Uber Is Headed For A Crash

http://nymag.com/intelligencer/2018/12/will-uber-survive-the-next-decade.html#comments

"Uber has established a large business in cities over the world. Yes, it’s easy to get a lot of traffic by selling at a discount. Uber is subsidizing ride costs. Across all its businesses, Uber was providing services at only roughly 74 percent of their cost in its last quarter. Uber was selling its services at only roughly 64 percent of their cost in 2017, with a GAAP profit margin of negative 57 percent. As a reference point, in its worst four quarters, Amazon lost $1.4 billion on $2.8 billion in sales, for a negative margin of 50 percent. Amazon reacted by firing over 15 percent of its workers."

"The pay cuts have led to more driver turnover, which leads to higher managerial costs. And it is degrading service quality. A comment on an article about Uber’s third-quarter earnings:"

"I needed a ride from Burbank to LAX on a Thursday morning around 5:45 AM. I requested a car the night before. At pickup time there wasn’t a Lyft or Uber within 20 miles. When I did get one the driver said that at the rate they are being paid it wasn’t worth getting out of bed early anymore."

The more I read these articles, the happier I get for pulling out last week. Thoughts?

 

The difference is Amazon fired workers. Uber doesn't need to fire workers because they don't employ them, the workers provide, labor, car and gas for the company and work for crumbs.

 

"No ultimately successful major technology company has been as deeply unprofitable for anywhere remotely as long as Uber has been."

Twitter is across 10th from Uber and it took 12 years to make a profit. Tesla took ~15 years to make a profit.

However, I do agree with many of the other sentiments in the article.

 

Explain to me how high turnover leads to higher managerial costs unless they are talking about actual uber employees and not drivers

 

They need people to sign-up the drivers, vehicle inspections, people to do background checks, etc. If there is a high turnover in drivers that means more work on the frontline.

 

They aren't a tech company where you have to think where and how do they make money like Twitter and Facebook, they are a taxi company and everyone knows they should be making money, especially how they continually cheat the drivers and overcharge the pax.

A lot of that is automated. Even before with customer service as a driver they only responded thru text and it took the workers in India who are paid peanuts, even less peanuts than the drivers here a minute or less to respond via a text message.

Plus a lot of that is automated. Background checks don't cost them more, they pay a flat rate to have a company do them, not per person. A lot of other things are automated too. Also in many parts of the country that are not as busy they don't even have greenlight hubs, you just take a photo of your car for inspection.

Don't you think if it cost them more than a few hours pay that a driver gives them when they start to hire new drivers that they would try harder retain drivers?