Adults Take Over at Uber, Cost Cutting Starts

Suddenly taking expenses seriously before it’s too late.

Uber is trying to unload its new headquarters. It bought the 380,000-square-foot Sears building in Oakland in September 2015 for $123.5 million and planned to fix it up before moving its headquarters and 2,500 to 3,000 employees into it.

It remains a mystery why it bought the building – now called Uptown Station – rather than leasing it, or why it needed to move its headquarters to Oakland when it was putting together its 423,000-square-foot campus in San Francisco’s Mission Bay. But hey, Uber was Uber and money was no objective. And things didn’t need to make business sense.

The seller, Lane Partners had paid $25 million for the 90-year-old structure and another $40 million to restore it. By selling it to Uber, Lane Partners almost doubled its money in no time. But Uber was Uber and money was simply no objective.

But now the adults have taken over at Uber. And money has become an objective.

A 14-member executive committee is running the show since there’s no CEO, no CFO, no number two behind the CFO, and no COO. A gaggle of other executives and managers left or were shoved out in the wake of scandals, chaos, and lawsuits.

And the adults have decided to bring the expenses down. One of the steps is to unload Uptown Station. According to the San Francisco Business Times:

The possible sale of Uptown Station means Uber can move the asset and development costs off its books, which could put it in a better financial position. That was a key motivator for exploring the sale, spokesperson MoMo Zhou told the Business Times.

Uber was looking “to strengthen our financial position so we can better serve riders and drivers in the long term,” she said. So they’re starting to concentrate their efforts and prioritize their spending where it matters: riders and drivers.

In March already, Uber had decided to scale down its move to Uptown Station. Instead of migrating 2,500 to 3,000 employees into the building, it said it would move just a few hundred, and lease out the remaining space.

Uber has booming sales – in Q2, “adjusted net revenue” soared by 118% year-over-year to $1.75 billion – but it also has booming expenses and losses, and sooner or later something has to give. In 2016, it booked an “adjusted” loss of $3.2 billion (not including interest, tax, employee stock compensation expenses, and other items). In the first two quarters of 2017, it booked an “adjusted” loss of $1.4 billion: $4.6 billion in “adjusted” losses in six quarters. It has $6.6 billion in cash. At this pace, it’ll be gone quickly.

Uber is now trying to cut its losses and reach profitability, a “person with knowledge of the matter” told the Business Times. And given the chaos surrounding Uber, it might be a better idea to concentrate employees in one place rather than scattering them all over the landscape.

This comes after the adults have also decided to shut down Uber’s subprime auto leasing program that was started two years ago. “Xchange Leasing” put their badly paid drivers with subprime credit into new vehicles they couldn’t afford. The leases allowed drivers to put “unlimited miles” on their cars without consequences and return the cars after 30 days with two weeks’ notice.

No one in the car business would ever offer this kind of lease. But the folks at Uber simply didn’t need to do the math.

Uber invested $600 million in this program. Now the adults found out they’re losing $9,000 per car. With 40,000 cars in the fleet, it adds up in a hurry. So they decided to shut down that program.

As a privately held company, Uber isn’t obligated to report financial and operational information to the public. But it has started to disclose some information on a select basis to show that it is making progress, that revenues are booming despite the chaos, and that expenses are finally being taken seriously, and that “adjusted” losses are coming down – they fell 14% year-over-year.

The cost-cutting effort is a sea change for a company that didn’t care how many billions of investor money it blew on whatever misguided efforts it undertook. Cutting extravaganzas is easy to do. But cutting operationally integrated programs, such as Xchange Leasing, has consequences. It will save a lot of money. But it will also cut into the muscle. What are these underpaid drivers going to drive? Old beaters that look just like the taxis Uber is competing with? Or will Uber have to pay its drivers more so that they can drive newer cars that riders have come to appreciate? Will it even be able to recruit drivers with decent cars?

Rideshare companies have revolutionized ground transportation and have crushed their competition of taxis and rental cars, but they have lost countless billions doing so. There are well-calculated suspicions that this business model cannot be profitable at the current fares, and that it cannot be competitive once fares are raised enough to make the companies profitable. So the adults at Uber have their work cut out for them to prove the suspicions wrong, and whittling down some expenses at the margin – though a step in the right direction – isn’t going to do the job.

Uber wants to let everyone know that its operations have not sunk into the chaos that surrounds the company. Read…  Uber Wants You to Know it’s Not Collapsing

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  72 comments for “Adults Take Over at Uber, Cost Cutting Starts

  1. raxadian says:

    So… I am curious why does people still use Uber?

    • jTr says:

      I’ve never used it, and I never will.

    • Ethan in NoVA says:

      Because the service works pretty well?

      • Les Francis says:

        Maybe works pretty well for the customers but not so well for the service provider.

        I am the former owner of a hire car (limousine) company.
        If your drivers don’t work for peanuts you wont make any worthwhile profit.

        • Mary says:

          The question asked why do people (riders) use uber. Not why drivers provide the service. Your reasoning answers the wrong question.

        • d says:


          “works pretty well for the customers” = is cheap.

          His drivers worked for Peanuts. Which means uber drivers, work for, peanut shells.

    • Jon says:

      Convenient and cheap

      • Vespa P200E says:

        Yes same here but use Uberselect on biz or Lyft personal. Turn off with few uber drivers and their DIRTY cars.

    • johannes says:

      It’s cheap and easy.

      shareholder subsidized rides, faster than cabs, avoid a DUI on the way home on Sat night, and if you’re working poor beats owning a car

    • TCG says:

      Why do people use Uber?

      Often because they don’t have any other better option. There are a lot of terrible options for getting around out there.

      Taxis are terrible, often dirty, expensive, drivers are often dangerously aggressive and don’t have much attention on their driving. I’ve had some chattering on the phone the whole time I had a ride. I’ve had taxis fail to show up or cancel pre scheduled rides at the last second when it was time-sensitive and I needed to go to the airport (in one case had to haul bags on a public transit bus and barely made my flight because of their shenanigans).

      Public transit is slow and poor in many areas, even in cities, doesn’t serve all routes well with long wait times, long trip times (too many stops), long waits when transferring between lines, only limited room (can’t take on large objects , all seats might be taken), dirty vehicles, crazy people. It can work in some circumstances but is fairly terrible in others.

      Having a car for each member of the family is wasteful, expensive and impractical in many urban environments since there may not be room to park a car either at home or work (in addition to paying significantly more to park vs other options). It can actually be slower and more expensive than other options in some circumstances, also. For instance, I can get to my work in 45-60 minutes on public transit and it would take at least as long with a car during rush hours and cost me more for gas, depreciation, tolls and parking costs.

      A bike? Dangerous in heavy car traffic, hills, sweaty at business appointments, poor infrastructure (bike lanes), only suitable for short trips or some kinds of trips. Walking is only suitable for nearby trips or some circumstances, also.

      Renting a car from a major rental company or using something like Zipcar or City Car Share is also somewhat expensive and a hassle of having to wait in lines or book ahead and may not be convenient to the locations you’re trying to get between.

      Uber’s competitors such as Lyft or Wingz? They usually work ok in San Francisco, but do not always have good availability in other metro areas (either not operating there or a much smaller network of drivers resulting in long wait times).

      I’m no fan of Uber on account of their corporate a-hole-ness, yet they’ve managed a make a product that works better for me than all the other options in some specific circumstances. I’m a bit comforted that they’re currently losing money on any ride I get from them (thanks for the subsidized rides, VC a-holes that are dumping your money in Uber). I also will choose any other available option if it comes anywhere close in convenience and cost so I only really use Uber when traveling outside of areas with good alternatives.

      PS. Personally, I’ve avoided Uber for a long time because the management has been well known as the biggest, most immature a-holes you can find. It suddenly became well-known in the last year, but has been going on for years and was obvious to anyone paying attention to those running the company. It was over 3 years ago when they began discussing smearing or blackmailing a journalist who wrote some articles critical of them, for example. Or early on when they made many fake bookings and then canceled rides on competitors products to screw up their service levels. It’s not like Travis Kalanick suddenly changed into a-hole. He, his company, and their culture have filled that a-hole role nicely for a long time.

      • IdahoPotato says:

        Now, in big metros in India, Uber is very popular. They have loads of public taxis, but folks prefer Uber.

        • Nope, we don’t use taxis that much in Metros. There is something called Auto-Rickshaws, which many folks use. Why they prefer Uber? Answer is same as TCG says, the existing options s**k and they are not customer friendly. Apart from Mumbai, every other cities have a problem with Auto driver or even taxi drivers. With Uber, you could get a comfortable ride at almost the same price and don’t have to beg the drivers.

          Even if it don’t make Business sense, people use it because it is at the same time cost efficient and comfortable. May be in the long run everyone loses. But at least now customers are winning.

          Earlier this year or may be last year there was a huge strike with Uber drivers in Bangalore. Their demands were simple – not allow anymore taxis and increase the minimum pay. We will see more strikes like the same in future.

      • alex in san jose says:

        I’ve not taken a ton of cabs but over the years I’ve had no complaints with Habib. No rudeness, no crazy driving, just … no problems.

        I’ve sworn to go 2 more years at least before getting a smart phone. Then I might consider the Uber app. But generally, these days, it’s my bike or the bus or trains, and I just plan ahead.

      • HertzBgone says:

        Great summary. I too would avoid all options and go for Uber since the service for me has been great. I see many complaints from the Uber drivers and how little they get paid. I would pay more if needed to get reliable service.

    • quack says:

      Very good service, even here overseas. Beats old fashioned taxi.

    • Rates says:

      I dislike Uber’s business practices, but nowadays I dislike SF Muni’s practices either. So I can see why people would like Uber.

      What’s wrong with SF Muni? Too many to list.

    • Nicko3 says:

      I live in a large city and use Uber pretty much every day. Why? It’s cheap, usually 50% the cost of a regular taxi. The cars are clean, some are nearly brand new. As the flat fees are so low, I tip the drivers generously…it’s still cheaper than a regular taxi or car hire. If Uber dies, other rideshare programs will fill the void, and of course driverless cars will take to the roads within a decade. The paradigm has shifted.

    • Uber Driver says:

      Some more reasons why people use Uber:

      Cheaper than owning a car in some metro areas. Here in El Lay, people seem to be ok with payments, gas, maintenance, and insurance. But when they have to circle the block for 30 minutes to find a $20 parking spot every day, that’s where they decide to just get rid of their car. I drive Uber rush hour in the mornings and these are the types of rides I get:

      Airport rides are cheaper, easier, friendlier, and faster. Any time of the day/night, Uber can be at your door to take you to your flight. As opposed to a taxi which may or may not show up, or SuperShuttle which will have a few stops along the way.

      Car in the shop? Take Uber to the office. Some dealerships have abandoned their shuttle service and now just call you an Uber.

      Tourist who doesn’t want the hassle of driving in this traffic? Uber everywhere. WAAAAAAYYYYY easier. Plus, your driver can give you tips about the area and point out sights along the way.

      Celebrate happy hour a little too hard? Take Uber home. Then take it to work the next morning. Then take it to where you left your car the previous night.

      Outpatient surgery? You’re not going to drive home after that anesthetic are you?

      And of course the bar scene, which I don’t do. It’s a no-brainer to take Uber to the bars when drinking and driving is so dangerous and so avoidable.

      • Uber Driver says:

        BTW, the wildest story of why one of my passengers was taking Uber with me was because he was dead.

        Let me explain.

        The man tried to renew his CA drivers license, and the DMV looked up his SSN to discover he was marked DECEASED several years earlier. Nobody told him. Because he was dead, he couldn’t get a renewed license. So he can’t legally drive anymore. And he exhausted all channels into the friendly government bureaucracy to rectify the situation to no avail.

        I hope he isn’t paying social security out of his paycheck. He was the owner of a company, so he wasn’t relying on it.

        He was a really nice guy. I told him I wished all my riders were dead 8-).

    • HertzBgone says:

      I just tried Uber while on vacation and it was the best experience ever. I will never rent a car again in my life after one big name rental car company tried to sneak a $300 cleaning charge on my CC without my authorization. I hope Uber fixes any problems they have at Corporate because I think it is an excellent service.

  2. Flying Monkey says:

    Another unintended consequence of free money….malinvestment..

    • Marty says:

      Yes, malinvestment, that lets SillyCon Valley use it’s society-destroying business model: move into an established market by applying tech, convince the peeps that it’s WAAAAAAAAAAAY cool, run at a loss funded by early investors (funded by government is even better), and when big enough, IPO and let the muppets and the unemployed worry about the results, while laughing all the way to the bank.

      Are any of these idiotic situations possible without 0% interest?

    • MD says:

      Consequence, yes.

      Unintended? Absolutely no way.

      The very purpose of cheap credit is to encourage all forms of speculation; it allows instant fortunes to be made without any intent or interest in sustainability (or even it seems profitability).

      And fast, easy money is the apogee of ‘aspiration’ in our contemporary culture, is it not?

  3. Truth Always says:

    Do investors have no say in how their money is spent?

    I will be unkind but truthful and say sovereign fund managers like Saudi Arabia who put money in Uber are too stupid to know where their petrodollars are going and they got no better ideas to invest themselves.

    But surprised that either Silicone Valley investors don’t have a say in the financial story or are also the same as the Saudi?

    • Wolf Richter says:

      If the investors have representatives on the board (some do), they have a say especially right now that the company is run by an executive committee.

  4. R2D2 says:

    When you provide free/almost free money to total idiots, they just party. Idiots don’t think of the consequences of their actions.

    I have a neighbor who is in the hole for $80,000 for student loan and credit card debt, and she is a just a cashier; but she throws parties like you wouldn’t believe.

    Most of these unicorns are equivalent of my stupid friend; they’ll party till the last penny is spent. Dot-com bubble 2.0.

  5. MC says:

    I have been trying to find the yield curve for Uber securities but so far I’ve had no luck. Apparently these data are only available to institutional investors and nobody is talking.
    This week Tesla bonds continued their long march upwards and reached 5.76%. Everybody has his theories (especially the fanboys who, obviously, don’t own a Tesla), from the Fed’s “QE unwind” to more exotic ones, but it seems to be one of those moments when investors of all stripes momentarily wake up from their slumber and demand better compensation for the insane risks they are taking.

    Uber is no Tesla: Uncle Sam won’t come to the rescue if there are financial and/or judicial problems. As a private company it cannot count on the BNS, the SPU and other thinly disguised State-owned hedge funds.
    That’s why I would be very interested to see bond yields and I would be very surprised if, after what happened this year (especially the capitulation to DiDi Chuxing), they were under 6%, which these days means people think your company is effectively a “purely speculative” asset.

    • TJ Martin says:

      … with our current SNAFU TESLA’s tail is pretty much hanging in the wind as well … along with SpaceX etc

      But hey .. Wolf ? Whats the deal with FCA’s head being on the auction block FSBO about to be handed over lock stock and pasta to the Chinese ?

      • MC says:

        The Chinese group Great Wall Motors is, at the moment, exclusively interested in the Jeep brand. Chairman Wei Jianjun said they are not interested in hatchbacks, sedans and the like, only in SUV’s.

        If FCA is sold off it’s likely to be broken up, with the choicest cuts going to whoever has the cash and the rest being discreetly nationalized by the Italian government, a fitting end to a group Rome has kept afloat for decades and some of whose brands originally belonged to the same government.
        The EU can do nothing about it: the French government is presently the first Renault shareholder with 20.73% of shares (it has been effectively re-nationalized) and the second PSA shareholder, with 23.5% of shares versus 24.5% of the Peugeot family, which is presently negotiating selling another 5-10% to the government.
        At the same time the Qatar government owns a hefty 17% of VAG (Volkswagen AG to you youths) and the Lander of Nieder Sachsen yet another whooping 20%.

      • Vespa P200E says:

        Don’t think Trump will allow the American icon Jeep to be sold to Chinese. Not when 1st salvo of trade war just began with US filing valid complaints about Chinese IP theft (what too them so long?) and Chinese return in kind claiming US us stealing their IP (too funny).

        It may escalate to dumping charges against Chinese and spill into currency war (what took US so long?).

        We shall see which strongmen wins as Xie is seeking unusual 2nd term but he is at mercy of Trump as he can easily bring about misery to Chinese export driven economies which itself is under pressure for rising wages.

        • alex in san jose says:

          I believe the first Jeeps were made by Willys-Overland, and that company could get started up again and spread the word that the “real Jeep” is a “Willys” and plenty would buy them, I’d think. I mean, plenty of people bought those butt’ugly H3’s.

    • Wolf Richter says:

      MC, in response to your point: “…been trying to find the yield curve for Uber securities…”

      Unlike Tesla, Uber has not issued any bonds yet. It has a $1 billion credit facility from a consortium of banks, but these are loan arrangements, and I don’t think these loans are traded at this time.

      • MC says:

        Thanks for the reply Mr Richter.

        Now I am curious to know what interest they pay the banks and what collaterals they pledged… ;-D

        • Wolf Richter says:

          That credit facility is related to funding Uber’s subprime auto-leasing program (Uber buys the cars and leases them to its drivers). So the collateral are the cars that Uber leases out with “unlimited miles” and on which it loses $9,000 each.

          But Uber has so much equity capital for now that the banks don’t have to worry. That’s why they agreed to do the loan. A money-losing startup like Uber, but one that is short on cash would have never been able to borrow $1 billion.

          Yes, it would be interesting to see what the costs of this loan is.

  6. Richard says:

    Uber has taken it’s investors for a ride but do they realize how expensive is the fare?

    • TJ Martin says:

      Better question . Once they’ve jumped ship with their $$$$$$$$ in hand leaving the investors and service providers out in in the cold … will they really care ?

  7. DK says:

    Money is an objective?
    Maybe the drivers will start to feel this way as well?

  8. robt says:

    An early 20th Century joke has become the 21st Century business model.
    ‘You’re losing money on every sale – how will you survive?
    We make up for it with volume.’

  9. JR says:

    tl;dr: Uber screwed up the TIMING. Uber has that indistinct feel of a wave crashing over the Unicorns in the Valley. Galloway the formerly Great, but now mearly Rich (having sold L2inc at the top, good move) views the general Chaos Monkey moves as “grow as fast as possible, profitability is not a goal”. But as he also observes – timing is everything – hire folks at the bottom and sell at the top. No doubt that this was the Uber story. Galloway observes that is it economically responsible to take an UberCopter from the airport to the Cannes publicity conf, while wondering why they keep inviting him back. Musing on the UberAlles story- my guess is the board missed the timing to go pubic BIG TIME, and now must settle for what was called in my dorm as “Cold Water Phase” as things generally deflate.

  10. Lune says:

    Their leasing program is a great example of why self-driving cars won’t be Uber’s salvation. Assuming initially self-driving cars will be significantly more expensive than regular cars, that $9000 loss in under two years of driving will likely balloon up to $20,000 or more. That means it would actually be cheaper (or at least not much more expensive) to pay a driver and use a cheaper car. IOW, the cost of a ride isn’t going down with self-driving cars, just paid out of a different accounting category.

  11. MD says:

    “A 14-member executive committee is running the show…”

    Ah well, there we go – if/when it all goes belly-up, they can blame it on those goddamn COMMIES!

  12. raxadian says:

    0% Interest rate was a scam from the very start, and is always the taxpapers paying it.

    Honesty, was 1% too high?

  13. Vespa P200E says:

    Sounds like the adults in the room are dying to cash out before uber and the stock market implodes.

    Trim down the expenses and maybe raise some cash by selling the Oakland building (many wondered why uber even bought it to begin with), fill the vacant management spots, spend some $$$ on PR priming it all for IPO.

    • Wolf Richter says:

      Yes, an IPO is the plan. But with these kinds of losses and the turmoil, an IPO at this valuation is hard to pull off. So they’re trying to show they’re on track to profitability – and unload that baby at a hopefully still high valuation. Right now, investors are pretty much stuck in Uber. So they’re trying to figure out what it takes to get out, which includes an entirely new team of executives from large publicly traded companies.

    • chip javert says:

      I’ve retired from the San Francisco Bay Area 5 years ago, so I’m not current on Oakland “social” practices (when I worked in San Mateo, Oakland had a whole lot of killing going on).

      When younger, I worked for what used to be called an accounting big-8 firm at an office in downtown Oakland, right at a BART station – you commuted ONLY during peak commute hours, avoided going out to lunch, and no body even thought of working late in the office.

      Assuming this general picture has not changed much, it’ll be interesting to see how much the Uber HQ goes for – especially if commercial RE prices tank.

      • Wolf Richter says:

        Parts of Oakland are fine. Parts of it are a little rough. We had some uncomfortable moments too. But some of our friends live over there, and where they are, it’s OK.

  14. Jim Graham says:

    I THINK that dumping “Xchange Leasing” is the wrong thing to do.

    Most (probably not all) of the loss is already baked into the pie. Write down the leasing division to a reasonable / truthfull number and keep it (a spinoff?) running.

    Take ADVANTAGE of their position and it will become “profitable” on the books if they want to sell it later…..

    • Wolf Richter says:

      The problem is that they’re losing $9,000 per car on average, going forward. So if they want to maintain the program, they’d subsidize their drivers’ car usage by $9,000 per leased car. That’s a huge subsidy. If they build the program to 120,000 cars in the US (less than half the drivers), that’s about $1 billion spread over the lease period (about 2 years). So that would be an annual expense of about $500 million.

    • chip javert says:

      Jim Graham

      You think like an Uber manager. Have you thought of applying for CEO?

      • Jim Graham says:

        I DO NOT think like a Uber manager.

        Those guys do NOT know the value of money. They would act like a gambling addict… They would double down and lose all that they have or ever be likely to have.

        The current losses in the leased / loaned / financed are there. There will be no one that will pay anywhere near the CURRENT actual value of the inventory. IF they were lucky (very lucky) they would probably get 75% max of their current value. Why give away that
        25% when you can make it work for the company and it’s drivers????

        “”Have you thought of applying for CEO?”” —- I would probably be stupid enough to take on the job if it were to be offered…. I have always liked a challenge.

  15. Rose says:

    On Feb 20th, 2017 in the evening, I paid $29.36 for a 40-minute ride from Los Angeles Airport to a remote suburb. I highly doubt the driver could have picked up anyone after dropping me off, so she would have spent a total of 80 minutes (almost 1.5 hours) on my trip. After subtracting for Uber’s cut, gas, and car maintenance, I calculate that the driver made about $11.25/hour (with no benefits). Yes, this is better than minimum wage but not by much. I also asked the driver how she managed healthcare insurance, and she told me she was on Medical.

    Many years ago, I would pay a taxi driver over $60 for this same trip. Even the customer recognizes that the price of an Uber trip is ridiculously low so it’s not surprising that the company is losing money. And once Uber drivers catch on that their net profit is underwhelming, perhaps fewer will be interested in this line of work.

    • Tom says:

      Medi-Cal? I think Uber is on to something, Rose… Maybe the company could outsource ALL of its costs to fiscal authorities; Then it’d really be rolling. Uber could even help its drivers secure food stamps and other social services to shore up its earnings.

      I wonder how that pompous, right-wing, middle-management-type Uber employee I once met, while at a park in Berkeley, is doing. She must really be “killing it,” so to speak. (The thought of parasites comes to mind.)

      • Matt P says:

        Outsource all employee benefits onto the government? That’s the tried true and test Wal-mart way.

        • Stevedcfc72 says:

          That’s the UK Business model also, minimum wage transfer the cost of a person onto the Government’s responsibility then people moan when there’s no money left for anything else. Complete joke.

          Going back to Uber, using the story above would you rather pay $60 rather than $29.36 for a taxi trip if it meant the Government saved hundreds of million of dollars in Medicaid expense to low earning people?

        • Tom McCloskey says:

          Matt P,

          At least now I know whom to thank for the steaming sh#t sandwich I’m expected to eat.

  16. chip javert says:


    How did you calculate the driver even made $11.25/hr (or $14.96 for 80 minutes) for your trip?

    Assuming your 40-minute (one way) ride was 30 miles, the round trip was 60 miles. Federal car allowance is $0.535/mile, or $32 of your $29.36 fare.

    I realize the Federal $0.535/mile is a fuzzy number, but gas alone had to be $10…

    • Rose says:

      It was a back-of-the-napkin calculation, and while I tried to be generous to the driver, I didn’t factor in income tax deductions for them. (On a gut level, it didn’t seem like a lot of money for the length of time.)

      This is how I did it:
      Revenue: $29.36
      Uber’s cut: $7.34 (25% – not certain if this is the right percentage)
      Gasoline: $4 (Sounds like you think it should be higher.)
      Car maintenance: $3 (total guestimate – maybe this should be more)
      Total costs: $14.34
      Net profit for trip: $29.36 – $14.34 = $15.02
      Hourly profit—> 15.02/80 min = .18775/min.
      60 minutes —> $11.26/60 minutes = $11.26/hour.
      I’m sure people can poke holes in this, and perhaps the hourly rate is even less.

      • roddy6667 says:

        You are using time, what about mileage? How many miles did the Uber driver put on his car round trip? It costs at least 50 cents a mile, closer to $1 a mile for some cars. That’s a lot more than the three bucks you allowed for car maintenance. The depreciation caused by the mileage put on the car reduced its trade in or sales value. Uber drivers are just borrowing from the equity in their vehicle.
        This calculation reduces the driver’s profit to less than nothing.

        • Rose says:

          I wasn’t aware of the depreciation calculation for the car, and given that, it’s true that the drivers are probably earning less than minimum wage. (I guess their only hope is generous tipping.)

          It’s sad that the drivers are under the impression they are doing well – all of the drivers I’ve spoken with are delighted with their arrangements- and it may take a number of years (or perhaps a bad car crash) before the truth makes its way out.

  17. andy says:

    And ‘Adjusted” numbers are bullshit.
    Show us the GAAP numbers.

  18. Tom McCloskey says:


    I’d love to hear your thoughts on the reality of Uber’s “privately held” status. I recently read that some large, discount brokers (e.g., Vanguard and Fidelity) were effectively in the private placement/private equity business with some of their funds.

    What the hell is that about? Did mom and pop suddenly become accredited investors while I was asleep? Oh that’s right, such funds are “only” allowed to speculate with up to 15% of the ignorant public’s money.

    I could go on, but I won’t. (End of rant.)

    • Wolf Richter says:

      Yeah, mutual funds are big late-stage investors in Uber. And so mom and pop own Uber shares. But mom and pop don’t know they own Uber shares… and four of those funds just wrote down their estimates of the share value, three by 15% and one by 12%. Mom and pop who own the funds don’t know about that either.

      So if Uber has a successful IPO and the mutual fund companies benefit from Uber’s soaring share price, mom and pop will do fine. If it’s some sort of opposite, mom and pop will be holding the bag. And I doubt they’ll ever know about it because Uber isn’t in the top ten holdings of any of those funds.

      • chip javert says:

        Send people a 25-page 5-point-font prospectus the says “we get to do anything we want with your money”, and you can do pretty much do anything you want with investors’ money.

        Funds may also “drift” (what a lovely word) from their original strategies.

  19. Rates says:

    Looks like Jeff Immelt has decided not to take the top job at Uber. Is Marissa Mayer going to take over?

  20. Cagney says:

    If you haven’t tried it as many have… you should. I use lyft regularly. Sometimes it makes absolute sense when parking at a local event is $15 and a lyft ride is $5.

    Many times when cruising with friends around town it’s only $8 for 4 people.

    Also I have used them to deliver stuff. I needed to deliver a key and I called a lyft gave him the key and had it delivered from Wilmington to down town Los Angeles for $40. Which is nothing in the world of business.

    Although I believe tech companies are terribly run I do believe there is real potential. I think uber and left have barely started. Not saying I want shares but I do think these hurdles are surmountable.

  21. roddy6667 says:

    There’s a business tool call a spreadsheet than has fallen out of favor lately. With it you can plug in different values and see how it affects the bottom line, barring unforeseen circumstances. Nobody wants to use them now because they can’t find any foreseeable combination of numbers that point to anything but bankruptcy. I wonder what changes would have be made at Uber to bring its finances out of the red.

  22. Rates says:

    Uber’s new CEO:

    Hot off the press!!!

    I think they needed to sell their HQ to afford this guy. NO ONE will come to Uber without a guaranteed Diamond Parachute. A golden one will not suffice.

  23. Arizona Slim says:

    Funny you should mention cost cutting and Uber. I have some personal experience with that.

    I’m writing this from a coworking space in Tucson, Arizona. Up until a few weeks ago, Uber was one of those oh-so-cool tech startups that had an office here. It was hardly ever used.

    And then Uber vanished. Poof. Gone. The office is still empty.

    Up until June, Uber offered its 101 classes for new drivers. And then a sign appeared on the front door of this place. Classes cancelled until further notice.

    Around town, I’m not seeing as many Uber cars as I did a couple of years ago. When I do see them, they also have Lyft stickers on the windshield. I guess the drivers are hedging their bets.

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