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Uber to cut down on costs, treat hiring as a ‘privilege’: CEO email

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UberIn an email to employees obtained by CNBC, Dara Khosrowshahi stated that the CEO will reduce spending and concentrate on making the business more lean in order to combat a “seismic shift in investor sentiment.”

Khosrowshahi stated in an email that he had sent late Sunday, “After earnings I spent several days meeting with investors in New York, Boston,” We must react to the seismic shift in market sentiments.

Technology stocks are available plunged sharplyThe highs from the coronavirus epidemic are being followed by investors worrying about the end of an era that saw low interest rates and a historical bull market. Investors are worried about the possibility of a end to an era of cheap money that defined a historic bull market. Nasdaq CompositeLast week was its fifth consecutive week in declines, the longest losing streak of weeks since 2012.

Khosrowshahi announced that Uber will reduce spending on marketing and incentive and make hiring a priority to combat the shifting economic sentiment.

Uber boss said, “We must make sure that our unit economics works before we get big.” “The most inefficient marketing and incentive spending will be cut.”

“We will consider hiring a privilege. We will carefully choose when and where to add staff. “We will have a greater focus on costs all around.”

This makes it the most recent tech company to warn about a slowdown of hiring. Facebook told employees last week that it would slow down hiring. stop or slowRobinhood has a rapid pace for adding senior or mid-level roles. cutting about 9% of its workforce.

Khosrowshahi explained that Uber’s new focus will be on increasing profitability on a cash flow basis, rather than on adjusted EBITDA (earnings after interest, taxes and amortization).

Khosrowshahi noted that while we have made significant progress on profitability and set a target of $5 billion Adjusted EBITDA by 2024, the objectiveposts have moved. Now it is about free cash flow. “We can and should get there quick.”

Uber revenues increased more than twice to $6.9 million in the quarter’s first quarter. The reason for this was that ridership rebounded after Covid restrictions were relaxed. To boost its pandemic sales, Uber heavily relied on Eat Food Delivery Unit.

Uber still posted a $5.9 billion lossIn the period, it cited a slump its equity investments.

He stated that “we are servicing multi-trillion-dollar markets but it is not relevant if the market size doesn’t translate to profit.”

Khosrowshahi explained that while investors may be “happy with Uber Eats’ growth, they should “shouldn’t be growing any faster.” Khosrowshahi said that the freight business was a potential growth area and “needs” to grow.

Ending the note, he called out to his staff with an encouraging call: “Let us make it famous!” GO GET IT!”

Below is the complete letter.

Uber team —

Following earnings, I spent several hours meeting with investors in New York City and Boston. The market is going through a significant shift, and it’s obvious that we must react. The meetings were very clarifying, and I want to share my thoughts with you all. As you read them, please bear in mind that while investors don’t run the company, they do own the company—and they’ve entrusted us with running it well. While we have the power to decide the strategy and take the final decisions, it is our responsibility to ensure that the company serves the long-term interests of shareholders.

1. Investors look for security in times of uncertainty. Although they recognize we are the largest company in each category, they do not know what that value is. To channel Jerry Maguire’s style, they need us to give them money. While we’ve made great strides in profitability terms, with a target of $5Billion in Adjusted EBITDA for 2024, our goalposts have moved. It’s now about cash flow. It is possible (and necessary) to get there quickly. Some companies will not be able to see the end of their careers and remain stuck in the past. Many of these companies will fail. Uber’s average worker is just over 30 years old, which means that you have experienced a prolonged and unimaginable bull market. It will take a completely different approach to the next period. Don’t worry, though. We’ll meet you at the right time.

2. Investors now realize that we’re a different beast than Lyft or other ridesharing platforms. They are thrilled by the speed of our innovation, how rapidly we are rebounding and big growth opportunities like Hailables, Taxi, and Hailables. They acknowledge we have won, but they aren’t sure what the size of the prize is. The questions they ask range from “Have you ever made money on demand transport?” to “Has anyone else made money in this industry?” To “Ridesharing is a long-standing phenomenon, so why aren’t other people making money?” They can see the TAM, but don’t get how this translates into substantial profits or cash flow. We must show them.

3. Delivery’s pandemic success has been praised by investors. They see us as a better pandemic winner than other winners. This was surprising to me as Delivery needs to grow faster, which is something I admit I wasn’t expecting. I was asked two main questions: “Is delivery a profitable business?” and “What happens if we enter a recession?” The primary questions were: “Is Delivery a good business and why?” And, “What will happen if there is a recession?” Both of these questions must be answered with unquestionable strong results.

4. Freight is a favorite topic of investors who have asked. But, only 10% asked. The freight industry needs to grow so investors can see the value of it and feel as passionate about it as I do.

5. Making trade-offs is part of meeting the current moment. This means that initiatives that need substantial capital are likely to be slowed down as the hurdle rate has increased. It is essential that we ensure the economics of our units work before going big. Marketing and incentives that are not efficient will be cut. The hiring process will be treated as a privilege. We’ll also take care to plan when and how we increase headcount. Our cost control will be more rigorous.

6. The Power of the Platform has been demonstrated, and it is this structural advantage that makes us stand out. You know that our strategy is straightforward: get consumers interested in Mobility or Delivery and encourage them to explore the other. All this tied together by a strong membership program. This is a clear advantage, however we need to demonstrate the real value of our platform in dollars. Market size does not translate into profits, even though we are servicing multi-trillion dollars markets.

7. All of this while delivering an exceptional and unique experience for both consumers and employees, is what we have to do. It doesn’t matter whether someone book rides to go on a summer getaway with their friends or uses Uber Eats as a way to get groceries and dinner for the kids. We must make each interaction great. Uber is a place where you can earn. In response to this pandemic, we became earner-centric like never before. We are innovating for earners, thinking deeply about their experience, and putting ourselves in their shoes—literally—by driving, delivering and shopping ourselves. People who are looking to make flexible incomes and have seen hundreds of advancements in this field, now turn to Uber to get the best of both worlds: our size, diversity, and dedication to treating people with respect.

We will win. I have never felt more sure. It will require the very best of us: hustle, determination, and innovation that can change categories. We will have to slow down and sprint forward in some areas. It will be necessary to accomplish more with less. It will be difficult, but epic. Be aware of who you are. Uber is a unique company, which changed the course of history and became an iconic word. Let’s start the next chapter together, as #OneUber.  

GO GET IT!

Dara

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