speaking up is.
Responding as if someone is acting in good faith means that
- you believe that
- they believe that
- they are true
On the other hand, if you believe someone it means that
- you believe that
- they are true
Using "believe" to mean the first situation only makes everyone's meaning less clear.
That should give you pause when you claim (incorrectly) that a such a narrow usage of language is correct.
All three points lead to different actions and the one in the middle seems to be the most appropriate.
Which is to say, do more than just investigate. Take action as though the complaints are true, although not necessarily all the action you would take if you knew the complaint to be exactly factual.
You should always investigate, even if (to borrow your formatting)
you believe that they believe that their statements are false
and are making a bad faith accusation. It would still be correct to investigate if that was your belief. If you believed that the accusations were entirely factual, then perhaps the immediate step would be to fire someone. But if instead you simply believe that the person is accusing someone of something in good faith, something has already gone wrong and there is a problem. Even if no one did anything wrong.
To put it in terms that might be more familiar, every complaint is an incident and should involve a (blameless) postmortem that asks how the system failed such that someone felt the need to complain. And action should be taken in response. Sometimes, the system failed in such a way that it allowed a malicious actor to do a bad thing, and that malicious actor should be reprimanded, independent of the postmortem.
Believe the accuser when writing the postmortem, and begin incident response as soon as possible. Investigate fully before reprimanding a potential malicious actor.
What's that supposed to mean?
You don't have to assume truth, just believe they mean their account, you assume good faith. Believe them and allow that belief to start the process of uncovering what the truth is.
There's a reason Listen & Believe is a thing and it's not because anyone is saying "you should have unquestioned faith in what someone says".
"Believe" has always implied to me "understands to be true". How can I believe anything based only on the words of a single person? (Except trivial things like believing that they said something to you)
I have primarily heard the phrase "listen and believe" used by people who think it is impossible for certain kinds of people to understand the experiences of other kinds of people.
Following that argument, the claim is that if you assert an experience I am not capable of understanding then I must accept it, for I have no grounds to refute it.
This has always seemed like unquestioned faith to me, for I think any argument should be able to stand on it's own merit. Maybe I am missing some nuance to the argument, or perhaps there is more going on, but in any case 'believe' seems to be the wrong word.
I'm using the usage that social and case workers use when they talk about believing victims.
So... frankly, I don't really care what HN thinks of the usage.
Note, again, that nothing you said is counter to the "good faith" usage. You're assuming they are speaking the truth as they see it. That's all.
That's how any investigation that involves eye witness testimony works.
It's also the recommended practice for improving reporting and investigation so, again, don't really care what HN thinks about the term: the experts in the field recommended it.
Here's a relevant scenario: I'm a man, I hold a managerial position and I have to choose between hiring another man or a woman as a one of my direct-reports. Let's say both contenders have the same qualifications, they're both equally fit for the job, but then, I, as a manager, start thinking that if I hire the woman she will then possibly think of filing a sexual harassment complaint down the line in order to take my job. Remember the "believe" part, which means that the sexual complaint doesn't even need to be backed by anything real, because most of the times after the complaint has been made public the damage is already done for me, as a male manager, no matter what the investigation finds (if it manages to find anything). So I choose the man over the woman as my direct-report.
The more general point would be, be aware of the second order effects of changes you promote. For example, revocation of innocent-until-proven-guilty would almost certainly reduce the chances of people who have blown the whistle of being hired again, as they would present a much higher risk to prospective companies, regardless of whether their claims were true. The fact that they would blow the whistle at all would serve as a huge red flag.
Of course, I don't actually know the incidence of sexual harassment at workplaces, and have no idea whether false reports are even an issue. I strongly doubt they are, but I can somewhat understand male managers fear of them, given that they can ruin careers and marriages. As much as sexual harassment is a problem, I don't think assumption of guilt is an appropriate or long-term effective solution.
b. Because the costs of a false negative is forcing someone to continue working for/with someone they clearly feel uncomfortable around.
(compare to crimes, where it's much easier to protect the victim even without any sanctions against the accused)
Anyone accused of sexual harassment should have a chance to give their side of the story and an investigation should be performed, but the company should act based on what HR believes happened, not just what HR can prove happened. Neither the accuser nor the accused has the presumption of being right or the burden of proof.
Also note that it is in general impossible to prove that something did not happen, as opposed to proving it did, as things that did not happen have no evidence of their occurrence by definition...
This is incorrect. "Innocent until proven guilty" and "preponderance of evidence" are not two levels on one scale. They are distinct legal principles which can be applied at the same time or separately. Both, however, relate to the burden of proof and differ between criminal and civil trials, which is probably the source of the confusion.
Crudely: one standard is about what happens without sufficient evidence, the other is about how much evidence is sufficient.
---
The burden of proof is a general concept of which party in a trial must prove their claims, and to what standard. "Presumption of innocence" is one possible answer to "which party", while "preponderance of evidence" is a possible answer to "what standard".
The party bearing the burden of proof for an issue is the party which must provide evidence. Simply: if everyone at the trial rests without offering any evidence, whoever bears the burden of proof loses. In criminal trials, this is the presumption of innocence you mention. In civil trials, the matter is more complicated, but in effect the plaintiff bears the (initial) burden. In asset forfeiture cases, infamously, the government bears the burden in the initial trial (against the asset), but the owner bears the burden of proof as a third-party claimant if they want their property back.
(It's emphatically not true that neither side has the burden of proof in civil trials. There is always a burden of proof when a claim is being made, to determine what happens if no evidence is provided. However, civil cases frequently involve affirmative defenses, in which each party bears the burden of proof for the claims made by that party. Both, not neither.)
The standard of proof, meanwhile, is the hurdle which must be cleared by whoever bears the burden of proof. It's how convincing their claim must be to be accepted. In civil cases, yes, this is a "preponderance of evidence", interpreted as the claim being more likely than not. In criminal cases, this is "beyond a reasonable doubt" - that's on the same scale as preponderance. Other standards exist outside of trial settings: in various contexts US law employs standards like "some evidence" and "reasonable suspicion".
---
I'm not (just) being pedantic here. If we're talking about borrowing a legal standard for deciding against someone in a dispute, I think it's very important that we're clear on what we mean.
It's possible to vary both the size and placement of the burden. We could believe the accuser (burden on the accused), but hold the accused to a mere "some credible evidence" standard for their defense. We could believe the accused and demand evidence "beyond a reasonable doubt", or lower that to "preponderance of evidence", or even further. Or we could even use some standard not borrowed from the courts.
But right now, almost no one clarifies what they mean. The results of moving the burden will be very different from the results of lessening the burden, and it's important to understand what we're proposing.
Innocent until proven guilty is the standard for depriving someone of their freedom, not their job. If the harassment rises to the level of sexual assault, it's the standard the prosecutor will use. Otherwise, it's irrelevant in the context of sexual harassment.
A well-run company will have proper procedures, processes in place to deal with work place issues.
Management and all staff will also be required to take training on a continuous basis.
Professionally managed organizations don't walk around "believing" this or that or spouting off "innocent until proven guilty" and such
:)
This is miserable. Unless the definition of sexual harassment changes every 6 months, you should not be forcing employees to retake these training sessions.
Fry: "I heard one time you single-handedly defeated a horde of rampaging somethings in the something something system"
Brannigan: "Killbots? A trifle. It was simply a matter of outsmarting them."
Fry: "Wow, I never would've thought of that."
Brannigan: "You see, killbots have a preset kill limit. Knowing their weakness, I sent wave after wave of my own men at them until they reached their limit and shut down. Kif, show them the medal I won."
I'm pushed to think that the "media" didn't report on it too much because the problems were economic. But as an average media company, that story doesn't sell, it doesn't interest the average reader, so they don't report it that much. Then the sexual harrasment scandal surfaced and _that_ is when the media jumped on board, because everybody loves getting political and hearing about scandals and feminism and all those kind of controversial topics.
If anything, the scandal damaged Uber's public image, but that is a superficial problem in proportion to their disasterous funding model and general financials.
This meme is often repeated in context of sexual harrassment (workplace or otherwise). How do you square that with the fact that women are as capable of laying and misleading as men are? How do you square that with "innocent until proven guilty" when accusation are leveled against another individual or company.
Sure everyone is capable of lying but P(harassment occurred | report of harassment) is much greater than P(harassment did not occur | report of harassment).
Care to put some real numbers on that?
Absolutely f-ing not. I'm not even sure what sort of mindset one needs to have to arrive at this conclusion.
Did you even consider the fact how damaging a false accusation can be to the other person?
No. Just no.
Standards for the burden of proof in a court of law and in the workplace are and should be different.
I bet if you are ever on the receiving end of a false accusation you will be singing a different tune. You will be shouting from the hilltops about the unfairness of it all, suing the company and accuser for defamation and writing blog posts to tell your side of the story, because even a mere accusation could ruin your entire career and your personal life. Your spouse, kids, neighbours, friends, business partners, customers will see this accusation attached to your name and wonder if there's truth to that.
This situation played out exactly as I described with a noted feminist activist, Richard Carrier, who had the exact perspective you did until he got accused of harrassment.
Good luck to you.
I don't know, I could say the same about women and men who show up to work and just want to do their jobs without coworkers trying to grope them, make lewd comments, withhold promotions or offer interesting work only in exchange for sexual favors. That seems pretty unfair too and we hear about that happening far more often than we hear about people being unjustly accused.
I'm a rich white guy, if someone makes a false accusation against me and I have to leave a company, tough luck; I'll be OK.
Obviously I would prefer if people do not make false accusations, and a company should try in the event of any allegation to determine whether it has a factual basis. But if it's a he said she said situation I am going to side with the accuser.
The wild thing is that the situation you are describing happens literally weekly in tech - prominent women do shout about the unfairness of it all, about reporting harassment and having nothing happen, or being forced out of companies after reporting. Many women choose to leave.
Ah. Isn't that perfect. It's great you're rich and your life could never be ruined by false accusations. Screw everyone else eh?
>But if it's a he said she said situation I am going to side with the accuser
That's insane.
>The wild thing is that the situation you are describing happens literally weekly in tech - prominent women do shout about the unfairness of it all, about reporting harassment and having nothing happen, or being forced out of companies after reporting. Many women choose to leave
You keep saying things like this but at some point you may want to back it up with some real numbers otherwise I'll just assume you're making things up.
Off my recent twitter feed... maybe I'll start saving these when people ask for proof
https://twitter.com/jilljubs/status/874985023350472704 https://twitter.com/aprilwensel/status/875104375244414977 https://twitter.com/paulcbetts/status/723595214875578368
Edit:
I want to add that I'm genuinely interested in knowing if a) there is a problem and b) the scope of the problem. Tech industry is one of the most progressive out there and tech hubs are based in very progressive regions - so what are we talking about here? All I see is people like you who not only have nothing to back up their claims with but also want to push for insane policies based on non-existent evidence ( policies which you admitted will never hurt you due to your wealth ).
https://techcrunch.com/2016/01/11/elephant-in-the-valley-sur...
Not exactly hard to find. We can quibble about the exact percentages and the methodology but the odds of the real percentage being close to 0 when ~50% of women reported an inappropriate advance from a superior are nil.
You're asking for a completely unreasonable standard to be upheld. If an employee said they got mugged and their laptop was missing, you wouldn't start asking if they were out late at night, were they drinking, "why did you put yourself in that situation," we'll replace your laptop the next time you lose it, etc, you'd say "that's awful" and replace their laptop.
It should go without saying, but this is independent of how wrong other commenters are. Someone else being wrong does not confer the right to drag the discussion down further.
Let's say a person in your company tells you their boss is sexually harrassing them. You're on reasonably good terms with both the accuser and the accused.
Some responses you might make in this case:
- Deflect. Pretend you didn't hear it. Or, if pressed: "This isn't something I know anything about. You'd better take that up with them. Or maybe you could talk to HR?"
- Express skepticism: "Well, I don't know if you're lying or not. Sounds like a he-said she-said situation. Sorry."
- Express emotional support: "That sounds terrible! I'm sorry you're going through this, and I appreciate that it must be very hard for you to talk about this. How can I help?"
- Provide logistical support: "Let's get to the bottom of this."
- Express complete solidarity: "That bastard! We're going to nail them right to the wall for this. Right. To. The. Wall."
- Express complete solidarity for the accused: "How could you say this about them? They're a good person! They would never intentionally harass you. It must be a misunderstanding!"
Now: which responses might fall under the sentiment of "please believe women"? Which wouldn't? Which responses violate your ethical norms?
Seems to me, if you're purely caught up in the legalism of the situation, I'm guessing your response is going to be "skepticism," whether you want it to be or not.
All companies will have a process for handling harrassment claims and process for resolving them. Accusations should be directed to HR (or suitable designated party at the company). If the harrassment continues you may have to involve the legal system - that's what it's there for.
They go to HR and a week later they're let go – no real explanation given. (Hey, it's at will employment here in CA.) Or, as happens at Uber, nothing happens, and your coworker continues to complain about harrassing behavior (if they're even talking to you at this point). What do you do now?
My point is: the real world is messy, and doesn't come with cut-and-dried definitions and solutions. Processes can help some, but true neutrality comes at a cost. Corrupt and sexist agencies in your company can continue to operate with aplomb. Your relationship will be damaged with coworkers who have had this happen to them – to say nothing of how it damages them when they have this happen and all of their coworkers look nervously away. It can poison your relationship to the company and all the good people that work there.
I read "please believe women" as an invitation to get involved in a constructive way, and I fervently disagree with you that you as a coworker can only make things worse. You can offer emotional support, so your coworker knows you're there for them. If you have pertinent information, you can offer it. You can hold your company's feet to the fire to make sure they're handling it appropriately. And of course – since I didn't specify the gender in the scenario – you can do the same whether the people involved are male, female, or anything in between.
That is the sort of belief we're talking about, a serious investigation with the assumption the person reporting it is not lying. The investigation itself could of course result in not sufficient evidence being found. It's really not that complicated.
That has the nice property that it's illegal, the whistleblower can get compensated, but only if they already have the means to wage a legal battle.
Alternatively, look at the public scrutiny of police shootings. However you personally feel about them, there is a section of the population that sees them as a miscarriage of justice that is playing out in the public square. People look at the extremely low (non-existent?) conviction rate of officers and see either a police force operating without consequences or a remarkably well-mantained and well-monitored police force.
Obviously there should be an investigation, but history tells us that it is very easy to fool ourselves into believing we've done a "fair" investigation which will not look fair to outsiders or victims. No malice is necessary, but it is frequently endemic anyway.
Investigations don't help much in these cases. The pressure isn't to find (often non-existent) evidence, it is to commit to the shitty process of trying to get people to care about you a painful part of your life.
no evidence? no problem. guilty until proven innocent based on the gender of the accuser.
One of the problems with this unilateral statement is that if this becomes the new norm, then women can just level accusations and be believed. Men get fired or have other consequences.
It is never a good idea to have a policy of sweepingly and uncritically believing some category of people over another. That is actually the problem we currently have, only it is generally white men who get believed, no matter what they say, while women and poc get ignored, dismissed, etc. Consider how poorly that is currently serving women and poc and maybe stop to wonder if you would want to be on the receiving end of that.
Your remarks make it clear that you have enormous privilege and you imagine you cannot lose that advantage. Consider the possibility of losing it. Just as a thought experiment. Your smugness is deeply rooted in your assumption that you will always be privileged. And I don't even know where to begin here in telling you how sick and twisted that is.
In a weird way, it deeply reinforces the current sick system. And if you did get your way, you could well lose the thing you currently cannot imagine losing.
I am not for having a Lord of the Flies social order and simply shuffling around who the default victims are. I would like to treat everyone better, not simply make the current victims the next generation of abusive tyrants.
The future of automobiles and transportation is still being swirled about, and it feels like Uber's downfall has blown the game WIDE open, ready for anyone (maybe Uber, maybe Lyft, maybe Tesla, Google, Apple, an automaker) to just step in and take all the riches.
Also, it wasn't even close to profitable.
But it's almost certainly not possible to do it with the same CEO. A leave of absence is not sufficient.
If you ever worked with her, you will clearly see shes a female type of Kalanick; the only difference he seems to love party, sex and alcohol and couldn't care about sexual harassment at his company; meanwhile Huffington is known for backstabbing employees (co owners too) and always gossiping behind others back just for fun and treat people like crap in general. In both examples, a normal company would not be able to thrive; and also look what happened with Huffington Post under her tensure; even AOL ceo did not want to work with her at some point.
Bottom line -- removing Kalanick is like rearranging seats on Titanic.
I can understand why some people might see this as a feature, but that's severely misunderstanding why people use services like Uber.
In Brazil, Uber required drivers to accept cash payment having seen that it was successful in other countries like India. Suddenly carjackers realised that Uber cars were basically cash machines on wheels and so armed robbery, murder and mayhem ensued.
https://motherboard.vice.com/en_us/article/brazils-love-affa...
Nobody gives a fuck about "Libre", I just want to get a fucking ride.
I have no idea who LibreTaxi is for, if anyone, but their marketing page makes me want to run a mile. Uber and grab have been a revelation for me in SEA and I use them exclusively.
You can't automatically assume that closed systems are a bad thing.
No COO, CFO and CMO for such a long time means the CEO was not doing his most important job: creating a high-functioning executive team.
https://www.bloomberg.com/graphics/2017-uber-leadership-gap/
You might think they're still strong in operations, but company-destroying risks rise every day the the leadership suite is in turmoil like this. And that's just internal risks: what about their competitors and antagonists?
Amazon have started from a very different place, but apart from the user accessible vehicles they are nearly at the same point, with their recent efforts in Prime, groceries, etc.
I wonder whether Amazon will open up that infrastructure further to other companies. Arguably "fulfilled by Amazon" is already starting to do that.
With Travis gone, the only people who will believe that's still the case are whatever committee is at the steering wheel. They will think they're great and totally capable of being as ruthless and fierce as Travis, which is why they are creating that situation. No other investors will agree: you can't replace someone like Travis with a committee.
IBM's recent demise, Lehman Brothers going down under, Enron, Arthur Anderson / Worldcom, the dismantling of Japanese mega conglomerates by the GHQ, Apple's 90's turnaround, the death of workstation companies, deregulation of US airlines, are all orders of magnitude more impactful than if Uber dies and Lyft prevails.
Somebody should let them know!
Certainly on a downward trend of late but ~80BN in revenues last year is far from dead
Uber is in 100 more US cities than Lyft and 81 countries where Lyft isn't. I find that in large parts outside of the USA "Uber" is synonymous with ride sharing.
Uber bookings revenue is doubling each year[0], net revenue growth is outpacing growth in losses[1] and they claim to be profitable on a per-city basis in early markets[2]
Direct comparisons: Countries 82 (Uber) vs 1, Bookings: $20,000M (Uber) vs $1,400M, Growth: 100% (Uber) vs 250% (Lyft), Net revenue: $6,500M (Uber) vs 700M, Losses: $2,800M (Uber) vs $800M (Uber has much better margins and margin growth), Valuation: $70,000M (Uber) vs $6,000M, Revenue/Valuation: Uber 3.5x Lyft 4.28x
Not an insurmountable task, but Lyft have a long way to go and no track record or operations outside of the USA.
[0] http://fortune.com/2015/08/21/uber-bookings-double/
[1] https://www.bloomberg.com/news/articles/2017-04-14/embattled...
[2] https://www.businessinsider.com.au/uber-profitable-in-hundre...
Salutation!
They just showed a complete lack of care in so many situations... Shows that ignoring the rules can certainly pay off.
It's also interesting that the five shareholders mentioned in the NYTimes article want 2 "truly independent directors". What does that mean? Depending on how many board seats there are, maybe two votes aren't enough?
Is Marissa Meyer the only woman y'all know?
[0] https://news.ycombinator.com/item?id=13682022
https://news.ycombinator.com/item?id=13747414#13749264
I do wish it hadn't happened, though, I would have preferred if the company could have healed with him still managing to stay in control.
They pressure him into taking a sabbatical, then two days in they pull this cowardly act of firing him remotely. Not only was it a cowardly act, but it was the wrong thing to do for the business. It will lead to an epic destruction of value.
Worst business move since Apple's board (with John Sculley's behind the scenes string pulling) fired Steve Jobs. How well did that work out for Apple's shareholders at the time?
Travis Kalanick needed to change but do you really think that running Uber by committee is going to work? Guess it's time to try Lyft.
It's business. Travis ought to understand that.
> Hope everyone's paying attention to the identity of these investors behind this horrid behavior. Travis is not without his flaws but he created an awful lot of value for them.
He's been very well compensated for the value he's created. You don't keep a job because of what you've done in the past, you keep a job based on what you can do in the future.
If Travis had been smart enough to create two classes of stock like Mark Zuckerberg and the Google founders he'd be calling the shots, instead he's out of a job.
And how many promising companies failed with their founders at the helm?
Better than abiding by an epic destruction of values.
My guess is that there are also much deeper issues here. And things like the Waymo deal indicate that there may be a whole slew of other slimy behavior that will end up hurting Uber more in the end. My guess is that we don't know the depths of poor decisions at Uber.
Secondly, it doesn't matter. Many people cared about the morality, and it was enough to make a difference.
Exactly. I would be wary of these specific folks. I bet you they would do the same to any founder in a heartbeat.
Travis has had to make a lot of hard decisions to get Uber where it is. These decisions have at times cost him goodwill of the public but I think they are (were) worth it for the long term.
> Travis has had to make a lot of hard decisions to get Uber where it is. These decisions have at times cost him goodwill of the public but I think they are (were) worth it for the long term.
For sure. But it will take a few years to know if that's actually a good place; at present, it doesn't look that way (but it's too early to tell for sure either way).
But who cares about that? He created and maintained a culture that systematically abused people and covered it up.
Fuck the investor value. People were harmed. This was the only ethical move they could make regarding Kalanick.
Travis helped build an incredible company, but his disregard for the law, for his employees' well-being, for basic decency threaten to tear all of that down. Just in the past six months:
* Susan Fowler's blog post exposed a terribly broken HR system and a culture of sexual harassment that reached the very top. This has huge legal implications in addition to the obvious moral and ethical ones.
* Waymo's lawsuit could shut down Uber's self-driving car program, into which they have put hundreds of millions of dollars. There may be evidence that Travis colluded with Levandowski to steal Google's self-driving techonology.
* Uber is under investigation at several levels of government for their Greyball program to hide from law enforcement.
* On top of all this, Travis was videotaped cursing at a driver who complained about pay rates.
At this point, Travis had to go. It's going to be hard for Uber to recover from all this, but this is the first step. I hope that this becomes a lesson in SV that there are consequences to this kind of behavior, and that at some point the adults will step in.
- Waymo: the judge has not ruled yet, and there is no evidence revealed to the public which implicates Uber. There is lots of evidence implicating Levadowski.
- Greyball: I can see investors forgiving this as a necessary play to fuel growth.
- Cursing the driver: a private conversation, neither here nor there.
That said, there may be issues that are not public, and the sexual harassment problem alone may be enough. Senior leadership was rapidly leaving. We don't know what the full Holder report said.
But uber is still lagging behind Waymo/Lyft in the self driving technology. They were desperate to catch up, hence the acquisition of lewandowski's new company in the first place. Now that path is no longer viable regardless of the verdict.
Whoever becomes the new CEO will have to be laser focused to make their auto pilot program work somehow. Without that, Uber has no path to profitability.
They really should have done what lyft did, building partnership with companies like Google/Waymo and GM instead of trying to build their own auto pilot program from scratch.
Sadly, Uber's board sounds more likely to be the kind of disaster that controlled Yahoo, HP and so many other faded stars from the valley.
Looks like Apple's decision not to invest was well played.
^^ this is why I never stopped using Uber.
Yes his assertiveness and drive got them where they are, but sometimes companies do need to grow up.
Jobs was a consistent asshole expecting perfection. That is way different than emboldening a climate of harassment, degradation, etc. that took place under his watch. Having recent external c-level hires quit due to the revelations of "culture" speak much.
I hope Uber can continue. As someone who travels internationally on business, it's quite useful. Seeing him go, it's just one more example. Pincus felt screwed through how Tribe.net went through, set himself up in a sheltered position at Zynga and through a combination of "management style" and problems at the company had to step down.
The cultural issues made public between Zynga and Uber are way different, but in both cases you had CEOs that structured the holdings such that they could retain power despite turmoil.
Sometimes the turmoil is too great.
My last international trip, I used Lyft.
> Travis himself has exhibited poor public behavior that was recorded by an Uber driver
Do you have any evidence of this, or is this hearsay?
If you're referring to the video I suspect you might be - have you actually watched it?
https://www.youtube.com/watch?v=ejZL5Flwmjc
All I see if a bitter, vindictive man try to ambush the CEO of Uber on a night out - who then actually sits down and tries to explain his reasoning to him for several minutes, before giving up, and being "stuff this" and getting out.
I hope everyone pays attention to the identity of the people that invests in his next company.
Kalanick is a bro on an ego trip who stumbled upon a business. But harassing women, and all his other flaws, are not what created uber.
Steve Jobs' flaws actually served Apple. The worst he's been accused of is driving people hard to achieve the perfection he sought.
And colluding with other tech companies to fix his employees' wages.
If we are angry about Kalanick sexually harassing people (as we should be), Steve Jobs mentally/emotionally harassing people is as bad. There is no difference, don't make it seem like it is okay or that it was "good for Apple".
I'm not primarily interest in defending Steve Jobs, although I think his reputation may be a bit overblown, and largely based on a few anecdotes from rather early in his career.
But the repeated reference to him shows how people are equating the two, which is just terribly wrong, at least in as far as it concerns the sexism at Uber.
Because from the stories I know about Jobs, a credible case can indeed be made that he was slavedriver in search of perfection, and that his nastiness contributed to his success.
For Kalanick that may also be true in regards to Uber's repeated trouble with local law regarding employment and licensing. But the sexual harassment charges simply have nothing to do with it,
Nobody else is going to buy it, and this is death for Uber.
But the reason anybody's fool enough to trigger the apocalypse is because THEY will be in charge and assume that's the answer. If they were on the outside looking in, they would have a very different opinion.
Valuation != value
Maybe some things matter more, like, not fostering an environment where sexual harassment is tolerated.
I wonder who will take his place, and, more importantly, I wonder if Uber will continue winning.
Does he deserve to be complimented in any way shape or form?
No... Not in the slightest.
I think the question is can uber continue winning without being toxic to staff (drivers, women, I'm sure there are others), maybe stealing (waymo lawsuit), and building tools to avoid the law....
The answer is I don't know, but it is going to be hard to recover from.
The only people that benefited from his achivement were the investors. Considering where Uber stands at the moment they might not ever see a return on that.
If creating value gives you some sort of moral pass then we shouldn't have any sort of issues with epipens being more expensive, or martin shkreli jacking up drug prices... after all they did it in the name of creating value.
The problem is were never going to know how much of the success your praising is tied to the awful behavior that you say we should be critical of.
Were talking about the lance armstrong of CEO's. The collective behavior is corporate doping, lying cheating and stealing to get to the top isn't the path to sustaining success.
With that said, who should lead Uber?
Not sure I'd use 'cash cow' to describe something that bleeds cash to the tune of billions of dollars a year.
Some deep cuts wil likely occur to make the company "more efficient" and "focused on core competency" etc...
Laura's post from feb stated that on the ops/sre/infra team alone they had ~126 engineers, though I don't know if that includes managers... but it made it sound like there were many layers of managers, thus all the infighting
So can't they cut some of this?
> In recent months, Ms. Huffington has become the public voice of Uber’s board as the company has tried to overcome scandals over its workplace culture. She has forged a friendship with Mr. Kalanick. And behind the scenes, she has been a driving force in recruiting an Uber board member and executives.
The article skips over the board entirely, but Travis must have been blindsided by his co-founder Garret Camp and early CEO Ryan Graves for this to have transpired. The board likely threatened to fire him unless he resigned, because there's no way Travis walks away because of this investor letter. It's more than likely the letter just provided the air cover his old friends needed to send him packing.
edit: For those replying that Travis has control of the board, please cite your sources. Being the majority shareholder using dual-class stock is a much different thing. Shareholders elect board members, but you can't remove investors' board seats, that language is boilerplate in financing documents.
Uber does not need the backing of the investors from the letter to remain solvent. With the exception of Fidelity, these aren't big players. Hundreds would take their place immediately given the chance.
So while Travis holds the majority of the voting power, he doesn't hold a ton of real-world cachet because of circumstance around the company. Uber is in a relatively fragile period in it's journey and no one at the top can afford to disagree right now so he has to mostly do what the big chunk of investors collectively tell him to do. The hope is that they can stay calm, run on autopilot without Travis for a bit and guide this cruise missile right through an IPO if everything goes according to plan. Since the investors effectively control the supply of additional capital, they are in a unique position of power here relative to Travis.
I think Uber's downfall is a bit exaggerated in the rest of these comments here. They'll go through some troubling times, but they just need to stay calm, and guide the ship. A lot of the pieces are already in place thanks to Travis, but Uber doesn't necessarily need him to oversee the next milestone the same way they needed him the past couple of years of insane growth.
That sounded right, but I was curious where that gets quantified. You can find the information in Uber's Articles of Incorporation. Not sure if this is the most recent copy, but here's a version from 2013...
http://orfe.princeton.edu/~alaink/SmartDrivingCars/PDFs/Uber...
The stuff about voting rights and board members starts on page 16.
Shareholder meetings operate on one-(voting)-share-one-vote, so a majority shareholder ultimately controls the composition of the board. But if one of "his" directors, who his shares elected, breaks ranks and votes to fire him, simply owning the shares doesn't allow him to immediately override that vote. Kalanick could have voted out the board members opposed to him at the next shareholder meeting, and voted in sympathetic ones, who then might rehire him as CEO. But that's a different question than whether he could win any board vote simply by virtue of owning a majority of voting shares. Shares don't directly have board votes, they just elect directors who have board votes, who usually vote with the interests of the shares that elected them, but might not always. Besides exercising their personal judgment, directors also have independent legal responsibilities that may in some cases make it prudent for them to vote to fire even the person who put them on the board.
Of course they do.
_delirium already said it, but it bears repeating since so many are confused.
Fear this inter connected world. Fear the power of language.
But go google and you'll find quite a few anecdotes that do make it seem as if he has a strange hangup with women himself.
With a new seasoned exec, I predict Uber will stabilize, IPO at some point and becomes the Yahoo of the industry. It won't be the next Google, Amazon or Facebook (all led by founder CEOs), that's for sure.
All CEOs make mistakes even great ones like Gates with antitrust or Zuck calling users dumb-fucks. They weren't kicked out, they instead were allowed to come into their own.
There's a distinct fire that a founder has for the company they founded. You can't hire that. Without this fire at the early stages of a company, the company will likely lose out to competitors like Lyft.
A hiatus is one thing but kicking a founder out is simply bad.
Mark my word and take that to the bank. This was a bad move.
How often do you hear VCs talk about how much they're on the founder's side like Vinod Khosla. At almost every turn, you'll hear Vinod go on about his reverence for founders. He does however add that this is not always the case. Sometimes, he says, founders must be asked to leave. When Vinod tells you to step aside, I think he'd most likely be right because you know his intentions aren't malicious. Do I think it had gotten to that point with Travis? My answer would be no.
The reason it's courage involved in such a situation is because, against all external pressure, he maintained that he thought it would create friction. I can see that and some people may disagree - and those people can use Lyft, but at the end of the day, most people use Uber the way it is because of a certain experience that's possibly inexplicable to them. They just like it. Travis and his team have created this experience.
If there's no courage and conviction, then Uber becomes indistinguishable from Lyft. I honestly don't think the next CEO will have as much courage to say something like, 'we know automation is coming and we have to be on top of it regardless of any negative feedback. If we don't, it won't matter because someone will do it anyway...'
Time will tell and I think it will tell the same story I've told here.
A woman for Uber CEO would be a good signal -- if the best candidate for the job happens to be one. Didn't Marissa Mayer recently resign from her job, and be available?
Even if you want to see Uber dead, there are more humanitarian ways.
edit: nevermind, Kara says no. https://twitter.com/karaswisher?ref_src=twsrc%5Egoogle%7Ctwc...
Yeah they may start losing money every quarter.
IPO? No way. They'd have to publish audited numbers. What's leaked out is bad enough. The real numbers have to be worse. Notice that leveraged loan in 2016.[2] All the details of that have to be disclosed in the prospectus for an IPO.
[1] https://www.crunchbase.com/organization/uber/funding-rounds [2] https://techcrunch.com/2016/07/07/new-reports-confirm-1-15b-...
Do you have a source for this?
If true, this seems far more likely to be a cause of Uber's death than Kalanick resigning. That, and the valuation being as insane as it is, which is also Kalanick's fault, which as you point out, makes it hard to find greater and greater suckers.
Perhaps they'll be better off all around without Kalanick, assuming they can get the business side on track and get the burn rate under control, and perhaps make their business sustainable rather than a gigantic handout of VC money.
[1] http://knowledge.wharton.upenn.edu/article/growth-vs-profits...
Also known as losing money on every ride but making it up in volume.
In fact, the central concept of venture capital is premised on the idea that businesses start out unprofitable but become profitable as volumes scale.
To what extent any of this is the case for Uber is worth debating. So feel free to have that debate, and bring forth new information or new arguments that support your thesis.
Particularly not if you can't set up an operation in an Western city with expensive taxi services without losing money on every ride you operate even before centralised overheads are taken into account.
From their 2015 financials, it looks like revenues have been consistently higher than cost of sales.
Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
According to financials from 2015, they have higher revenues than cost of sales:
www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html
This suggests to me that marginal rides are profitable, even if they aren't profitable enough to cover fixed costs of software development or investments into new geographic markets.
And if you're subsidising rides below cost because you're trying to grow your market and you have piles of VC cash so you don't care that you're burning through money, then eventually you're going to run out of that money and will be in trouble if you can't raise any more.
Time will tell whether Uber was building a sustainable business or just burning through VC cash.
Winners don't quit, so Uber is dead to capital now: it was always based on maximum evilness and all the stuff about disrupting and ridesharing was mere window dressing.
Note to capital, wherever it is: this is what you get when you go by personality rather than studying the fundamentals of a business. You can't simply pick the most toxic individual or company, claim they're going to kill everybody else, and then prop them up with valuation. The valuation didn't fail but your pet Dr. Evil did, and that was your proxy for maintaining the 'killer' behavior. Unless or until capital can be personified as evil AIs that cannot die, this was never really an optimal strategy for capital.
From their 2015 financials, it looks like revenues have been consistently higher than cost of sales.
Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
Quick Forbes link I found https://www.forbes.com/sites/ellenhuet/2014/07/02/ubers-newe...
Nonetheless, my impression is that this is more the exception than the rule, based on the financials I linked to earlier.
Yup, that sounds about right.
I'm not saying this will ever offset their increasing losses, but that is what always seemed the long term goal of monopoly.
> I thought the whole point of subsidizing rides was(as OP comments pointed out) to raise demand, both for drivers and riders, they first entice both ways with the promise of lower rates and higher payoffs, then slowly increase their cut of the pie against the driver's payoff and increase the rates on riders.
Right, and by the logic that decreasing prices raises demand, increasing prices will decrease demand.
That's my point, and the point of critics that are often ignored. Their customers will bail the moment they start getting charged the $25 their $10 ride actually costs. And that increase will be to break even. Not make any money. Just break even.
Uber will never achieve a monopoly. There are buses, bicycles, and used cars for $1500. People aren't going to pay $600 per month on a ride hailing service. I've already ditched Uber, and so have many of my peers, in favor of alternatives that save money. And that's without significant price hikes yet.
The fundamental economics of having a private driver have not changed. An app doesn't change what it costs to pay someone to drive you everywhere. I hate being critical because it's often a waste of time, but Uber is sincerely one of the worst investments that Silicon Valley has ever produced.
I'm not sure if you're disputing OP's idea that Uber subsidizing rides is (at least in part) of an effort to kill the taxi industry, but my logic is, if you don't have any competition, why wouldn't you raise rates?
While transportation is something everyone needs, I'm (as priviledged as I am in my salary) not going to pay $20 for an uber if it's $2 on the bus.
I'll take uber when it's $10, compared to $2.
They could possibly raise their rates some, but to answer your question specifically: because there are other factors involved in their price/demand/profit/market share equation, besides just competition.
People won't pay to use the service if Uber charges what it actually costs to deliver it. They're heavily subsidizing each ride. When you pay for an Uber, they're basically giving investor money to the driver to cover your fare for you. Investors have been paying for your transportation over the past few years.
At some point, they have to actually make money, and the only way to do that is to raise prices. The issue is no one will stick with the app at higher prices. I've already abandoned Uber/Lyft/others for a $300 bike and a bus pass, because it's much cheaper and much healthier. If they double or triple their prices, which is about what they'd have to do just to break even, lots of people will be following suit.
The self-driving car game was supposed to save them, but I don't think they're guaranteed to win that fight. Tesla seems further along than anyone, and I have far more faith in Musk's ability and track record of executing than I do in Travis (or whatever committee is replacing him). Not to mention every automaker is working on self-driving cars right now to boot.
Uber has no guarantee they'll dominate that market, and considering they can't even break even in their current market, I see them as a ticking time bomb.
Agreed. I'd argue that existing car-sharing companies like Car2Go are better positioned to dominate the "self-driving taxi" market. They've already solved the challenges of owning and maintaining a shared car fleet profitably. The day self-driving technology is ready, they'll already be miles ahead of Uber.
edit: I forgot what green name means... green btw...
Newly created HN accounts are colored green so members can recalibrate before responding to troll-like contributions from new accounts (I think).
I think we need more of it though...
This is true for almost any good.
I've yet to see an Uber driver who started rolling in cash after the rates were dropped. 100% of my anecdotal conversations (and that's not 99.9% rounded up, but a straight up 100%) reminisce about the good ole days.
And I have a really hard time believing companies plan to fail.
It's a very clear case of dumping, or whatever it's called in English. Unsustainable low prices, suffocate your competitors, raise prices.
[1]https://medium.com/@thisTenqyuLife/nobody-will-talk-about-ub...
Such a great quote
Sounds like a '90s startup. Companies acting like this en masse was what caused the 2000 crash. Uber isn't going to make it out of this alive, and they're going to take the rest of the industry with them. I think the whole culture of VCs looking for "unicorn startups" is going to go away when the unicorns all die.
What matter are: Cash In Bank, Cash Coming In, Burn Rate.
Kalanick has serious issues but he's demonstrated unquestionably forceful (and polarizing) leadership that mere "managers" will never be able to replace.
I've been bullish on Uber despite all their mistakes and internal issues because at the end of the day, the guy at the top was irrationally emotionally committed to _winning_. Now I am a bear on Uber.
No, but that's not the point. How quickly we forget that we don't need dude bros to create a hostile environment for women. That GitHub situation was created by a woman, one who wasn't even an employee. We really don't give women enough credit.
Toxic work environment is everywhere. Remember the spreadsheet that Googlers started to compare salaries? I'd argue the Apple-Google-X pact to not poach one another is worse than anything Travis could imagine.
If there was crass behavior at Uber, I'm inclined to be more lenient because I think it is at a more primitive level than a well thought out plan to increase shareholder value by illegal collaboration to push down worker cost. If these people who criticize Uber really care about their employees, they will start publishing all details about how much salary and benefits and whatever money each employee makes.
Talk is cheap. Actions speak louder than words.
Look at Google; they're firmly business-minded and have often butted heads with regulators and so forth, but most people like google, not least because of that 'don't be evil' branding and and their habit of giving people Nice Things.
If your margins are razor thin. You have to be ruthless. That permeates to your culture.
Do you things are any better at Amazon, Foxconn or other warehouse places?
That has nothing to do with sexual harassment. And to imply that the two must be linked is false.
Does 'highly demanding environment' == 'Harassment' to you? If yes then you have far bigger problems. Any demanding mission ever might be out of reach to you per your value system.
Work conditions, overall demands of productivity et al will be brutal. And that ultimately gets to cause all sorts of other problems. People who just can't catch up with all the rush ultimately feel discriminated.
Non sequitur. You're also generally espousing some pretty reprehensible ideas. We as a society do not take the view that business success overrides all soft concerns, especially with regard to their employees. If ruthlessness and discrimination is the grist that your mill requires, find another mill.
Also please avoid working in management.
This is obviously wrong. Have you ever bought a iPhone? Or any other Apple product. Have you ever ordered anything from Amazon.
How do you think Walmarts and Targets of the world can sell you things for so cheap? Behind all this there is some guy being sent through some real hard ships.
As a consumer you have already made that choice.
The reader will note that this is a classic example of the 'tu quoque' fallacy[0].
[0] https://en.wikipedia.org/wiki/Tu_quoque
My answer to that is then there is something fundamentally wrong with your business model. Basically, what is the point in running a business under which such conditions are the norm?
Any demanding mission ever might be out of reach to you per your value system.
This is fallacious. Of course there are times when struggle is necessary. A rewarding life (however you define reward) certainly requires an investment of effort, and at time that effort will be very difficult. Sometimes we are faced with very trying circumstances such as natural disaster or war or serious economic insecurity, and we have to work very ahrd to survive.
But a key word here is sometimes. If you deliberately construct such an environment where survival and advancement are only possible through 'brutal' work conditions and demands of productivity, then you are actively making the world a worse place, because you are establishing such brutal conditions as a norm and implicitly telling people that their life choices boil down to slavery or death. Why would any sane person want to create the conditions of slavery? Slavery is a condition of life that people rationally wish to escape.
There seems to be this attitude that if people are not constantly driven by necessity then they'll get too comfortable and lazy and never do anything. This is not borne out by the evidence. Some people would, not least because they're constantly bombarded with messages to consume, consume, consume whenever they can as a relief from their economic anxiety. But few people are fundamentally motivated by gluttony. Given the opportunity most people opt to develop their capabilities and contribute or create rather than merely consume.
Choosing to promulgate brutal working conditions is essentially promoting brutality as your preferred model of social organization. That's basically a displacement of sadistic and/or masochistic impulses into the economic sphere. You may very well feel that nothing of value happens except under harsh compulsion, but that seems to both ignore all the evidence to the contrary (an irrational bias) and abdicate responsibility for the consequences (since brutality is well-understood to result in wholly avoidable injuries).
It seems to me that your value system rests on some rather extreme assumptions that are not justified by the available evidence, and insofar as it imposes compulsion on others rather than being used to motivate yourself, it's intolerable. Put another way, if you only feel alive and productive under conditions of harsh necessity, that's your business. But as soon as you insist that this is the way of the world and that others must get with it or be cast aside, you're infringing upon the freedom of others. And at a social level, through regulatory process, experience of litigation and so on, we've agreed that the creation of such conditions is not an acceptable means to pursue arbitrary ends.
As usual : 'Value'. All these affordable iPhones and seamless Amazon deliveries happen because they have a work culture that optimizes for every single $. I agree with your premise that these are not for everyone. But this is precisely why we have freedom. Nobody should sign up for a job they think is too hard for them.
As we talk there are doctors who are training by the clock, sleeplessly working towards becoming surgeons. This is necessary for various reasons. If it were any easy, people would become bad doctors with less training. This is bad for society. The fact that work conditions are harsh- that isn't wrong or discrimination or even harassment. The very demands of the job are such.
The top percentage of any profession are this way. That comes with the job. You just don't go and say why don't they make it easy to me to be the next Zakir Hussain. Mr Hussain has set pretty high practice benchmarks practicing his instrument pretty much his whole life. Was it worth for his to have undergone all that pain and punishment to get there? May be that fits into his value system.
If you want to beat Jeff Bezos you have to at least perform at his level or higher. You just have to chose your mission based on the mileage you think you have.
Edit: you did say 'almost'.
The company is what is pertinent to the discussion :)
"Mr. Smith: I move my finger one inch to use my turn signal. Why are these assholes so lazy they can't move their finger one fucking measly inch to drive more safely? You wanna know why?
DQ: Not particularly.
Mr. Smith: Because these rich bastards have to be callous and inconsiderate in the first place to make all that money, so when they get on the road, they can't help themselves. They've gotta be callous and inconsiderate drivers too. It's in their nature."
https://www.youtube.com/watch?v=ov4JvTiQWUU
a-holes will remain a-holes, maybe a bit more successful on average, but many times a proper clusterf_ck on others. nothing to envy about
Anecdotally, famous Nordic startups include Spotify, Skype, Mojang (behind Minecraft), King (behind Candy Crush, Farm Heroes), Rovio and Supercell.
https://youtu.be/A9UmdY0E8hU
1. Nordic countries have more über wealthy per capita.
2. Nordic countries are social democracies.
Then he draws the conclusion, with no corroborating evidence, that these two things are inextricably linked. No data to link these two points at all. Nordic countries in general have a high GDP PPP, and that is probably not solely (or at all) due to being social democracies. Scandinavian systems need to be efficient due the nature of their environment, e.g. they have a lot of land and not a lot of population, and fairly harsh climate (e.g. poor farming conditions). I would almost argue that "being cold" is probably a better indicator of national wealth per capita than "being a social democracy" (though admittedly, I haven't done thorough research either). I mean, look at Canada. Look at the non-farming bits of the US vs. the farming bits. Look at North versus South Italy. etc. Industrialization is more efficient and effective in regions where alternative methods of production weren't great in the first place.
For reference, here is the population density of the nations he was comparing (in people per km^2):
Iceland - 3; Norway - 16; Sweden - 22; US - 33; https://en.wikipedia.org/wiki/List_of_countries_and_territor...
The US has 11x the population density of Iceland. Easier to have shared wealth when each person in your country can have 11x the land they could have in another country (with the caveat, of course, that this only applies if you are an industrialized nation).
I mean, just look at one of his "indicators" - billionaires per million people. By that metric, iceland is at that top. But there is only a single billionaire in iceland. Statistically, then, it's easier to be a billionaire in iceland. In practice, however, that is not the case. Things like population subsets need to be considered. In the US, you have a very large population, which is obviously going to impact per capita stats. However, you need to ask what proportion of those people are actually pursuing wealth in a way that could ever result in becoming a billionaire. e.g. a grocery bagger, probably never to be a billionaire. A plumber? Same. A hippy in a commune? Same. No data has been shown to adjust for lack of competition. At the end of the day, you have to look not at the total population, but at how many people are actually competing to become uber wealthy. Because, while attaining wealth isn't a zero-sum game, it certainly isn't an "everyone wins" game either.
Scandinavian countries have a very high proportion of jobs that don't really have a cap on upper income, such as software/game development, banking, music production, etc. because they have exceedingly efficient economies (as he actually touches on).
However, there is not clear reason to believe that they are efficient because they have social democracies. In fact, the converse (they became social democracies because they already had efficient economies) is just as likely, if not more so.
Can you elaborate on this supposed link between population density and shared wealth in developed nations? I don't understand the logical underpinnings of your argument. Developed countries almost by definition are less reliant on local geography.
Moreover, I don't see how space metrics are even relevant here. Iceland may technically have a lot of available "land" - but more than half the country lives in Reykjavik. A similarly lopsided urban / rural population distribution holds true in other Nordic countries.
My point about geography and population density needs to be related to my point about industrialization to make any sense.
It is this: Nordic countries have modern economies weighed very heavily towards industrialization/mechanization, but most importantly, they are efficient. As you say, they also have a "lopsided urban / rural population distribution", which is a much better way of saying (thank you) what I was trying to say: Nordic countries have land, but it's not good for the classic wealth generator - farming. This is why the population is focused in urban areas and is not spread out. However, luckily for places like Iceland, modern cities don't really care how good the land is for farming. An oil refinery doesn't care about the health of the soil. A modern factory doesn't care if the terrain is a bit rocky. Solar panels don't care. Mines don't care. etc., etc. Basically all modern industry is fine in a place like Iceland.
This an unexpected and immense boon to making a modern industrialized nation efficient, because on the one hand, you have major population centres with not much in-between (due to the lack of farming), which is in itself efficient, because areas you need to service with public services are greatly reduced. But on the other hand, you have plenty of space to put modern things like factories or new cities or what have you.
Compare this to the US, the country with more arable farmland than any other country on earth. Sure, the US has big population centres, but they are spread out, and many of them are still driven by rural economies. This greatly reduces efficiency, and is generally why the spread out states seem to be further behind the small / densely populated ones.
I've included the percentage of population that is urban below for comparison, according to The World Bank, from 2015. Also, I think it is slightly different when the rural population is doing something like fishing (Nordic) vs farming, but I won't go into that here.
US - 81%
Sweden - 86%
Iceland - 94%
Comparing anything to the US is a little bit silly though, because the US is comprised of 50 states, all of which are quite a bit different from each other. For instance, I bet the uber wealthy per capita in say California or New York is much, much higher than the Nordic countries. So the obvious answer to this video is probably "move to New York or California if you want to make a lot of money". I will say that would probably require more initial capital than a nordic country, but if you have the initial capital, then your chances are probably better. SO THE ACTUAL ANSWER IS: Get a great education and livelihood in Norseland while you're young, get some seed capital, and move to Cali/NYC/etc to really start making bank.
Obviously if you want to become a billionaire, you're not going to move to Plano, TX. Yet Plano is affecting the per capita stats.
I'd rather have a real work life balance (it's not so called, it's very real) than any amount of abuse working for a US style startup would throw at me.
Most of my colleague would as well.
To have the disdain for life you seem to display you must live in a very distant place from a sane version of reality.
Sweden has a population of 9.8 million yet it has produced Skype, Mojang, Spotify, King, Klarna [0]
Australia has 2.5x the population but only two unicorns. The UK and London market themselves as the capital of unicorns in Europe yet with 6.5x the population they have either the same number of unicorns or just four more (depending how you count them).
That is remarkable for a country like Sweden, especially when considering the strength and size of the Swedish expatriate community in tech around the world (many tend to leave).
In terms of similar results, I think only Singapore is in similar or better unicorn per capita territory.
[0] http://www.technologist.eu/sweden-the-land-of-unicorns/
[1] "unicorn" isn't the best measure since it is a private valuation and you can get different answers depending on who you ask, but most people would recognize those Swedish startups as being successful.
We are technically a UK incorporated company, headquartered and half our staff in Sydney and many of our staff and customers in the USA.
I still consider us Australian though.
I see many clever companies where I live in Melbourne - however I am saddened by what I perceive as the neglect the government is showing for the tech sector, especially startups; I'm looking e.g. at how share options are taxed. I believe there's a lot of lost opportunity here.
Skype is Estonian.
https://www.microsoft.com/en-us/stories/skype/skype-chapter-...
For human rights issues, yes, I tend to agree.
Morals are relative.
I don't know how old you are, but public morality towards sexual harassment just in the U.S. has changed in my lifetime. (For the better, although it is currently ugly and messy, as these changes always are.)
Even attitudes about what constitute harassment vary by culture between similar cultures. Compare Italy and Germany.
If you peal back the layers, probably most rapid growth, hard driving large companies have left a wake of upset and screwed over people behind it. Nobody "gives" you a hundred billion dollar company.. Uber's leadership was just particularly inept at pivoting from "scorched earth" to a slightly less savage strategy.
This will be an interesting pivot to watch, I've been kind of betting with myself when will the first week come with no news or good news for uber. I thought they'd have spun up the pr machine months ago, talking about co2 saved by carpooling or something. Giant company, currently fixed runway, all eyes on it and damaged culture. If uber doesn't die, the next CEO is a superstar.
[1] http://quoteinvestigator.com/2013/09/09/fortune-crime/
Here in India, I go by the office cab to home everyday. I generally chat with the drivers as to why they don't drive for Uber/Ola etc. The answer is they need to make a good 1300 rupees on a round trip to be profitable, at a minimum of 6 trips per day. A trip with Uber/Ola etc costs 300 rupees(With pool). But even then!
So that's like these people need to start charging a minimum of 5x extra to make profits. At that price these people are no longer a viable means of transport.
To be profitable you need to back to the yellow taxi medallion thingy all over again.
EDIT: Fix a mistake.
So if the (now edited) original intent was exponential, "more like 10x than 1x (or 100x)", then calling 5x an oom is fine. If the intent was linear, then yes, rounding 5x to 10x is 100 percent error (difference/actual). :)
I'm headed in the opposite direction and reinstalling the Uber app tonight. This is a very convincing capstone to a 180 degree course correction away from everything I disliked about Uber. I also hope Travis can learn and come back and lead the company again in the future.
They are not. There are ways in which being an asshole ay be good for founders (cf Steve Jobs). Kalanick is just an asshole, and even take-no-prisoner ask-forgiveness-later businesses run much better with a bit of attention to human decency.
I don't think anyone's suggesting that sexually harassing women is good for business.
http://www.gq.com/story/uber-cab-confessions?currentPage=1
It also is weird that matt4077 repeatedly contrasts Kalanick with Steve Jobs in this thread, despite Apple having been accused many times of mean culture, sexism, harassment and cover-ups too.
https://www.recode.net/2017/6/7/15754316/uber-executive-indi...
I've commented all over this thread (as a sister comment points out) because it appears there is a narrative that his attitude towards his employees misbehaviour is at least closely linked to the personality traits that allowed him to be successful. That can be seen, I believe, by the many comparisons to Steve Jobs, for whom it's accepted more widely that it was often hard to work for him because of his perfectionism, but that this was a necessary trait for his success.
The danger here is that people (mis)understand the situation and start excusing inexcusable behaviour, or even imitate it, because they think it's linked to success. It is not. You have to separate the strip-club-going bravado from the other law-breaking, which could at least in theory explain Uber's success.
Honestly, this feels like a white-wash. Jobs was exceedingly demanding, but that's hardly unique. Jobs was also dishonest, secretive, and simply cruel to the people around him. This comes up over and over, even in his non-business interactions.
I agree that it's an error to lionize Kalanick's behavior. But it's also wrong to say that Jobs' behavior was radically different, or that Kalanick's party-boy bravado is clearly separable from his disregard for the law. Realistically, I think we'd be better off admitting that an urge to ignore boundaries usually applies across many topics.
If Jobs was more capable Kalanick, I don't think that was a function of his nastiness somehow being more noble. He seems to have simply brought a lot more skill to his task.
Like any good late-stage US capitalist, he outsourced it.
so he was standing over watching with approval as his employees were accosted? I doubt it. I think what's more likely is he didn't know about the extent of harassment (or didn't care, if you want to be cynical) and the initial HR non-response was likely just a really poor quality HR department designed to manage PR rather than solve employee problems. Organisations are more than just their CEO and while you can lay plenty of blame on him for allowing such a poor quality workplace culture to evolve, that doesn't necessarily mean that he's a big fan of sexual harassment in the workplace.
I bet you do, because nobody in their right mind believes that, and you are obviously attempting to cast the notion that a CEO might know what happens in their company as absurd.
Or do you also think that others believe oversight committees on BoDs literally stand over the managers and nod or grimace?
If he didn't know what HR was up to, he was incompetent.
> that doesn't necessarily mean that he's a big fan of sexual harassment
And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.
If he didn't know what HR was up to, perhaps he wasn't the director in charge of HR? You can't expect a CEO to know 100% of what's happening in a larger company.
> And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.
> ... managed HR's nonresponse to it.
your quote seems to imply that he went out of his way to make sure HR did nothing about the harassment. I'd be inclined to argue incompetence (or just a lack of ground-level micromanagement) over malice.
Unless the facts on the ground are very different than what we've heard, Uber HR had a policy of protecting some people accused of harassment because they were highly valued. In other words, a decision somewhere was made that policy was to prefer key-player retention over the risk of lawsuits, because, obviously, that sort of policy is pretty much guaranteed to lead to lawsuits[1].
I have a great deal of difficulty imagining the HR exec who doesn't realize that - that would be beyond incompetent, well in to senility[2]. I also have difficulty imagining the HR exec who will personally take on the risk of mandating policy about balancing disparate business risks (slowing down by losing productive harassers vs. lawsuits and bad press). That can end careers, and anyone capable of landing a management job at an Uber is exceedingly unlikely to take that risk without taking it up the food chain.
Finally, I find it remarkable that so many people are willing to credit the man with extraordinary genius in business execution while simultaneously arguing his incompetence when it happens to absolve him of shitty behavior.
And with this, I'm done with discussing things I didn't say.
[1] Moving on to speculation, making that choice makes perfect sense in an environment with a value system emphasizing winning at any cost and burning down anything in the way. If they thought first-mover advantage was literally everything and they thought they had enough money to weather any resulting legal problems, that's the rational choice. And especially if you think you're the smartest guy in the room and can get away with it. Not unlike hypothetically deciding to gaslight regulators or steal IP from competitors or invade medical privacy to discredit opponents. For example.
[2] I don't know about other states, but in California, HR for firms over some number of employees are legally required to ensure employees have been trained on sexual harassment law. I'm sure it takes other forms, but generally we get to watch these awful law-firm Flash videos of cartoons being either awkward with or awful to each other, and then have to answer questions about which actions are harassment in order to make sure we paid attention.
Nowhere has he said this. You're conflating two very different issues. No one is disputing that he is an asshole, etc. OP was making a different point.
I'm sort of baffled by seeing someone say this in a comment that's supportive of Steve Jobs. Are there tons of "the human decency of Steve Jobs" stories I've missed? Because I would have said that I've never heard of Jobs showing even a scrap of that, and it worked out pretty well for him.
The things happening under Jobs were different than the things happening under Kalanick, sure. But I don't see where that's a function of anything like decency - it just looks like a cultural difference in what kind of inhumane hostility was happening. Jobs was a perfectionist, but he was also manipulative, cruel, and dishonest in ways totally distinct from that.
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.
– Dune, Frank Herbert
- God Emperor of Dune, Frank Herbert (a prescient book on social feedback loops, my favourite in the series)
-- 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?
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.
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.
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".
https://en.wikipedia.org/wiki/Monopoly_on_violence
It's why "non-coercive government" is an oxymoron.
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.
I also don't think the examples he cited are violations of those duties.
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.
http://www.businessinsider.com/sears-ceo-will-pay-40-million...
They could smell the liquidity ...
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.
https://aleph.vc/hidden-cap-table-secrets-bd6c4e9e780e
If there's a next round, it will probably involve a big haircut for the early-stage investors.
No, they could be crammed out by later investors' liquidation preferences. Depends on how down the down is.
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.
Stop growing maybe, but going bankrupt and shutting down?
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.
[1] http://www.businessinsider.com/ubers-revenue-profit-and-loss...
> 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.
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.
>"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.
> 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.
And there aren't too many NYCs in the world.
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.
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.
- 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.
Those 4 can handle everything backend related too?
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.
More than a team of four can manage certainly.
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.
There is always demand for Uber/Lyft just because there isn't a taxi cab nearby 24/7. How is that difficult to understand?
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.
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.
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.
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%.
There are a few costs like background checks that may go down when they stop expanding, but fewer than you might think.
Uber demand is definitely elastic.
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)
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.
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.
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.
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?
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.
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
"drivers start to leave" where are they leaving to?
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.
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.
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.
That's a non-sequitur
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?
I think the confusion stems from saying pro-competition legislation will prevent competition.
$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).
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.
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.
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.
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.
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 drivers certainly care.
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
Yeah... that's why they have so much investment from car companies... ;-)
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.
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.
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.
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
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.
Not even sure if I installed Uber last month when I got a new iPhone.
The thread link is: https://news.ycombinator.com/item?id=14456973
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.
In some cases this lack of maturity is particularly striking.
I think it's far to say you don't have a sustainable business model yet if you're dependent on future investment.
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.
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...
And in Jobs' case, it took an absence from the company of more than 10 years…
Edit: Downvotes for simply stating a fact?
Edit: I imagine it's this interview at AllThingsD[1]. Ed jumps into this topic right off the bat.
1. https://youtu.be/U8kH5eZdIqA
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.
I'd argue that a "mature CEO" is not a fit for Uber which needs to keep growing or die.
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.
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.
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.
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".
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.
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.
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.
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.
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. :)
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.
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.
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.
young people, old people, and homeless people.
Everyone else needs a car frequently.
> but personal vehicles are not going to go away.
For the vast majority of the population, yes, they will go away.
Look at the quality of the interior of the average cab and you will see why a lot of people would prefer to own.
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.)
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.
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.
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.
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?
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.
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.
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.
Stay. Wait... wait.... go fetch!
Companies at this stage in an ultra competitive market (not talking about ride sharing, but self-driving) need their founders to lead and grow. It is just too early and critical to bring in a professional CEO. See Apple.
Just look at the numbers in this article[1] - they need scale economics of two times the cost of the driver of the cab to archive GAAP profitability, which, obviously, is impossible even with self-driving.
[1] http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
Yahoo for example is coasting along at a market cap of 53.40B down from its high of over $125 billion[1]. In 1999 dollars. Is it "dead"?
[1] http://www.businessinsider.com/yahoo-market-cap-over-time-20...
But if they cut it too much, they'll stop growing.
The problem is they need to sustain their 70 billion dollar valuation for investors to be happy.
To be worth 70 billion they have to be either:
Growing at a very fast rate (which requires a very large burn rate to sustain)
Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.
People will stop using Uber if the wait times get really long, which they will if most of the drivers leave.
Their profitability problem isn't just one of opex. They don't have margin, either.
http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
My main takeway: revenues are higher than their cost of sales. In other words, they are earning money on marginal rides served. Not losing money.
To me, this suggests that profitability is plausibly achievable if they end subsidies into small markets and drastically cut development costs.
I suppose there's some tipping point of "very valuable" and "not that badly behaved" where the argument is actually valid (see: all the Steve Jobs references in this thread). But at that point I guess the ethical solution is to make it very clear what new hires are in for, and pay a healthy "dealing with this person" bonus (see: Steve Jobs, again).
Uber has been pushing hard on self-driving cars (I mean, in the long term, it strikes me as their only viable business model, so it makes sense). By my best estimates, salary for delivery drivers for Amazon packages run somewhere between $6B and $10B per year (for comparison, if I remember correctly, Amazon's revenue is somewhere around $35B/yr). Automating delivery could be a HUGE deal for them, and an opportunity to scoop up a major player in the autonomous driving space might look very appealing.
Then again, with Washington State throwing the doors open for autonomous testing, Amazon could likely develop their own system on their own turf for less, even if Uber's valuation goes WAY down.
Counterpoint: businesses in good shape don't just drop CEOs. This move might just help it die slower.
How could Uber, barring wholly incompetent leadership, completely implode?
And many/most Uber drivers also drive for Lyft. There's no harm in leaving both apps on and grabbing a more-elusive (but higher) Uber fare when one comes along.
It's actually would be a major news point I think. Whether or not Travis sells his shares is what's gonna be decisive of his position in the company and possible future ambitions.
The lender takes the risks as to share value and liquidity. If presented early in Uber's climbing valuation curve, it probably would have looked like a good opportunity to lenders.
I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.
I'm very optimistic about this change. To me, Kalanick, and the culture he bread, were toxic to Uber.
I'm reminded of how Microsoft's share price jumped by 12% the day Steve Ballmer's retirement plans were announced. Microsoft has been on a major run ever since. Let's hope that we see something similar here.
Uber has lived in Unicorn land thus far. The potential to turn a profit has buoyed them but that cash bubble seems to be running out of fumes. They could sell for 1/10th of what they raised money at. Time will tell.
It's a bad time for Travis to be handing over the reigns because he clearly hasn't built a command team to takeover and the fraternity atmosphere is toxic enough that as these new leaders step in I'm afraid the middle management will view them as "illegitimate" leaders.
Time will tell. I hope for the sake of all the people who hold Uber stock as part of their compensation that they get a pay day but it's a gamble.
Nope, This is wrong. Kalanick stood in front in the fight against the City officials and Taxi unions across the globe. Uber could've been done and dusted had it been left as a product to be sold by itself. Kalanick pushed Uber up high against the current of water, which is not exactly similar to running a Social Media Company.
If anything, there's a proportion of people who supported local government rules and existing taxi services over the American interloper, a counter-balance to the anti-union and anti-municipal crowd.
Please be mindful that the American experience does not translate globally, even to other english-speaking western countries!
And regardless of that, it doesn't matter: by the time Uber started operating in Australia (or any non-US country, for that matter), they already had a history of pushing hard against existing norms. Uber would have never even gotten to the point where expanding outside the US would have been possible if it hadn't been for Kalanick.
Sure, he's a jerk, but to claim that he had nothing to do with Uber's expansion after launch is just absurd.
'Software company, Not a taxi company' argument was used extensively to circumvent license and medallion regulations. On top of it they used VC money to drive down the prices by 4x-5x.
Several tens of thousands of drivers in every state in every country they went to got shafted because of these moves.
So yes he was very brutal and ruthless upfront. You can't replace that kind of human quality easily.
Your wages will dilute to a point it will be hard for you to make a decent living.
Don't kid yourself, this fight was fought by lawyers and lobbyists.
Uber financed one side of this fight, but seeing as the outcome of this fight was critical to Uber's business model, that wasn't some genius insight, that was self-preservation.
It's called execution...
Haha don't know where to start. Facebook could have gone to shit in so many ways just like all the predecessors like Myspace and Friendster, but they made all the right decisions and won. Same goes for Uber.
Kalanick's right decisions are now based on how much he was lying when he said he hadn't divested the slightest bit from Uber. I'm guessing that everyone read his character well, and that he was in fact lying on a massive scale and has many lifetimes worth of stashed-away wealth. Right now, winning for him means avoiding prosecution and jail (probably easy to do) and Uber is over, already.
So Uber lost, and anyone still clinging to Uber has lost (but there will be amazingly few of those). It's the frog and scorpion fable, really. Travis isn't the scorpion, and Uber isn't the frog. Uber is the scorpion and Wall Street is the frog.
Nobody would seriously argue that there's no difference between the two because Uber doesn't exist yet in 'stock' terms. They need to translate the initial investor enthusiasm into an IPO, so short/long spells out the likely climate for said IPO.
I am talking about how execution matters, because parent said Uber just worked on its own to get where they have, just like Facebook worked on its own to get where they have. None of these are true.
My comment has nothing to do with wall street or shorting or whatever concepts you bring up.
Facebook may have won. I think you'll find Uber didn't win, because Wall Street needed Uber to remain the Travis Uber, in spite of any laws or limitations, and that's clearly no longer true.
People do move, and the convenience of one app to hail taxis everywhere is appealing. But then again, people don't move that often that installing the local taxi app is too much of an assle.
This is not the case for 100% Internet based businesses like Facebook.
So they're really completely different models and therefore the competitive landscape can't resemble each other. It's more fair to compare the Uber-Lyft dynamic to rental car businesses like Enterprise-Hertz.
The reason I compared Uber's success to Facebook was because demand for the product was so great, it was viral. It's hard to mess up a product that is so incredibly popular.
Perhaps Instagram would have been a better example to communicate my point. Its initial success was clearly not anticipated even by its founders, and its success continued despite numerous hiccups and screwups in its early days. I posit that its founders ability, which was clearly limited (by their own accounts), had much to do with its success.
https://www.slideshare.net/iammutex/scaling-instagram
But it was a premature optimization because those responsible for turning 'viciously competitive evil guy' into raw capital failed to acknowledge that he'd screw them in turn as soon as he needed an exit strategy. You simply cannot turn to childish human dominance battles as a model for what will work in large systems and interdependent markets.Even propping up your 'pet winner' with near-infinite capital won't save you forever.
The irony is that in growing, FB traded down that cachet -- but managed to transition from cohort value to network value fairly successfully.
This is an argument I've made for years, I'm happy to see that I'm not the only one -- danah boyd has mentioned it several times as well.
I'm not saying Zuck didn't execute well -- the advantage still could have been blown (and I've only just learnt of a similar network started IIRC at Columbia University which didn't go as well). But for all the things Zuck can claim, building Harvard's social appeal is not one of them.
We don't know exactly how much influence Zuckerberg had in all the decisions. For example the common theme for years was for there to be uproar after any major feature or change.
Like the news feed that is now ubiquitous. A worse company might have feared the backlash and slowed down on features and growing the news feed.
I assume Zuckerberg was also fundamental in acquiring Instagram and Whatsapp. Instagram is worth tens of billions now. Whatsapp has 1.2B or so monthly users. There were many comments on how overpriced and silly the Whatsapp purchase was. But most of it was in stocks and the cash at the time may have been a lot ($4B), but Facebook gets that much per month now. Whatsapp tripled its users since its acquisition.
A lot of tech people disliked the Messenger split off. But that seems to be working out for the business too. It is becoming its own platform now and can also boast 1B+ users per month.
Maybe anyone would've done all this. I don't know. But I do know it was Zuckerberg in charge when all this occurred.
They will change the company's current culture. Slow down the pace of growth to try to adjust what is wrong. Probably focus on where they have margin to operate. This is clear in Gary ( Uber Co founder) text on Medium.
"In a highly competitive market it is easy to become obsessed with growth, instead of taking the time to ensure you’re on the right path. Now is that time… to pause"[0]
[0]https://medium.com/@gc/ubers-path-forward-b59ec9bd4ef6
This is death. I mean, it's sensible talk, in another context it would be seen as enlightened, in a larger sense it's the right answer.
Uber aren't IN another context. They depend completely on Wall Street continuing to think they are the biggest shark that ever sharked, and now that's ruined and the only big investment opportunities are in betting AGAINST Uber. Most likely the smartest money is already out.
This is death. Shouldn't be, in a more sensible context, but it absolutely is. You can't tell Wall Street 'it is time to think sustainability' when they bet on you eating the goddamn world for them.
I'll grab my popcorn, this will be fun to watch.
If they cut ad spend and raise costs, then their growth story stops and other competitors have a window to move.
The go-to reading (at least a few years ago) for handling the difficulties of burn rate at a high-growth company is 'Mastering the Rockefeller Habits' by Verne Harnish, the chapter on cashflow. I think 'The hard thing about hard things' also talks about how this situation can kill your company if you're unlucky or unprepared
Traditional firms will generally prefer debt to equity as you will generally get a better shareholder return on debt. VC backed firms do not usually raise debt -- even if it is preferred -- because they are viewed as too risky by banks. When VC-backed firms raise debt it is because they are transitioning out of high risk to the stability of a established and predictable firm.
In some Nobel-winning economic theories the best capital structure is all debt: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo... https://en.wikipedia.org/wiki/Capital_structure
If the only thing about this loan that makes it "leveraged" is its interest rate of 5% then that is probably preferable to equity and not a red flag.
Highly unlikely. Why? Investors who stomach multi-billion dollar annual losses will probably just shrug off the recent bit of trouble. If the choice is to either write off $15 billion or to give another couple to help the company go through a rough patch (what a buying opportunity!) I think I know what investors are going to do.
Kalanick's head has now rolled (not that it really hurts him much personally though, it's probably even a relief for him) but seriously a whole nother level of crap would have to happen with Uber before investors start getting comfortable with the thought of letting go those $15 billion.
Bear in mind that the company's growth has been driven by its ability to run a very, very highly-performant backend -- and that's in turn a matter of getting the very best engineering talent on board.
Some, perhaps most of that talent is already pissed off about the fratty work environment and questionable leadership decisions. Recently, their options exercise window changed from 30 days to 7 years[0].
Angry employees + management turnover/uncertainty + limited runway + new rule that basically you don't lose your options when you quit = I'm officially an U-Bear.
On a related topic, I think people's schadenfreude for Travis is getting out of control and he's becoming a bit of a totem for everything that's wrong with SV....while his issues are largely self-inflicted ("boob-er" / treating drivers like crap on camera / etc), all the hatred directed toward him seems excessive in context. The guy just lost his mother, maybe cut him some slack?
[0]: http://www.bizjournals.com/sanfrancisco/news/2017/05/16/uber...
Agree this is good for Uber employees and I'm happy they have significantly less of an impediment to leaving than most other workers at pre-exit startups.
My gut tells me that Uber's financial performance won't change
Being a good guy as requirement for being CEO is a 21st century thing.
...and if that's a 21st Century thing, so be it.Maybe you should do 21st-century things like being a good guy, considering this is the 21st century.