[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.

[greglindahl]

Amazon is still mainly valued on projected earnings after 2020 -- the only recent change is that they went from steadily losing money to slightly making money. But the money that they're making now does not justify their stock price.

[thanksgiving]

My impression was that Amazon does make plenty of revenue — it is just that all of the "profits" simply gets reinvested into Amazon? Is that too naïve? My thought was, hey they found something useful to do with that money. (Funny how I don't see Twitter that way. I think they could/ should cut their spending by something like $1B a year.) I'm of course comparing Amazon to apple which makes so much money that they can afford to keep it "cash" as opposed to reinvesting.

[tim333]

Indeed Amazon has never needed much funding. Crunchbase showed their most recent raise as being $100m in 2001.

Uber is very different. Their burn was $991m in Q4 2016 and growing.

[TheCoelacanth]

Amazon never burned through multiple billions of dollars a year.

[temp20160423]

It's pretty naive to make statements like this. Uber came into being when interest rates were near-zero for 5+ years (in comparison, interest rates were 5%+ in the first dot-com bubble). Money was basically free in 2009-2015. Uber likely had extremely favorable terms for its funding rounds. Now that the fed is finally raising rates again, we'll have to see if Uber can become break-even within a few years.

[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.

[geofft]

More relevantly, this is about founders who voluntarily step down thinking it's a recommended best practice to let an experienced CEO take the job once the company is big. That might have been common wisdom in 2010, but it doesn't seem to be quite as common wisdom today, and in any case, that's a very different scenario from a founder who's been forced out or even one who's almost been forced out. The reason to look for a non-founder CEO in this case is some specific belief that this particular person has become bad for the company, not a generic belief that all founders are bad as CEOs.

[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.

[rpmcmurphy]

30% over minimum wage. Wow, sign me up! That would be $18 an hour in San Francisco, so working a 40 hour week, that would be about $2900 pre tax. Let's shave off 25% for taxes, that's $2160 per month, not enough to make rent (and that's assuming you allocate 100% of your income to rent). Explain again how this is not crap pay.

[aianus]

It's good pay for an easy job that requires no skills and offers perfect flexibility. The alternatives are a lot shittier.

[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.

[alphaalpha101]

It seems so insane to me that we have a company that is spending billions of dollars per year to break the law all over the world by undercutting while making a loss to corner markets, that is breaking labour laws all over the world, is a horribly toxic place to work, and this is just... okay and fine?

Why is this a thing? Imagine all the useful things those billions could do. Feeding and housing all the homeless people in the USA, for example.

[gruturo]

That's Kalanick's genius: people HATE taxi drivers so much, they'll be ok with almost anything to avoid dealing with them. This is the real business opportunity he saw.

[tim333]

I got one the other day. £7, I was happy, the driver presumably was happy. Pre Uber I would have got the bus. There's a lot of value created for ordinary people on limited budgets.

[sillysaurus3]

We'll find out. That's two years to turn a 2.5B burn rate into profits. I wonder what Dara will do?

Users won't like the changes. And Lyft is waiting with open arms and promo deals. That 6.6B cash is only impressive because of their user base and fleet.

Drivers might be the first to suffer. They'll probably feel the effects -- less pay -- before the users see price increases. So if Uber is about to switch to moneymaking mode, their fleet may become unreliable soon.

[noway421]

I think uber has the exact model they're trying to execute in mind. They'll turn their existing funds into growth and turn cash flow positive at around their last $100m left in the bank. That way, they most effectively utilise the resources they have and grow as big as they possibly can get. The fact that they are firmly closing the losses gap with constant rate of improvement kinda proves that fact. They definitely won't switch to new pricing model overnight to turn profit, the process has to be gradual anyway. Of course, market forces could be more sophisticated than a simple mathematical model of funds vs returns, and there could be unseen side effects if stopping half way or closing the gap way to quick, but it's probably an assessed risk.

Uber's model of survival isn't exactly self-driving ambitions, it's more about utilising their asset sheet effectively. That's why benchmark could be so eager to get a CFO - someone needs to vouch and stand behind the path to Uber's profitability. Right now, the only person who's left who can stand behind it is Travis, and he lost a lot of cred. Recent rumours about softbank investment might suggest that Travis thinks that this model can be extended even further at the cost of the dilution, and even greater market scale could be achieved (along with his own personal desire to lead on with that deal, possibly), but investors would rather not play another round of uncertainty and ambitious spending and would rather cash out quick. Also after an IPO the company would have a much better chance at leveraging a simple loan/bond to continue growth, as because the rate of its growth would still most likely exceed the interest rates.

[malandrew]

The big question is whose investors are willing to go for the big prize.

If both companies push for profitability, then the market slows to the pace they both push it while remaining profitable.

If however only one company pushes for profitability now and the other has investors willing to fund growth for the foreseeable future we could see one emerging as a winner.

Personally, barring an economic downturn on the horizon, it's foolish to go public now if their competition doesn't also go public.

Because there is still plenty of growth opportunities across their various products globally, they can get at least 1-2 more private funding rounds before they truly need to turn to public markets for funding. They should take that money while it's still there.

[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.

[ghaff]

I may be wrong but as I remember it, the dispute was over whether affiliates constituted a physical presence. They collected where they had actual warehouses.

[greglindahl]

There was an additional dispute about affiliates. The tax dispute over warehouses went through several iterations.

[s73ver_]

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