> And to top it all off, the biggest thing driving their valuation recently, self driving cars, appears to be in serious jeopardy, can anyone make a credible case of Uber having self driving fleet in the next 5 years?

Uber currently sends teams to major cities all over the world to build maps for self driving cars. They outfit cars in those cities with 6 figure camera rigs and enable 'passive collection', where maps are built over the course of normal rides. After that they actively collect any missing pieces and move on to the next city. They've got teams in C / D level cities (which I won't name because I don't want to ID anyone but are the international equivalents of a Baltimore MD or Miami FL).

They are not positioned as well as say Tesla IMO but they also aren't just sitting around waiting for something to happen on this front.

And if those maps were built with illegally obtained lidar technology (or just if the judge thinks they might have been), they become fruit of the poisonous tree.

I thought fruit of the poisonous tree was only relevant in evidence collection: https://en.wikipedia.org/wiki/Fruit_of_the_poisonous_tree

I think the responder is correct that FOTPT is not applicable here, but I wonder if there is an analogous legal concept for the product of a stolen good.

I wonder if one of those international cities is Perth, Australia? We had a news report today that Perth is launching trials of a self-driving on-demand taxi service in April 2018:

http://www.zdnet.com/article/navya-bringing-driverless-vehic...

(I realize the trials aren't Uber, but if our government is getting ready to allow self-driving taxis, I imagine Uber would want to be prepared & ready to launch ASAP.)

Perth was not the first AUS city ;)

Parent comment is likely referring to the lawsuit against them which has recently seemed to take a turn for the worse for Uber.

An IPO would be the best scenario but it is far from certain.

Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long.

Why else would Benchmark and others be running for the exits now? If all the smart money that knows the company best is dumping at a discount it does not paint a pretty picture.

> Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long.

I don't think this can be understated. In the social and political climate of today, it would be hard (I think) for Uber to have a banner IPO. When you look at where we are, with sexual misconduct headlining the nightly news, I feel like Uber would generally like to avoid public scrutiny until the issue is not as hot.

I kind of suspect that Uber might have skeletons much bigger then sexual misconduct. I would be surprised if their financials were in order and if legal documents did not contained a lot of lies.

I don't think any Uber investors can be characterized as smart, even if they have made or end up making money.

Hindsight is always 2020.

Hardly. That has been my position for years. I have always believed that Uber's management made it a profoundly risky investment, and accordingly not smart. Reasonable minds will disagree with me. I'm entitled to think they're wrong.

Are Uber's costs really in the tech space? It's a complex tech operation for sure, but I wouldn't have thought they could make up much of the 1.5bn USD if they fired a bunch of developers. These bulk of these costs must be in marketing, customer acquisition and discounted fares, right?

They have around 12,000 employees according to Wikipedia (and a few other sources show a similar figure). If we figure the average employee is 250,000/year in liabilities on the balance sheet (salary + benefits + options/RSUs) then thats $3 billion a year in employee expenses. I don't think $250k is too unrealistic considering the massive capital gains many employees must have on paper as well as the high level of talent Uber has lured away from competitors. They had the creator of Google Maps, the Otto acquisition (and the subsequent legal costs if we want to factor those in), and a whole lot of other experts around mapping / autonomous vehicles.

Don't confuse years and quarters. Their quarterly loss is $1.5B. If we accept a $3B yearly salary cost (I expect it's actually a lot lower, because their 12,000 worldwide employees, I think, include lots of local employees at far-flung cities who probably have very low salaries by silicon-valley-programmer standards), and extrapolate their quarterly loss to a year, then they could cut all of their salaries to 0 and still only reduce their loss from $6B/year to $3B/year.

That seems like an absurdly high number of employees for what's basically a taxi company, especially considering their drivers aren't employees.

That's roughly as many employees as Apple had in 2005, a company that was making laptops, desktops, servers, wireless routers, portable audio players, and entire operating systems.

Self driving cars and operations eat a lot of staff

It's not even clear why self-driving is an important pursuit at this point for a company like Uber. They're going to blow through billions on this and someone else will come in with a solution that just works.

I doubt a scrappy "startup" like Uber can beat companies like Toyota, Volkswagen, GM, Google or even Apple to market with a viable, certified self-driving car. They have, at best, a few billion left to dump into that venture. Those big companies could throw in ten times that if they wanted to.

Maybe someone needs to disrupt Uber. Go Lyft!

Uber has a lot of Operations staff all around the world who are getting faaar less than $250K a year (even if you add everything in the kitchen sink to reach the compensation number). And by faar I mean an order of magnitude less.

Other than engineering they also have a lot of people going around mapping cities, QAing those maps etc.

Most operational staff are hourly workers who don't get paid anywhere near what a engineer gets and hourly works usually don't get RSUs. You have to consider the 1000s people working on city ops, support, their insurance ops teams are huge, in the US alone they probably have 1 to 2k of people in support roles. Only salaried employees garner the big pay which is guess is less than half the company.

Ps... you'd crap your pants if you knew how many contractors they have doing operations work. Their mostly in low cost counties like the Philippines, and Brazil. Nothing about support scales with growth.

Sure on the other hand employees who got in early have pay packages that are easily in the tens of millions

250k may well be an average, but not the type of average that matters. The few high-pay people warp the average. They will not be culled before an IPO as doing so will reduce confidence. Uber needs to keep its headliners. They can only cut from the plebs costing in the 50-100K range. So either they need to fire 4x as many people, or a cull won't solve the problem.

I doubt that there's a single full-time employee (in the US) that only costs them 50k/year. Total overhead costs are a lot higher than the employee's salary. I have no idea what the distribution of salaries look like, so this doesn't necessarily invalidate your point.

Their sales/brand reps are reportedly paid 20$/hour, which works out to about 40k. I don't know what the benefit package is but I doubt it's much, as I doubt they are all paid for full 40-hour weeks. So I assume they have a pool of sub-40k people.

rule of thumb is 3x your salary is your cost to employer

Not at engineer salaries. Maybe if you're a minimum wage employee.

So remember that it's not that they burned $1.5B this quarter; they burned $3.5B (net revenue of $2B, $1.5B loss).

If their average employee costs them $500,000 a year (surely a generous estimate), then that's $125k per quarter. A $2B spend on salaries would suggest then that they had 16,000 employees (not counting drivers, who aren't part of this equation -- they're the difference between the $9.7B "gross bookings" and the $2B net revenue).

Uber employs apparently "more than 12,000 people," which is shocking, but salary still can't plausibly be the entire story here.

How about driver bonuses? Would those count as expenses, pr as the difference between gross bookings and net revenue? I know sometimes (especially in new markets) Uber let drivers keep 100% and then add bonuses on top of that.

I believe that bonuses and other incentives, to drivers and passengers, are the source of a huge amount of expenses and are counted out of the $2B net revenue, not included in the difference between bookings and revenue.

I generally agree with this, however if Softbank easily fills their tender offer I wonder if it puts a crimp in the IPO plans. Lets say that Softbank's tender is filled with a bunch of executives and Kalnick contributing their shares to get a payoff (shades of Groupon's last raise before going public). What does that look like to potential investors on the roadshow? How much bump will they need to be 'promised' before they subscribe?

No matter what I think Uber will remain a big part of the unicorn bubble story going forward.

Fwiw Travis Kalnick isn't selling.

I couldn't understand the part about an employee and loosing my job. Are you saying that they won't be able to sell their equity even at a steep discount in 90 days? Even, if they incur a loss of ~30-40% over the current prevailing price; it would still be a fortune. They can easily do that to save on the tax or did you mean something else?

1) They're worried they'll be fired to make the IPO work.

2) They're worried the value of their options will drop out before they have the option to exercise them.

And I would add that in situations like this, employees should be very careful assuming that they'll get a price anything like what the most recent investors are getting.

Check out Table 2 here, down on page 45:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455

It uses Square as an example. The headline valuation price from their E round suggests that a share of stock was worth $15.46. But later investors can have all sorts of preferences. Common stock, though, is valued at $5.62.

As people who were here for the last bubble know, this is exacerbated when valuations dip. I know a number of people who worked their asses off for companies that got sold for hundreds of millions of dollars. But the employees saw nothing, because investors get paid first.

Well, let's use the SNAP example which has been quoted above.

They went public earlier this year. With burgeoning balance sheet they have to fire people:

https://www.businessinsider.in/Snap-hit-with-more-layoffs-pl...

To be fair, 18 / 2000 is very small and hardly a dent - the layoffs came because they are decreasing the rate of recruiting, which is still notable but is not laying off engineers (yet anyways). If Uber wanted to make IPO and were pressed for money, a slowing of hiring would not be enough.

Thanks! We've updated the link from https://techcrunch.com/2017/11/29/ubers-losses-grew-to-1-5-b....

All recent employees (within the last 2 years+) are on RSUs, not options.

Option exercise price is 409A price, not the preferred price per share.

These two things make it highly unlikely that any option holder is truly under water.

When looking at SNAP vs UBER, I think that this negative publicity will stop that first positive bump. Each negative scandal after will hit their stock hard, along with each quarter report. I do agree it will happen, but I think most everyone will see through it.

Given their burn rate and their IPO scheduled for 2019, they will still struggle to get there even with the incoming round. At this point it's hard to find any winners besides Lyft.

Winners besides Lyft? Their financials are on-par if not worse - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...

Part of Uber's increased losses are stemming directly from massive burn on Lyfts end to try and capitalize on Uber's problems.

How is 1.5B a quarter on-par or worse than 750M per year?

An apples to apples comparison would standardize across:

1. GAAP v.s. non GAAP. Different media sites are reporting between 1.5B and 750B for Uber because of this discrepancy.

2. Timelines - Uber numbers are from Q3. Lyft from H1

3. Size discrepancies - it's better to look at loss per trip given that Uber is far bigger.

You're still mixing different time period sizes in 1. I think even size adjusted per ride, Lyft may still be in a better position. 6B vs 750M (more if using newer numbers) when the market ratio of Lyft is nearing a third means that unless their yearly losses are over 2B, they still have the edge.

Overall I agree somewhat, but when what matters is explicitly runway (who can survive the longest), scaling for size may not make sense. Lyft's smaller current size might actually advantage them in this marathon.

What happens to stock which isn't part of the IPO? Ie, all the stock owned by employees, investors, etc? Does it become instantly tradeable?

I would imagine that considering the long road, a lot of people are really ready to sell. There are lots of owners that will have achieved 50X or more return, even at a low market cap. Former employees with option strike prices @ £20m, early investors that got in @ £150m....

That means far too much of their net worth is in Uber. They need out regardless of fundamentals. They've probably felt this way for a while. Meanwhile all the shifty news about workplace bullying, an ousted ceo, legal battles.

I guess this applies to all IPOs. Why don't prices plummet as soon as all the people who want out can get out?

I've heard anecdotes that this is indeed the case at Uber. Lots of senior engineers / techs are burned out but can't afford to quit without abandoning their options. Many of them don't do any work at all, and Uber is fine with it because they don't want a mass exodus before the IPO. This is not uncommon around the Valley, but I hear it's especially problematic at Uber. I'm sure it's a continued drag on earnings, but probably not big enough to make a dent in the driver payment gap.

But I honestly doubt that Uber will ever make it to IPO; at least not an IPO that pays off employees in any meaningful way. Their business model is basically "buy for $10 and sell for $8" -- it's fundamentally flawed, and they're about to get a whole bunch of competition in the form of self-driving fleet management. New challengers wouldn't have the overhead of Uber's legacy infrastructure / driver incentives / etc. and much of the tech that made Uber unique has been commoditized. I doubt their IPO will even cover the late-stage investment they've received; much of their valuation was based on brand value which has been thoroughly destroyed by recent scandals.

Wow, is this a real phenomenon? This is fascinating.

I would love for one of these people to speak on the record about this, but I imagine that’ll never happen.

There are lockup periods that prevent them selling.

https://www.investopedia.com/ask/answer/12/ipo-lockup-period...

>For example, Facebook's IPO lock up prevented the sale of 271 million shares during the company's first three months of public ownership. FB hit an all-time low of $19.69 the day its first lock-up period ended, a price about 50% lower than the share price on the day the company went public. Further restrictions prevented the sale of another 1.66 billion shares through mid-2013. Facebook's unusual lock-up policy released insider shares at five different dates.

All the more reason to quit just before the IPO! (assuming they own the shares)

Nearly all insiders (i.e. management, investors, employees, etc.) will be subject to a "lock-up" on an IPO that prevents them from selling immediately. Typically the lock-up lasts for 180 days, but this can vary.

Share price does often drop when the lock-up expires, but usually not as much as you'd expect--the number of restricted shares to be release and resulting liquidity effects of that expiration are well know and disclosed in public filings. So this mostly gets baked into pricing well in advance.

A third worry: Uber's brand on your resume. At every turn there just seems like increasingly shady stuff coming out of there: covering up data breaches, covering up IP theft, etc.

Every person who I know has left Uber this year is at some company HN would probably agree as "better" (FANGs as backup, startups if more adventurous). So unless you're in the handful caught in the crossfire of these issues, Uber is an extremely strong brand name on a resume.

How long does this remain so though? Is there a point where it starts to look bad (like why didn't you leave earlier?)

Wasn't the case in the beginning of the year and isn't the case at the end (I know people who have left this week for FANG). And that period arguably coincides with the most intense PR snafu for Uber. Most companies are smart enough to distinguish between a rotten top-mandated culture against individual actions, and not generalize 14k+ employees. Also worth noting that a large contingent were already former FANG employees so some are just returning back home.

With regards to why not move sooner, isn't the company going through an entirely top-down overhaul starting with the CEO? If someone wants to be part of that change, and if they still believe in the ride-sharing space and if they were never in the crossfires of any of this anyways, then all of these are valid reasons to stick around.

Maybe. I've interviewed people eager to leave Uber and the name was mixed for us. I see it as an indicator of technical talent, but a culture risk for sure. Clearly a lot of people at Uber at least acquiesced in the face of unethical, abusive, or outright criminal behavior. That's not a character trait I'm excited about having on my teams.

You have to understand human nature though. Most people are more or less followers. They will do whatever a strong leader tells them to do--unless it's something clearly, blatantly wrong or illegal--and they will rationalize it.

If Uber had ethical leadership, there would be no worry about any of the technical talent, and they would be the very same people.

People have been trained to be followers. Our industrial-age education system and our industrial-age-derived corporate structures do that training.

That worked adequately for industrial work. But for creative work, following isn't enough. Our whole field is about making computers do the dumb stuff so that humans can focus on the smart stuff. The SV startup model gets much of its economic power from the way that a small group of people can out-think, out-innovate large companies that operate along industrial lines.

But that only keeps working as long as individuals have a fair bit of autonomy. Which in turn only works as long as workers are able to think for themselves. As David Marquet wrote, modern effective organizations don't move information to authority; they move authority to information.

I want to build teams that can spot a ball, pick it up, and run with it. That doesn't work well if they have to run every detail up to the CEO for signoff.

Maybe if you're in senior management.

Frontline devs or middle management? Honestly they're some of the best talent in the valley esp if they joined in 2014 when Uber was the top destination ($19B valuation timeframe)

Seemingly not even sr management gets dinged for this. Cruise (GM) just named Susan Fowler’s former boss from Uber their new CTO.

https://news.ycombinator.com/item?id=15819808