[braythwayt]

> Uber, for example, could probably lay off 80% of its engineering staff and turn profitable if it was truly necessary.

A lot of people say these things, but:

We don’t know if that’s true. If they turn off the hype and marketing juice and stop spending more money acquiring customers than the revenue they accrue, do we know that they’ll become profitable?

We really need something more specific than, “just lay off all the expensive tech workers and bam, instant profitability.”

What we need is a specific plan, that we then go over with a fine-tooth comb looking for unintended consequences that could bite our “rightsizing” plan in the ass.

Many a company has set out to cut costs and drive towrds profitability, but very few make it. Honestly, very few make it. Most of the time, when a CEO sets out to make a systemically unprofitable company profitable, they end up in Chapter 11.

It’s really, REALLY hard to pull off, and it’s not for lack of trying or inexperience on the part of management. It turns out that for most companies, the right way to become profitable is to grow your revenues, not cut your costs by 80+.

JM2C.

[tylerhou]

Yes, minus engineering and marketing, they are profitable for now (https://news.ycombinator.com/item?id=23382477), but it's not a good idea. Growing revenues is much better, especially since Uber has competitors who are also trying to grow.

[urthen]

I don't know what companies you've been working for, but even if you do zero product research and development, a company as tech-focused as Uber is still going to need a substantial engineering department just to keep the lights on. Not to mention a tech company that isn't developing new products and features, and isn't marketing, isn't going to remain profitable for long no matter how much they've cut labor costs.

I understand that they're investing in growth, but the key points still stands - money is flowing down the drain with the promise that it'll all be worth it "some day."

[tylerhou]

> a company as tech-focused as Uber is still going to need a substantial engineering department just to keep the lights on.

Which is why I initially estimated keeping 20% of engineers. Then Uber would be slightly profitable in the short term, pre-coronavirus.

[braythwayt]

This is all speculative, of course, so you are entitled to your beliefs based on your views and experience.

In my case, I have often seen the case that companies have certain stable modes, and many unstable modes. It could easily be that after slashing 80% of their engineering workforce, and cutting their marketing, they subside into becoming a slightly higher-tech taxi company.

But what about the remaining 20% of engineering? Do they want to work for a company that has let go 80% of its engineers, and has given up on self-driving cars and drones and whatever else they were dreaming of?

Or will the rest of the talent head for the exits, their options hopelessly underwater forever, because investors have no interest in the faded hulk of a company that was once a Unicorn?

It could be that if they try to shrink to 20% of their engineering talent, they keep on shrinking involuntarily, shedding their best talent in all areas, not just engineering.

I don't know for a fact what will happen, but for the moment, if I had to bet, my bet is that if they try to cut 80% of their engineering and most of their marketing, they will keep on shrinking until they become a penny stock.

It would probably be easier for them to have Private Equity come in and take the company private first. If they have to cut that much flesh off the bones in public, it's going to be brutal.