[kiyanforoughi]

This is the guy who made a huge tactical mistake when Booking.com was challenging Expedia by choosing to stick to merchant model (i.e., buying inventory) as Booking went for the agency model (i.e., lead gen).

Expedia has moved to an agency model since but the damage was done. Booking managed to get far more inventory, capitalise on more search/PPC traffic and blow past Expedia.

Wonder if he's going to make a similar kind of mistake and misread the transportation market.

Props to a fellow originally Iranian though :-)

[indescions_2017]

Pretty sure even my grandma knows where the transportation sector is headed: electric, autonomous, sharing, services based, etc ;)

I think this is more about $UBER IPO. Stabilize the ship, smooth relations with investors, and start shopping to underwriters. Expect to see road show by Q2 2018.

[askafriend]

This is spot-on, in my opinion. All they need is someone who is demonstrably competent and experienced to stabilize the ship and steer it towards an IPO.

There's no need for the candidate to be a visionary or meddle drastically with something that's already working extraordinarily well. That part is largely done - the Uber machine is mature and chugging along.

A seasoned operator needs to come in to provide PR cover, put in some basic organizational guardrails and rebuild the executive ranks to get the company IPO ready. Hiring a CFO is probably top priority as well as getting PR back on track. Those two moves alone would suppress external distractions and start the IPO process by having someone working on it full-time (CFO).

Let's see if Dara can pull this off.

[sillysaurus3]

I think this is exactly how Uber will fade into irrelevance. Think about it: We're bringing in a money guy to "stabilize the ship."

When the opposite of "rock the boat" is in power, don't be surprised if you get an irrelevant cruise ship. They run out of money soon, and nothing will change that short of a mass layoff or raising their prices above taxis. Then what?

They needed that autonomous driving tech. And I don't see a money guy pulling that off.

Remember how Marissa Meyer turned out? People ended up saying "Well, nothing could've saved Yahoo." But you could've said the same thing about Apple at its nadir. Same with Uber.

Uber is a real opportunity. Kalanick is unpopular, but he got Uber to where it is. So how certain are you that it was a good idea to kick the founder in exchange for a money guy? Given those options, I'd bet on the unpopular founder every time.

[ghaff]

Autonomous driving in the sense of door-to-door taxis is not going to happen in a timeframe remotely relevant to companies like Uber. Maybe in a few decades. Uber needs someone not betting on that.

[sillysaurus3]

Maybe not, but it has the virtue of being their only chance of not running out of money in the next few years.

[sumeno]

Unless a competent CEO comes along with a plan that is better than betting the companies existence on solving autonomous vehicles in the next two years they are going to run out of money either way.

If Uber wants to be a player in autonomous vehicles they have to become profitable enough to survive long enough to realize that goal. Kalanick's plan was always a pipe dream. Driverless cars just aren't going to be ready in time.

[godzillabrennus]

How long did Amazon float by on potential while running at a loss?

Companies can raise funds if people think it'll succeed.

[geofft]

> Uber is a real opportunity. Kalanick is unpopular, but he got Uber to where it is.

And Lyft got to where it is with no Kalanick. (... actually, does anyone know off the top of their heads, besides Lyft and maybe Uber employees, who founded Lyft and whether they're still in charge?)

The myth of the founder-hero who is the only person who can run a company usually has little evidence in its favor, but in this case it has explicit evidence against it. Lyft as a service is basically indistinguishable from Uber in markets where it serves both, possibly slightly better. And if Lyft acquires Uber, the two services get to stop competing on price, buying them plenty of time to figure out the self-driving tech (which, I agree, they need), and the combined company will succeed easily, no Kalanick needed.

(Also, I think "unpopular" is a pretty low-information description of why Kalanick got forced out. It could mean anything from "people on the internet don't like them" to "regulators don't like them" to "investors don't like them" to "employees don't like them," each of which have very different impacts on the company, and comparing an unpopular founder in one sense to another company's unpopular founder in another sense may not be meaningful.)

[stephenhck]

I think you're overlooking a huge difference in your argument against "the myth of the founder-hero": Lyft benefited tremendously from Uber pushing into new markets / cities first. Uber and tk had a huge impact on making ride share legal, and Lyft never had to deal with that (or not nearly as much).

Also, how would Lyft ever buy Uber? Even if Uber and Lyft get 50/50 market share, which I think is impossible, you need to be way larger to buy out another company.

[sah2ed]

In the tech industry, the pioneers are usually the ones with arrows in their backs.

You are absolutely right that the TK/Uber combo going head-on against existing laws is what made ride hailing a reality for millions of consumers, but unless the pioneer has an air tight go-to market strategy to create and maintain dominance of the market, historically, the odds tilt strongly in favor of the second mover, third mover, nth mover (i.e. fast followers) achieving market dominance.

Facebook, the market leader was launched in 2004, MySpace in 2003 and there was Friendster in 2002 founded by Jonathan Abrams.

Zuckerberg learnt how not to run a social network from watching the mistakes of Friendster and MySpace before him.

[malandrew]

This. Kalanick is as much Lyft's founder as Uber's founder. Without Kalanick, Lyft would be a tiny fraction of its current size and available only in a few markets.

[shaklee3]

Companies with a founder leading are more likely to be successful: https://a16z.com/2010/04/28/why-we-prefer-founding-ceos/

[ec109685]

There is some survivorship bias here, right? Only successful companies would allow their founder to continue leading them.

[rpmcmurphy]

The change that nobody is factoring into predictions is what happens if local governments pass minimum pay requirements for drivers. This will end the race to the bottom, which will be a good thing for all parties (except passengers who are freeriding off investor subsidies and crap driver pay).

[aianus]

As a driver, the pay is well over (+30%) minimum wage after all expenses including depreciation.

Don't know where this 'crap pay' trope is coming from, might be different in different markets.

[Grue3]

Lyft wouldn't get anywhere if Uber didn't exist. They don't have the guts to flaunt the laws like Uber did. It's always easier to follow.

[AndrewKemendo]

Why do people keep bringing this up? Mayer did exactly what she was brought into do: increase the value of the stock to make an exit out of a failure.

"The real winner here is Yahoo, which is receiving far more value for this asset than it is worth and has also managed to halve its exposure to liabilities that it should be fully on the hook for. ... It is not difficult to still see upside in the Yahoo share price. Marissa Mayer may have been terrible at executing on a digital ecosystem, but she seems to be a great salesperson."

[1] http://www.investors.com/news/technology/yahoo-marissa-mayer...

[xiaoma]

> " Mayer did exactly what she was brought into do: increase the value of the stock to make an exit out of a failure."

Why are you giving her credit for that? Nearly all of Yahoo's value was its investment in Alibaba (which happened years earlier). If anybody deserves credit for Yahoo's recent exit, it's Jack Ma.

[dilemma]

Mayer was brought on to turn around Yahoo, not to sell it. Evidence is the Tumblr acquisition for $1B, which was then written off in full or close to it. She failed the turn around and the only way out after that was a sale.

[sillysaurus3]

Because Yahoo faded into irrelevancy. If you want Uber to rise in value for a short time, Khosrowshahi seems like an excellent bet. I wonder who Uber will cede their throne to? Lyft?

You could argue that the damage was done, that Kalanick screwed up the company so badly that nothing could save it at this point, so you may as well try to cannibalize it for value. But the best investors know better.

Let it sink in: they're going to run out of money. What then?

[roskilli]

If you look at the numbers I have to say that's a little bit silly to say. They have $6.6 bill cash on hand, they are burning ~$2.5 bill per year, although quarter to quarter net loss fell 9% last quarter. They very likely have 2 years, likely more, to start making profits each quarter.

If they really need to jettison more expensive parts of the business they can sell off their autonomous unit and their VTOL investments, along with a ton of other fat they can trim.

Your viewpoint does not seem connected with reality IMHO.

[rodgerd]

> I think this is exactly how Uber will fade into irrelevance.

Like Amazon? Because they used to break rules left, right, and centre. Their competitive advantage, in their early years, was ignoring tax law. The difference was that Bezos was smart enough to hedge against the day he'd have to comply, and to diversify.

[ghaff]

> was ignoring tax law

Most online/catalog companies don't collect sales tax and leave it up to buyers to pay usage tax [which is legal absent a physical nexus https://en.wikipedia.org/wiki/Quill_Corp._v._North_Dakota]. This remains the case. Amazon just got pressured into collecting because they're so big and have affiliate sales programs.

[greglindahl]

The way Amazon was ignoring tax law was that they operated warehouses in states while claiming that they had no physical nexus in them, by using shell companies.

[s73ver_]

Kalanick wasn't just unpopular; he was completely incompetent as the leader of a large company.

[wpietri]

This would make sense to me if they had a decent business. But they are currently losing money hand over fist [1]. If they stabilize as is, they don't look like a good IPO target to me. The median amount taken in by an IPO in 2016 is $94.5 million [2], which would cover less than 2 weeks of Uber losses at their current burn rate. (Surely their IPO won't be the median size. E.g., Facebook's brought in $16 billion. But at that point, Facebook had been in the black for 3 years and their profit for their last full year was a billion dollars.)

Can they raise rates enough to get to break even before IPO? Maybe. But that would drastically reduce pressure on their competitors. Lyft is growing fast. Uber can really only justify their current valuation if they end up with no real competitors and can extract monopoly rents.

So I think their CEO needs to do a lot more than stabilize things. They either need to find a way to make the current business work much better (something I'm skeptical exists) or to drastically change the business to one where they have more of a moat.

My guess, though, is that they have run out of "greater fools" [3], and that the public market would realize that Uber, at least as currently constituted, is not a high-margin tech company but a low-margin discount taxi dispatch company.

[1] https://www.axios.com/exclusive-uber-financials-2475912645.h...

[2] https://www.wilmerhale.com/uploadedFiles/Shared_Content/Edit...

https://en.wikipedia.org/wiki/Greater_fool_theory

[mrobins]

Even if that's the only way it could be headed (and I think there's lots of room for variation) - The correct path for Uber for the next few years and through an IPO is hardly a given.

They're currently far and away the market leader but that's a dangerous place to be. Lots of people want them to fail - both for competitive reasons and because they just hate the evil guy at the top.

Competition (backed by huge names like GM) is healthy in some markets for both riders and drivers, and they haven't been able to make a go of it in others. On top of that the autonomous space alone is going to be a war zone for the next decade and casualties will happen.

[Silhouette]

Pretty sure even my grandma knows where the transportation sector is headed: electric, autonomous, sharing, services based, etc ;)

I'm sure big names such as Uber and Tesla are hoping for that outcome. Personally, I'll believe it when I see it. For now, both autonomous and electric vehicles are still looking like technologies with great PR videos but also quite a few fundamental problems with no credible solutions yet.

I wouldn't be surprised if Uber was aiming for a big IPO before too much of that reality invades those PR videos, particularly if the financial foundations of their current business model are as shaky as some reports have suggested.

[sah2ed]

I think Musk realizes that electric cars will be a commodity which will lead to razor-thin margins. The one thing that's not yet a commodity, and will not be for a while, is lithum-ion battery tech which is why they are building the gigafactory to cement their place as near sole supplier to the rest of the industry when they eventually catch up with selling all-electric drive trains.

[maxerickson]

Tesla is going to consume the entire output of the gigafactory and build also more battery factories.

And there are already examples of other companies making lots of batteries. LG is making them for the Bolt.

[throwaway2048]

What if it isn't heading that way, what if thats mostly just hype? I think its easy to be smug and pretend to know whats going to happen, but if predicting trends was so easy, nobody would ever be suprised by anything.

There are a lot of indicators that driverless cars arnt comming any time soon, and it seems like one of the few things that would work as a get out of jail free card for uber.

In any case, a market that is (supposedly) about to be rocked by major techtonic shifts is no place to make "sure bets" about the future.

[dalbasal]

IMO, it's almost best to ignore that.

Transport may be going autonomous, but it isn't there yet. It won't be affected until full autonomy goes live, and the network of drivers becomes obsolete.

It will be 5, 10, 15 years before technology, laws, etc. are mature enough. Meanwhile, uber needs to be the dominant ride-sharing service. That might be even harder if they're being too clever and thinking beyond the next couple of years.

[shalmanese]

I think that's one of those decisions that only look better with hindsight though. The merchant model had absolutely monster margins compared to the agency model (especially with bundle deals that provided a defensive moat) and Expedia was in a strong negotiation position vis a vis hotels that they didn't want to lose.

I think a lot of people were surprised at just how much inventory was out there and how much the merchant model hindered going after that extreme long tail.

[kiyanforoughi]

Fair. However, nothing stopped them from testing a hybrid (agency/merchant) as the agency model made way more sense to consolidate international hotel inventory as it is way more fragmented than in the US.

[shalmanese]

I think a hybrid would have been the worst of both world because you lose your negotiation leverage without getting in a superior strategic position.

I think Expedia was hoping the hotel industry would modernize and consolidate way faster than it actually did (remember, this was the gogo 90s where the entire world was hopping onto the information superhighway). What they eventually discovered was that it's hard to underestimate just how much hoteliers hate technology, even when you take into account this effect.

Little known fact: Expedia was actually close to buying out Booking.com and switching them over to an merchant model buy Booking.com got cold feet and got bought by Priceline for a pittance just a few years later. If Expedia had owned the biggest merchant provider in the US + Europe, there's a fair chance today no agency competitor could have stood up against them and the entire world would be still on the merchant model.

[kiyanforoughi]

All good points. I just don't think a merchant model would've worked in anywhere but the US. The market is just too fragmented elsewhere (especially Asia & Europe).

[yesiamyourdad]

Personally as an Expedia shareholder and former employee, this sucks. I thought he did a good job as CEO. EXPE is down 4% right now, so it seems like the stock market agrees. Hopefully EXPE has someone groomed to take over.

[user5994461]

>>> Expedia has moved to an agency model since but the damage was done. Booking managed to get far more inventory, capitalise on more search/PPC traffic and blow past Expedia.

Absolutely not! Expedia has the hotels.com brand. They are doing very very well by all metrics.

hotels.com and booking.com are about 50/50 market share globally. hotels is bigger in the USA, booking is bigger in the EU.

Historically, the USA hotels are massive chains whereas the EU hotels are smaller and independents. That's why they respectively started with the merchant and agency model.

Source: Insider data.

[_joe]

booking.com and hotels.com 50/50?

LOL.

And yes, failing to kill booking.com when Expedia was a clear market leader is a huge mistake indeed.

[jgust]

> booking.com and hotels.com 50/50?

If you consider only OTAs, this is about right.

[user5994461]

Yes, they are.

[bogomipz]

Could you elaborate on how the merchant model vs the agency model works in online hotels booking sites? I have not heard this before.

[sankyo]

Merchant model is where the OTA (online travel agency) is the merchant of record. Your credit card is debited by the OTA when you book. Behind the scenes, OTA buys N room nights from the hotel chain for some discounted price, and sells the room nights via their site.

Agency is where OTA acts as an agent between customer and lodging supplier. The OTA takes a fee and/or percent cut of the booking. Usually the customer pays the hotel directly upon checkin, and the hotel in turn pays the OTA.

Booking.com uses the Agency model and they dominate Europe. Expedia is strong in North America and struggles to get a foothold in other regions.

Expedia now uses the agency model and merchant model. Europeans understandably do not prefer to pay for the hotel stay at the time of booking.

There are more nuances, but that is basically how it works.

[beambot]

> Europeans understandably do not prefer to pay for the hotel stay at the time of booking.

I do not understand the obviousness of "understandably". Seems like a likely culture difference. Explain?

[paganel]

Not sure what the OP meant, as I'm an European who does all of his traveling through Booking.com and as such I've encountered both situations, I'd say in equal measure: i.e. I've either paid the booking up-front or I've paid it after the stay was over (at check-out). I slightly prefer to pay at check-out, but that is in no way a stopping point for me when shopping for accommodation.

What Booking.com is really excellent for is that it just works and that it takes away a lot of the stress when traveling. Just by filtering on 8+ -rated reviews and by your desired nightly pay and you're sure to get what you want, no hidden gotchas, no anything.

[ghaff]

In general, pre-pay seems to be increasing pretty much everywhere. It used to be mostly limited to some resorts and other pre-pay packages. Today, it's pretty common at a lot of hotels, both in the US and elsewhere, to get substantial discounts for pre-paying.

[DrScump]

It "just works"... except when reviews and ratings and inventory ("just 1 room left!") are bogus, as I experienced last week.

[bogomipz]

>'It "just works"... except when reviews and ratings and inventory ("just 1 room left!") are bogus, as I experienced last week.'

These are all the reasons to just avoid booking.com. The whole site is like a shady used car salesman - for example returning search results that say -"You just missed it", then why tell me about it? Or "5 people looking at this right now", seriously who cares? Do people really liked to feel pressured? Or how booking.com returns properties with the red "sold out!" in search queries for hotel rooms? Booking.com is one of the most miserable user experiences on the internet and the UI? What a total 1990s looking shit show that is. And of course the reviews seem dubious as you mentioned.

I've been burned by them more times than I care to admit and prepaying means you are stuck with it.

[paganel]

Yeah, I've recently noticed the "just 1 room left!" thingie, I generally tend to ignore it, as I travel by myself or with my gf. The reviews have held up for me, though. Granted, I also look at the number of reviews and at way those reviews are written, if it seems like there's something fishy I just skip it. On top of that I use TripAdvisor, which is really holding up pretty well for me in terms of traveler reviews.

[vadym909]

yup- he's bound to miss the next big strategic thing that everyone else can see, because that's the only thing he did at Expedia!

C'mon dude

[hammock]

Agent model is not sustainably competitive+scalable. C.f. Groupon

[smueller1234]

I think booking.com and the Priceline Group stock (PCLN) and financial performance beg toyl differ about being competitive and scalable for many years now.

Disclosure: booking.com employee.