Long time ago, an Uber driver told me that Uber just connect them to customers and take money from that. Uber doesn't need to pay for gas, car maintenance etc. But Uber is still not profitable last time I checked. What did they spend so much money on? I am thinking an analogy with real estate agents, not sure how they could lose do much money. Be gentle please, I am not in SW, so I don't quite understand the operations of Uber. TC 130K
Employees, marketing, insursnce, and low margins to protect or grow market share.
Uber doesn’t make much money on its revenue. Its gross margin is very thin compared to G/FB.
They reinvest the money they are making to expand in new markets, research new initiatives (Uber eats/self driving cars for example), and improve their products. If they decided to stop aiming for growth they could easily cut back on these things and be profitable but they'd be missing out on profit over the long run. It's like how amazon was not profitable for a long time while they aimed to grow.
One huge spend for these companies is insurance. As it was described to me, a large amount of money goes to insurance for things like lawsuits. The person I spoke to worked at one of these places recruiting data scientists to help reduce their insurance costs by small percentages, which could be why Uber and Lyft and others want self driving cars. No driver, less chance of something happening to the passenger where the company could get sued.
Uber loses money on every car ride. It has to pay drivers enough to keep them incentivised to drive but prices low for riders. It's made especially bad by the fact that Lyft exists and they are also in a price war
High salaries + high marketing spend = death
Must be my high TC
If I understand correctly, Uber makes money on rides at the typical price, but then offers so many discounts and promos, that they end up making a loss overall.
Many startups don't seem to understand that established industries aren't wholly inefficient. They spent tons of money to buy market share of thin-margin opportunities. Uber, Lyft, BlueApron, Groupon, etc. don't have a chance unless they bring something new to the table besides a frictionless app. I believe grocery/food delivery companies will also tank when they go public.
All last mile logistics is pure garbage. Amazon is the only company to pull it off and we know all the other plays they have that keep them afloat.
That's interesting. I wonder if it's because last mile problems are just too different in every geo/city, so it's just really hard to find scalable solutions.
High TCs for SWEs.
No. It’s driver incentives, marketing, user acquisition, discounts, etc. They lose money on every ride and food delivery because of that. The running joke is that if we really wanted to hurt our competitor, we should just use their platform more
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