Postmates lost almost a billion dollars

Uber Postmates Combo Could Be a Raw Deal:

The filing gave an update on Postmates's losses, which have continued to grow -- albeit at a slower pace than last year. This is despite solid demand for food delivery amid the pandemic. According to the filing, Postmates had an accumulated deficit of $929.3 million as of June 30. Compared with the previously reported deficit as of March 31, that means Postmates lost more than $32 million in the second quarter at the height of the pandemic, despite Uber reporting that Postmates saw an implied $1 billion in gross bookings in the period.

Couldn't happen to a nicer couple, since anything with the taint of Uber on it is literal blood money.

But this does also emphasize that the grift powering these companies has little to do with "exchanging money for goods and services", but is a far more esoteric con. So while it's fun to say "look at how much money they are losing! Look at how bad they are at all the things!", that is failing to follow the money. Someone got richer while someone else set a billion dollars on fire. The Invisible Hand is pleased.

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13 Responses:

  1. mhoye says:

    If it was stuff, we'd recognize this as a dumping attack on a specific economic sector. But somehow, because it's a software backed service we just... don't. Well, "we" - the people who can't set up their own email but are still making economic policy these days.

  2. Dude says:

    Woe unto Uber. Now, they can only run those bullshit pro-Prop 22 spots every 30 minutes rather than every 15.

    (Seriously, Fuck Prop 22 and several other bullshit pieces that would give these assholes more power.)

  3. The most innocent part of me wants to believe that August 23 of 1994 is looping and when the stream resumes all the accounting books will reconcile just fine.

  4. Anonymous says:

    Someone got richer while someone else set a billion dollars on fire.

    The logistics of on-demand food delivery are more expensive than people think (and more expensive than customers would be willing to pay for if these companies were to start trying to break even, let alone turn a profit). If there's a theory that the money is going anywhere else, I'd be curious to hear it.

    Their expenses for driver payouts and on promos are almost definitely more than can be justified by how much they're actually bringing in. They may have lost tens of millions on exec salaries or other expenses that could have been tightened up, but they (probably) didn't lose a billion dollars to it.

    • jwz says:

      If there's a theory that the money is going anywhere else, I'd be curious to hear it.

      Missing the point entirely. These money-"losing" companies continue to exist because someone is making bank off of them, and someone else is getting fleeced.

      Traditionally, that someone else is the taxpaying public. But sometimes it's merely less-bright billionaires.

      • Kyzer says:

        The people "making bank" are drivers and other ancilary employees. Investors with deep pockets and large appetites for risk hoping to disrupt the market are "getting fleeced".

        In the long list of reasons why Uber is bad, "they pay their staff a fair wage" is not one of them. "They can sustain enormous losses while they try to ruin their competitors" is. "They could permanently distort markets" is.

        • jwz says:

          "The drivers", LOL no. It's a massive transfer of wealth from investors to company executives, and there are probably other significant aspects of the grift as well, but this ain't no WPA program.

          In the long list of reasons why Uber is bad, "they pay their staff a fair wage" is not one of them.

          That's true, it's not one of the reasons they're bad, as paying their drivers fairly is certainly not something anyone has ever accused them of doing.

      • Anonymous says:

        Missing the point entirely.

        Yeah, but not. There wasn't any confusion that you were saying that earlier; it was clear who the "someone else" is. (Side note: even in the case of billionaires being bamboozled, why are we supposed to care?)

        My point was to ask, "Who is the 'someone'? Is there even one?". Aside from the salaries of the people operating the unsustainable machine, there's probably not anybody making any money on this. Someone has to cover the delta between what customers are going to pay for an order and what it costs to actually get the food to them. Uber is almost definitely _actually_ losing money doing that.

        • jwz says:

          Side note: even in the case of billionaires being bamboozled, why are we supposed to care?

          No reason at all, that's nearly the test case for schadenfreude. I just think it's worth noting that any of these narratives framing companies like this as "losing" so much money year after year are more complicated than that: someone's still always winning. If not, they would stop.

        • Glaurung says:

          You appear to be unacquainted with the “Investor Storytime” business model.

          “Investor storytime is when someone pays you to tell them how rich they'll get when you finally put ads on your site.” Or in this case, finally crush the competition and achieve the scale needed to be profitable, or whatever line of BS Uber has been waving around. The investors lose tons of money. Meanwhile the startup owners get to take home munificent salaries and pay their coders a competitive wage.

  5. J. Peterson says:

    The Verge, from last year: Uber lost over $5B in one quarter, but don't worry, it gets worse.

    A whole generation of teens & college kids grew up expecting a ride/meal was a few taps away. It'll be interesting to see what happens when those services finally drown in red ink.

  6. db48x says:

    It's a minor point, but of course the money wasn't burnt. It was spent on things. Maybe useless things, or expensive things, or the wrong things, but they did get things of value for the all money they spent. Pretty bad for their investors either way though.

    Some food delivery companies have managed to make a profit, but maybe it still requires complete vertical integration (think Pizza Hut and so on). I also wonder how much Uber and the rest end up paying Google for things like Google Maps. I just checked, and while several large pizza chains do have an app the screenshots don't show off any maps. Perhaps they don't like the cost.

    BTW, your link has an errant space in the middle of it.

    • Nick Lamb says:

      Fire is something "of value" too. Burning money is not an efficient way to get fire though. There's a weird aversion to noticing that executive management are frequently incompetent. If tech executives had an entry level job at a corner store, most of them wouldn't last six months, but as executives they can write off one mistake after another as unforeseeable, well, I guess my plan didn't work out, we'll have to fire some of the staff to hit our projections. I must be good at this though, because if I wasn't how can you explain why I was given this job and paid so much money to do it? And while we're on the subject, since I was so effective at totally failing to make any money while firing lots of employees, I think I deserve a raise.

      Uber is a "success" if the people behind it get rich. It's a failure if they don't. Shareholders lose everything? Not a problem. Riders stranded, or raped, or murdered? Not a problem. Employee's lives destroyed? Pedestrians run down? Honest politicians (statistically there must be some even in America) torn down? None of it matters so long as senior management get the money and power they desire.

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