While I don't think this is the case here, it's super interesting that leaving in disgrace can be a valid financial exit strategy. The founder and (ex) CEO of a company is able to sell 100% of their stock without causing a panic, under the condition there is another story which justifies it.
Suppose you were in a position where you thought poorly of the long term viability of the company. Wouldn't engineering a fallout with* the board be ultimately prudent?
*"with" here could even mean "in collaboration with".
A methodical and peaceful exit ultimately is more prudent. For speed and financial gain, you might be on to something but I think you pay for it in negative legacy.
Not a Cloud Kitchens employee, but I interviewed with them. They have bright talent, but the offers aren't all that good, especially for the level of experience they were looking for: they want the cream of the crop of this industry, and they do not want to pay top numbers.
The valuation has the "implicit" success baked into the price already-- and I don't think you could say Uber is a guaranteed success story yet. With CK, you take the risk of being an early employee with very little, if any, upside. This came up in other threads recently, but it's likely better odds to stick with Big N companies.
One angle people might be missing is how much CK is a real estate play. There's real technical problems to tackle, but it requires spinning up these dark kitchens in dense, pricy real estate markets. Conceptually, it's the WeWork of restaurant kitchens, though I'm hesitant to draw that comparison due to the many other connotations of WeWork that I wouldn't associate with CK.
Typical Travis, cheap as hell. He publicly said that people would join Uber for purely monetary gains, so he wouldn't want to pay them much. Back in 2016, he instructed his managers to A/B test packages to see how low a package candidates can accept. Indeed, "forced" is more accurate than "instructed". I guess nothing is wrong with Travis' MO. It's a free market anyway. It's just that I wouldn't bet my future career on him.
I suspect that they've raised $700M because Travis Kalanick is involved. Uber made a lot of people rich, and some of those people would certainly be interested in investing w/ Travis again.
I mean it does seem like a good opportunity. Renting a kitchen or even cooking out of your own kitchen seems like a way to bootstrap to success. I remember hearing/reading an NPR "how I made it" about Stacy's Pita chips and she basically followed this path. Here Travis seems have learned from WeWork to own the real estate and rent out the kitchen as well. It seems like a win-win.
Looks like an excellent opportunity. Real estate is not getting cheaper. I believe they are based in LA, so when I'm ready to move out there guaranteed I'll be applying there. :)
It's interesting that he has apparently faced no consequences within the Silicon Valley community for creating a toxic corporate culture rife with sexual harassment and threatening behavior. (Just one example of many: https://time.com/5023287/uber-threatened-journalist-sarah-la...)
For those of you who don't get that reference because you actually work in Silicon Valley and can't stand to watch the HBO comedy of the same name because it's too much like daily
life:
By physically locating themselves in the upper atmosphere cloud kitchens are saving tons of money on refrigeration costs. Combined with advancements to automated drone deliveries which are JUST around the corner the enterprise could be profitable as soon as Q3 2021.
It’s not clear whether HN has ever approached the same level of signal as subreddits. If you visit reddit front page then surely you’re looking for comedy and chatter, but if you consider the tech subreddits I don’t think Reddit was ever outperformed, such as for the Rust subreddit. In a way HN is all front page, even if its front page is higher signal than Reddit.
You're right, but if Hacker News questioned its deeply held cultural belief in its own intellectual and technical superiority over Reddit, it would have an existential crisis.
Does it? Because lots of shitty cliche jokes regularly get upvoted and built upon even further, whereas others that are actually good get flag-killed within a short timespan. I’ve been looking for an explanation for this wild discrepancy but I’ve come to believe it’s just luck, and depends on people’s collective moods that day.
Would make for an interesting deep-dive to be sure.
I didn't read it. But for some of us, silly inane comments that don't add to the conversation can detract from it.
If that's what you are looking for, may I suggest reddit? On there, an article is posted and you'll have 10,000s of silly one liners with no information or further understanding. Most never having even read the FA. I personally love the fact that /. doesn't allow this. It means those of us who want to discuss topics can actually do so without drowning in a sea of silliness.
most comments argue a position, which doesn't necessarily build bridges either. good satire, even if taking a position, should be thought-provoking rather than simply insulting.
Satire definition:
"the use of humor, irony, exaggeration, or ridicule to expose and criticize people's stupidity or vices, particularly in the context of contemporary politics and other topical issues."
From Wikipedia:
"satire is a genre of literature and performing arts, in which vices, follies, abuses and shortcomings are held up to ridicule, ideally with the intent of shaming individuals, corporations, government, or society itself into improvement."
Not only is satire bad for communication, it's bad for learning, since it must presuppose the person creating the satire is not in the wrong. Generally people who are open to learning start from the perspective they too might be wrong. Of course, you are welcome to show me examples of when satire changed your mind... that would make me reconsider a different perspective.
but those are flat and lifeless definitions of satire. i'm delighted by good satire that points out my own as-yet-undiscovered follies in a wry or clever way. a lot of creative writing and philosophical works do this.
idea exchanged is neutered if all writing must be carefully crafted to not offend even a little bit. plenty of comments here offend others, even without that intent, but the best ones will (1) not target individuals and (2) make a reasonable argument. to me, satire is just adding a little cleverness to these latter kinds of comments.
in any case, i'm not imploring you to agree with me, just adding my voice to the chorus.
Great. Personally, I've changed my mind on some very serious topics: death penalty, addiction, government regulations, capitalism, etc.
In each case, it took someone patiently going over points to help me see better. It takes time for me to fully incorporate new world views. It was a process that required the patience of another human who helped me work through thoughts without judgement or ridicule.
In my case, satire did not help. In fact, it has generally made me double down on my perspective, since it has an inherently ridiculing tone (you might not agree, but that is so by the very definition of the word) - Most people I know double down when confronted with ridicule. In fact most people generally double down on their opinion no matter how thin the evidence in favor of it.
So I'm asking, what deeply held beliefs did you completely change your mind on when confronted with satire? How did it go?
Hearing people's actual experience that is outside of my common conceptions is always super interesting. I'm always open to changing my mind.
I wonder what impact him selling all his stock had on the share price. They floated 180M shares at IPO, Travis owned 117.5M. Average daily volume is about 25M shares.
The release of the news might move the market a bit, but typically for these large volume trades, they don't go through the typical exchanges like NYSE. Instead, traders will often deal with another large player through an OTC transaction.
I really don't know enough about this: why, in general do people step down from the board of directors? Is is as simple as him not owning enough stock to justify it anymore, or are there considerations like whether he's running a competing business? It seems strange for him to leave - since as far as I can tell there's no cost to having him on the board and as the founder he brings a certain level of trust to the operation.
> and as the founder he brings a certain level of trust to the operation
He wasn't exactly portrayed as a symbol of trust in the media. I guess you could say, for PR purposes, his active involvement became a liability. I don't see Uber having trust issues as a result of him leaving.
And, in rare cases board members can be held responsible for the actions of the board. In that sense you have a lot more to lose as a board member than as a shareholder.
So if you think that the board might be held liable by shareholders for something in the future it is usually a prudent step to create as much distance between you and the board as a shareholder as you can so you don't end up on both sides of a lawsuit.
Is that true? Many people are on multiple corporate boards, and some boards meet only a few times a year. I've only been on charity boards, but it wasn't a particularly demanding commitment.
I guess the reputation cost is a good point, but Kalanick is always going to be associated with Uber, whether he's officially on the board or not.
Certainly, being below a certain threshold would be one important factor.
He was a contentious figure, and Uber might want to see him off - remember that he got in a huge boardroom war with other board members - so this is likely something they want. His departure could have been part of the long term deal, or possibly in his contract somewhere.
Though there's definitely cred in having the founder around, I suggest this is not that kind of situation.
There's only so many board seats as well, there may have been angling for others to step in.
Personal choice matters a lot as well - he simply may not really want to do it for a variety of reasons.
To me it seems there are no hard rules for boards: it's not like hiring staff or even execs wherein you're generally looking for things, often, the board is just the 'gang of people with the power' duking it out for influence and control etc. so things can be very nuanced, political etc..
Sorry, but at this level people don't make multi billion dollar decisions for spite. Also, "told to leave the board" doesn't mean anything - he's either voted out or not. He was previously kicked out as CEO, someone else is in charge, and he obviously doesn't believe leaving his capital there is a good use of his money.
I would think at his level it would be the opposite. He has FU money. They did kick him out of the company he made. Maybe he wants to tell Uber something.
It doesn't really make sense for him to do this, if his reputation is to carry with him to Cloud Kitchens. People would be quite wary of future business dealings. If "getting back" at Uber is acceptable, he may decide to "get back" at Cloud Kitchens -- in other words, it sets a bad precedent.
I don't think most people would sell 3.5 billion dollars worth of stock haphazardly to temporarily spite a group of people a little bit. At %4 per year you can spend $380,000 every day for the rest of your life. There are probably better ways to get even and even better things to do with your time and freedom.
Increasing supply of the stock combined with the knowledge that the founder, who is an insider and large shareholder, is selling stock puts downward pressure on the price which makes the board look like they mishandled the situation.
> There is nothing particularly strange about this. At one point—basically before June 2017—Kalanick was the founder-CEO of Uber and owned an appropriate amount of stock for a founder-CEO, and now he is not the founder-CEO and is working his way down to an appropriate amount of stock for a non-founder-CEO.
…
> He has sold stock every day since the lockup expired. He has accounted for about 7.8% of Uber’s volume during that time
Great points, but it is highly unusual that someone in his situation would sell all of their stock so quickly. He probably couldn’t have sold it much faster.
Because Directors have fiduciary duties of loyalty and care to the company and its stockholders--even more than the CEO does. To the extent he wants to do his own thing now, that can be an issue/liability.
> I really don't know enough about this: why, in general do people step down from the board of directors?
If it is voluntary, then they step down because they want to ( for whatever reason - pursue other opportunities, etc ).
If it is involuntary ( forced out ), then it's pressure from shareholders ( especially a major shareholder or a group of major shareholders ).
Board of directors are elected by shareholders and they serve the interests of the shareholders. Only shareholders can remove board of directors. Of course if you have more than 50% of the voting shares and are on the board of directors, then you are golden. In that case, only legal action could get you removed, but that bar is very very high.
Or he is quite happy to have cashed out instead of wasting his life away trying to run a low (if any) margin, weak network effects business with local competitors and regulators nibbling at your sanity.
It's kind of amazing that almost 100% of the Uber and Lyft rides I've taken in the last 6 months have had drivers/cars that work for both simultaneously. There only service distinction is which app you use to book the ride, the inventory and employees are all the same.
Lyft/Uber driver here: It depends on what driver rewards they are running. Most of the time they are about the same. They are both sneaky in their own way:
Uber:
1) You drive to a surge area for an extra reward and as soon as you get there it disappears. Your presence eliminates the need for a surge reward. Chasing the surge is for rookies.
2) Most of the time I get let's say X for taking someone to the airport. On a surge I am supposed to get X + Y, however they'll pay me 75% of X + Y. Isn't that great that I made Y extra! actually no, they reduced X. It's straight up robbery.
Lyft
1) I drove out some rural roads to a scheduled pickup. The rider didn't show up. Before I had a chance to cancel the ride and get some payment, the algorithm cancelled the ride paying me nothing. This does not happen on Uber. I always get paid for cancelled rides there.
2) I got a pickup in an area I was not currently in. I went there. The pickup point was inside a cemetery at night. I'm not going to drive into a cemetery at night and get robbed. I get a message "You are in a very high demand area (the neighborhood next door) Why don't you stay there and wait for a ride?" The zombie pickup went away with no comment from Lyft. Lyft sneakily lured me into an area (an unsafe lure too)
3) There were too many drivers waiting at the airport. Lyft created a high demand reward area in a town next to the airport. It didn't make sense to me, but I went there and waited. I noticed a bunch of other Lyft drivers parked there waiting. No one getting any rides. So Lyft created a false high demand reward area to siphon excess drivers from the airport waiting lot (keeping the peace with folks that live around there)
I'd say the Uber algorithm is less dishonest than the Lyft algorithm. The odd thing to me is that they don't want to hear from techie drivers that could serve as beta testers, but neither Lyft or Uber want to hear from drivers. At all. They are losing business because good drivers (smart drivers) won't take some actual legitimate rides or cancel them because of these games.
It's interesting that you bring this up. Every time I take an uber or lyft (which is very often), I ask the driver which one they prefer. Around early 2019, I've noticed a lot of drivers say they get more business on uber, but prefer lyft. So, it seems like there is actually a noticeable distinction for the 2 services, at least from the driver's perspective.
From a (very occasional) rider perspective: I only have an Uber account. From my understanding - which may be completely incorrect, but it's what my decision to only have Uber was based on - Uber is available in more cities (which are likely nearly a superset of Lyft's cities), has more drivers, and is cheaper.
In other words, based on my understanding of the brands, the only reason for me to install Lyft would be if I wanted to boycott Uber. And I already have Uber, but not Lyft, and I would likely have to keep Uber because I go to cities where Uber exists and Lyft doesn't.
So some network effect is there, but I don't see how it justifies the insane valuation of the company. AFAIK they're still operating at a loss.
Their strategy seems to be having the network when self-driving cars come around, but any competitor offering (safe) self-driving rides would get my sign-up just due to novelty. Even if not, $100B buys you a lot of new-user incentives.
Uber has to solve completely different issues than a self-driving cab: A self-driving cab company can just flood a market with cars to ensure a smooth experience for new users, offer a bunch of free rides in a limited time to get people to sign up, then move the excess cars to the next city (can't simply do that with human drivers).
No need to recruit and manage drivers, deal with driver fraud, settle disputes when a driver claims a passenger puked in the car and the passenger claims they didn't (if they take a picture after the passenger leaves). All the tracking and fraud detection systems of Uber are worthless.
Writing an app that can show a map and let people press a "I want a car" button may not be trivial, but it isn't going to cost a billion dollars.
You can also link your Lyft account to both Delta and Hilton to earn a few points per dollar with them every time you take a ride. It's a good way to keep Hilton points from expiring if you don't stay at one very often.
>"There only service distinction is which app you use to book the ride, the inventory and employees are all the same."
The one area where I have been able to draw a distinction and for me this is the most important is customer service. When I have had issues with Uber I found the customer service to be completely worthless. It seem to consist of nothing more than canned email responses from a support center in India. Case in point I had a psychopath Uber driver who kicked me out of car at night and left me on the side of the road when I asked if they could turn on the air conditioning because there was a heatwave. Despite my persistence I was never able to get anything more than a canned email response of "Uber upholds our drivers to the highest standards ..." Every email I sent asking if they could please escalate this as it was serious issue resulted in a new canned email response signed by a different employee name.
Lyft by contrast on the two occasions that I had a somewhat serious issue responded to me by having a customer service representative call me and ask me further details.
For me this matters much more than the fare differential at any given time. In my experience Uber/Lyft feels increasingly more like a race to the bottom and this distinction has become more important to me.
IMO this points to inevitable consolidation. Uber and Lyft will merge at some point. As long as traditional taxis still exist and/or there is a Republican administration, it should clear antitrust.
Personally, I found it to be a rehash of all the articles since 2017. Even the structure of the book is like each chapter was an article about a set of events.
Commercial kitchens are more rare then empty office space because they require a lot of certifications and special equipment. Also if you are cooking food for the public then it has to be done in a commercial kitchen where for WeWork the alternative is to work from home...
Prior to WeWork, many companies were (are) in the business of renting commercial real estate. CloudKitchen's bet is creating a huge valuation proposition by making securing a kitchen (as a restauranteur) as easy as provisioning resources on AWS. In a sense, there is some logic there, as restaurants in major cities come and go. There's some degree of food being subject to a fad boom/bust cycle. And as a customer, having access to a constantly rotating set of restaurants, as opposed to a much more static set of brick-and-mortar restaurants in your neighborhood -- maybe you're more likely to engage more with the whatever food delivery app CloudKitchen might eventually make, for it's continuing novelty in dining options.
Uber’s core Rides business has huge margins and one of the most powerful network effects in business (that’s why you see only 1 or 2 neverchanging players in mature markets).
Source? And what do you mean by margins specifically?
> one of the most powerful network effects in business
Disagree. One result of a very strong network effect is that it means higher switching costs for customers/users.
- Rider switching costs are near zero. For example, it's as simple as downloading a new app. If I switch from Facebook to Path (if it was still around), I have to re-establish all of my connections again, which is a massive amount of friction.
- It has one of the frailest controls on its sourcing. Drivers switching costs are near zero (unless of course the drivers are sucked into preferential leasing by the rideshare company).
Ridesharing will become a race to the bottom. Stronger network effects imply margin expansion (see what Facebook did to its gross margin circa 2013-2017).
the definition of a network effect is that the users themselves make the network more valuable, if the network effect is meaningful they do so in an exponential way and the network is hard to break up.
Uber has virtually no network effects. One driver is just one more driver without any effect on other drivers or users, in contrast to say, user-driven content generation on tiktok or youtube.
In fact, due to the natural constraints on supply in cities if anything there a negative effect to growing the business, which is of course why there has never been a taxi monopoly, to begin with, and transportation is a traditional small business, high competition sector.
No offence and I don't intend to be rude but literally everything in your statement is comedically wrong. They don't make any money, there are no tech margins because drivers, regulation and advertisement cost pile up linearly, and the competition is brutal. How Uber got butchered by Didi in China is only one example of it, but the ride-sharing industry has had many victims already. Just look at bike-sharing in China.
They have a network effect. If a car is not available or I have to wait too long then I will consider some other option. The number of cars available is a function of the number of users.
that's not a network effect, that is just supply. If the gas station runs out of gas you also go to another gas station, that doesn't mean there's a gas network effect.
There would be a network effect if them having more cars would make it much more likely for them to get even more cars, or add value in some other way beyond the fact that they have one additional driver. That is not the case.
For facebook say, it's much easier to get more users because each user themselves increases the value of the business, because the users interact. You don't care if Uber has ten thousand or ten million drivers, it does not improve the service (significantly) apart from increasing supply.
> Uber has virtually no network effects. One driver is just one more driver without any effect on other drivers or users, in contrast to say, user-driven content generation on tiktok or youtube.
How does youtube have a network effect then? Using your language, youtube has a supply of viewers and a supply of creators. More videos on youtube do not beget more videos, and likewise more viewers do not beget more viewers.
In the same way that the userbase is what gives youtube value in the eyes of the creators, the passenger base gives uber value in the eyes of the drivers.
>More videos on youtube do not beget more videos, and likewise, more viewers do not beget more viewers.
Given the virality and the way video creators interact with their audience and other video creators I don't think that statement is true. Youtube is not just a one-sided tv channel, it's also a community-driven social network which makes the network defensible.
If your favourite content creator is on youtube or twitch (or your audience if you are one) is on the same platform there's a pretty bad collective action problem to get you to move to a less popular platform.
On a ridesharing app, there's no social interaction, you don't care who drives you and every driver can easily drive for every competitor.
My favourite content creation platforms all have unique creators that I would miss, so I can't leave. Every ridesharing app I have ever used is utterly interchangeable. Not even the theoretical benefits from scale like say better service where ever noticeable.
There is absolutely a gas network effect, which is why Tesla has spend millions on building out a Supercharger network.
I prefer Lyft, and still take Uber anyway in parts of the country where there aren't enough Lyft drivers. It can make a meaningful difference in wait times. I'm also unlikely to check back later, unless I think of it.
>Any kid can see that Uber is a 2 sided market place with typical market place network effects
Uber is not a two-sided market place at all. Two-sided market places are characterised by increasing gains from size, because it improves the functioning of the marketplace and discovery.
For ride-sharing businesses, this is only true for very small sizes, as they grow the size of the platform doesn't deliver any significant additional returns, whether you wait 2 minutes on uber or 3 minutes on left is largely immaterial. So its an asymptotic marketplace, which is vulnerable to competition.
Even the characterisation of a marketplace is dubious because there's no price discovery between drivers and customers or much other interaction, it's more like a matchmaking site, so there isn't really a lot of unique features to differentiate one from another.
Why would he go back into Uber when he exited with billions? It's obvious he doesn't have control over the company anymore, so he sold his stake and is moving on. It's the smart thing to do at this point, he has extracted as much as he possibly could, and instead of betting on the current management, he sold his stake and is betting on himself a second time through Cloud Kitchens, which is actually a good idea.
Partly because NeXt was failing, but it was more than that. I suspect there’s a lot of similarity there with Travis, but in his case he may be in a better position.
Taxi companies are profitable and they have employees, a fleet, garages.
Uber is not profitable and does the same job as a taxi company. Doesn’t something seem wrong here?
The reason drivers love Lyft is they pay more. They ph more because Lyft takes a bigger loss than Uber to stay competitive. That business model won’t last so Uber will outlast Lyft and then finally be on the road to profitability once the stupid Lyft price war ends.
I’m baffled by people who think Uber cant make money. there’s no logic at all in that thought process. They also ignore the huge rnd cost uber is footing for self driving tech.
I’m confident The sell off has nothing to do with kalanick spiting Uber and everything to do with him wanting to divest his interests so he can work on his other project
Uber is literally having the same business model of subsidizing rides, which loses them a lot of money. This is not even tied to simply being competitive with Lyft - its also to incentivize users to choose them over taxis. You really thing that upping their prices is going to a simple decision and people will just keep using them because of what? Just out of habit?
I've never understood why anyone who applied a bit of critical thinking ever thought Uber or Lyft would be profitable. It's been over 10 years and they're still hemorrhaging billions of dollars, but clearly wild profits are just around the corner.
If you want to know what business model to look at to see how Uber and Lyft will end up, look at the airline industry. Paper thin margins (and that's assuming they're profitable at all), required a government bailout, one of the few industries consistently declining in a historical market surge - many of the airline companies will go bankrupt again when there's even a whiff of a recession.
If the unit economics don't make sense, then you just lose more money by scaling. And that's exactly what Uber and Lyft are doing - they are literally losing billions of dollars every year. They aren't building infrastructure. They aren't building a brand anymore (their brands are diminishing over time instead of strengthening). They're just sucking what money they can out of their failing business model as the ship slowly sinks.
Even against a government backed cab monopoly, Uber still has more market share in key markets like NYC. That’s kinda my point why the bear narrative doesn’t hold up.
The big questions with the ride sharing business model are A) what is demand once prices are no longer subsidized, and then B) how does that compare to the current valuations? I think whoever wins the race will have a nice business as a taxi replacement, but these investments were sold as the future of transportation, not as a replacement for taxis.
> Uber is not profitable and does the same job as a taxi company.
Taxi companies tend to own their fleet (and in some cases their licenses / medallions). The profit comes from return on capital invested. Uber does the same job as someone on the phone line at a taxi company.
After getting ousted from Apple, Jobs sold all of his Apple stock. After re-joining Apple, Jobs sold all of his Apple stock to play mind-tricks on the board (successfully, I might add).
I was saying this to my friend about 18 months ago. This process seems very similar to what happened with Steve Jobs.
1. founder starts company
2. board replaces abrasive founder with operator
3. founder fully exits company (except for 1 share)
4. founder starts new company
5. original founder company nears bankruptcy
6. founder executes reverse take over of original company
7. founder revitalizes original company
At the time, we were at step 2 with Dara becoming the CEO,
now we're at step 4.
Is it their fault that code doesn't lay out well on mobile? Or hn? Is a forum poster responsible for the responsive design of their post on a site they don't control? Do you test your posts so they work well on my Nokia?
When he’s throwing a yacht party at Cannes Film Festival I guarantee you that nobody will know, care or remember how he has enough money to be in that situation.
It's just my person musings but..for non-commodities companies(and I don't think many tech companies are considered commodities)... I think that founders have a certain vision and talent which cannot be separated from the company.
When that founder leaves, unless the company has become a monopoly, the company is basically lost.
No amount of the worlds best and brightest bean counters can replace the talent and spark that founder had.
These are just personal thoughts. It will be interesting to see how this plays out in the future. To see if the board killed the golden goose like Apple did in the 90s.
Suppose you were in a position where you thought poorly of the long term viability of the company. Wouldn't engineering a fallout with* the board be ultimately prudent?
*"with" here could even mean "in collaboration with".