"Can Uber Ever Deliver? Part Ten: The Uber Death Watch Begins"

While there are some silly stories on the Ubster* going around over the last couple days, I'm leaning toward this take at Grasping Reality in February. As linked in "Uber's Master Plan, The Short Version":

[and now Slee at Grasping Reality]

It sounds like Ben Thompson is falling for the Uber bait and switch. Stages of which:

– Uber has a nice business as a status product (Uber Black Car ~ 2010)

– Uber Black may not be profitable, but Uber will displace taxis and be hugely profitable because of technology-driven efficiencies (UberX: 2014-2015)

– UberX may not be profitable, but UberPool will lead to new efficiencies in mass transit (2015-2016)

– UberX may not be profitable, but Uber is a logistics company and will rewrite the rules of delivery (UberEats, various speculative stories, 2013-2015)

– UberPool may not be profitable, but when Uber displaces car ownership the scale of the market will make it profitable (2016)

– Uber with drivers may not be profitable, but driverless cars will make Uber profitable (2014-)

– Driverless cars may not be profitable, but Uber is looking into flying vehicles (2016) The Uber makes losses while maintaining credibility for bringing “the future” in some form or other.

Sweet.
And just so you know, we were on top of the flying vehicles:

Uber to Challenge Airbus in the Autonomous Electric Flying Taxi Business

As the only analysts covering the nascent as-yet-theoretical autonomous electric flying taxi market we intend to be the the go-to source for all things autonomous electric flying taxi and/or theoretical....

There's a reason that, while countless electrons were burned on a billionaire board member's stupid joke, our Uber story the day of the big board meeting was:
"...New York Uber Drivers and “others similarly situated” Have Been Deemed Employees..."

However, minor confession, I couldn't resist The Register's headline:

...In other Uber news:
Culture Colonic Cleanses Kalanick

And here's today's headline story from naked capitalism:

By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan has no financial links with any urban car service industry competitors, investors or regulators, or any firms that work on behalf of industry participants

On June 13th Uber announced that its Board had accepted all of the management process recommendations of a study led by Eric Holder of the law firm Covington & Burling.[1]  Uber also announced that CEO Travis Kalanick would take a temporary leave of absence and that SVP Emil Michael, Kalanick’s closest confidante, had been dismissed.  The intent had been to turn the tide of highly negative stories on Uber since the beginning of the year.

Earlier installments in this Naked Capitalism series refrained from predicting  Uber’s future. However, given a business strategy that depended on achieving global industry dominance, the critical question was always : could Uber achieve that dominance before it burned through its massive $13 billion war chest? Until recently it seems likely that it might, but recent events now strongly suggest that the answer may be no.

While Uber’s finances are currently secure (in April it was reported to have roughly $7 billion in cash on hand out of the $13 billion originally provided by investors), it is increasingly difficult to see how Uber can survive in the longer term. For any company to rebound from a major crisis, it must have correctly identified its major problems and workable solutions, and installed strong, positive leadership that staff and other stakeholders can trust to navigate near term turmoil successfully. Uber has done none of these things.

For an immature company like Uber that has always been highly unprofitable to survive a crisis, it must have a clear, widely understood plan that will rapidly reverse the multi-billion dollar losses of recent years, as well as  maintain the goodwill of customers, suppliers and outside industry observers through the turnaround process. Recent events have badly undermined goodwill. There is no evidence that Uber has a credible profit turnaround plan. None of the alternative strategic paths that one can imagine appear to have much chance of success.

Mature companies facing crises of culture and executive leadership usually have the cash flow and management depth that will give them the time needed to make major personnel and strategic changes. Uber does not have that time, as it has been burning through its cash for seven years, and its executive ranks have been decimated.
Before laying out Uber’s existential crisis, let’s quickly summarize recent events....

...Recent events have badly undermined public goodwill towards Uber and the “narrative” explaining Uber’s path to profitability is no longer credible
As discussed in parts eight and nine of this series, Uber’s public goodwill depended in large measure upon a carefully developed PR/propaganda campaign designed to explain its inevitable success, and divert attention from the lack of evidence of profitability or competitiveness. Among other things, that narrative claimed Uber’s global dominance would be driven by cutting edge technological innovations that were so powerful they could overwhelm incumbent competitors anywhere in the world and could eventually displace car ownership, that startup losses would soon give way to robust profits just like other technologically driven startups, that its meteoric growth was the result of consumers choosing their vastly superior services in competitive markets, and resistance to Uber’s growth was entirely due to people fighting to preserve a status quo dominated by an Evil Taxi Cartel and corrupt regulators.

Until the events of this year, no one in the mainstream media bothered to scrutinize, much less question Uber’s story. But enough doubts has been raised in the last couple years as to whether Uber was really an avatar of economic progress so that Fowler’s description of a deeply flawed company was immediately and universally accepted. Last week’s Indian rape revelations effectively killed the effort to convince outsiders that the company’s only problem was a few bad actors who liked to hit on female staff and should similarly destroy any remaining perception that Uber management can be assumed to be wise or trustworthy.

It is not clear whether Uber will enjoy even a brief respite from its tsunami of negative publicity, as there may be further leaks of past bad behavior. In addition, court findings that Kalanick or other A-Team members had actively conspired in the Google IP theft would be far more damaging than any of Fowler’s statements.

Uber has no ability to earn profits within a competitive taxi industry
Uber could restore its credibility by presenting a convincing strategy to reverse its enormous losses. But no one at Uber has a credible plan and none of this week’s actions move Uber closer to developing one.

As previous installments of the Naked Capitalism Uber series have documented in detail, Uber’s real problem is that it is a staggeringly unprofitable company with fundamentally uncompetitive economics. It lost $2 billion in 2015, $3 billion in 2016, and another billion in China. It is a higher cost, less efficient producer of taxi service than traditional operators; all of its growth is explained by these multi-billion dollar subsidies as it has flooded markets with additional capacity offering unprofitably low fares.

It has none of the scale or network economies that allowed other startups to quickly grow into profitability. In its fifth year of operation Facebook had achieved 25% profit margins; in Uber’s fifth year its profit margins were negative 149%. Absolute Uber losses have continued to worsen with recent growth. Margins improved somewhat in 2016, but only because Uber unilaterally reduced driver compensation by $1 billion, leading to news reports of drivers sleeping in the cars in order to make ends meet. Uber never had any hope of profitability in a competitive market, even at its present scale.

Uber’s original strategy for investor returns required global industry dominance but this may no longer be achievable
Travis Kalanick’s goal was to build Uber into a globally dominant urban transport company. Its $68 billion valuation reflects the hope that–once dominant–the ubiquity of the Uber platform and market power over passengers and suppliers would give it the kind of power Facebook and Amazon now enjoy. But those companies achieved quasi-monopoly power by inventing entirely new products that people hugely valued or by figuring out how to provide services massively more efficiently than any existing competitor could....

...MUCH MORE

*Why Uber Will Still Dominate
We Are All to Blame for Uber

"Taxi And Uber Drivers, Once Mortal Enemies, Join Forces In New Labor Dispute"

As foretold by the prophecy.* 
The last price cut by Uber may have been a bridge too far for some drivers. As I mentioned in passing on Thursday:

At some point the drivers and the investors are going to get tired of subsidizing rides to finance the top line growth....

From Fast Company, Feb. 19:

Uber's lower prices hurt both Uber drivers and taxi drivers, so they're teaming up to protest and organize.

Last year, taxi drivers in Belgium threw eggs at Uber drivers’ cars and blocked them from picking up passengers during a protest against the ride-hailing company. In France, during another day of protests, taxi drivers attacked Uber drivers, in a couple of cases even setting their cars on fire. Footage from a protest against Uber in Toronto shows a man banging on the window of someone he suspects is driving for Uber, only to be dragged 20 feet before letting go. And in cities across the U.S., Uber drivers and taxi drivers have faced off on opposite sides of protests over Uber regulations.

Both Uber and taxi trade associations have historically made efforts to fuel this vitriol. "We’re in a political campaign, and the candidate is Uber and the opponent is an asshole named Taxi," Uber CEO Travis Kalanick noted while explaining the rift in 2014. "Nobody likes him, he’s not a nice character, but he’s so woven into the political machinery and fabric that a lot of people owe him favors." The Taxicab, Limousine and Paratransit Association has poured money into a smear campaign against Uber that includes, for instance, a running tally of alleged kidnappings and sexual assaults by Uber drivers.

But as Uber and Lyft cut fares, some of their drivers are beginning to see taxi drivers not as opponents, but as allies in a labor battle that impacts both groups."When I first started driving, taxis hated Uber drivers, and Uber drivers hated taxis," says Abe Husein, a former Uber driver who has helped organize strikes and protests in Kansas City and nationwide. "Now everybody hates Uber. Times have changed."

 

Organizers hosted a protest against Uber and Lyft fare cuts at New York's City Hall on Wednesday.Photo: Sarah Kessler

On Wednesday, the New York Taxi Workers Alliance (NYTWA) and the International Association of Machinists, which represents black car drivers, cohosted a protest at New York’s City Hall to call for Uber and Lyft to reinstate fare rates that they cut by 15% last month. The NYTWA has organized several similar protests throughout the last several weeks, and another local chapter of the Taxi Workers Alliance has organized more in Philadelphia. "They were more pro-taxi," says Abdoul Diallo, an Uber driver organizer in New York City, about the NYTWA. "But what they realized is that Uber drivers were also really taxi drivers. It's just a new form of doing it. Their members were leaving the livery cab industry and going to work for Uber, so it became important for them to stand up, not just in the taxi industry, but for workers in general."

At the demonstration in New York on Wednesday, a group of about 40 people stood on the steps of City Hall holding signs with slogans like, "Killing jobs is not innovation," and, "Hey Uber, politicians may cave in, but workers strike." Bhairavi Desai, the president of the National Taxi Workers Alliance, which represents 19,000 drivers in New York, led a short press conference. "We are here to say to Uber and Lyft, to all of these app-based dispatch companies, the race to the bottom must end," began Desai, who had no microphone and had to shout to be heard. "We will not let them continue to gut our incomes. When the biggest dispatching company in New York City, with over 30,000 affiliated vehicles, starts to cut its rates, it sends a signal across the industry to cut the rates across the board." Though Uber says it is a technology company, Desai believes it is no different than any car dispatcher.

The fates of Uber drivers and taxi cab drivers are intertwined. As Uber lowers fares, its drivers make less money on each mile they drive, but Uber also becomes more compelling to budget-conscious customers as an alternative to taxis. And while the number of taxis in New York is limited by the medallion system, the number of Uber drivers is not. Last year, when Mayor Bill de Blasio proposed legislation that, if passed, would have capped the number of Uber drivers, Uber lobbied against him—going so far as to install a "DeBlasio’s Uber" feature in its app that showed New York City residents long wait times. De Blasio dropped the initiative days later....MORE

*See also:
Alphaville's Izabella Kaminska Banned-
What Uber Hath Wrought: The Coming Digital Labor Movement 
As Chicago Prepares an App For Taxis to Compete With Uber, Giant Union AFSCME is Organizing Cab Drivers
Watch Out Uber: National Labor Relations Board Interpretation Could Allow Many Taxi Drivers to Unionize 
Seattle is first city in nation to give Uber, other contract drivers ability to unionize
"The Sharing Economy Is Labor’s Next Hope"  

"Why Uber Has To Start Using Self-Driving Cars"

We've suggested that the end-game is not only to get rid of the drivers but to mandate the use of autonomous vehicles, whether owned by individuals (probably not, less profitable), or by fleet operators who really, really like the recurring revenue model. There is a misconception that companies like Uber are Libertarian when what they actually are is bro-culture authoritarian.

What with the talk of a drivers strike for higher wages this weekend (it fizzled) this is a timely piece from Nautil.us:

In the span of nearly 5 years, Uber has gone from a limited launch in San Francisco to offering rides in more than 300 cities worldwide. In China alone, despite existing in a legal gray zone, the company claims it arranges 1 million rides per day. That means 35 Chinese people hop into an Uber there every time you blink.But are there limits to how much Uber can scale? There might be: Us.

“The natural end point has to rely on autonomous driving technology”—not humans, says Emilio Frazzoli, director of the Transportation@MIT Initiative. He thinks robots could be taking the wheel in the next 15 years, certainly within the next 30. The reasons, he says, are economical and cultural.

First, as much as 50 percent of an Uber ride’s cost goes toward paying the human behind the wheel, Frazzoli says, and that’s money that could be going into Uber’s pocket. Replacing human operators has already begun in Singapore, a city that relies heavily on public transit. It’s not widely advertised, Frazzoli says, but the subway trains there “are completely automated. They are just horizontal elevators.”

Felix Oberholzer-Gee, a professor at Harvard Business School, agrees. Uber, he says, is a perfect example of a business that benefits from network effects, where the value of its service increases with more use. But, unlike other companies that benefit from strong network effects, such as Facebook, Uber has to deal with bringing two different types of users—and networks—together: drivers and riders. The network effects of getting rid of human drivers, he says, “will make the platform even stronger.”

Plus, for reasons from supply to quality control, Oberholzer-Gee says getting drivers will likely always be more of a headache than finding more riders. With autonomous vehicles, he says, “You could have a guaranteed supply of one of the sides, and particularly of the side that is harder to manage.” Uber might already be learning how cheap they can pay their drivers during a transition to vehicle autonomy. “They want to test the bottom line,” a Chinese Uber driver told MIT Technology Review, “just to see how much lower they can go before you quit.”

Second, Uber’s urban saturation is making a lot of people rethink the idea of owning a car, Frazzoli says, “versus just taking an Uber.” That’s no accident: As Uber’s general manager in Vietman recently told Reuters, “Our goal is to replace private car ownership.” Carnegie Mellon computer scientist David Andersen is on board. “What an unfortunate waste of resources,” he wrote in his blog, referring to the cost of using his car, which he recently sold. “Taking public transit, uber, or cabs…wouldn’t have been free, but it would have been better for my wallet.”

Uber is a perfect example of a business that benefits from network effects, where the value of its service increases with more use.

Stowe Boyd, lead researcher at GigaOM Research, which specializes in emerging technology, thinks more and more people will follow Andersen’s lead once self-driving cars arrive. They will “radically decrease car ownership,” he told Pew Research Center. “Perhaps 70% of cars in urban areas would go away.” Uber CEO Travis Kalanick has already acknowledged this potential future. “This is the way of the world,” he once said, “and the world isn’t always great.” Apparently to bring it about, Uber hired away 50 researchers from Carnegie Mellon’s National Robotics Engineering Center, a third of the department’s staff, for a developmental project on self-driving cars. (A month later, in February, the company and school announced a “strategic partnership” that makes the hiring seem a little less like brain poaching.)

If the custom of car-ownership dramatically dissolves, then Uber’s mass of potential drivers will, too. Driver scarcity will serve as another forcing function on Uber’s business model, further compelling it to evolve toward autonomous cars.

Oberholzer-Gee, however, doesn’t think it would be in Uber’s best interest to manufacture its own fleet of self-driving cars. That would change its strategy from, he says, “a very asset-light business model that Wall Street and the investors love, to sitting on billions and billions of dollars of invested assets.” That is a particularly difficult proposition given the dramatic fluctuations that happen to ride demand and availability. A large fleet of vehicles is needed at peak times, but a fleet that sits idle during off hours is just an added expense. “Regular drivers and autonomous vehicles have similar properties that I think make the Uber model difficult to scale,” says Oberholzer-Gee....MORE

Some of our Uber posts:
UPDATED--Here's the Real Problem With Uber: You Can't Trust Them
"It’s Already Over And Uber Has Won"
Uber Executive Suggests Digging Up Dirt On Journalists
"Uber Is Stealing Scientists, But Only So It Can Lay Off Drivers" 
Night of the Long Knives: "Google Vs. Uber in the Rush To Drive You Around, Driverless" (GOOG)
The End Of Mass Car Ownership Is Coming Mr. Ford
Data Scientists Have Isolated the Exact Times a Yellow Taxi is a Better Deal Than an Uber 
I've Got Your Disruptive App: How To Get Around Uber's Surge Pricing
"On the Uber Rollercoaster: Narrative Tweaks, Twists and Turns!"
As Three More New Economy Companies Are Sued For Employee Misclassification, Uber Thinks It Has the Golden Ticket
Corrected--Starting July 15 Uber Will Track Your Location Whether You're Using the App Or Not
Uber Bids for Nokia Maps Service to Lessen Google Reliance
Prof.Damodaran's Handy Uber Valuation Template (or, How to Price a Narrative)
How Big Can Uber get?
"Uber can't be stopped. So what happens next?"
Peak "Like Uber For...": "Why there won’t be an Uber in every vertical"
For the record we completely agree with FT Alphaville's David Keohane that the "Like Uber for..." formulation should be banned and go further than he in postulating that it's usage is a sign of a weak mind and probably indicates underlying pathologies in the user's character in addition to retarded social development.
And poor fashion sense.
UBER+PIKETTY=2014: "The secret to the Uber economy is wealth inequality"
“Lyft seems like a respectable company, and Uber seems like a bunch of thugs.”
"Uber has an asshole problem"
After Car Attacked By Paris Taxi Drivers, Uber to Toughen Image With Umlauts

And many more, use the search blog box if interested. 

Alphabet's Waymo Will Let Uber Off the Hook For $2.6 Billion or Cash on Hand

Uber is so used to beating up on city councils and regulators represented by civil service attorneys that they seem a bit wrong-footed when confronted with large dollar lawyering.
Waymo's trial attorney, Quinn Emanuel’s Charles Verhoeven is one of the best intellectual property litigators in the country and watching his interplay with the other side and a very tech-savvy judge is pretty amazing.

His bio page at the firm's website notes in passing "Mr. Verhoeven's record as lead counsel before the Federal Circuit is 23-2."

Alrighty then, on to the story. From Reuters, Sept. 20:

Waymo seeking $2.6 bln from Uber for one trade secret - lawyer

Alphabet Inc’s Waymo unit is seeking about $2.6 billion from Uber for the alleged theft of one of several trade secrets in a lawsuit over self-driving cars, a lawyer for Uber said on Wednesday.

Uber Technologies Inc attorney Bill Carmody disclosed the figure in a hearing in federal court in San Francisco, where both companies are discussing whether a trial in the case will begin next month.

Waymo has asserted claims that Uber stole several of its trade secrets. The total amount of Waymo’s damages request was not publicly disclosed at the hearing on Wednesday. 

Waymo claimed in a lawsuit earlier this year that former engineer Anthony Levandowski downloaded more than 14,000 confidential files before leaving to set up a self-driving truck company, which Uber acquired soon after. 

Uber has denied using any of Waymo’s trade secrets. 

Waymo’s allegations have already led Uber to fire Levandowski, who had directed Uber’s efforts in the nascent yet pivotal field of self-driving cars. A loss by Uber at trial would add to the company’s lengthy list of legal headaches...MORE

Did I forget to mention the $2.6 billion was for just one of the claims?
My bad. There are nine claims that the judge may allow to go forward.

As of the last report released by Uber, they were down to $6.6 billion cash-on-hand which may not be enough.
While Mr. Son at SoftBank circles patiently.

Previously:

Feb. 22 

Uber Is A Cesspit: Google's Waymo Sues Kalanick's Creation--UPDATED

Dude's got a problem....  

March 29 

"Judge Alsup Wants Uber & Waymo To Teach Him How To LiDAR Prior To Self-Driving Car Case" 

March 31

"In Waymo v. Uber, honing the craft of litigation gamesmanship" (GOOG)
I was going to put something together on Anthony Levandowski's use of the 5th amendment in a civil matter and some of the implications of doing so but didn't get to it. In the meantime here is a look at some high-buck lawyering and tactics of litigators.

April 1

Uber: Judge Says He May Grant Waymo's Request For An Injunction Against Uber's Self Driving Efforts

April 4 

Exec At Center Of Waymo Lawsuit Was Apparently A Perfect Fit For Uber's Culture

The headline/sub-head combo pretty much defines sleazy corruption.... 

April 26 

Waymo vs. Uber: 8 Things I Learned From Anthony Levandowski Taking the 5th

May 12 

Uber Suffers Legal Setbacks In Europe, U.S.

In the Waymo case Uber's bid to make their arguments in private was turned down by the judge overseeing the action but even worse for Levandowski, hizzoner is using his Federal Judgeship powers.*

May 19 

Thrown Under The Autonomous Bus: "Uber Threatens to Fire Engineer at Center of Waymo Lawsuit"

The testimony thus far sure makes a prima facie case that Uber and Levandowski were in cahoots, that there was an actual conspiracy. If that proves to be the case this move is simply thieves falling out....

June 7 

Double Hit To Uber: Judge Alsup Denies Uber’s Request for Stay, Gives Waymo Fatherly Advice; Magistrate Judge Corley Approves Waymo Request to Peek at Dirty Laundry

The latter may prove to be the more important ruling so first up Judge Alsup at TechCrunch:

June 15

Lest We Forget: "Uber isn't sure if it can 'remain a viable business' without building self-driving cars"

If I were a late round Uber investor this would be a bit concerning.
We've posted on Kalanick and his "existential" quote, which is one thing, but this is a statement to a Federal Court....

June 25 

Alphabet says Travis Kalanick knew one of Uber’s acquisitions had taken Alphabet files

June 28 

"Uber Made an Unusual Legal Pledge to the Head of Its Driverless Car Project"

Aug 15 

The Third Rate Bromance of Travis Kalanick and Anthony Levandowski (plus Elon Musk does a drive-by)

Aug. 17 

Uber: Do NOT Piss Off The Federal Judge Hearing Your Case

And a whole bunch of earlier posts on the lead-up to all this in roughly chronological (not reverse chron) order:

Google is spinning off its self-driving car program into a new company called Waymo (GOOG)
"New Patents Hint That Amazon and Google Each Have Plans to Compete with Uber" (AMZN; GOOG) 
Uber Is A Cesspit: Google's Waymo Sues Kalanick's Creation--UPDATED
Waymo Comments On Why They'r Suing Uber
"The Uber Bombshell About to Drop"
"Alphabet’s Waymo asks judge to block Uber from using self-driving car secrets" (GOOG)
Remember that time Uber's Kalanick said having autonomous was crucial to the company's very survival? (a deep dive)
 
And related:

Night of the Long Knives: "Google Vs. Uber in the Rush To Drive You Around, Driverless" (GOOG)
Uber Bids for Nokia Maps Service to Lessen Google Reliance
"Why Uber Has To Start Using Self-Driving Cars"
Uber Throws Tesla Under the Autonomous Bus
Uber to Buy Self-Driving-Truck Company Otto
"Google’s Car People Diaspora" (GOOG)    

Can Uber Ever Deliver? Part Nineteen: Uber’s IPO Prospectus Overstates Its 2018 Profit Improvement by $5 Billion

From naked capitalism, April 15:

Hubert Horan: Can Uber Ever Deliver? Part Nineteen: Uber’s IPO Prospectus Overstates Its 2018 Profit Improvement by $5 Billion

By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan has no financial links with any urban car service industry competitors, investors or regulators, or any firms that work on behalf of industry participants

Uber released its S-1, its  IPO filing with the Securities and Exchange Commission, on April 11th.[1] Press reports indicate Uber is seeking to raise $10 billion and achieve a valuation close to $100 billion. To succeed, investors will need to believe that despite losing roughly $14 billion in the last four years, Uber not only warrants a current valuation that would make it the second most valuable startup IPO in US history (after Facebook) and the second most valuable publicly traded transportation company in the world (after Union Pacific), but that its stock will continue to steadily appreciate once it becomes publicly traded.

Uber’s biggest IPO challenges are to convince potential investors that it has already made substantial progress towards reversing its recent massive losses, and that its businesses have the ability to generate strong, sustainable profits.

Uber’s S-1 not only fails to present any credible evidence about future potential profits, but its presentation of historical results is designed to mislead potential investors about recent improvements that did not actually occur.

Nobody believes Uber’s claim that it earned a billion dollar profit in 2018
Uber’s S-1 claims that it achieved a $5 billion profit improvement in 2018, moving from a $4.03 billion loss in 2017 to a $997 profit in 2018. Uber’s efforts to manufacture artificial accounting profits that gullible outsiders might not immediately see through first surfaced with the release of its first quarter 2018 results, when a claimed $3003m gain from the sale of its failed Southeast Asia operations to Grab converted a huge loss into a small profit. A fair number of the reporters actively following Uber saw through the original first quarter ambit [2] and the vast majority of reporters following the S-1 ignored the reported $5 billion improvement.

Many current reports have still misreported the 2018 profitability of Uber’s ongoing operations in ways that incorrectly showed meaningful year-over-year profit improvement [3] because Uber was deliberately making it difficult for outsiders to understand those numbers. But most realized that any reported profitability numbers needed to exclude items such as the Grab gain.

All previously released Uber P&L data were based on actual worldwide operations.[4] Uber decided to recast all of its S-1 financial reporting to segregate Uber decided to re-do its accounting to segregate results from countries (China, Russia, Southeast Asia) where it failed dismally and sold its remaining operations to the dominant local company. This would be reasonable if done transparently and consistently, as it might help potential IPO investors better understand the past performance and future profit potential of the parts of the business that haven’t failed.

If Uber’s  intention were to help these investors, the S-1 would have included clear warnings that the 2018 “improvements” were the result of the decisions to abandon these failed markets. Uber didn’t do that, because they are trying to give outsiders the impression that profitability is on a strong upward trajectory.

Uber overstated its 2018 profit improvement of its ongoing operations by $5 billion; ongoing operations lost the same $3.5 billion that they had in 2017.
Uber’s S-1 P&L says that “Net Income From Continuing Operations” improved by roughly $5 billion, from a $4 billion loss in 2017 to a $987 profit in 2018. This is not true; the actual net income from continuing operations in 2018 was negative $3.5 billion, virtually the same as 2017’s result. Uber mischaracterized $5 billion in gains from discontinued operations as gains from continuing operations in order to mislead IPO investors into thinking that the performance of its ongoing business was rapidly improving.....

...MUCH MORE

For folks just getting into the story, here's a thumbnail sketch of the last five years of Uber, Uber, Uber, by way of a couple geniuses and then stolen by yours truly.

September 2018
Uber's Long Road To Profitability: eBikes, That's The Ticket !!
Can't Stop Laughing.

Fans of the never-ending story may remember the chronology of Uber's pivots put together by a genius commenter at J. Bradford Delong's blog back in early 2017:

Uber's Master Plan, The Short Version

Readers who have followed the FT's Izabella Kaminska, and to a lesser extent ourselves, on Uber  over the last four years know the evolution of Uber's pitch. However, among all opiners, this comment at Brad DeLong's Grasping Reality with Both Hands blog is as succinct as it gets. I am envious.
(in our and Ms. Kaminska's defense, we were doing it in real time but still...)

HT up front to Izabella's confrère Matthew Klein who's link set up the chain to naked capitalism and then DeLong's commenter, Mr. Slee.

– Uber has a nice business as a status product (Uber Black Car ~ 2010)

– Uber Black may not be profitable, but Uber will displace taxis and be hugely profitable because of technology-driven efficiencies (UberX: 2014-2015)

– UberX may not be profitable, but UberPool will lead to new efficiencies in mass transit (2015-2016)

– UberX may not be profitable, but Uber is a logistics company and will rewrite the rules of delivery (UberEats, various speculative stories, 2013-2015)

– UberPool may not be profitable, but when Uber displaces car ownership the scale of the market will make it profitable (2016)

– Uber with drivers may not be profitable, but driverless cars will make Uber profitable (2014-)

– Driverless cars may not be profitable, but Uber is looking into flying vehicles (2016)

The Uber makes losses while maintaining credibility for bringing “the future” in some form or other.

Sweet.
And just so you know, we were on top of the flying vehicles:   
Uber to Challenge Airbus in the Autonomous Electric Flying Taxi Business

As the only analysts covering the nascent as-yet-theoretical autonomous electric flying taxi market we intend to be the the go-to source for all things autonomous electric flying taxi and/or theoretical....

Here's the latest from SmartCitiesDive:

Uber CEO: Moving business beyond ride-sharing is 'very valuable'

Uber In Talks To Sell Self-Driving Car Unit (UBER)

What a long strange trip.

Does this mean the autonomous flying taxis are going on the block next?*

From TechCrunch, November 13:

Eighteen months ago, Uber’s self-driving car unit, Uber Advanced Technologies Group, was valued at $7.25 billion following a $1 billion investment from Toyota, DENSO and SoftBank’s Vision Fund. Now, it’s up for sale and a competing autonomous vehicle technology startup is in talks with Uber to buy it, according to three sources familiar with the deal.

Aurora Innovation, the startup founded by three veterans of the autonomous vehicle industry who led programs at Google, Tesla and Uber, is in negotiations to buy Uber ATG. Terms of the deal are still unknown, but sources say the two companies have been in talks since October and it is far along in the process.

An Uber spokesperson declined to comment, citing that the company’s general policy is not to comment on these sorts of inquiries. An Aurora spokesperson said it doesn’t comment on speculation.

The talks could falter. But if successful, they have the potential to triple Aurora’s headcount and allow Uber to unload an expensive long-term play that has sustained several controversies in its short life.

Uber has ‘been shopping’

Shedding Uber ATG would follow a string of spin-offs or other deals in recent months that has narrowed Uber’s focus and costs into core areas of ride-hailing and delivery. Two years ago, Uber’s business model could be described as an “all of the above approach,” a bet on generating revenue from all forms of transportation, including ride-hailing, micromobility, logistics, package and food delivery and someday even autonomous robotaxis.

That strategy has changed since Uber went public and has further accelerated as the COVID-19 pandemic has upended the economy and fundamentally changed how people live. In the past 11 months, Uber has dumped shared micromobility unit Jump, sold a stake in its growing but still unprofitable logistics arm, Uber Freight and acquired Postmates. (The Postmates acquisition is expected to close in the fourth quarter of 2020).

Uber ATG has been the company’s last big, expensive holding. Uber ATG holds a lot of long-term promise and high present-day costs; Uber reported in November that ATG and “other technologies” (which includes Uber Elevate) had a net loss of $303 million in the nine months that ended September 30, 2020. In its S-1 document, Uber said it incurred $457 million of research and development expenses for its ATG and “other Technology Programs” initiatives.

Four sources within the industry told TechCrunch that Uber “has been shopping” ATG to several companies, including automakers this year. Sources have also told TechCrunch that Uber ATG was facing a potential down round, which might have been an additional motivator behind the talks with Aurora....

....MUCH MORE

*From February 2017 a bit of genius analysis from a fellow named Tom Slee:

Uber's Master Plan, The Short Version

....[and now Slee at Grasping Reality]

It sounds like Ben Thompson is falling for the Uber bait and switch. Stages of which:

– Uber has a nice business as a status product (Uber Black Car ~ 2010)

– Uber Black may not be profitable, but Uber will displace taxis and be hugely profitable because of technology-driven efficiencies (UberX: 2014-2015)

– UberX may not be profitable, but UberPool will lead to new efficiencies in mass transit (2015-2016)

– UberX may not be profitable, but Uber is a logistics company and will rewrite the rules of delivery (UberEats, various speculative stories, 2013-2015)

– UberPool may not be profitable, but when Uber displaces car ownership the scale of the market will make it profitable (2016)

– Uber with drivers may not be profitable, but driverless cars will make Uber profitable (2014-)

– Driverless cars may not be profitable, but Uber is looking into flying vehicles (2016)

The Uber makes losses while maintaining credibility for bringing “the future” in some form or other.....

Sweet.
And just so you know, we were on top of the flying vehicles:....

Uber-for-Laundry Is Dead; Long Live Uber-for-Laundry

A few weeks ago I mentioned that one of the leaders of the California secession movement was a fairly successful VC who had some middle-round Airbnb and Uber on the books but unfortunately his Uber-for-Laundry deal, Washio, had folded.

And I thought we were done with the laundry
(forgetting about eDaixi for some reason) 

Now we read at the Financial Times: 

Electrolux gives ‘Uber for laundry’ idea a spin
Swedish appliance maker tests concept of sharing washing machines

Electrolux, the Swedish appliance maker, is exploring starting an “Uber for laundry” in which consumers would use their own washing machines to wash other people’s clothes.

Jonas Samuelson, the new chief executive of the world’s second-biggest white goods manufacturer, told the Financial Times that Electrolux was trying to overcome big hurdles to make the project work.

“We have a few fun ideas we are testing, like: how about a laundry Uber, where people share their unused laundry time? But there are enormous complexities such as what happens if the clothes come out and are ruined?” Mr Samuelson added.....MORE

Well yeah, there is that.

And as for the FT, at least I felt a twinge when I used the "folded" line in the original intro and tried to deflect with a self-deprecating "see what I did there?"

I detect no such shame/remorse/whatev from the pink'un for giving the "‘Uber for laundry’ idea a spin".

As for eDaixi, despite having done a Baidu/Tencent-led $100 mil. B round when we last visited in 2015, for some reason they raised $14 million last week.
But at least they're still alive.

And in case Electrolux has forgotten, the "Uber for ____" formulation is so two years ago:

Written by Jason O. Gilbert

December 12, 2014

There’s Uber for planes,
And Uber for jets,
An Uber for pills
And Uber for pets.

There’s Uber for dogs,
And Uber for cats.
Need a hot stone massage?
There’s an Uber for that.

An Uber for nails,
And an Uber for news.
And while your nails dry,
There’s an uber for booze.

There’s an Uber for kids,
And an Uber for maids,
There’s an Uber for hair
So you can Uber your braids.

There’s Uber for bikes,
And an Uber for gifting,
There’s an Uber for beauty,
If your face needs a lifting.

There’s Uber for house painting,
And Uber for car towing,
There’s Uber for clothes washing,
And Uber for lawn mowing.

...MORE (Quartz)

HBR: "Uber Can’t Be Fixed — It’s Time for Regulators to Shut It Down"

From The Harvard Business Review:

From many passengers’ perspective, Uber is a godsend — lower fares than taxis, clean vehicles, courteous drivers, easy electronic payments. Yet the company’smounting scandals reveal something seriously amiss, culminating in last week’s stern report from former U.S. Attorney General Eric Holder.

Some people attribute the company’s missteps to the personal failings of founder-CEO Travis Kalanick. These have certainly contributed to the company’s problems, and his resignation is probably appropriate. Kalanick and other top executives signal by example what is and is not acceptable behavior, and they are clearly responsible for the company’s ethically and legally questionable decisions and practices.

But I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.
Uber’s Fundamental Illegality

Uber brought some important improvements to the taxi business, which are at this point well known. But by the company’s launch, in 2010, most urban taxi fleets used modern dispatch with GPS, plus custom hardware and software. In those respects, Uber was much like what incumbents had and where they were headed.

Nor was Uber alone in realizing that expensive taxi medallions wereunnecessary for prebooked trips — a tactic already used by other entrepreneurs in many cities. Uber was wise to use smartphone apps (not telephone calls) to let passengers request vehicles, and it found major cost savings in equipping drivers with standard phones (not specialized hardware). But others did this, too. Ultimately, most of Uber’s technical advances were ideas that competitors would have devised in short order.

Uber’s biggest advantage over incumbents was in using ordinary vehicles with no special licensing or other formalities. With regular noncommercial cars, Uber and its drivers avoided commercial insurance, commercial registration, commercial plates, special driver’s licenses, background checks, rigorous commercial vehicle inspections, and countless other expenses. With these savings, Uber seized a huge cost advantage over taxis and traditional car services. Uber’s lower costs brought lower prices to consumers, with resulting popularity and growth. But this use of noncommercial cars was unlawful from the start. In most jurisdictions, longstanding rules required all the protections described above, and no exception allowed what Uber envisioned. (To be fair, Uber didn’t start it — Lyft did. More on that later on.)

What’s more, Uber’s most distinctive capabilities focused on defending its illegality. Uber built up staff, procedures, and software systems whose purpose was to enable and mobilize passengers and drivers to lobby regulators and legislators — creating political disaster for anyone who questioned Uber’s approach. The company’s phalanx of attorneys brought arguments perfected from prior disputes, whereas each jurisdiction approached Uber independently and from a blank slate, usually with a modest litigation team. Uber publicists presented the company as the epitome of innovation, styling critics as incumbent puppets stuck in the past.

Through these tactics, Uber muddied the waters. Despite flouting straightforward, widely applicable law in most jurisdictions, Uber usually managed to slow or stop enforcement, in due course changing the law to allow its approach. As the company’s vision became the new normal, it was easy to forget that the strategy was, at the outset, plainly illegal.
Rotten to the Core

Uber faced an important challenge in implementing this strategy: It isn’t easy to get people to commit crimes. Indeed, employees at every turn faced personal and professional risks in defying the law; two European executives wereindicted and arrested for operating without required permits. But Uber succeeded in making lawbreaking normal and routine by celebrating its subversion of the laws relating to taxi services. Look at the company’s stated values — “super-pumped,” “always be hustlin’,” and “bold.” Respect for the law barely merits a footnote.

Uber’s lawyers were complicit in building a culture of illegality. At normal companies, managers look to their attorneys to advise them on how to keep their business within the law. Not at Uber, whose legal team, led by Chief Legal Officer Salle Yoo, formerly its general counsel, approved its Greyball software(which concealed the company’s practices from government investigators) and even reportedly participated in the hiring of a private investigator to interview friends and colleagues of litigation adversaries.

Having built a corporate culture that celebrates breaking the law, it is surely no accident that Uber then faced scandal after scandal. How is an Uber manager to know which laws should be followed and which ignored?

A Race to the Bottom
The 16th-century financier Sir Thomas Gresham famously observed that bad money drives out good. The same, I’d suggest, is true about illegal business models. If we allow an illegal business model to flourish in one sector, soon businesses in that sector and others will see that the shrewd strategy is to ignore the law, seek forgiveness rather than permission, and hope for the best....MUCH MORE

HT: FT Alphaville's Further Reading post

The Fine Line Uber Is Walking With Its Drivers

Following up on one of the questions raised in the Alphaville post linked in last week's "The FT's Izabella Kaminska Asks: What's The Problem With Uber?" here's more on the challenge Uber faces.
From Quartz:

THREADING THE NEEDLE
Uber investors aren’t paying for innovation anymore

When Ayda Valilar first read that Uber was losing billions of dollars, she couldn’t believe it. She’d been driving for the ride-share service for nearly five years, and had tried unsuccessfully to organize a union in Los Angeles with other Uber contractors. How could a company that had so adamantly played Goliath to the drivers’ David be so deep in the red?

That was the reaction among many casual observers when Bloomberg reported in late August that Uber had lost $1.6 billion in the first six months of 2016, hemorrhaging capital on subsidies designed to make its pricing more competitive. It was the latest in a string of bad headlines for Uber. A week earlier, a federal judge ruled the company could be on the hook for more than $1 billion in labor costs. And just before that, drivers in Seattle beat back a legal challenge to dissolve the first-ever Uber drivers union.

Taken together, the summer’s events brought into sharp focus two of Uber’s fundamental challenges: labor and competition. The company is primarily engaged in buying a monopoly to justify its status as the highest valued start-up on the market. Meanwhile, it’s devoting many of its substantial resources to keep driver disputes stretching across the country from California to New York at bay—at least for now.

While the ride-hailing giant has provided the blueprint for a new generation of on-demand startups, its woes point to simmering contradiction in that gilded space. On one hand, venture investment in the on-demand economy multiplied 15-fold between 2013 and 2015. But increasingly, these investors are paying less for innovation than they are for gaming the market.

A plan to transform transportation
Since Uber’s founding in 2010, it has attracted more pre-IPO funding than any technology firm in history. The company is on pace to haul in at least $4 billion in revenue this year, with operations in more than 400 cities around the world.

Everyone agrees that Uber’s towering valuation can’t be justified by its current business alone. A full 85% of Americans have never used a ride-sharing service in their lives. Uber has convinced investors that the company won’t just disrupt the taxi business, but the broader universe of auto transportation.

Arun Sundararajan, a professor at New York University’s Stern School of Business and the author of The Sharing Economy, thinks it’s a possibility. “If they can shift 5% of US spending on buying cars toward on-demand, they’d be generating $50 to $60 billion in revenue a year,” he said. “It’s worth making deep investments now in order to be the one to capture that shift.”

As consumers grow accustomed to e-hailing services, the theory goes, car ownership will naturally fade—particularly if taking Uber becomes cheaper than having wheels of one’s own. Meanwhile, Uber is plotting its way into public transit and shipping.

The battle for market share
While we all wait for Uber to transform industries it has yet to penetrate, it’s worth taking stock of how Uber spends its money now. Uber’s goal is to convert investor money into muscle, edging out any potential competitor—including public transportation. Thanks to subsidies financed by investors, an UberPool ride in Manhattan costs as low as $5 a pop, nearly rivaling the subway.

The battle for market share isn’t cheap. Uber reportedly lost $2 billion in 2015, and as much as $1.27 billion in the first half of 2016, chiefly from subsidizing rides, according to Bloomberg.

Uber’s competition was stiffest in China, where the company was reportedly spending $1 billion a year battling rival Didi Chuxing. Uber lost the war, but ended up winning a stake in Didi when the Chinese competitor bought up Uber’s Chinese division in July.

Losses have mounted stateside as well. Uber eked out a profit in the US in the first quarter, but sank back into the red in the second.

Dean Baker, a longtime Uber critic and economist at the Center for Economic and Policy Research, compares Uber to Groupon, the over-hyped web discount company whose valuation fell from $13 billion in 2011 to less than a quarter of that today. “It’s not surprising that VC guys are getting really excited about something, but don’t have a clear idea of what it will look like, and how it will be profitable,” Baker said.

But if you listen to Uber’s investors and management, the big losses are all part of the plan. Disruption costs money and attracts enemies. Most startups take a while to post profits. That Uber has managed to corner roughly 85% of the ride-share market and achieve a $69 billion valuation are proof enough that things are going well.

“Uber is a unique beast for which there is seemingly insatiable investor appetite,” says Nikhil Krishnan, tech industry analyst at CB Insights. “These investors seem perfectly willing to finance this growth even with large losses.”

Riding out a worker revolt
What is clear is that Uber is in a new phase of development. The initial innovation phase, in which Uber’s engineers built the core of its ride-hailing product, has largely passed. Then there was a rapid expansion phase, gave way to slower, grinding turf wars.

Now Uber is in its latest phase: monopolization. Its capital flows increasingly to market maneuvers and labor struggles. Instead of paying for new innovations and capacity building, investments in the most highly valued private company in the world primarily exist to give customers cheap rides until Uber comes out on top....MORE

Uber Tells California It Won't Be Applying For An Autonomous Driving Permit, California Tells Uber The State's Attorney General Will Be In Touch

Some observers have postulated that one reason Uber is defying the state is the permit requirement that in exchange for being able to test on the public roads they would have to turn over data to the state including data on accidents.
Which, if you think about it, is a bit ironic considering how much data Uber collects on their passengers.
It's also an excellent shorthand for the mindset at the top levels of the company.

First up, the c|net, Dec. 16 to catch us up:

Uber keeps self-driving cars on the road, challenging the law
The ride-hailing company brushes off California DMV, announcing it won't pull its autonomous cars from San Francisco streets. Now the state's attorney general is getting involved.

Uber and the state of California are in a standoff.

After Uber rolled out its self-driving cars to passengers in San Francisco on Wednesday, California's Department of Motor Vehicles told the ride-hailing company it was breaking the law and had to take its cars off the streets and get a permit.

Uber kept mum for two days, but has broken its silence.

"The cars are on the road today," Anthony Levandowski, Uber's vice president of self-driving technology, said in a conference call with reporters on Friday. "We're intending to continue."

Which, in turn, prompted a letter from California's Office of the Attorney General to Uber saying the company must "immediately remove its self-driving vehicles from California public roadways until it obtains the appropriate permit" or else the attorney general "will seek injunctive and other appropriate relief."

Uber made its name by pairing passengers with drivers via a phone app. Over the past six years, it's grown from small startup to multinational company with operations in more than 400 cities in 72 countries. The company has a history of launching products and features before getting the required permits. And, Uber's rollout of self-driving cars in San Francisco is no different. But, in doing so, lawmakers worry the company could be forsaking public safety and transparency.


Uber says the reason why it's not getting the permit is because the law doesn't apply to its self-driving cars. The company says that because humans constantly monitor its vehicles while driving and can take over control at any time, they aren't yet autonomous vehicles. Uber also says its self-driving cars aren't yet "capable" of driving without monitoring or active physical control.

"While these are considered state of the art today, they still require monitoring by a vehicle operator at all times," Levandowski said during the conference call. "We believe they are no different than any other car on the road today."...MORE

The problem with that as legal reasoning is that Uber is still subject to the traffic laws that say the driver has to be in control of their vehicle, it's why a traffic cop can pull your 16-year old over for driving "hands-free".

Uber's most recent large acquisition, Otto, the autonomous trucking Co. did the same defy-the-law-and-don't-make-the-info-public thing in Nevada, see Backchannel's:

How Otto Defied Nevada and Scored a $680 Million Payout from Uber
The engineer who helped craft Nevada’s self-driving car regulations also ended up blowing past them.

Finally, the usually fashion-forward Los Angeles Times editorial board makes the simple realpolitik argument about the $150.00 (yes, $150, so it's probably not the money, except it's all about money) permit:

Editorial

If Uber doesn’t like California's rules, it can test its driverless cars elsewhere

Uber is at it again. The company, famous (or notorious, depending on your point of view) for flouting regulations as it built its disruptive, multi-billion-dollar business, rolled out a fleet of autonomous cars in San Francisco this week despite an explicit warning from the Department of Motor Vehicles that testing on public roads was illegal without a permit.

Never mind that 20 of Uber’s competitors in the race to develop autonomous cars have followed the California DMV’s rules and gotten testing permits. Never mind that new federal guidelines for the safe operation of autonomous vehicles anticipate that car companies will get a state’s permission before testing driverless technology on its public roads. Never mind that Uber’s executives were told by DMV officials before the launch that the company would need a permit to operate its autonomous vehicles.

Instead, Uber — in typical Uber fashion — found an apparent loophole in California’s rules and chose to drive its driverless vehicles right through it. The regulations say a permit is required if the vehicle can drive itself “without the active physical control or monitoring of a natural person.” Defending the decision to forgo a permit, an Uber executive wrote in a blog post that “it’s still early days and the company’s cars are not yet ready to drive without a person monitoring them.”

Uber is setting up a false choice for cities and states. They can and should be pro-technology and pro-safety.

Of course they aren’t, but that’s not the point. No autonomous vehicle, including those covered by testing permits, can be driven in the state without a human monitor. The state requires that an operator sit behind the wheel during testing, ready to take control at any time. Why? Because the technology is unproven, and state regulators don’t believe it’s ready for uncontrolled operation on public streets — which is why California created, with industry input, a permitting process.

DMV officials didn’t buy Uber’s argument, nor should they have. Less than a day into Uber’s new venture, the DMV threatened legal action if the company didn’t halt testing. But Uber has refused to back down, insisting again on Friday that the “driverless” Ubers it has touted do not need permits because they are not really driverless, but rather vehicles equipped with advanced driver-assist technologies.

Uber built its business by challenging regulators and entrenched assumptions about how best to assure public safety. It successfully evaded the strict local rules that the taxi industry faces on fares, licenses and driver background checks by arguing that smartphone-summoned rides were different from taxis and should be regulated under new state standards. It has also avoided a variety of mandates on employers by classifying its drivers as independent contractors, not employees....MORE

See also:
Uber Rolls Out S.F. Self-Driving Cars, California Says Uber Needs A Permit For Autonomous, Uber Says No, It Doesn't, California Says...
"Uber to put self-driving cars on the road in SF 'very soon'
Congressman Asks Airbnb to Drop Arbitration Clause. PLUS: You're Down to 5 Days To Opt Out Of Uber's New Terms and Conditions

"Uber Spent $10.7 Billion in Nine Years. Does It Have Enough to Show for It?"

Ha!
Back in December 2016 one of the authors of this piece, Eric Newcomer, came dangerously close to mansplaining Uber, Uber's losses and Uber in China to the FT's Izabella Kaminska.*
His central fallacy (besides arguing in public) was that Uber, having ditched the money-sucking black hole that was their China operation was now heading for the broad sunlit uplands of  taxi service (thanks Winston). He was wrong.
Ahem.

Here's the latest from Bloomberg:

Uber is a financial oddity. Can it mutate into a sustainable business?

By

Ian King

and

Eric Newcomer

March 6, 2018, 3:00 AM PST

What makes Uber Technologies Inc. the most valuable venture-backed technology company in the world? Investors say size and growth. The business is transforming global transportation networks. On closer inspection of its financial performance, Uber also pioneered a very expensive way of establishing a market and staying on top.

Uber has had little trouble finding investors eager to buy into its vision. It relishes telling backers about gross bookings, or the amount riders pay for service. That number is enormous, totaling $37 billion last year. But most of that goes to drivers. Uber’s cut, or net revenue, came to $7.4 billion. Compared to public companies with similar valuations, Uber’s revenue lags well behind. (See chart below.)

At the same time, Uber has worked to downplay its persistent losses. Because the company doesn’t disclose financial results with much consistency, it’s easy to lose sight of how much of investors’ money Uber has spent. Since its founding nine years ago, Uber has burned through about $10.7 billion, according to a person familiar with the matter. Over the past decade, only one public technology company in North America lost more in a year than Uber lost in 2017. None has burned such a tremendous amount in the first stage of its life, according to data compiled by Bloomberg.

Investors have contributed $17.3 billion to Uber, said the person, who isn’t authorized to discuss the figure and asked not to be identified—an enormously long leash for the company to experiment with and subsidize global growth. Figuring out whether that investment will pay off is partly based on what you think will happen to Uber’s losses.

An analysis of Uber’s financial position, based on Bloomberg reporting and voluntary disclosures by the privately held company, shows that Uber is a corporate anomaly. Few companies in history have grown so fast or lost so much money in such a short period of time. Uber has developed what may be considered a Peter Pan syndrome. After reaching a stage of maturity most companies never realize, it has yet to turn a profit and remains deeply in the red.

Uber showed a sign of promise in the first few months with Dara Khosrowshahi at the helm: Its loss narrowed from the previous quarter. “Our growth at scale remains incredibly strong, and we are driving meaningful improvements in our margins,” an Uber spokesman wrote in an emailed statement. “Under Dara’s leadership, we are making big bets for the long term in new technology like Express POOL and in businesses like UberEATS, which is growing at an extraordinarily fast rate.”
Typically, when a business posts a multibillion-dollar loss, it’s followed by many quarters or years of penance. Hewlett-Packard reported a loss of $14.7 billion in 2012, mostly due to the discovery of financial falsehoods related to the acquisition of Autonomy. HP made up for that loss in subsequent years when it generated billions in profit.

The only other public tech companies that have come close to rivaling Uber’s ability to lose money are chipmakers....MUCH MORE

*Besides the fact Izabella was one of the first journos, along with Pando founder Sarah Lacey who had the advantage of being the target of an Uber smear campaign funded to the tune of a mil. to tip her off that something was not right over on Market St., San Francisco, CA, USA; besides the fact Ms Kaminska was on the story back in 2014 she has additionally posted more on the Ubester than most folks alive.
Here is part of the to-ing and fro-ing:

2/ Uber's first half of 2016 losses included China. Uber owned 87.5 of Uber China. Losses WERE consolidated pic.twitter.com/zhWu9pOHtm

— Eric Newcomer (@EricNewcomer) December 1, 2016

https://t.co/IYmBp0snBB How can you give this so much lift and not communicate errors?

— Eric Newcomer (@EricNewcomer) December 2, 2016

There's more, here's one of the threads.

A couple months later we recapped the story in:

Notes to Self If Arguing With The FT's Izabella Kaminska: Uber and the Multi-Billion Dollar Losses Edition

The denouement in that piece was epic.

To his credit Mr. Newcomer has taken a more gimlet-eyed view of Uber over the last year, so we continue to read and from time-to-time, link.

Uber Rolls Out S.F. Self-Driving Cars, California Says Uber Needs A Permit For Autonomous, Uber Says No, It Doesn't, California Says...

Following up on Tuesday's "Uber to put self-driving cars on the road in SF 'very soon'", Uber rolled out the self-driving cars yesterday...and...here's the story so far.

From TechCrunch, Wednesday morning:

Uber’s San Francisco self-driving pilot draws criticism from California DMV

Uber launched a small fleet of self-driving vehicles in San Francisco on Tuesday[sic], but the second city to host the public test of the ride-hailing company’s work in this area isn’t quite as enthusiastic on the regulator side. California’s DMV, which has a practice of vetting companies testing autonomous driving technology on state roads and then granting permits to those who meet its standards.

Twenty such companies are on the DMV’s list of parties approved for autonomous testing in the state, but Uber is not on that list – the DMV says it should be, but Uber maintains it doesn’t need to seek a permit because of the circumstances of its self-driving launch.

The DMV’s statement on the matter notes that while it “encourages the responsible exploration of self-driving cars,” it’s not enough to simply assume responsible action on the part of companies doing testing:

We have a permitting process in place to ensure public safety as this technology is being tested. Twenty manufacturers have already obtained permits to test hundreds of cars on California roads. Uber shall do the same.

Uber, for its part, maintains that it actually doesn’t require one of these special DMV permits in California because of the nature of its testing. That’s because it sees the vehicles as still primarily human-controlled, since a driver behind the wheel with their hands at the steering wheel ready to take control is still required at this phase of testing....MORE

Via Digg:

Uh, Is This A Self-Driving Uber Running A Red Light On Its First Day Of Testing?

Uber started testing automated cars today in San Francisco, and this video appears to show one blowing through a red. As Buzzfeed notes, humans are behind the wheel (just in case), so this might be human error. Still, not an auspicious start!

And here's TechCrunch last night:

Uber ordered to stop self-driving vehicle service in San Francisco

Uber has been ordered by state regulators to stop using self-driving cars in California, according to the Associated Press, at least until it secures the necessary permit issued by the state to allow companies to test autonomous vehicles on public roads. The California Department of Motor Vehicles issued a statement saying Uber was expected to secure such a permit, but Uber maintained that it did not require this clearance because its vehicles were not fully self-driving and have a driver onboard at all times.

The self-driving pilot program in San Francisco is an expansion of Uber’s original launch of the service in Pittsburgh earlier this year. This city expansion featured Volvo’s XC90 SUV, a third-generation version of Uber’s autonomous test vehicle.

Uber said earlier that it did not intend to pursue this permit, the requirements for which are detailed by the California DMV on a site dedicated to autonomous vehicle operation on public roads. In a letter to Uber telling it to end the launch of its self-driving service, the DMV states that Uber will face “legal action, including but not limited to, seeking injunctive relief” if it does not comply.

Prior to the state regulators explicitly ordering Uber to stop, Uber’s vehicle was caught on camera apparently running a red light, thought the circumstances of this incident aren’t known at this time (including whether this was while the car was human or computer-operated when it ran the light). Uber told TechCrunch it is looking into this matter as “safety is a top priority.”

That means it’s only been less than one day since Uber started its test, had its first documented incident with the vehicles and was ordered by the state to stop what it was doing. This definitely looks more like the risk-happy Uber of the early days that often acted in contravention of local regulators to achieve its business goals....MORE