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Comment by SilasX | Hacker News Reader

That would only be true if their unit profits were low or negative. On each ride they make a lot of money. They lose money because of their huge, ride-count-independent fixed costs, like legal defense and marketing. So it's not necessarily true that giving the riders a larger cut would widen the loss, if it came with a scale-back on all the marketing.

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I cannot understand why Uber needs 22k employees.

I get it that WhatsApp and StackOverflow and Instagram have/had a lot less legal, financial, and marketing requirements. But Uber has almost 1000 times the amount of employees WhatsApp, Instagram, and StackOverflow had when they reached similar scale.

I get it that there's a lot more analytics and geospatial complexity in Uber. I get it that they have to manage tens (hundreds?) of thousands of drivers.

It just seems like there's a LOT of unnecessary fat that could be cut.

Facebook only had 4k employees when they IPOed. Google had only 1,900!

Uber has around 25 offices in the UK alone. Most are required for local regulation afaik. If this is scaled across the US and Europe that could easily run into hundreds of offices, inflating their employee count for relatively minor employees.

https://www.uber.com/en-GB/drive/resources/contact-us/

Uber has a huge community operations team that's in charge of making sure that its drivers stay productive and at least semi-at-peace with the way the system works (and evolves!) There's a lot more human-to-human work needed in this business than for a social-media site, or an automated online-ad service.

That's where a lot of the 22,000 employees are, and if Uber could thrive without them, it surely would have already done so. Among the tasks I see listed in a current Uber job ad:

--Walk driver-partners through the onboarding process and all of the tools they need to be successful on the Uber platform

-- Help existing driver-partners troubleshoot any issues they experience (i.e. a delayed payment)

-- Help brand the Uber name and get driver-partners excited to be on the road

-- Assist with events and promotions as needed (occasionally off-site, during off-hours or weekends)

>and if Uber could thrive without them, it surely would have already done so.

That's uber's position, that doesn't make it so.

----Help brand the Uber name and get driver-partners excited to be on the road

Why is this essential? It seems like a fluffy marketing position to me.

It is fluffy marketing. But bear in mind that when you're offering a B-minus experience to drivers in terms of pay, hours and quality of life, it takes a lot of fluffy marketing to minimize driver churn or corrosive behavior.

Classic HN lol.

Just get one of the engineers to write code to get driver-partners excited to be on the road. Seems like an easy weekend hack.

I can definitely understand 22k considering all the drivers to manage. And imagine how many employees you need to manage regulatory compliance in as many cities, counties, provinces, states, countries they have to deal with.

The more interesting figure to me would be how many of those 22k are developers.

This is what gets lost in all the negativity. Lyft/Uber can slash their R&D by 90% and they wouldn't have much trouble running normal operations as minimal app-based cab companies. At 2,000 minimally required head count for running operations, they would probably average $2B in annual expenses. However suddenly they would be gloriously profitable with huge scalable upside and small fixed costs.

Here are some calculations:

Currently per mile cost of car (fuel, vehicle, insurance) to driver is about $0.50. Uber/Lyft typically charge $2.00 per mile so $1.50 goes to driver. Subtracting cost of car, driver pockets about $1 per mile which translates to $30/hr in urban areas.

One issue however is upper limit on the business. There is probably demand for 100,000 cabs each hour in US. That translates to may be 2-3 million miles per hour. if Uber can capture 30% of this, then their US revenue would be at about $4B. The international revenue perhaps adds another 2X so we are looking at total revenue of about $12B @ 30% market share. There is room to grow by almost 100% here in terms of market share so with $24B revenue and $2B of minimally needed fixed cost for operations, this seems fairly sustainable and astoundingly profitable business to me.

This is a bad estimate for the cost per mile.

Average depreciation cost per mile driven is ~ $0.6 [0]. Commercial insurance is ~ $0.2 Cost of gas per mile (in CA at 20 mpg, since most cars are non-hybrid) ~ $0.2

So cost of driving per mile is ~$1 to the driver

So really driver makes ~$15/hour when it is busy, less most of the time

[0] - https://newsroom.aaa.com/tag/driving-cost-per-mile/

The cost of per mile was from AAA.

AAA cites 59¢/mile for an average sedan [1], further they cite the costs for average private insurance, which is inappropriate for running a commercial operation with uber/lyft.

Additionally the average occupancy for an uber/lyft is much higher than typical privately used cars. Adding hundreds of pounds of passenger weight for a shared ride will yield below average MPG on a typical car, making expenses above average.

[1] https://newsroom.aaa.com/tag/driving-cost-per-mile/

A lot of the marketing budget goes to driver incentives, so it wouldn’t help the drivers if they cut back on that to reduce the cut they take from the ride (which is only 25% btw, so diver comp can only go up 33%).

I have the understanding that they actually lose ~$1 per ride.

That figure comes from taking total losses and dividing by the number of rides. It's not the same as saying that the costs of providing the ride itself are $1 more than they charge for the ride. (The fixed vs variable distinction I was making above.)

Uber's costs of providing a specific ride are: Driver's cut, maps licensing, cloud charges, data transfer. That is rarely more than the cost of the ride. Remember, Lyft took flack for the outrageously high 14 cents a ride in cloud costs.

You’re forgetting the cost to develop the software itself. It’s like saying a gigabyte of data on a wireless carrier cost them pennies in electricity and bandwidth.

It's still not a per-ride cost.

>You’re forgetting the cost to develop the software itself

No, I'm (correctly) excluding it from the list of things they have to pay for to provide one more ride.

>It’s like saying a gigabyte of data on a wireless carrier cost them pennies in electricity and bandwidth.

It's more like:

Verizon is unprofitable.

People keep repeating the claim that, "lol, Verizon mobile actually loses money for every byte of data they transmit to you."

I reply that, "No, Verizon loses money in the aggregate. The cost of sending one more byte of data, on average, is less than they charge for it, but not by enough to cover their fixed costs."

I understand how "cost to provide one more ride works", I'm just saying that it's a bit of an accounting fiction and has little to do with whether they can or cannot be profitable. It also confuses people into thinking that running a telecom is just pure profit and that they're getting ripped off. That's why I used that example.

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