I would love to see the breakdown of drivers and their immigration status, because from what I can gather, what is happening here is not any different than in the past of America’s history where the whole business model relies on the exploitation of “immigrant” labor that knows no better and is easily exploited, aka their unrealized labor value is converted into profit, or better states, benefits and riches for the executives.
Rideshare expanded the reach of taxi-like services to more regions, people, and use cases. It's now viable to travel without renting a car in many US cities - you can see this by how rideshare affected rental car companies. That's what makes the rideshare business hard: the places where they didn't have existing competition, because that's where the matching is harder and the economics not as easy.
It's a similar story for food delivery: GrubHub/Seamless operated in core areas of cities like NYC for many years (since the 90s in NYC, I think). Uber Eats brings that service to far more places, and that's where the challenge comes from in that business.
You don't need rideshare for delivering service to large areas.
In my country we have a taxi app which can be used by any taxi driver. If you request a drive, your call can be seen by all drivers which are at a certain distance from you. That distance can be se by each driver.
One or more drivers will reply to your request and you get to pick the driver.
And you can either pay directly to the driver using cash or card or you can be charged through the app.
The fee for the drivers is very small so almost all drivers use it.
And the money are not subject to tax evasion, they stay in the local economy. Taxi drivers have wages, social insurance, health insurance and pension funds. They also have a valid license to transport people and are regularly checked to be able to hold that license.
No Uber needed.
In fact I’ve had a lot of conversations with Uber and taxi drivers who started as taxi drivers, switched to Uber when the bonuses were lucrative, and then some of them switched back because they liked the predictability of a fixed shift and not being ordered around by a machine. Others felt exactly the opposite.
It sounds like "developing the core product" falls entirely under this bucket, so with what others are saying about what falls under other buckets is right, then the one that looks most cuttable to me is actually "Research and Development". That sounds like the "experimental new stuff that may go nowhere" bucket, and if it's eliminated it would also put them just above break-even. Maybe they could focus on improving profits for their core product for a while before bringing that back.
Maybe there is necessary stuff included in it though, which I guess means that wouldn't be an option.
[0] https://www.investopedia.com/terms/c/cost-of-revenue.asp
A quick look at Ubers annual report states they do not capitalise r&d costs and instead expense it as incurred.
If you look at their financials, they show gross bookings, which include both the full billed values for food and delivery, and transportation of people. Revenues only show their share of that total.
In regards to incentives, it looks like a complicated question, I found an interesting outline[2]
[1] https://seekingalpha.com/article/4293755-insurance-primary-b... [2] https://news.bloombergtax.com/financial-accounting/rideshari...
Cost of Revenue goes a step further, and includes the next layer of costs that are necessary to cause sales to happen for a given product/service line in a reporting period. That includes things like sales and marketing, and distribution. Basically anything that would cause the revenue to stop coming in fairly immediately if it wasn't done.
Neither includes R&D to create the product/service in the first place, or general overhead.
It's a clever way to disguise their unit economics to look better.
Their marketing budget is mostly going to pay drivers.
Put another way - you could be saying - why not pay drivers EVEN less? Well, they're paying them the least they can already. You can be sure of that.
If they did actually paid the drivers more and not disguise it as marketing - then their unit economics wouldn't look good - and when the business as a whole doesn't look good either - that's not a good look.
They only need some occasional reminders that might be targeted at the few people that haven't used or heard of friends or family using an Uber before.
Conversely, I'm not going to take an Uber ride tomorrow because they showed me an ad today. When I need to get somewhere I'll look at my options and choose the best. So long as Uber meets the minimum level of me being aware of it then theyre good.
Marketing is as much about keeping your customers from going to rival providers as it is about finding new customers. If you don't want people to leave you need to remind them why you're better than the exciting new company that's spending VC money to take your market share.