Feb 19, 2020 Society's winners and losers of Uber and Lyft (it's a love/hate relationship) Read More 5 Stars for Convenience... 0 stars for congestion. The Uber and Lyft-led ride industry has made life easier for many: whether it's having a few too many margaritas with dinner, visiting a new city, or needing a ride to the airport. It's also never been harder in one way: traffic. Here's the low-down, based on studies summed up by the WSJ:
The Pitch: Uber/Lyft pitched themselves as ride-sharing apps (picture 4 strangers in a Prius heading the same direction). Five years ago, Uber founder Travis Kalanick said it would end congestion: "If every car in San Francisco was Ubered there would be no traffic."
The Reality: Congestion got worse. Most riders hail private cars — an estimated 70%-80% of rides in major metro areas are non-pool. Drivers in NYC and California cruise without passengers ~40% of the time. Though Lyft estimates 500K Americans gave up personal cars thanks to ride-hailing (not ride-sharing).
Negative effects take a back-seat... When you can get contact solution delivered to your door same-day by Amazon, you're probably not thinking about delivery vehicles congesting streets. Similarly, users of ride-hailing services are likely to think more about convenience than traffic or pollution.
The Takeaway:Fibbing about your mission can be a (disturbingly) successful strategy... The reality of ride-hail apps is more driving, more traffic, more pollution, more horn honking, more air fresheners. If we were woke sooner to Uber being part of a problem, not part of a solution, we may be less likely to have started Ubering. But now Lyft/Uber are here to stay, despite years pitching a mission that wasn't accurate.
Jan 22, 2020 Uber is letting some drivers set their own fares (to avoid paying them as employees) Read More I'm an app, duh... Uber, to the California government. Uber is now letting some CA drivers set their own fares as part of a test in response to CA's new gig-economy law (aka, AB5). The law forces companies like Uber, Lyft, or Postmates to treat workers as employees (give them sick days, benefits, etc). But Uber wants to prove its drivers are independent contractors. So it's made these changes:
Last month, Uber let CA drivers see where riders are going before deciding whether to accept or reject a ride (wasn't a thing before).
This month, Uber put a 25% cap on commissions drivers pay to Uber.
Now, Uber is letting drivers who pick-up/drop-off from airports in Santa Barbara, Palm Springs, and Sacramento price their rides up to 5X basic Uber fares (or charge as little as 1/10th).
It's a tech company, I swear... Uber's trying to prove it's just an app with independent drivers (nothing to see here), in an effort to dodge the 20%-30% cost increase that would come with turning their contractors into employees. The gig-law could also make rides pricier for riders, which could reduce demand for rides overall.The Takeaway:Uber's current pricing method is all about efficiency... 11PM Saturday rides are pricier than 10AM Sunday rides because surge pricing factors in demand. This new bidding-style pricing might mean higher fares for drivers, but could also mean lower fares if drivers compete for the cheapest price. This auction-like system is less efficient, but Uber is hoping it'll help prove that drivers have autonomy, and should therefore be treated not like employees. Jan 9, 2020 Gruhub may sell itself because of the mafia-style delivery wars Read More News, delivered hot (28 minutes after the ETA)... Grubhub shares spiked on word the food-deliverer is considering selling itself (+ fries, sauce on side). If Grubhub gets acquired like the WSJ reported it might, it'll probably be at a higher price than where the stock was trading yesterday — that's why shares jumped 13%.
2004: Grubhub is founded in Chicago as a menu-posting site — then it merged with delivery rival Seamless in 2013.
2014: Grubhub IPOs with a $4.5B valuation, ultimately reaching $13B just over a year go.
2019: Shares plunged over 40% in October on delivery of disappointing earnings -- it's now back to a $5B valuation (barely better than its IPO value).
You're becoming "more promiscuous"... That's what Grubhub's CEO thinks about us diners. Grubhubers used to be loyal, one-app customers. Now they're flirting with the competition, and it's an (expensive) marketing battle of "$5-off-next-order" promo codes to win them back. We noticed that delivery apps are divided by territory, mafia-style:
DoorDash (37% of the US market): Dominates the West, with most of the market share in San Francisco, Phoenix, and Dallas.
Grubhub (30%): Runs the East Coast, from Philadelphia to New York to Boston.
Uber Eats (20%): Took over the Atlanta-to-Miami corridor.
Postmates (10%) is LA-approved (it's pretty much only got LA).The Takeaway:If you can't beat 'em... Consolidate. The Delivery Wars are so vicious that even Amazon dropped its restaurant delivery service last year. With un-loyal customers and aggressive price competition, mergers are inevitable. Doordash already bought Caviar, and Grubhub might have to sell itself or merge — that's cheaper than splurging on marketing to beat Uber Eats in Miami.
Dec 25, 2019 Uber's co-founder and ex-CEO has sold all his Uber stock (and quit the board) Read More Travis don't want a lot for Christmas... There is just one thing Travis needs: 100% separating himself from his old company. Former Uber CEO Travis Kalanick just made 2 major holiday moves:
The money: Ever since the "lockup period" ended on Nov 6th, allowing pre-IPO Uber shareholders to sell their stock, Travis has gradually sold his $2.7B worth. He's now a 0% owner of the company he once defined.
The power: Although he hasn't been CEO since getting ousted in 2017 (more on that below), he has remained a board member — He's stepping down from that corporate jedi council on Dec 31st.
Less super pumped... Travis founded Uber in 2009, leading it to become the most valuable private tech startup in the US (its peak value was $68B). But he lost his CEO-ship in 2017 and wasn't even invited to ring the bell on IPO day this May. Three issues caused his CEO-ousting:
Scandal: That secret "Greyball" software it used to evade government regulators who were trying to study (and potentially stop) Uber.
Culture: A bro-tastic workplace environment that was reported to ignore sexual harrassment complaints.
#DeleteUber: Those first 2 (along with a seemlingly constant flow of negative PR) allowed rival Lyft to snag some of Uber's share of the ride-hail market.The Takeaway:"...To focus on his new business..." Those are the critical words we noticed in Travis' press release. His new startup, CloudKitchens, is a spinoff idea from Uber Eats: Renting out fully-equiped kitchen space for restaurants that only deliver. He's pouring his own $$$ (and $400M from Saudi Arabia) into the idea. This holiday breakup with Uber isn't just personal — it's also his bet on the future of food logistics. Nov 25, 2019 London tries to ban Uber (for a 2nd time) for "unfitness" Read More Uber X, Uber XL, Uber Powdered Wig... London's transport agency announced out of nowhere Monday that it is removing Uber's privilege to operate in Her Majesty's capital. The reason: "not fit and proper." Let's get more specific:
The claim: Uber has had a "pattern of failures" that "placed passengers and their safety at risk."
For example: 43 unauthorized drivers (including some banned by Uber) used their buddies' Uber driver accounts to drive, and even uploaded their profile picture so passengers wouldn't notice.
The result: London experienced 14K rides with those unauthorized drivers. That also means no proper insurance in place.
The verdict: Uber's tried to fix these issues, but London doesn't think it's fit to.
Kate Middleton can still Uber Black if she wants to... because Uber is appealing this, naturally. Its other 3.5M Uber riders and 45K Uber drivers will keep ubering too until the courts decide if the ruling is legal or not. London tried to stop Uber 2 years ago, but ultimately gave Uber another shot during that appeal.The Takeaway:Uber's #1 threat is public policy... aka government's laws, rules, and regulations. Uber requires politicians' consent to operate, but plenty of them don't like Uber — the brand's become villainous. Airbnb, Lyft, and SmileDirectClub face similar policy threats, but can learn from where Uber went wrong: Brand reputation is critical when politicians stand between you and profits. Nov 6, 2019 An Uber Eats job post reveals it's about to add digital billboards to its app Read More New job posting: Ads Lead... “Responsible for creating a new ads business that enables eaters to discover new foods.” TechCrunch reporters noticed that up on the Uber Eats career page. It's a signal that instead of taking just a delivery fee off your late-night chimichanga order, Uber is adding a new revenue stream from the prime real estate at the top of its Uber Eats app.
We're calling it a "Browsing Billboard"... As your fingers browse Uber Eats for dinner, your eyes will see a billboard. The app's valuable space highlighting food options can be sold as ads to restaurants that crave better delivery sales. Here's how Uber Eats' Browsing Billboard would go down:
You: Starved for saucy pizza, but don't want to get up. So you open the Uber Eats app.
The list: Before, the top 5 NYC pizza joints delivering to you featured Di Fara's, Pasquale Jones, Lil' Frankie's, Dani's, and Emily. They're at the top of the list because of their ratings.
The (future) list: Soon, that top spot might be occupied by Pizza Hut (with the word "sponsored" in small letters underneath). It's at the top of the list because it paid for it.
Uber: Makes money selling ads, just like Google does on Google search.The Takeaway:The Browsing Billboard is the next evolution of platforms... Web platforms like Uber play a middleman role, connecting buyers with sellers. Expedia plays that role too — but when you search for vacation options, some of the top results are paid ads. And more platforms could start doing that:
Spotify's platform for music discovery could start making money by promoting artists that pay for it.
Apple's podcast store could make $$$ the same way.
Tweet us your own ideas for potential Browsing Billboards @RobinhoodSnacks.
Nov 4, 2019 Uber stock sinks 6% because it's on pace to lose $8B this year Read More Losing $543K per hour... Think about that. One time you lost nana's birthday check and you were inconsolable. Uber just told investors everything about its 3rd quarter, but it's hard to not focus on the $1.2B it lost. After losing $5B the previous quarter (that was higher because of one-time IPO costs), Uber's on pace to lose $8B this year. $8 billion.
It's Uber vs. Everybody... Investors piled into Uber for years with the hope it would become like Amazon — an unstoppable giant — but for transportation. In reality though it has enemies. Everywhere:
Competition: Lyft rose from the ashes of Uber’s scandals. Delivery apps are all over your phone. And self-driving car companies could unleash self-driver not-Uber fleets before Uber.
Politicians: California's new law could make Uber even more unprofitable by forcing it to pay drivers actual wages and benefits.
Restaurants: Yup, spots like Bareburger get 20% of their sales from delivery apps — but they're fed up with paying away 15% of those sales as fees to Uber Eats and its delivery rivals. The CEO calls the apps "a necessary evil" that he hopes to be rid of by next year.The Takeaway:Uber prefers you look at its sales growth instead... If you do, you're impressed by rides (revenues up 20%), Eats food delivery (+71%), and Freight (+81%!). Here's the problem: Uber's paying for all that growth. Competition forces it to dish out discounts and promo codes Oprah-style. So it's pledged to change things... in 2 years:
2021: That's the magical year when Uber CEO Dara Khosrowshahi says it'll become profitable. Funny — that's also when Lyft said it will stop destroying money and start making it, too. Oct 4, 2019 The 4th Uber app has arrived: Uber Works is the Uber for temp workers Read More Who's going to make the "Uber for staffing"?... Turns out it's Uber. With deep profitability problems in its core ride/food delivery apps, Uber hopes this becomes its profit puppy: Uber Works. The new app is the essence of gig — connecting humans who want work with people who need work. It launched in Chicago, and here are some scenarios you could Uber Work for:
🍽 Events: Cook, bartend, set-up/clean-up. Uber Works finds the restaurant, bar, or party that's desperate for side-hustlers.
📦 Warehousing: Help with inventory, shipping, or packaging. Uber Works connects you with a factory in need.
Staffing is hard... and it's dominated by local or industry-specific firms sticking people like Ryan Howard into a role at Dunder Mifflin (and charging a fee for it). Uber Works replaces that with its app's secret algorithm to balance supply with demand through dynamic (aka "surge") pricing. The pricing in this case being an hourly wage.The Takeaway:Uber's got an "independent contractor" problem... but Uber Works probably won't face it. California recently passed a law requiring Uber to treat drivers as full-time employees with benefits (benefits = expensive.). With Works though, Uber is purely a middleman, taking a fee from a variety of businesses that find gig workers via Uber. It's a cleaner transaction with fewer legal question marks. Sep 26, 2019 Endeavor cancels its IPO the night before it was supposed to happen Read More They're supposed to be celebratory... IPOs feel like graduation or getting your Instagram account verified. But 2019 — the year of the tech IPO — has been the opposite. Talent agency Endeavor just canceled its IPO less than 24 hours before it was supposed to happen. This is the entertainment company that repped Denzel and owns half of Ultimate Fighting Championship.
There are fewer rainbows out there for unicorns lately... That's why Endeavor dipped out. The share price that a company IPOs at matters to its existing investors — they own stock in the private company and want to eventually sell once it becomces public. Here's what's happened to stocks lately once they IPO:
Uber & Lyft are down 31% and 43% as investors wonder if they'll ever become profitable.
SmileDirectClub and Slack both had painful starts, down 36% and 42%.
Peloton is only 1 day in but already sweating.
WeWork is a whole different category — Its valuation was $47B the last time it raised money from private investors, and could be re-priced down to a $15B valuation (or less) when/if it IPOs.The Takeaway:Private markets were hype, public markets are reality... In 2017, SoftBank scrapped together $100B from insanely wealthy people, companies, and countries to invest huge sums in startups. The venture capital firm gave Uber, WeWork, and Slack gigantic checks to fund their growth, also driving their valuations up. But Wall Street's been more skeptical, slashing those valuations by hammering their stock prices. Now unicorns might wait to IPO until their chests grow profit hairs. Sep 12, 2019 California disrupts the disrupters, classifying Uber/Lyft drivers as "employees" Read More Flashback to Uber's IPO in May... Deep in its filing paperwork (aka "S-1"), Uber listed a nightmare policy scenario under the "risks" section:
“Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.”
That. Just. Happened... California's AB5 law (brutal name) passed late Tuesday to go into effect Jan. 1, pending the governor's signature (he said he'll sign). It requires Uber, Lyft, and other gig icons to grant full employee benefits, pay, and anniversary balloons to their drivers — that's instead of the 1099 form drivers currently get as independent contractors.
Uber's response = Not doing it... This seems destined for a legal battle. Here's how this law would be good and bad for the world:
The Good: Uber drivers would receive reliable (and probably higher) pay, benefits, and the opportunity to unionize.
The Bad: Uber claims it would need to schedule driver shifts, stealing their "drive when you want" freedom. The higher overall driver pay would also probably translate to higher prices for you and us riders.The Takeaway:Don't forget Uber & Lyft's dirty little secret... To transition from hugely unprofitable to actually make money, they've got 3 options:
Pay drivers less (not happening with this new law)
Increase prices for Uber rides
Replace drivers with self-driving car technology
#2 could happen because of this new law. The pressure to get to #3 will be even greater. Sep 10, 2019 Uber invests big in "Freight" — the Uber for pallets of stuff in tractor-trailers Read More Freight just brought sexy back... Uber wants to make trucking its next profit puppy. Just like ride-hailing, Uber Freight connects drivers (of 18-wheelers) with riders (Budweiser's beer kegs or Land O'Lakes' stacks of butter). Uber just announced that Freight is its fastest-growing business line, so it's investing more in a big way:
Cash: Uber's Freight line will get a $200M investment each year.
Personnel: Uber's hiring 2K people at its future 2nd-biggest location (and the only other one besides SF that gets engineers) — Chicago = Freight HQ.
Perks: To sign up new truck drivers to the gig-for-cargo platform, it's offering discounts on gas, free tires (but seriously — tractor-trailers need 18 of 'em), and cash bonuses.
Uber's spending money to stop losing money... It lost a gargantuan $5B last quarter (the last 3 months), and loses $3.36 each time someone delivers an Uber Eats meal. It's funneling money away from marketing (it laid off 400 this summer in that dep't) and toward this growing bet.The Takeaway:Freight has to be different than the rest of Uber... Uber's 3 non-Freight divisions — rides, bikes/scooters, and Eats — all face copycat competition. Without barriers to entry to creating an app platform, Lyft, DoorDash, and others keep prices low and competition fierce. Uber must find a way to prevent an Amazon Freight or Lyft Trailer from becoming a thing. Aug 20, 2019 Apple's Goldman Sachs credit card is now available for all (iPhone-owning) Americans Read More "Hover"... That's the non-swipe verb Apple envisions you motioning with your new Apple Card, the digital-native payment method it announced in May last year. Welp, it's finally available to all (in the US), and you apply through the Wallet app on the iPhone. If you're approved, you get:
Hoverability: Apple Card's natural habitat is Apple Pay, the contactless payment method built into the Apple Wallet app.
Privacy: The card doesn't even have a number. It's witness protection program approved, and totally encrypted, generating a new digital number with every transaction.
Rando coolness: When you first get your card, it exists on your phone in a blank-slate white hue. Then it changes color based on what you buy (restaurants = orange).
3 is for me... People ❤️ points. So Apple's giving you 3% cash back when you make Apple purchases or pay for an Uber. If you pay through Apple Pay on your iPhone, you get 2% cash back. But there's also a physical brag-worthy titanium card — Apple only gives 1% cash back when you pay non-digitally. It's subtly incentivizing iPhone-dependency via points.The Takeaway:Apple Card is access to iPhone Nation... CEO Tim Cook wants Apple Card to become a status symbol. He knows that, and is offering up membership to what we're calling "the 3% Club": merchants that will offer Apple Carders 3% cash back. Here's why we expect more companies to ask Apple to join the deal and exclusively accept Apple Card:
What merchants pay: That cash back you get comes from somewhere — the store pays it.
What merchants get: The loyalty from iPhone Nation — if you get 3% off every Uber ride, are you really gonna take Lyft?
Aug 7, 2019 Lyft shares jumped, but 2 other stories revealed its "de-wokeing" Read More "Use code EARNINGS to get 15% off your 1st ride"... Lyft jumped on word that revenues surged 72% to a new record high. But because those discount codes it dishes out to drive growth are getting expensive, we noticed its growing loss.
Last year’s 2nd quarter = Lyft lost $179M
This year’s 2nd quarter = Lyft lost $644M
The good news: That loss was huge, but Lyft thinks 2019 is its "peak loss" year — losses will shrink from here on out (and hopefully/eventually become profits).
But then we noticed 2 other stories... and both looked less good on Lyft. Together, they highlight a couple major issues that de-woke Lyft's previous wokeness.
It's not handling harassment well: If a driver bothers you, Uber's got a panic button that takes just 1 click to report – The Washington Post notes that it takes a bunch of clicks to reach Lyft's safety team (and their responses haven't been satisfactory).
Congestion — it's a problem: Uber and Lyft commissioned their own report on traffic. Turns out a whopping 14% of vehicle miles traveled in San Francisco are ride-hails — and ~40% of driver time overall is spent cruising around without riders.The Takeaway:Lyft had one advantage over Uber... Reputation. Uber owns more of the ride share market, offers more services (like Uber Eats), and has more big bets (like UberFreight). Lyft had a #DeleteUber reputation advantage that helped it gain market share last year. It can't afford to waste that. Jul 23, 2019 Uber launches a membership service fueled by its core advantage over Lyft Read More Hungry and lazy?... There's an app for that. Uber is piloting a membership service in San Francisco and Chicago. For $24.99 a month, users will get a fixed discount on each Uber ride, free delivery on Uber Eats, and 30 minutes of JUMP bike-share and scooter rides per day for free.
Variety gets 5 stars... Technically, Lyft has a monthly subscription too (an unlimited pass called "All Access"). But Uber's competitive advantage is all the logistics options for a variety of daily needs packed into one monthly charge. Lyft doesn't have that. Need to drive far? Uber's membership covers it. Just need to scoot around the corner? It's covered. Want a gyro STAT? All included.The Takeaway:"Prime-ification" is happening... Amazon brought the club concept to a mass audience with $119/year (or $12.99/month) Prime. Uber's pulling the same move because it knows that once you commit, you're a sticky customer. Already paid the month's Uber membership fee? You won't even open Lyft (unless Uber's surge pricing is crazy). Membership programs thrive on that guilt — and the recurring, consistent revenue they drive may get more business models Prime-ifying.
PS: What will get "Prime-ified" next? Tweet your guess @RobinhoodSnacks. Jul 17, 2019 Domino's earnings reveal cracks in its delivery dominance Read More Emphasis on the "no's"... Shares of Michigan-based Domino's (mozzarella is stretchier in the Midwest) fell 9% on word that sales growth slowed to just 3% for restaurants in the US (it was even worse internationally). Domino's tech-savviness helped it get pizza to people faster and shot the stock up over 3,300% in just 10 years. But now new technology is attacking it.
"Aggressive activity from 3rd-party delivery aggregators"... The Domino's CEO gave DoorDash, Postmates, Uber Eats, and GrubHub the Voldemort treatment — He dropped "3rd-party aggregators" 19 times in the earnings call with analysts yesterday. Instead of even mentioning the Big Four food delivery apps, he bemoaned the promotions they're all giving away to entice orders.
The Big Four have democratized access to delivery from McDonald's to Chipotle to Sweetgreen to Shake Shack to a bodega.
Domino's is trying to be more like the Silicon Valley darlings — it just added "track my pizza" with GPS.
The Takeaway:Domino's isn't a pizza company — it's a delivery company... And the delivery competition is on its A-game. In the past, we were typically limited to pizza or Chinese when it came to staying in and ordering delivery. Now, the Big Four delivery apps have deconstructed that, and Domino's faces delivery competition from any place with a stove and plastic to-go containers. May 22, 2019 A leak just revealed "Uber Eats Pass" (aka unlimited free delivery) Read More Sauce on the side... forever. Turns out Uber's food delivery app wants a seat at the subscription table — Uber Eats is working on unlimited food delivery for $9.99 a month. “Uber Eats Pass” will waive the typically 15% delivery fee on your evening enchilada ritual, but still require that order minimum. And Uber Eats already cooks up good numbers:
It makes up 13% of Uber's total revenues (according to the IPO paperwork).
And while ride-hailing revenue grew 33% for Uber last year, Eats surged 149%.
Now Uber Eats is the biggest food deliverer on Earth outside of China.
One thing tastes better than this story... It's how it went down. Jane Manchun Wong is a “reverse-engineering specialist”: She looks through code hidden in apps, puts two-and-two together, then tips off TechCrunch with a juicy story. She discovered not-yet-announced images for "free delivery" and the other deets that make up this story.The Takeaway:Subscriptions are all about “guilt” loyalty... Competitors DoorDash and Postmates already have the same monthly commitment passes. But if you're an Uber Eats Pass-er, you'd hate yourself wasting money on delivery fees with other apps. Loyalty leads to habits — And once Uber Eats enables your Monday maki roll routine, Uber could raise prices in the future.