In this week’s roundup, senior RSG contributor John Ince covers Uber’s fighting spirit, a new lawsuit in New York City, and more.
Uber Fights to Get Its Edge Back [NY Times]
Sum and Substance: SAN FRANCISCO — A few days after Uber went public in May and its stock fell into a tailspin, the ride-hailing company’s chief executive, Dara Khosrowshahi, sent a rallying message to employees.
“There is one simple way for us to succeed — focus on the work at hand and execute against our plans effectively,” Mr. Khosrowshahi, 50, wrote to staff in a May 13 email. “We simply would not be here without you.”
Since then, Mr. Khosrowshahi’s message has steadily become tougher.
Faced with questions about whether Uber can make money and a souring environment for unprofitable tech firms, Mr. Khosrowshahi has laid off more than 1,000 workers in three rounds of job cuts. He has ousted some top executives, and board members have left. And in recent emails to employees, he has said Uber’s teams are “too big,” are producing “mediocre results” and that the company “needs to get its edge back.”…
My Take: Uber’s got problems, and this is as good a summary as you might find out there. What are the initiatives at work now? Who are the key players? And so on. It’s an interesting read, and well worth your time.
Uber for years shortchanged nearly 100,000 drivers: lawsuit [DailyNews]
Sum and Substance: The millionaires who run Uber for years illegally stole millions from of thousands of working class drivers in New York City, a class action lawsuit filed Wednesday alleges. The lawsuit claims the company did not pay taxes it took out of drivers’ pay for nearly four years. The plaintiffs argue that Uber violated its own complicated employee agreements, and effectively robbed them of wages they desperately need.
Uber has previously admitted to deducting sales taxes and a surcharge for a worker’s compensation fund from payments to drivers. The suit argues that customers are supposed to pay those fees, not employees.
Rides that travel across state lines are also legally exempt from sales taxes, the suit states.
The class could cover as many as 96,000 drivers, according to the New York Taxi Workers Alliance, the organization that filed the suit…
My Take: I can’t comment on the legal case here, but this doesn’t look good. There are so many ways that Uber can cause confusion in the pay scheme. Here, it was taxes…
Uber’s Disappointing Quarter Sets The Stage For A Sell-off Ahead Of Wednesday’s IPO Lock-up Expiration [Forbes]
Sum and Substance: It’s tempting to include a pun in the lede of an article about Uber Technologies, Inc., but running late/breaking down/getting stuck in traffic, etc. would not adequately describe the value destruction at this company since its IPO on May 9th. Uber shares are falling in after-hours trading after reporting third quarter results that were a mishmash, but the cash outflow certainly hasn’t stopped. …
So, investors who bought at Uber’s IPO price have seen more than a 33% decline in value since May 10th, the first day of public trading for Uber shares, but the pain lies even more deeply for some of Uber’s longer-term backers. Uber’s market capitalization, based on after-hours pricing, has fallen just under $50 billion. That it was $78.2 billion on May 9th is easy to figure, but the bigger issue for Uber holders is the pre-money valuation accorded this company. …
My Take: Well, the lockup came and went. Meanwhile Uber’s stock price actually went up almost 2% on the day when people could start selling their shares. I guess it was priced in.
Uber is entering the ads business [Techcrunch]
Sum and Substance: Uber will become an ad platform, selling space inside its Eats app to restaurants hoping to lure in more food delivery orders. A recent Uber job listing spotted by TechCrunch seeks an Uber Eats Ads Lead “to lead the team and efforts responsible for creating a new ads business that enables eaters to discover new foods and restaurants to grow their customer base.”
An Uber spokesperson confirmed the company would be entering the ads business, telling TechCrunch, “We are exploring relevant ads in Eats.” Selling ads could help it improve margins on Eats, where it only takes 10.7% of gross bookings as adjusted net revenue because it pays out so much to restaurants and drivers.
My Take: Now Uber is in the advertising business. I’m not sure why, except that they’ve got to do something with the money they’ve got and advertising is something that they haven’t really tried yet.
Uber founder Travis Kalanick has reportedly raised $400 million for his next act from Saudi Arabia. He’ll be competing directly with his old company. [Business Insider]
Sum and Substance: Uber’s ousted founder Travis Kalanick quietly raised $400 million from Saudi Arabia for his food-delivery startup in January, The Wall Street Journal reported Thursday.
It’s the first known investment by the kingdom since its murder of American journalist Jamal Khashoggi last year.
Delivery-only restaurants are a hot topic right now, not only by startups but by Kalanick’s former employer too.
According to The Wall Street Journal’s Rory Jones and Rolfe Winkler, the billionaire quietly raised $400 million Saudi Arabia’s sovereign-wealth fund in January, in a deal that values CloudKitchens, a delivery-only restaurant company at $5 billion.
My Take: Just keeping up with former Uber CEO Travis Kalanick. He raised $400 million, and I can’t figure out why he needs that when he’s worth over $5 billion. I guess it’s better to gamble with other people’s money.
Readers, what do you think of this week’s roundup?
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-John @ RSG