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Uber CEO: We Could Be Profitable -- We Just Don't Want To Be (fastcompany.com)
Uber CEO Dara Khosrowshahi said he's not worried that his company lost $4.5 billion last year and claimed the company could "turn the knobs" to be profitable if it wanted to -- it just doesn't. From a report: Khosrowshahi made the comments at the Goldman Sachs Technology and Internet Conference in San Francisco this week where he explained that if Uber did turn those knobs to be an immediately profitable company it would "sacrifice growth and sacrifice innovation." He also spoke optimistically about the impact self-driving cars will have on transportation costs.
Serious question here, how does a company lose 4.5 BILLION dollars and survive? That's just mind boggling.
What's better, revenue, or profit? I worked once for a shop that had profit every single quarter (and tidy bonuses for all of us under the sharing plan), right up to the day they laid us all off and closed down the shop.
Ask Bezos...Amazon did it for years!
I can jump out of my window here on the 68th floor and fly...
I just don't want to.
UberPonzi.
I can't believe enough people are throwing that amount of money at them year after year. At least Amazon has a viable business plan that isn't threatened near daily by lawsuits and regulations. A fool and their money I suppose...
he explained that if Uber did turn those knobs to be an immediately profitable company it would "sacrifice growth and sacrifice innovation."
In other words, they'll make it up on volume.
toiling away for scraps while their earnings are used to design their replacements
they are paying for the privilege of being used up like dixie cups
Serious question here, how does a company lose 4.5 BILLION dollars and survive? That's just mind boggling.
Stupid willing to give it more money.
Like Tesla. Tesla has been losing money for 14 years selling cars and if it weren't for stupid people giving it more money - like this last junk bond issue - it would have been long dead.
Yeah yeah yeah, cue the stupid people 'It hasn't been losing money! It's been building up!"
You may mod me off-topic, but my Opera 12 finally stopped working with Slashdot today ('fatal security connection error') and I am sad. :(
I'd be more impressed if he said he could take home a wage if he wanted to, but chooses no to.
When they came for the communists, I said "He's next door. Take him away. Goddam commies."
I remember a company named Amazon that used to say the same thing. What happened to them? Who knows.
They... become President on a promise to sell out America to corporations? I'm just spitballing...
All they have to do is up their prices by 50% or so, and they're in the black. That kind of price increase wouldn't drive their sales down or anything, right?
"We could be moral too!" - We Just Don't Want To Be ;)
Sure Uber we believe you, after having all your executives quit due to discrimination issues within Uber, outright ignoring local city rules, spying on politicians checking out the system. Getting into a massive lawsuit with Google Alphabet where it looks like you poached an engineer and potentially paid him to do industrial espionage. Looking to get self-driving tech to fire all your Uber drivers despite them being paid so little they need to sleep in their cabs. Yup, sounds like a fine company to me.
Or an ogolopy.
That's what the big money on Wall Street sees. It sees a future where one or a small number of companies have the public over a barrel in terms of public transport. With few options and fewer publicly owned projects, we will have little choice but to take them up on their charges and fees.
So right now, they will tolerate the so-called loss of a few billion dollars. They can write part of it off as the cost of doing business, they can shuffle more profitable parts of their dealings such that it washes out to zero, or other accounting wizardry so it doesn't hurt them right now. In a few years or decades, whatever it takes - they have the time - it will work.
This is how the ultra-wealthy stays that way.
Ask Bezos...Amazon did it for years!
Not true. https://www.gurufocus.com/fina...
Because they had revenues of $6.5 billion last year and revenue growth rate is going up faster than the loss rate. Eventually they will make money. How is Amazon the most valuable company in the world, while only having a few profitable quarters?
It didn't look that way nearly two decades ago, almost right after the dot com bubble.
#DeleteFacebook
"Turn knobs" is a management way of saying "screw drivers out of a larger percentage of their fare".
4.5 Billion? That's nothing. Just wait til they actually try to switch over to self driving cars. Ummm. anyone got a few trillions dollars to invest.
but I enjoy eating fine foods and drinking good beer.
In its three biggest losing years, Amazon suffered losses of $0.7 billion in 1999, $1.1 billion in 2000, and $0.6 billion in 2001.
https://revenuesandprofits.com...
In fact, Amazon's losses in its first 8 years (1995-2002) together totaled $3.0 billion, which is still less than what Uber lost last year alone.
Amazon became profitable in 2003, nine years after its founding. Uber will be nine years old next month.
But that's okay, we'll make it up in volume!
A post a day keeps productivity at bay.
"I'm not an addict, I can quit anytime I want to! (I just don't want to right now, obviously...)". A little different subject matter, same self-deception.
In other words, they'll make it up on volume.
It's not just volume. Uber is really two parts. The ride sharing side and the company researching self driving cars side. It would be interesting to see that broken down. My guess is that the ride sharing side would likely be profitable if the R&D side wasn't eating up their profit plus some.
It's kindof a strange combination. A pure ride sharing company without the self driving car R&D could likely operate with fairly high profit margins but when/if self driving cars get here they will either need to quickly find someone willing to sell them self driving cars or they will not be able to compete with driverless cars.
Driverless cars are an existential risk to lots of current companies which is why so many companies are either researching it or investing in companies that are.
So with revenues of $6.5 billion, to have a loss of $4.5 billion means they spent at least $11 billion (they would have to spend all their revenue to reach $0 income, and spend another $4.5 billion to lose that much). They are spending nearly twice their revenue right now; assuming spending is held flat, they will need to nearly double revenue just to break even.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Considering that they have to pay drivers significantly less than minimum wage in order to keep the prices down far enough to undercut the taxi companies and fund their R&D, I think it's questionable if they could make a profit even if they wanted to.
In fact, if the authorities weren't so incompetent, they'd be sued for antitrust and minimum wage violations to the point where they'd probably go under from that alone.
Giving sh*t away is easy.
They want to put taxis out of business, I don't think there is any doubt about that. Once evil taxis are out of business Uber can charge you even more on average than taxis charge now due to 'smart' pricing. Everyone who things taxis are evil.... just wait.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Reinvesting profits is not the same as losing money. Uber is only surviving on continued flow of investor money. Amazon was was surviving on its own sales revenue.
I am not an alcoholic honey. I can quit anytime. Hic..
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Knowing Uber I'm guessing hookers, blow and access to the office sex dungeon for investors.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Serious question here, how does a company lose 4.5 BILLION dollars and survive? That's just mind boggling.
Investors in UBER should seriously consider a lawsuit claiming the CEO and/or members of the board and C-level executives are not maintaining a fiduciary responsibility in operating the company.
Let's face the facts here. The CEO of a publically traded company made a public statement saying they are not interested in making a profit.
I think such a statement would hold up in court.
Dear Uber CEO,
If you're comfortable not making a profit and you'd like to improve the image of your business, why not just give your drivers a little more pay? Passengers would gladly pay more. It's like you're not really competing with taxis at all. You're competing with public transport on price for most shorter journeys. Right now, most people just think you're asshats.
Yours Sincerely,
John and Joan Q. Public.
I could give up drinking anytime if i wanted.
Before the election Trump said he could be presidential anytime if he wanted to.
See how well that worked out?
The way you stay in business despite losing $4.5 billion is to start with a lot more than $4.5 billion in the bank. Uber raised a lot of money and has substantial reserves. The basic idea behind the company has always been to spend heavily developing their brand, expanding their reach, and getting customers used to dealing with them rather than conventional cabs. Once they're well enough established, they'll be able to raise prices and/or pay drivers less to bring themselves to profitability. This kind of thing is very common among start-ups; they burn through a lot of money getting started in the hopes of big profits later.
As far as I can tell, Uber has two hopes for why they'll be profitable enough to justify eating all those losses up front. One is that they'll be able to get driverless cabs before the rest of the market and make big money by not needing to pay drivers. The other is that they'll be able to drive the conventional cab companies out of business and have the market to themselves. If they can charge monopoly rates, they could become very profitable indeed.
There's no point in questioning authority if you aren't going to listen to the answers.
Uber fans like to throw shade at local taxi companies, invariably based on tautologies, anecdotes, and confirmation bias. But it's real hard for a local company that has to show a profit - and pay its workers a living wage - with a corporation that can afford to lose 4+ billion a year.
Like how Amazon operated for a decade on loses, driving local bookstores out of business that weren't able to lose huge amounts of money for long amounts of time.
People exactly like you (probably also specifically you) shit on Amazon for years, and Tesla, and Uber, and every other business you don't understand.
There's a reason why you are poor and a slave to your salary. You think there are these rules that everyone must follow to be successful, and can't comprehend success outside of that arbitrary mind prison.
You don't understand how billions in losses means zero in taxes for the next 20 years. You don't understand how a bankruptcy means a hundred million dollar payday. You're a fucking moron. Accept that, and embrace that this is why you will never be successful.
Where do people get this idea that company directors are bound by law to make as much profit as possible? "Fiduciary responsibly" simply means telling the truth about company finances in a timely manner, it has nothing to do with the desire or otherwise to make a profit. The law is that the directors must do what the majority of shareholders want to do, if the shareholders vote to spend more money than they earn then that's what the directors are bound to do.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Uber is only surviving on continued flow of investor money
Here's a thought: let's not count Uber's business income at all, so you can attempt to make your meaningless point. ;)
ask trump. he managed to do it all by himself two decades ago.
The Pee Wee Herman method ... "I meant to do that."
I just don’t want to.
It's called an IPO https://en.wikipedia.org/wiki/.... They just have to survive until a few months after that. So the banksters lend the money in turn for major piece of the company upon the basis, that they will be able to dump it on mug investors at IPO time and rake in billions in profit, this with suitably corrupt PR=B$ to dress up the company for sale, they then bet the company will go bust and make money on the way done. Look not further that Dot.Bomb https://en.wikipedia.org/wiki/.... Why would you think this would ever stop.
Chaos - everything, everywhere, everywhen
Considering that they have to pay drivers significantly less than minimum wage in order to keep the prices down far enough to undercut the taxi companies and fund their R&D, I think it's questionable if they could make a profit even if they wanted to.
In fact, if the authorities weren't so incompetent, they'd be sued for antitrust and minimum wage violations to the point where they'd probably go under from that alone.
My point is that most of that R&D money is being spent on replacing their current business model with self driving cars. Drivers working for less than minimum wage and not being able to cover their own wear and tear actually makes them even more profitable. Their R&D budget is almost entirely devoted to trying to get rid of the driver. They already have a version of Uber that works with human drivers; they don't need to spend money researching that. Their current business model of fleecing drivers and pocketing the difference would likely be very profitable if they didn't have the expensive all consuming side project of getting rid of the driver altogether.
I think he left off half that statement. what he should have said is "company could "turn the knobs" to be profitable if it wanted to just we would then be out of business 6 months later". I don't believe at this current juncture that they can be profitable AND survive and this I suspect is more the reason why they have not turned that knob as they are still trying to figure out how the fuck they can turn a profit while not destroying the business.
That Uber has income does not negate a thing Mr. Lunix wrote. Take a course in logic some day.
Where do people get this idea that company directors are bound by law to make as much profit as possible?
Henry Ford once increased the pay of his line workers, reducing shareholder returns, because, he said publicly, he felt that the workers deserved the money more than the shareholders. The shareholders sued, and Henry Ford lost. The court said that he could increase the wages to improve worker productivity, reduce turnover, reduce the chances of union strikes or violence, etc., but not just because he liked the workers more.
In short, if you cannot justify something to increase shareholder returns (and increasing long-term by screwing over short-term investors is alright), then you are open to shareholder lawsuits. OTOH, saying that Uber is trying to increase market share, losing money while improving processes, etc., in the expectation of better returns in the future, would probably be enough to escape any lawsuit (especially if the majority of the shares agree, and I think that I read that management had structured matters so that would be true, regardless).
Because Amazon is a well run company with strong cash flows.
Uber.. are not.
Because they had revenues of $6.5 billion last year and revenue growth rate is going up faster than the loss rate. Eventually they will make money. How is Amazon the most valuable company in the world, while only having a few profitable quarters?
Uber is a scam. They are losing money on every single trip and no amount of growth can fix that. The growth only serves to back the ponzi-scheme it is to investors.
Throwing good money after bad money.
Reinvestment and loans put into the company.
Uber is using the current relatively low interest rates to buy cheap money to spend on things that will bring in more money then the cost of the cash.
Just as long as your investments bring in more then the cost your company can run it debt for eternity, and still pay off all the bills. That said. For most companies they grow to a point where such investments do not pay off as well the cost of money. So the company at some point will need to switch to profits.
For a small business or personal financing. This strategy is difficult to impossible.
1. Interest rates are governed by the risk so poorer people have to pay more. So money is more expensive.
2. Smaller investments lead to smaller rewards which could be easily eaten by a bad investment that didn’t pan out.
3. You don’t have the resources to fight and bargain with creditors.
4. Survival requires non investable purchases. $500 a month on food is money that you are not going to get back. Hence why a lot of successful businesses owners who start from nothing talk about eating Ramon for a few years.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
It's not just volume. Uber is really two parts. The ride sharing side and the company researching self driving cars side. It would be interesting to see that broken down. My guess is that the ride sharing side would likely be profitable if the R&D side wasn't eating up their profit plus some.
Why do you assume that Uber's ride sharing is profitable? There is to my knowledge zero evidence to suggest that Uber's ride sharing is profitable or that it even has a path to profitability. It's not clear they have a cost advantage over their competition and the costs of running a taxi service are largely fixed (fuel, labor, etc) with limited economies of scale. Plus there actually is data out there on how Uber spends their money and it appears their losses mostly are from trying to buy their way into markets by discounting ride sharing below cost. Yes they have a lot of revenue growth but it's easy to generate a lot of sales by selling $2 bills for $1.
Driverless cars are an existential risk to lots of current companies which is why so many companies are either researching it or investing in companies that are.
In Uber's case it's hard to see what their business model is or where they have any sort of advantage when it comes to driverless cars. Uber is losing billions per year on ridesharing and their competitors (google, ford, gm, etc) all MAKE billions in profit per year or in the case of Tesla actually make cars. Given that real driverless cars are at least a decade away from widespread commercial viability (sorry you won't see them next year) I cannot see any meaningful business model that won't result in Uber running out of cash long before driverless cars become a viable product unless Uber can get to at least breakeven on their ride sharing business.
My point is that most of that R&D money is being spent on replacing their current business model with self driving cars
So what? Google has a HUGE war chest from their ad business to finance the R&D and a big head start. Same with GM and Ford plus they actually make cars. Tesla is in the mix too and while they don't have the cash they do have the technology and know how to make cars. Where is Uber's competitive advantage here? Even if they develop some viable technology they will have to partner with someone else to make it and that sort of joint venture is inherently unstable because it requires splitting the profits.
Drivers working for less than minimum wage and not being able to cover their own wear and tear actually makes them even more profitable.
Umm, maybe for a short time but those costs HAVE to be recouped eventually.
They already have a version of Uber that works with human drivers; they don't need to spend money researching that.
Since it isn't even CLOSE to profitable, they haven't solved that problem yet. It's not clear that they have any meaningful cost advantage and are just convincing investors to finance their attempt to buy market share. Not clear how that will be sustainable once the subsidies go away. At their current burn rate they will be out of cash a long time before driverless cars become commercially viable.
In its three biggest losing years, Amazon suffered losses of $0.7 billion in 1999, $1.1 billion in 2000, and $0.6 billion in 2001.
Amazon was creating an entirely new industry, they had to create a lot of things from the ground up, logistics chains, warehousing systems, stock tracking and management that didn't exist before Amazon did it. Amazon moved into a market that didn't exist when they started... Uber is just an illegal taxi company. They aren't even remotely comparable.
Further more, Amazon had a plan for profitability, Uber doesn't.
But the sooner Uber dies, the better.
Calling someone a "hater" only means you can not rationally rebut their argument.
The moment the venture capitalists stop paying some percentage of my Uber trips is the moment the competitors kill them off.
Uber's competitors can't beat the price, so instead are ramping up other things, like quality of vehicles, security, invoicing, or whatever else. Those things might not be enough to lure the price conscious in, but once price stops being so far different, Uber loses it's edge altogether. It's a bit like a Ponzi scheme right now, so it'll be interesting to see how it plays out. No one can afford to lose billions per year for too long.
It's not just volume. Uber is really two parts. The ride sharing side and the company researching self driving cars side.
Who will win the greatest tech race of our time? The largest technology companies, he car manufacturers or the dodgy taxi company? Tune in next week to find out.
If you think someone isn't free to have a different definition of "freedom" you may be a tyrant.
"Sure I sell them at a loss, but I make it up in volume!"
People exactly like you (probably also specifically you) shit on Amazon for years, and Tesla, and Uber, and every other business you don't understand.
There's a reason why you are poor and a slave to your salary. You think there are these rules that everyone must follow to be successful, and can't comprehend success outside of that arbitrary mind prison.
You don't understand how billions in losses means zero in taxes for the next 20 years. You don't understand how a bankruptcy means a hundred million dollar payday. You're a fucking moron. Accept that, and embrace that this is why you will never be successful.
If you were as successful as you imply you are, you likely wouldn't be shitposting on the Internet. You'd probably have better things to do. Being truly happy and successful means not feeling the need to disparage strangers on the Internet; from an anonymous account no less.
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
Further more, Amazon had a plan for profitability, Uber doesn't. But the sooner Uber dies, the better.
I don't know, I heard recently that Uber could be profitable tomorrow, but are just choosing not to be.
LOL
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
Let's face the facts here. The CEO of a publically traded company made a public statement saying they are not interested in making a profit.
I think such a statement would hold up in court.
Uber is not a publicly traded company.
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
It certainly did. They were selling a tangible product that people actually wanted, and they were selling for less than traditional booksellers. Better selection, better price, and it allowed people to be LAZY... just sit on your couch and order books.
Uber provides virtually nothing to anyone. The drivers own the cars and provide the labor. Every cab company in the world accepts phone calls for immediate dispatch. So... Uber is essentially a cab-dispatching company that loses billions of dollars in investor money every year. WTF?
Most rides where I live (Washington, DC) are cheaper by traditional cab. And I can get a cab faster by walking to the street and waving my hand. Boom! Cab. Meanwhile the hipsters and millennials are staring at their phones or peering into cars creeping by to see if itâ(TM)s their car or not. They wait forever. Itâ(TM)s funny when itâ(TM)s not sad.
Maybe they just throw great investor parties or something. I really donâ(TM)t get it. At all. Itâ(TM)s a completely worthless company that isnâ(TM)t âoedisruptingâ anything itâ(TM)s just robbing investors. They will never make self-driving cabs work. Someone else will get there far sooner, and then Uber will have no more #future to claim. The bubble will burst and all the investors will wonder WTF happened.
I just donâ(TM)t understand why they haven the come to that conclusion already. Most state governments donâ(TM)t even spend this much money in a year.
In what market is Uber actually cheaper? Honest question... has anyone ever seen an Uber ride cost less than a regular cab? Not the Uber-plus-random-other-people ride, the one where you get the car to yourself. I never use Uber, but my phone always tells me how much Uber will cost when I look up directions, and my traditional cab ride is always cheaper, usually by 20-50%.
They just need market share until they bring self driving cars to market, at which point you can cut the fares in half because you don't need to pay a human to pilot it anymore. That's the end goal. Global transit system that funnels through a single app. You don't have to "get it" because everyone else does and thats why they're willing to wager 100 billion dollars to see it happen and profit from it.
moox. for a new generation.
I am guessing that you are in a major city with lots of cabs. I have found that where cabs are a little less plentiful, Uber is a bit less expensive.
They just need market share until they bring self driving cars to market, at which point you can cut the fares in half because you don't need to pay a human to pilot it anymore. That's the end goal. Global transit system that funnels through a single app. You don't have to "get it" because everyone else does and thats why they're willing to wager 100 billion dollars to see it happen and profit from it.
No, it is not. While self-driving cars are close, the first generations will be for special roads only and not from endpoint-to-endpoint. Their research into AI is just another part of the scam to get more investors. They will be long dead before we reach level 5 AI.
No it doesn't. They could have invested 10 Billion in RnD and hidden the other billion in a tax shelter for a rainy day.
Maybe crack open a dictionary and look up spent, revenue and loss.
plan for profitability? easy suffer losses next 10-20 years, and kill-off/buy any competition, than when self driving cars become fully functional, just fire all meat-robots, you also know them as neighbors, family and friends, and replace them with much cheaper self driving cars.
after that since you starved all competition using those big looses you can enjoy monopoly and profits, and get a lot of money to your investors
that reminds me, have to get more Uber stock, BRB
also as someone said all those losses will be restructured to reduce taxes once company becomes profitable, so government will pay you back every cent