Uber S-1 - <AUTHOR> https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm <comment><USER2> People here seem to think that Uber/Lyft do not have any competitive moat. I disagree. What we seem to forget is that just because a VC can burn boatloads of money to capture ridesharing market from Uber/Lyft doesn't mean that they would. From a game theoretic POV, Uber and Lyft have signaled that they're ready to fight for survival in markets they are established in. Unless as a startup founder you can demonstrate that you can achieve lower cost structures than Uber/Lyft, no VC will fund their rapid growth (small offerings will still find a niche, assuming they don't get gobbled up). Uber/Lyft do have a VCs- will-not-race-to-the-bottom-with-them moat, and tomorrow they might as well raise their prices to turn profitable. Their biggest challenge is Waymo and SDC because if a competitor as significantly lower cost structure, all bets are off.

<comment><USER3> > no VC will fund their rapid growth (small offerings will still find a niche, > assuming they don't get gobbled up

And yet Grab and Didi drove Uber out of South East Asia and China, Ola is giving Uber a run for its money in India and now GoJek in turn is challenging Grab. In my recent trip to Tokyo we were mostly advised to take regular cabs Vs Uber in contrast to a year ago. That's literally half the world where they're getting out competed.

When reasoning doesn't line up with facts, there are usually flaws in the logic. One possible flaw it turns out is that well off globe trotters or even people who frequently travel across cities in a country and would love to use the same app everywhere likely form a small % of total cab trips. Majority of trips are just local trips by an area's residents. So locally, majority just goes with whoever offers better service and relevance. Cutting Price can trump over these but by going public, bottom line became a lot more important to Uber and Lyft - so this isn't likely a viable strategy. Another possible flaw is that the compute required to support this is likely commoditized and there's not likely as much competitive advantage in data.

So it's going to be interesting...

<comment><USER4> They did not get "out competed" in china, a country where competition has nothing to do with success. Likewise in Russia. Grab is the only company to out compete Uber so far.

<comment><USER5> Ola vs Uber in India is so similar in terms of experience that I literally open the first app that's on my screen.

There is no way to differentiate in this market. The only thing that would make me switch is a guarantee of a good driver, but that would just raise the costs absurdly.

<comment><USER6> There is actually -- both the companies have certain cities where they seem to have many more drivers than the other. Due to this, when I'm in Bangalore, I prefer Uber, but when in Calcutta, I prefer Ola.

</comment></comment></comment></comment></comment><comment><USER7> Note:

\- Expected to be teh largest IPO this year in the US.

\- 10th largest all time

\- trying to raise around $10B

\- 2018 Year Ended Revenue $11.27 billion

\- 2018 Year Ended Net Income $997 million

\- 2017 Year End lost $4.03 billion.

\- 10 billion trips in September 2018, up from 5 billion in September 2017

\- Gross Bookings From Ridesharing $41.5 billion in 2018

\- Revenue From Ridesharing Products $9.2 Billion in 2018

\- List under UBER, good ticker!!

\- 29 banks listed as underwriting the IPO, for those of you wondering, yes that is alot. Like 20+ more than a typical IPO.

From Bloomberg:

\- 2018, Uber's operating loss totaled $3.03 billion, however it technically turned a profit in 2018, generating $997 million in net income. That's thanks to a $5 billion "other income" benefit.

Other Income is defined as:

\- Interest income, which consists primarily of interest earned on our cash and cash equivalents and restricted cash and cash equivalents.

\- Gain on divestitures, which consists of gain on sale of divested operations.

\- Unrealized gain on investments, which consists primarily of gains from fair value adjustments relating to our investments such as our investment in Didi.

\- Foreign currency exchange gains (losses), net, which consist primarily of remeasurement of transactions and monetary assets and liabilities denominated in currencies other than the functional currency at the end of the period.

\- Change in fair value of embedded derivatives, which consists primarily of gains and losses on embedded derivatives related to our Convertible Notes.

\- Other, which consists primarily of changes in the fair value of warrants and income from forfeitures of warrants.

\- Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:(

Biggest Surprise to me:

\- Uber Eats comes in at $165 million for Q4, for comparison Ride sharing generated a total of $2.5B in net revenue, the rest being ride sharing.

\- So Uber is not really all that diversified in terms of ride sharing vs other, they are essentially Lyft in more markets.

<comment><USER8> > Lyft now at $61/share, ouch, there just is no other way to put it. THey > pulled a lot of financial engineering tricks to boost their IPO price and > well the results speak for themselves:(

I don't understand why this is seen as a negative. An IPO is a share issuance — the higher the price per share, the more money they receive in exchange for the same percentage of the company. Post-IPO "pops" represent money left on the table, effectively a transfer to the high-dollar investors with connections to the underwriter who can buy at the issue price.

<comment><USER9> It's a good thing for Lyft-the-corporation but a bad thing for anyone who bought into the IPO.

Any sort of financial engineering tricks that goose the accounting numbers without affecting the long-term health of the business are basically a transfer payment from people who buy in at the inflated price to entities who sell at the inflated price. It's rational for the company to try to pull them; it's also rational for prospective shareholders to refuse to take the other side of the trade (at least until the price corrects to the point where the true fundamentals make it worth it). In today's markets, you can always find someone irrational.

<comment><USER10> Think about morale at Lyft. You have employees locked in who cant sell for first couple of months. They are seeing their networth plummet everyday.

<comment><USER11> Should've bought options to hedge.

<comment><USER12> It's against any competently worded lockup agreement.

""Derivatives" is sort of a vague term, and there is a persistent folk belief that they have magic powers, that any legal or financial problem can somehow be solved by doing a derivative."

[https://www.bloomberg.com/opinion/articles/2019-04-08/lyft-i...](https://www.bloomberg.com/opinion/articles/2019-04-08/lyft- is-angry-about-lockups)

<comment><USER13> Lyft's common stockholder market standoff agreement doesn't bar hedging. See the s1.

<comment><USER14> But employees are forbidden to hedge. Source: am one.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER15> Feels more like Uber and Lyft reached a point where they cannot raise private capital anymore and so jumped onto the public markets to fool random investors. If they cannot be profitable now, what makes them think they will be profitable with SDCs?

I challenge the fundamental premise that SDCs will make them profitable. There is no stickiness to their business model. Moving on to another ride sharing service is frictionless today. Most people I know use both Lyft and Uber. So if tomorrow SDCs become popular and offer a cheaper rate, people will move to them in droves. Nothing stopping them. We know Uber and Lyft are way behind on SDCs compared to Google on that front. It also looks like GM and Ford could there before these two. So what makes them a good investment either in the short or long term?

<comment><USER16> Aren't most index funds, almost by definition, required to buy their shares? If Vanguard owns a piece of every listed company, they're going to buy Uber at pretty much any price, right?

<comment><USER17> >Vanguard owns a piece of every listed company

I doubt this is true, at least not across their primary stock market index funds. For example, VTSAX only holds about 3500 stocks [0].

I don't know how the fund usually treats new, large IPOs, but I highly doubt that they would just blindly buy it at "any price"

EDIT: I just checked the holdings of VTSAX [1] and VGT [2], neither holds Lyft.

[0] - [https://investor.vanguard.com/mutual- funds/profile/portfolio...](https://investor.vanguard.com/mutual- funds/profile/portfolio/vtsax)

[1] - [https://investor.vanguard.com/mutual- funds/profile/overview/...](https://investor.vanguard.com/mutual- funds/profile/overview/VTSAX/portfolio-holdings)

[2] - [https://investor.vanguard.com/etf/profile/portfolio/VGT/port...](https://investor.vanguard.com/etf/profile/portfolio/VGT/portfolio- holdings)

<comment><USER18> The link for VTSAX says the portfolio data is current as of 02/28/2019, which was before Lyft's IPO (3/29/19).

<comment><USER17> Good catch, guess we'll see when they update.

</comment></comment></comment></comment></comment><comment> tom-_- The cost of entry into this space is much greater than I think most people realize. It's not "building an app". It's building a balanced, efficient marketplace.

This means complex matching, pricing and routing algorithms that have been developed for almost a decade. It's also about working with regulations at the city level and building a reliable labor force of contractors to supply the marketplace in every new city before the launch date.

There is so many experiments and tweaks to ensure that both supply and demand side remain properly incentivized, not to mentioned fighting deeply entrenched Taxi companies from city to city, that I'm surprised Uber and Lyft have gone to IPO so quickly, other than for cash raising.

<comment><USER19> I disagree. [http://www.rideaustin.com/](http://www.rideaustin.com/) was launched in Austin a couple years ago when Uber and Lyft were temporarily kicked out of the city. The app had some growing pains but now I use them whenever I can in preference to Uber and Lyft because they pay their drivers more. If Uber and Lyft suddenly went away Ride<CityName> could easily pop up all over.

Of course, Uber and Lyft right now ARE so big because of all the advantages you mention, but a lot of that is still due to boatloads of VC money that allow them to operate unprofitably.

<comment><USER20> How is that a counterexample when they started when Uber and Lyft couldn't operate? Are there examples of local services that sprouted up and had to compete with Uber and Lyft and got off the ground?

<comment><USER19> You are implying an argument I did not make. I was replying to the statement "The cost of entry into this space is much greater than I think most people realize. It's not "building an app". It's building a balanced, efficient marketplace." My point is that building a balanced, efficient marketplace is actually not that difficult. The fact that Uber and Lyft can kill the competition now by burning through multiple billions in VC funding is irrelevant to that.

In the end, I think the ride-sharing business will look a lot like the airlines: lots of people traveling, but not a particularly great business.

<comment><USER21> Most of the "cost of entry" \- building the marketplace, approval from government etc - has already been paid by the earlier players.

</comment></comment></comment></comment></comment><comment><USER22> Their falling growth is the biggest concern for investors.

2016-7: 100% revenue growth, 105% trips, 51% MAPC 2017-8: 40% revenue growth, 40% trips, 33% MAPC (MAPC = active users)

These are sharp drops in the growth rate.

The quarterly revenue data is more worrying - December Quarter 2018 was up only 22% over the previous year. (Page 121) On Page 126 we see that even that revenue increase was subsidised by excess driver incentives, and netting that out the growth was only 17% year on year.

They have tightened things and their adjusted yearly EBITDA loss fell by $800m to $1.65 billion, but has this come at the expense of growth? Or has the growth simply become too expensive to chase? Or are electric mobility devices taking away the shorter distance rides?

And they had a loss of $890 million in the last quarter, and it's hard to see tangible evidence of margin improvement. (P128)

A valuation today of, say, $100 million needs to have net income of, say, $10 billion to be a very real probability relatively soon, or of one much larger later.

At, say, a 20% net margin and 40% growth $10 billion income would take 5 years. But that is a courageous assumption about the growth rate, given the above, and it also assumes significant margin improvement, which will be hard if the marketing spend continues, which itself is required for growth. And pricing is hard because increased prices simply move customers onto other platforms. This is not a winner take all market.

For the model to work Uber Eats growth needs to be maintained for a while, and that's possibility, although I suspect their margins will be sharply squeezed as big brand chains respond. (e.g with Mobi2Go and 3rd party delivery agencies they can roll their own)

</comment><comment><USER23> Interesting S-1. I was actually kinda bearish on Uber in terms of scale for future growth/profit opportunities, compared to Lyft, but now I feel like Uber has the upper hand.

Yes, profitability is a big piece, but Uber is more diversified, in that they have other rev streams - Food Delivery and Freight, which they are ramping up (Focused on growth for now).

Also, by way of partnerships/equity, they have stakes in a lot of different market leaders in other markets/geographies. These companies are further diversified in terms of other rev streams (payments, commerce, food delivery etc).

Not sure how much of that is captured in the valuation.

SDCs (L5) are definitely a ways off in terms of becoming ubiquitous. Companies are doing fixed route or city/geo-fenced testing and for any of these companies to actually get to Uber's scale will take a long time and maybe Uber can acquire/partner with one/more of these before that happens.

Also, if we consider ride sharing as a commodity, Uber benefits from economies of scale as opposed to other competitors who may operate in smaller regions/markets so that's also going in their favor.

All of this is to say, they are definitely focusing on growth for now (which there is a lot of opportunity for), but at a certain point they could probably start becoming profitable by either reducing costs or ramping up prices (in tiny percentages) and still be better than the alternative.

</comment><comment><USER24> Wow those are some heavy risk disclosures:

We have incurred significant losses since inception, including in the United States and other major markets. We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.

Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.

If we are unable to attract or maintain a critical mass of Drivers, consumers, restaurants, shippers, and carriers, whether as a result of competition or other factors, our platform will become less appealing to platform users.

We may fail to develop and successfully commercialize autonomous vehicle technologies and expect that our competitors will develop such technologies before us, and such technologies may fail to perform as expected, or may be inferior to those developed by our competitors.

<comment><USER25> eh, those are more CYA than anything. Yes, these are risks, but thats in plain sight. Its about disclosing all the ways you could fail, however obvious, to avoid a lawsuit. There are lots of scary statements like that in most financials.

<comment><USER26> Yes, but...they are all not even all that unlikely, in this case. This looks to me like "IPO now because this is as good as it will ever get".

</comment></comment></comment><comment><USER27> Just a brief scan and it looks much healthier and diversified than Lyft. Of course far from a perfect business or anything. Their revenue is 5X Lyft's revenue. Doesn't look good for Lyft's stock to be honest.

I wouldn't be surprised if after their first earnings release, Lyft stock goes below 40 USD.

<comment><USER28> They did really well with the CEO they recruited. From the outside, it seemed like he did a really exceptional job profitably growing Expedia.

<comment><USER29> When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

                            --- Warren Buffett

Expedia makes money from advertising (12%), from bookings fees, and from buying blocks of hotel rooms at a discount then selling them for higher prices to their customers (66%). [1]

All of these revenue models are something that is pretty obvious how you make money at. And all of them are very different than crowd-sourcing rides for which it is not clear that the market prices is higher than the cost of providing the ride.

[1] [https://www.fool.com/investing/2017/08/28/how-expedia- makes-...](https://www.fool.com/investing/2017/08/28/how-expedia-makes-most- of-its-money.aspx)

<comment><USER30> To further your second point. A whole cottage industry has sprung up around AirBnB. To me this indicates that the business model for AirBnB is working. There is no similar thing happening w/ uber. Seems to just be a question of who (uber or the drivers) is going to absorb the losses.

</comment></comment></comment></comment><comment><USER31> As always, the most interesting place to start is "Risks to our business": [https://www.sec.gov/Archives/edgar/data/1543151/000119312519...](https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm#toc647752_2)

<comment><USER32> "Our business would be adversely affected if Drivers were classified as employees instead of independent contractors."

They're upfront about it at the least.

<comment><USER31> Yeah the SEC force them to be brutally honest.

"We have previously received a high degree of negative media coverage around the world, which has adversely affected our brand and reputation and fueled distrust of our company. In 2017, the #DeleteUber campaign prompted hundreds of thousands of consumers to stop using our platform within days. Subsequently, our reputation was further harmed when an employee published a blog post alleging, among other things, that we had a toxic culture and that certain sexual harassment and discriminatory practices occurred in our workplace. Shortly thereafter, we had a number of highly publicized events and allegations, including investigations related to a software tool allegedly designed to evade and deceive authorities, a high-profile lawsuit filed against us by Waymo, and our disclosure of a data security breach."

</comment></comment></comment><comment><USER33> Horrible numbers! They cannot get the unit economics to work. In order to make up for that fundamental flaw, they are trying to throw a number of things at the wall(UberEats/UberFrieght/SD/Bikes/etc) and see if something sticks. Each of those other bets seems poor, thus far.

They better focus on getting their original business in shape(call a cab via an app). I would be curious to know if they tried to raise prices in any markets and what the results were. I'm sure they want to know this for themselves and their investors thus far. Has anyone seen data/insights into such experiments by Uber/Lyft/Ola/X/Y/Z?

Given that none of the ride-sharing companies are sharing insights on such experiments, I am going to conservatively assume that these companies have low/no confidence that they can raise prices. Network effects make a good moat. But demand elasticity, substitute products, and competition seem to be dominating over the network effects.

Their original business is a good one. Price and value are way out of sync. UBER at $100-120B is way overvalued. Not touching UBER/LYFT stocks with a long pole at these valuations. Overpriced by 3-4x in my view. When they fall by 70-80%, will buy some.

<comment><USER34> The real problem that I see with using Über in South America is that the service is not improving.

\- The time estimations are way off

\- The app doesn't know one-way roads well, although they should have a lot of training data on the routes I go on

\- They allow drivers haggling for the price by forcing users to pay with cash instead of credit card.

\- The app doesn't know about the road tarifs sometimes, and the driver is not allowed to ask that money from me, which makes an awkward situation

\- Sometimes I'm getting 30 year old cars, which the Taxi companies filter for

I would happily pay more than the current price, but I need more reliable service, which the software could provide. Right now Taxis with all their problems are still competition.

<comment><USER35> I'm curious to know more about ridesharing in South America, specifically the haggle portion. If the credit card was allowed it seems like it would alleviate a decent amount of the issues you named in your post. Why would they disallow credit cards? Is it a cultural problem, infrastructure problem or something else?

The other issues you mentioned seem to be tech related in that as companies that offer navigation services improve their data and services in South America the experience there should markedly improve.

<comment><USER34> I select credit card, but at some places the drivers wait 5-10 minutes, ask where I'm going and write that I should cancel the ride and they bring me for double the cash. At that point I also have to pay for cancelling the ride, and I'm also late, so I have ti accept their offer. They use the Uber messaging system and Uber doesn't catch these drivers (they should just filter for drivers that want users to cancel), although it would be very simple.

<comment><USER35> I had similar experience living in Sweden, where the market is present but ride sharing has not quite penetrated yet. For the most part (90% of the time in my experience) the ride share driver wouldn't try to pull anything like you describe. About 10% of the time I would have an experience very similar to what you describe. Every time I was able to continue the normal transaction, however, by being firm with the driver and insisting that they continue the ride. It's an interesting power dynamic that reflects supply and demand though, because I noticed that if you're calling the ride at a time where there aren't going to be a whole lot of drivers, the driver was a lot more insistent and willing to fight back on the deal set by the rideshare company.

<comment><USER34> It's very interesting, I have been feeling this in Dominican Republic, where people are screwing tourists whenever they can, but Sweden is one of the most advanced countries in the world, where I imagine that this isn't that usual behaviour from most people.

<comment><USER35> Where I stayed there were a lot of poorer people by Sweden standards. This was in Skåne, which is an area well known in Sweden for being a location where a lot of poorer immigrants reside (mostly in Malmö, where I lived). So it actually might be a better parallel to the DR than you would first imagine.

I haven't been to the DR personally, but am well acquainted with Central America in general, having been to several countries. So I would say that this kind of behavior is not nearly as noxious or obnoxious as you might observe in Central America, but is similar enough to draw a decent parallel.

</comment></comment></comment></comment></comment></comment></comment><comment><USER36> My observations

1\. Humans aren't gonna trust SDCs easily. The way I look at it, SDCs would be used only to transport freight for a few years before people can trust it enough for ride sharing. I personally believe that companies should focus on self-driving trucking rather than self-driving cars and pivot into ride sharing after a few years of successful freight transport. People would trust the leader in the self-driving truck industry more than a top-notch but unproven tech company. Let alone cars, as simple as elevators in the buildings were operated by actual people before becoming completely autonomous.

2\. Uber is not just in the USA. SDCs aren't gonna be approved everywhere, even after it becomes legal in the USA. Uber still has access to that market, but Waymo magically can't.

3\. Uber has other verticals too (Uber Eats).

<comment><USER37> > I personally believe that companies should focus on self-driving trucking > rather than self-driving cars and pivot into ride sharing after a few years > of successful freight transport.

Really? I work in the SDC industry and I have the opposite opinion. Unless the self-driving trucks are all driving on dedicated roads (which won't happen) I would not want to share the road with them while they 'experiment'. IMO, the greatest threat is not to the occupants of the SDC but to the other vehicles, pedestrians, and bicyclists.

</comment></comment><comment><USER38> "We generated 15% of our Ridesharing Gross Bookings from trips that either started or were completed at an airport"

This just highlights the need for better public transportation from cities to their airports.

<comment><USER39> Especially arriving, and also departing, I think Uber with "door-to-door" service may be a better answer. Luggage above carry-on would be hard to take on multiple-stop public transportation with a walk, and especially arriving in evening after a tiring travel, I often want to get directly to my lodging and freshen up.

<comment><USER40> As a counterpoint see Heathrow Express in London. Taking taxis in London from a major airport, unless at odd hours, is almost always more expensive and slower even with checked bags.

</comment></comment></comment><comment><USER41> > The Company has from time to time issued nonrecourse loans to certain > employees for the exercise of stock options or for personal use. As of > December 31, 2017 and 2018, the total outstanding employee loan balances > were $21 million and $16 million, respectively. A total of 16 million and 10 > million shares were pledged as collateral to secure the loans as of December > 31, 2017 and 2018, respectively.

Is loaning 20 million dollars to employees for personal use as dodgy as it sounds?

<comment><USER42> No, it's usually negotiated as part of an options package. "We will lend you the money to exercise your options". Then they can pay it back once they sell the shares they received.

</comment></comment><comment><USER43> While I admit that the losses are staggering, the growth rates are also astounding:

Revenue

2016: $3.8bn

2017: $7.9bn

2018: $11.27bn

Trips

2016: 1.8bn

2017: 3.7bn

2018: 5.2bn

The internet is such a game-changer.

<comment><USER44> > The internet is such a game-changer.

Yes but also portable, low-cost GPS enabled internet connected devices are a game-changer. I don't see how Uber or Lyft could exist prior to the iPhone pushing adoption of GPS.

<comment><USER45> Did the iPhone so the most to push adoption? iPhone 1 didn't have GPS but the first Android device did. The killer app on mobile phones has always been Maps. I'd give Google the most credit here.

</comment></comment></comment><comment><USER46> Some people are excited about Uber having a more diversified business than Lyft. Uber Freight, Uber Eats, Jump bikes and e scooters are some of their offerings. However, currently the revenue they generate (or don't) is completely dwarfed by the ride hailing service. If at some point in the future these other businesses turn out to be profitable, shareholders will insist to break them out of Uber to maximize gains. Ride hailing absolutely has to be profitable for Uber to succeed post IPO. At least for the foreseeable future Uber is exactly Lyft with minor garnishing.

<comment><USER47> instead of one money-burning product, you get five burning your money! in two dozen regions!

IPOs are making BTC look good.

</comment></comment><comment><USER48> I wonder if anyone reading through this filing could speculate: Can Uber just raise their prices to reach profitability? If they lost $3B on $44.1B of Gross Bookings, it seems they could raise their prices by about 7% to hit breakeven. Would they really lose that much market share if they did that?

<comment><USER49> If Uber raises prices, they immediately lose customers to Lyft. It was always a race to the bottom and I don't see why it would be any different now.

<comment><USER48> Why wouldn't both Uber and Lift simultaneously raise their prices by a few percent? Once they're both public and the VC cash injections dry up they'll both need to raise prices if they don't want to be out of business. Coke and Pepsi don't sell at a loss to try to steal each other's market share. What would cause these two public companies to run themselves into the ground if the market could absorb a 7% price increase?

I don't actually like Uber that much as a brand, and I understand that the HN groupthink is against them, but I'm not clear on why everyone seems think this is such a terrible business. Are people really going to go back to taking cabs?

I predict that Uber and Lyft will both see big drops in stock price, especially as we enter the next recession. If one or both of the companies survive the downturn, they will turn into leaner, healthy bluechip stocks that turn a stable profit, at least until the flying, self-driving, solar-powered scooters take over. IMHO anyway.

<comment><USER50> Because that's market collusion, and that is illegal.

<comment><USER51> Collusion is when the parties coordinate on the price increases. If they both increase prices independently to achieve profitability, then I don't believe that to be illegal.

<comment><USER52> Even if they didn't collude, they'd be under suspicion of it. Depending on how DOJ wind blows, that could be a big and expensive distraction.

<comment><USER2> No. That's not how price collusion works. If Delta airlines started charging for 2nd baggage, and after their announcement United/American/Southwest follow suit, that's not a price collusion if it wasn't predetermined secretly through implicit and explicit signaling among the airlines. The other airlines had option of either increasing their margins by adding new fee, or keeping 2nd bag free and hoping to make more money with increased volume (profit = unit margin _volume). They are free to choose former or latter in our capitalistic setup. If there aren 't any easily available substitutes, and you don't expect some new entrant to come and distrupt you, first option becomes much more lucrative. Especially if you have negative unit margins, since with second option - negative margins_higher volumes = lots of losses

<comment><USER52> > _If Delta airlines started charging for 2nd baggage, and after their > announcement United /American/Southwest follow suit, that's not a price > collusion if it wasn't predetermined secretly through implicit and explicit > signaling among the airlines._

I understand that.

That's why I said "suspicion". Something that seems too convenient and warrants some more poking and prodding and surveillance.

It's not as though folks colluding walk around waving "I am colluding, please investigate further" placards.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER53> Can we just take a second to appreciate how ridiculous their growth chart is considering how big they are. Hockey stick at its finest.

<comment><USER54> I think the word you are looking for is "quadratic".

</comment></comment><comment><USER55> The trend in their Core Platform Contribution Margin ("a useful indicator of the economics of our Core Platform", essentially ignoring all the costs apart from payments to drivers and restaurants) is not very uplifting:

             Q1  Q2  Q3  Q4
      2017  -8% -0% -3%  9%
      2018  18% 15%  9% -3%

"We also expect our Core Platform Contribution Margin to decline in the near term due to, among other factors, competition in Ridesharing and planned significant investments in Uber Eats, based upon our long-term growth expectations for Uber Eats. Our Uber Eats Take Rate has declined in recent periods, and may continue to decline, as we onboard large-volume restaurants at a lower service fee and restaurants with lower average basket sizes, and as we invest in more nascent and competitive markets, such as India."

</comment><comment><USER56> Wow, we're finally seeing all of these exact charts and figures that have been secret for so long. The easily digestible charts start on page 98.

</comment><comment><USER57> I'm not an Uber-hater - but they don't offer anything unique and the valuation is insane.

Their problem is that if they rack up prices/commission to pay off their investors, then both their drivers and riders will simply switch to the next pre-IPO company that will connect them for less.

Uber in my mind is like all the other social media sites. We appreciate that they're the best thing to connect us at this time - but if something better comes along, both sides have no loyalty and will move on.

Can anybody imagine an Uber provider/rider they've met paying over the odds for an identical service because "they love the Uber brand"?

<comment><USER58> I can imagine such a person. If rider values reliability, they would always open Uber app straight away and get a ride in 5 seconds. I don't think the argument of people switching to a cheaper service actually holds true that much. People don't shop around for a ridesharing service, they open up something that they know will work and work fast.

</comment></comment><comment><USER59> One of the most interesting things I see about Uber/Lyft's IPO has been their risk factors which says:

 _Our business would be adversely affected if Drivers were classified as employees instead of independent contractors._

</comment><comment><USER60> As an IPO n00b, I have basic question: Let's say I'm a startup founder with revenues in $10M and want to raise money. Can't I just go straight to IPO instead of making VC rounds? It seems you don't need to be profitable or even have to have great outlook. Meanwhile majority of IPOs are getting magically funded anyway no matter what. On the top of it you get to even keep most of the voting shares. So what are the minimum requirements to do IPO?

<comment><USER61> I don't know the answers to your specific questions, but note that such late and humongous IPOs are a recent phenomena: [https://steveblank.com/2019/04/10/startup-stock-options- why-...](https://steveblank.com/2019/04/10/startup-stock-options-why-a-good- deal-has-gone-bad/)

My guess is that $10M/yr in revenue is close to enough to IPO. It's just not popular recently.

<comment><USER62> Some reasons why a company with $10M/year in revenue may not want to IPO:

1\. Due to recent regulations (introduced after the 2000 dot-com crash), the fixed cost of going IPO (SOX compliance, putting internal controls in place, audits etc) have significantly gone up.

2\. The additional scrutiny and public visibility that comes from going public is a drag on management bandwidth, employee morale and attention.

3\. Private money is now plentiful and cheap, so it might actually be cheaper just to take private investors than public.

4\. Public markets prefer stable, predictable companies with a known well understood strategy. Consider how often Tesla is in the public eye and how they might have benefited from staying private longer given their unpredictable business and strategy.

</comment></comment></comment><comment><USER63> Looks like really bad news for LYFT. Their lack of diversification is really going to hurt them.

</comment><comment><USER64> Would it be better to be hired 1 month before Uber's IPO or 1 month after and why?

<comment><USER65> One month before, because you get two extra pay checks.

More relevantly, because of vesting cliffs it likely makes roughly no difference, except you get to see a bunch of colleagues celebrating becoming more wealthy.

</comment></comment><comment><USER66> Uber is clearly losing share to Lyft: "In 2017, our ridesharing category position in the United States and Canada was significantly impacted by adverse publicity events. Although the rate of decline in our ridesharing category position has since moderated, our ridesharing category position generally declined in 2018 in the substantial majority of the regions in which we operate, impacted in part by heavy subsidies and discounts by our competitors in various markets that we felt compelled to match or exceed in order to remain competitive."

</comment><comment><USER67> looks like every unicorn is racing to go public before the recession

</comment><comment><USER68> What's there to see? What's their value add? They're not going to be profitable until driverless cars are a legit thing or they pivot into something with higher margins. This IPO will make incumbent banks a cool mint and early engineers paper millionaires but will hopefully blow up and let capital into companies that actually have a chance of staying solvent without successive massive influxes of cash.

<comment><USER69> > and early engineers paper millionaires

actual millionaires not paper millionaires :).

> but will hopefully blow up

why do you wish others to fail so bad?

<comment><USER70> No, paper millionaires. You're only an actual millionaire once you sell your stock. You become a paper millionaire when the IPO happens and you gain liquidity and price increases.

<comment><USER71> According to your logic there is no such thing as an actual millionaire. No sane person keeps a million dollars sitting in cash in a savings account, they invest it somewhere (equity, bonds, real estate, etc).

<comment><USER72> Lots of people keep 10-20% of assets in cash.

if you have $20 or $30m, you'd almost certainly have $1m in cash sitting around.

<comment><USER71> I would be very very surprised if the median person with $20m net worth keeps $1m in cash on a long term basis.

</comment></comment></comment></comment></comment></comment><comment><USER73> I can't wait to see how a SDC deals with a passenger puking and passing out while getting a ride home from the club...

<comment><USER74> Have some dude oncall? You probably don't need more than one per city.

Or do you not expect the car to detect puke and/or a passed-out passenger? Seems like a trivial problem compared to all the recognition software that would be needed for self-driving.

</comment></comment><comment><USER75> Does anyone know how soon after an S-1 filing a company can issue their IPO? Is it basically up to them once they've filed or is there some vetting period at the SEC?

Will they be doing a road show next or is this something that they would have already done prior to the filing?

</comment><comment><USER76> Is the Saudi family invested in Uber? There was a story that Uber was trying to cover up that the Prince that ordered the murder of the journalist Khashoggi - is this true? I know this is a tech forum, but I am not sure what to believe?

<comment><USER77> The Saudi family is invested in a lot of SV companies via Softbank's Vision fund (The Saudi fund also owns 5.4% of Uber, directly).

I don't think Uber, specifically, had anything to do with Khashoggi murders (with regards to the coverup).

<comment><USER78> A Saudi Prince also invested in Lyft

[https://www.cnbc.com/2017/10/23/saudi-prince-alwaleed-bin- ta...](https://www.cnbc.com/2017/10/23/saudi-prince-alwaleed-bin-talal- invested-in-lyft-over-uber-heres-why.html)

</comment></comment></comment><comment><USER79> So 44% (4.4 billion) of their 2018 revenue was 'Other'.

Gain on divestiture 3,214

Unrealized gain on investments 1,996

If this was pure cash going into their bank account, does it mean they ran out of cash in 2018? Their working capital was 4,900 billion at the end of 2018.

<comment><USER56> Do we know what "other" revenue even is?

<comment><USER44> Includes gain on divestiture of $3,214BB, plus unrealized gain on investments of $1,996BB

<comment><USER80> Cool

Whats that mean again?

<comment><USER52> 1\. They sold some business or businesses.

2\. They raised the book value of something else they own for some legal reason.

</comment></comment></comment></comment></comment><comment><USER81> Juicy details about Levandowski and their Google Maps costs...

</comment><comment><USER82> Any idea on the size of the employee option pool given 22.3% is owned by "other shareholders", with 22,263 employees and 3000+ engineers?

</comment><comment><USER83> people in here keep on saying that uber is not making profit. where is the source for that? i remember people saying the same thing about tesla. complete dogma. nobody seemed to understand that tesla was investing huge amounts of money into the development of other cars and expanding their factories. so what are ubers expenses? it does not pass the smell test. what is the expense that is killing them?

and people in here also dont seem to appreciate that uber can change their prices. they cant right now, but they will be able to soon. all the investor money floating around means that their competition may be able to operate in the red for extended periods of time. when the investor money dries up and everyone is surviving on profit, prices can go up. and they will go up because rideshare is the most efficient and cheapest way to do taxis -- nobody is going to come in and disrupt uber. except for driverless cars. but driverless cars arent going to happen. not anytime soon.

edit: i just looked at the chart in the document and as far as i can tell they are 3B in the red. not really sure what the units are in that chart. ok, well there are a lot of expenses where i cant tell exactly what they are, but their marketing expenses were 3B. 3 fucking billion dollars -- am i reading that correctl? thats the same amount by which they are in the red. i also see some very high numbers for management. all uber has to do is cut the fat and they will be making a nice profit.

</comment><comment><USER84> if i were rich enough to invest, Uber would be an absolute landmine for me.

This company seems to be run like a mafia ring compared to lyft. [https://en.wikipedia.org/wiki/Uber#Criticism](https://en.wikipedia.org/wiki/Uber#Criticism)

</comment><comment><USER54> So, here a line from their "Consolidated Statements of Operations":

      Other income (expense), net:  139, (16), 4,993

The three numbers representing 2016, 2017 and 2018. The company is _only_ $997M down for 2018 because of that $4,993M item.

Can someone explain what that is? Will it re-occur in the coming years?

</comment><comment><USER85> So... Let me see if I have this straight:

1\. Uber is unprofitable and the only way it can become profitable is to get SDC's

2\. Uber is significantly (years) behind Waymo in the SDC space.

3\. Waymo will launch SDC taxi services first meaning:

\- When it puts in an order for SDC components no one else is going to be buying in bulk and thus it can have effectively 100% of capacity of these specialized equipment makers

\- It is going to be competing with other taxi/ride share services with all the cost advantages of SDC vehicles while its competitors are paying human drivers (and have basically no fat to cut from their current pricing)

\- It will be able to improve its services so when someone else does launch their service will be inferior.

4\. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition.

5\. Uber expects that it is going to be able to continue to use human drivers even while it competes against those same people with its SDC's (i.e. when your employer hires your replacement but expects you to train them).

I simply can't imagine how Uber is worth anything at the moment.

<comment><USER86> _> can't imagine how Uber is worth anything_

If the operation doesn't make an economic profit, and if there isn't sufficient moat to defend the operation until it can become profitable, then I agree with you it's not worth anything.

But in fact, Uber does have a massive moat -- its network of drivers and riders in thousands of cities around the world. No competitor is even close.

It takes tremendous capital expenditure to build that network, and it will take tremendous capital expenditure to neutralize it.

It remains to be seen if Uber can make an economic profit, but with an operating loss of just 10% of gross revenue, it's not at all inconceivable.

<comment><USER87> > It takes tremendous capital expenditure to build that network, and it will > take tremendous capital expenditure to neutralize it.

Does it, though? Every driver I've talked to basically drives for "all of them". Several told me they try to find whatever apps are local for driving and they setup those alone with Uber and Lyft and simply take whatever pays the most / is more frequent.

Uber's software and network are solid but I don't think there is a whole lot of loyalty there. Anyone who can drive a wedge into a spot in their business could slowly erode it, IMO.

Now, they're too big to die quickly or anything like that. But it doesn't seem impossible at all to me.

<comment><USER88> Agreed - Facebook has a network effect/moat because a new service that's better in every way is useless if your friends aren't on it. Getting the network to migrate is hard and when this does happen FB is quick to buy the threat (Instagram, WhatsApp) or compete and kill them (Snap).

Nobody holds an allegiance to Lyft or Uber - they pick whichever is currently a better deal for both driving and riding. Uber's recent loyalty program is the first thing that slightly moves this in favor of continuing to use Uber, but it's only a little incentive. Large swings in price still favor switching.

Their only moat comes from being able to undercut competitors with VC money in any market they appear in until the competitor is dead and Uber can then raise prices to be profitable.

It's probably a winner take all market. A SDC competitor would be a threat, but I'd be both impressed and surprised if Google could pull that off.

<comment><USER89> Quick note that Facebook, unfortunately, has no real competitor for the sheer number of things it does. As soon as one comes out built for non-technical users the way Facebook is - and hopefully is a nonprofit - I'll go running to it and encourage my friends, too.

<comment><USER88> I'd want one that's just an online account with a single picture, name, address, phone number that lets you have friends. No posting - basically just a contact list that's always up to date because people update themselves.

Keybase could be this.

The main way to get people in would be a focus on event scheduling relying on twilio and sms for including users that don't have accounts.

Make it cheap but not free ($1/month for people with more than 25 contacts) and advertise no ads or tracking ever.

<comment><USER90> What would motivate everyone you know to use this service?

<comment><USER88> Convenient way to do event scheduling - some friends I know are not on FB so it's a pain currently.

Also having up to date contacts to stay in touch. Phone numbers and addresses change and it's hard to know when that happens (and currently most people don't put this on FB).

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER91> Convinced media-bias is the only reason why anyone could be "long $LYFT." They are a text-book "one trick pony" and too late for them to catch up in food delivery, international expansion, etc.

<comment><USER92> It's pretty reasonable to be skeptical of both companies considering how much money they lose without a clear path to profitability.

</comment></comment><comment><USER93> Wow, some heavy risk disclosures.

</comment><comment><USER94> Uber is basically an escrow for illegal taxi operations. They're hustling.

</comment><comment><USER95> > as of December 31, 2018, we had an accumulated deficit of $7.9 billion

zoinks

</comment><comment><USER96> So it begins.

</comment><comment><USER97> "We do the right thing. Period."

<comment><USER98> Good thing there isn't more than one perspective on what is right and wrong. This could've been a meaningless platitude otherwise.

<comment><USER99> There is value in vocalizing a guiding principle, even if it doesn't prescribe the exact way every single situation should be approached.

</comment></comment></comment><comment><USER100> that's it, we're officially close to a recession</comment>


Tesla Third Quarter 2018 Update [pdf] - <AUTHOR> http://ir.tesla.com/static-files/725970e6-eda5-47ab-96e1-422d4045f799 <comment><USER2> One massive advantage that I'm not sure most people realize quite yet is the Supercharger network. No manufacturer (other than Porsche talking about it recently) has actually built out chargers for their cars.

Every other electric car has to rely on a broken, sparse, expensive charger network. Blink chargers and some ChargePoint chargers are expensive in many places ($2 an hour!), and Blink is notorious for having broken charging stations. There's 4 ChargePoint stations in a garage near me that have been broken and unmaintained for years, and they're out of warranty and the mall doesn't have a financial incentive to fix them.

And then there's the DC fast chargers. I'm not aware of a single BEV (Volts or other PHEVs are excluded here) that can travel across the US with a reasonable route without worrying about finding chargers along the way. In fact, last time I looked, there was no physical way I could do a road trip I've been meaning to do through the western US in my i3 (my car, of course, has half the battery range of a Bolt) because of a lack of chargers.

Tesla's Supercharger build out is extremely important to their future. Until other companies step up and install DCFC stations everywhere (and figure out the CCS vs CHAdeMO format war), Tesla is going to have a massive advantage. Sure, not everyone is going to want to do a multi-thousand mile road trip, but driving one of Tesla's cars might make them.

<comment><USER3> How long do you think the current Supercharger network will be a large competitive advantage?

I agree with Benedict Evan's point that electric charging will become a commodity: [https://www.ben-evans.com/benedictevans/2018/8/29/tesla- soft...](https://www.ben-evans.com/benedictevans/2018/8/29/tesla-software-and- disruption)

<comment><USER4> Wouldn't it be awful if you could only buy Ford gasoline from Ford gas stations? The lock in model is attractive until you think about broader implication, I agree with Evans too that it will be a commodity race to the bottom for recharging, with cost introduced for the power

<comment><USER5> Tesla's aren't locked into using Tesla chargers. They do have a proprietary connector on the vehicles but they come with several adapters including J1772. Superchargers are a phenomenal perk, not a lock in.

<comment><USER6> Are Superchargers free to use by people who have not bought Teslas?

<comment><USER7> No, but the point is that this is not a reason Tesla won't succeed, it's just a reason that superchargers suck for non-Tesla EV owners. From a business standpoint, this is the right place to be; lock others out, but don't lock your customers in.

<comment><USER5> Exactly. I don't think Tesla would have anywhere near the sales they've had without Superchargers. The other EV manufacturers need to figure out how to offer something similar if they want any chance of competing.

</comment></comment></comment></comment></comment></comment></comment><comment><USER8> Congrats to Tesla and Musk. The numbers are just insane: "The electric car- maker reported adjusted earnings of $2.90 per share on revenue of $6.82 billion, exceeding average analyst expectations of losses of 15 cents per share on revenue of $6.32 billion."

<comment><USER9> Almost there but not out of the woods yet.

Good:

$1.3B cash from ops, $1B increase in receivables

Bad:

$2B current portion of debt coming due, $1.2B increase in payables

Still need stellar numbers (and cash) in Q4.

<comment><USER10> $2 Billion? I'm only aware of the $920 Million due in March 2019. Is there another major bond worth discussing?

> $1.2B increase in payables

That's a yearly increase. $500M-ish increase between Q2 -> Q3. I think its reasonable to expect payables to go up as they ramp up from 2000 M3/week to 4000 M3/week, but the number still gives me worry.

I think you're right to worry about these numbers. But its important to worry about the CORRECT numbers.

<comment><USER11> Actually there are a lot of bonds outstanding

Per [http://ir.tesla.com/static- files/6db4f56e-1532-4cd6-b8dc-3ff...](http://ir.tesla.com/static- files/6db4f56e-1532-4cd6-b8dc-3ffbffe35e26) they have $230 million due in Nov 2018, $920 million due in March 2019, $560 million due in Nov 2019, $113 million due in Dec 2020, $1,380 million due March 2021, and $977.5 million due in March 2022. Plus coupons on all of these payable regularly between now and then.

By my count this totals $4.1805 billion. They claim to currently have $3 billion in cash and cash equivalents on hand. But there are various outstanding liabilities.

Given a GAAP profit in the $300 million+ range this quarter, and a projected European market twice the size of the American one, this may all be doable. But it is still a balancing act.

<comment><USER10> A lot of companies have a lot of bonds out. Its not necessarily unhealthy to keep some debt around, especially through the 2013 through 2017 timeframe when interest rates were abnormally low.

Elon will have to roll over the debt somehow: either into stock offerings or maybe into new bonds. The meager profits reported this quarter aren't anywhere near the amount they need to pay off those debts... even if the profits grow 2x or 3x larger in Q4 and Q1-2019.

But, paying off some of those debts will put the company into a stronger position.

<comment><USER11> According to financial theory, how you structure a company has no correlation with its success. Therefore the kind of debt financing that Elon is using is just fine.

Financial theory and reality tend to agree except in a crisis. Unfortunately crises do tend to come along periodically. How TSLA weathers the next one will be interesting to see.

<comment><USER12> The Modigliani-Miller 'theorem' is dangerous nonsense. It proves a fact about a model rather than a fact about the real world.

From Wikipedia " _The basic theorem states that in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed_ ". See anything wrong with this picture?

<comment><USER13> I agree with you that the grandparent misinterpreted the theorem as the Wikipedia article includes something similar to your reply:

"These results might seem irrelevant (after all, none of the conditions are met in the real world), but the theorem is still taught and studied because it tells something very important. That is, capital structure matters precisely because _one or more of these assumptions is violated_."

[0] [https://en.wikipedia.org/wiki/Modigliani–Miller_theorem](https://en.wikipedia.org/wiki/Modigliani–Miller_theorem)

<comment><USER12> But it's already painfully obvious that one or more of the assumptions is violated. That should only be surprising if you've spent years being indoctrinated by academic finance or economics.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER14> Tesla could realistically hit 500,000 cars next year, almost 10% of total cars sold in America. The electric revolution is here and it's finally profitable! Budget EVs with solid range are coming next year too with the 2019 leaf!

Convince congress to extend the federal tax rebate (no real increase in spending just keeping what's already there) by like 2 years which is just maybe $1-2B more and electric will be the way to go for good!

<comment><USER15> What's just as amazing is that this whole revolution is done off the back of the Li-Ion 18650/21700 battery cell.

Time will tell how good of a choice it is.

<comment><USER16> I recall reading many HN posters commenting that this cylindrical form factor was a terrible choice for cars. Now several other carmakers have adopted it.

<comment><USER17> From an engineering perspective it's suboptimal since they have small surface area relative to volume. That's probably why Telsa went with the 2170 instead of the 26650, which has a larger diameter.

Despite this disadvantage the Telsa battery cost, power density, cost per kwh, peak power, and longevity are unmatched. Especially as measure by real people driving real cars on real roads.

So sure in theory batteries with more surface area would have greater package efficiencies. So far nobody has managed to.

<comment><USER18> > So sure in theory batteries with more surface area would have greater > package efficiencies.

There's way more to a battery than just density; however, one of the things that needs to be managed is the heat generated during charging. There might be a case to be made for slightly suboptimal packaging strategies if it makes cooling all those cells that much easier.

<comment><USER19> I read an article that made the case that lithium of batteries are sensitive to the direction of the heat gradient. Tried looking, can't find it. But the upshot was you want the gradient parallel to the electrode layers not perpendicular. Which means you want to remove the heat from the ends of the cell.

<comment><USER20> I can't find it either, but I remember reading it.

However, [http://jes.ecsdl.org/content/163/9/A1846.full](http://jes.ecsdl.org/content/163/9/A1846.full) points out some of the details.

<comment><USER19> That actually I think is what I was looking for.

Money quote: For automotive applications where 80% capacity is considered end- of-life, using tab cooling rather than surface cooling would therefore be equivalent to extending the lifetime of a pack by 3 times, or reducing the lifetime cost by 66%.

Meaning battery packs that last not 150,000 miles, but 450,000 miles.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER21> This is a really, really big deal. They've still got a long way to go (as I'm sure Musk would be the first person to admit), but turning a profit is no small feat and should be applauded as such.

<comment><USER10> I dunno. Its not yet a yearly profit. Its a quarterly profit (which is good for sure!!) but they're -$1.5 Billion from Q1 and Q2 so far. So they're likely going to be very negative on this year.

<comment><USER22> Agree. A lot of the numbers seem suspicious as well, mostly in the expense around salaries. Time will tell if these are sustainable.

<comment><USER10> The only thing suspicious to me is the number of executives who have left the company in Q3. Why would they leave if the numbers were going to be good?

<comment><USER23> I'm sure many executive level people simply got tired of Musk's antics

</comment></comment></comment></comment></comment><comment><USER24> I picked up a Model 3 performance about a month ago, I'd recommend anyone interested in Tesla go visit a store and test drive one.

They're so far beyond anything anyone else is making.

<comment><USER25> when i visited china, it was filled with electric cars from multiple manufacturers, and the fit and finish was just as good if not better than tesla. i don't view tesla as beyond anyone. when other car manufacturers enter the market, tesla might have a hard time keeping up because other manufacturers know how to build cars and not just an okay car with an electric motor.

<comment><USER7> There are a number of reasons those cars aren't sold in the US, and inability to pass any kind of safety standard is certainly going to be one of them.

Of course, the fact that our market is (probably) smaller than theirs with way more red tape (including the aforementioned safety standards) doesn't hurt.

<comment><USER25> those are all excuses that, in my opinion, causes one to ignore the progress over there. it's dangerous thinking. do you really think that tesla is as safe as other established car manufacturers? (i am aware of their "ratings", which i find hard to believe.)

edit: and you can see my other reply or do a google search to see that china's car manufacturing revolution, including their massive and unparalleled surge into electric vehicles, is something one cannot simply write off. i don't know why people like you hold your opinions in the face of the history of brands like hyundai and kia. kia used to make terrible cars, but is now one of the top auto manufacturers in terms of value, execution, and design. just take a look at the new kia stinger and huge success of the optima model line.

<comment><USER26> > i am aware of their "ratings", which i find hard to believe.

Is this common among the anti-Tesla crowd? I think you're the first crash rating conspiracy theorist I've come across. If anything I'd assume that the organisations doing the testing would be deeply connected with traditional car manufacturers and that Tesla (as a newcomer) would actually be at a disadvantage.

Perhaps you know something we don't?

<comment><USER27> Some of Tesla's statements regarding safety were apparently a bit exaggerated, in the way advertising often hides fine print to tell you they are the absolute best.

Non the less does Tesla seem focused on safety and I also haven't come across credible reports finding them unsafe, as GP is implying.

<comment><USER25> i didn't imply they were unsafe. i said i felt they weren't _as_ safe. for example, the Insurance Institute for Highway Safety rates the model s below the kia optima, which was landed their top safety rating. i simply call into question elon musk simply claiming they are the safest car ever and the fact that everyone seems to buy into that. there are a lot of stories and examples of hurried and amateur designs at tesla, including examples from teardowns of the vehicles. i simply have a hard time believing that "the best ever" safety emerges from such stressed processes at tesla.

</comment></comment></comment></comment></comment></comment></comment><comment><USER28> Amazing how quickly things can change with Tesla. Just a month ago the sky seemed to be falling, with constant negative press news about the SEC, concerns over Elon Musk's mental health, Tesla losing money, and so on. Had someone shorted Tesla just a week ago based on the media's pessimism, they would be down 20%. of course, Tesla could face problems, but this was a really solid earning report that dispels a lot of the gloom we have been seeing lately.

<comment><USER29> The press, helped by Elon, started to ignore production when it really started to do well. Funny how that happens.

Would have been interesting what would have happened if Elon hadn't fucked up.

<comment><USER30> It's not surprising that the reputation of the press is worsening when it values drama around eccentric personalities higher than simple facts and research.

</comment></comment></comment><comment><USER31> I feel like the way that the press reports on corporate earnings in general is in bad need of an overhaul. There is a lot of talk in here about "rare" profits and the needs for financing, but little about why that might be the case.

Does the reporter genuinely believe that a business like Tesla could be built without doing those things? If you had to recreate Tesla from scratch tomorrow, how much would it cost? And wouldn't you have even bigger loans and debt than the business does?

There is just so much context that is not merely left out, but replaced with confusion.

<comment><USER32> I don't think anyone objects to Tesla taking on debt to finance its growth. The thing is that if your debts are falling due and you don't have enough cash to pay them, you will need to borrow money, sell shares or renegotiate the debts. Your only other option is bankruptcy.

Elon Musk nailed his colours to the mast earlier in the year by saying Tesla would not take on any new debt in 2018. And issuing shares has gotten a bit less simple since his "taking Tesla private" tweet. Which leaves renegotiation or bankruptcy. It remains to be seen whether creditors will renegotiate to avoid the hassle of bankruptcy and the possibility of significant upside through some kind of debt/equity deal. Or whether they will look at the $10Bn of PPE on the assets side of the balance sheet and say "well we can probably get $5Bn for that in a firesale to Toyota, Ford or GM and come out ahead".

</comment></comment><comment><USER33> Great numbers and congratulations to Tesla. If we as a country are going to lessen our dependence on fossil fuels companies like Tesla will need to lead the way.

Just a side note that Tesla received a ~$500m loan from the US government back in 2009, which was paid back in 2013 (the loan went out to some other automakers for electric vehicle R&D), and I believe the tax break on electric cars are still valid. Tesla is a really nice example of there being a problem that is both in the interest of the public and private sector to solve, and those sectors working together to innovate.

<comment><USER34> The loan was a terrible deal for taxpayers. It enriched early Tesla equity holders -- including foreign Mercedes-- at the public's expense. The govt was taking on huge risk, the loan was vastly bigger than the company's revenues, but taxpayers got no corresponding upside for that risk. A similar loan to Fisker was a $139 million loss for the government.

<comment><USER35> Government and business aren't known for considering externalities in their decision making, but it seems noteworthy that the impact of the loan is not a small return, but the survival of a successful electric car and battery company. Would you be alright with providing equivalent money in grants to produce this tech? Because I would argue loans to a business have a better chance of reaching market successfully. Could they have gotten here without that loan? Maybe. Could better terms have been arranged? Possibly. But I think it was a praiseworthy investment nonetheless.

</comment></comment></comment><comment><USER36> Anyone paying any attention in the Bay Area over the last few months has known what the Wall Street shorts and national media don't. Model 3 is an unbelievably massive success. It went from zero on the road, to more common than seeing a BMW 3 series in 6 months.

<comment><USER37> The bay area is a different planet from the rest of the world.

<comment><USER20> I am in Ontario Canada, and I have seen a number of them here.

<comment><USER38> My country has no Tesla's registered. More anecdotes anyone?

<comment><USER39> Due to lack of demand or lack of supply?

</comment></comment></comment></comment></comment><comment><USER40> They have to be happy with those numbers, interesting question of whether they continue to sell the S,X,3's and generate a pile of cash before they start burning it on model Y development.

In general it should also muzzle a lot of the nay sayers, it isn't easy to lie about money in the bank.

Solar City is a disappointment. I keep watching the solar roof tile business to see if that goes anywhere. I'm getting close to putting in Powerwalls and getting off the grid completely, the PG&E shenanigans are just that annoying for grid tied solar systems.

<comment><USER41> Just a heads up. Make sure you get both solar and powerwall at the same time if you don't yet already have solar. I learned the hard way about the additional cost associated with replacing the ac inverter.

Here we're mandated by the city to be connected to the grid at ~$10 a month, which (along with net metering) pretty much disincentives a powerwall.

<comment><USER40> I was early to the solar thing, I put in a 5kW system in 2002[1] and we've replace one of the inverters when it failed with a single 6kW inverter. So any Powerwall install is going to be either in addition to that, or as part of a re-engineer to replace the panels with new panels that have more power for the same footprint.

When you say 'mandated by the city' do you mean to say that you can't get a permit to put up solar _unless_ you grid tie it? And if so does your power company allow for an even 'watts in vs watts out' scheme?

[1] And yes it has paid for itself and is nominally cash flow positive at this point.

</comment></comment></comment><comment><USER42> My understanding is that the conditions inside of Tesla's manufacturing are brutal. I have friends who work on the production side and they effectively tell me corporate culture is driven by fear. I am definitely cheering Tesla on for global warming reasons but I worry that Musk is running a Faustian bargain that may bite him in the backside long term.

These numbers though are really exciting.

<comment><USER24> I have friends that work there too and I've heard from some that they love it and some that they didn't.

It's been enough of a spread that I suspect it's just normal "my manager is bad" type of variety.

<comment><USER43> yeah, it was a big question around the 5000/week ramp up, but if nothing cracked I guess everything is back to normal~.

</comment></comment></comment><comment><USER44> Great news but I have to ask. Maybe someone here can share their view/opinion about the market and what's going on.

Musk can't tweet about going private. So a major short seller sue him and Tesla. Stock "crash" during two months. Short seller completly turn around and now long the stock which rises A DAY before this report?

Eyebrows should be raised so high everyone go bald. Where Will this end with SEC? And How is this not manipulation from both sides?

Disclaimer: Sure I am a fan boy and we all "knew" they were going to make a profit soon. Great work and this is promising for the future!

<comment><USER45> This is called late economic cycle hysteria. No rules.

I've been through two of them, things get crazier.

<comment><USER46> How do you envision things getting crazier?

</comment></comment></comment><comment><USER47> such an amazing example of how reality and conventional wisdom on the internet are so totally out of sync.

</comment><comment><USER48> Amazing results - I am especially taking great pleasure in watching the shorts get decimated.

The Model 3 is a game-changer for the masses. I walked past 6 of them just on my way to get coffee this morning. We're truly witnessing the EV revolution.

<comment><USER49> I will never understand why Tesla people are so obsessed with short sellers.

They exist for every company. And the majority of them would have hedged their bets in some form so it's not like they are likely to lose substantial amounts of money. Tesla almost seems to be similar to Trump in that they need a fictitious enemy to distract the attention away from themselves.

<comment><USER50> Everyone's got shorts, but Tesla's short position as percent of float is very high, at almost 29%. GM, for example, is under 2%, and Ford around 3%. That makes it a material point of discussion.

Second, yes, they are probably hedged. But usually they hedge against correlated securities such as industry competitors so they can hedge away risk they don't want to take (i.e., they have a position against Tesla, but no position about car sales in general, so they hedge against the rest of the industry to protect themselves against economic growth raising all car sales). So if Tesla reports good numbers relative to the industry, it will absolutely impact shorts and they are likely to lose substantial amounts of money. What else would they be hedging with? Maybe their bonds, if you had some sort of complicated capital structure arbitrage play, but I haven't seen much of a case being made about the bonds being undervalued relative to equity.

Having said that, I think shorts play an important role in the economy to keep companies honest.

<comment><USER51> > Tesla's short position as percent of float is very high, at almost 29%. GM, > for example, is under 2%, and Ford around 3%.

Auto comparisons are worthwhile, but equally valid are comparisons to companies of a similar age, not just established stalwarts (for better or worse).

</comment></comment></comment></comment><comment><USER52> Even the largest automakers of the world will be like bug hit by a windshield. This is Nokia vs Apple all over again.

</comment><comment><USER53> This is massive for Tesla. I cannot imagine they have achieved this after the tumultuous last few months. Tesla is bigger than Musk, that's the key to its success. I agree that Musk's blind ambition and hubris has made this possible, but now is a good time for Tesla to get a veteran COO to take things to the next level.

Congrats Tesla. Your growth is a source of inspiration for me.

</comment><comment><USER54> I wasn't following it closely but it does tickle me that the headline couple of hours earlier was __Tesla stock skyrockets after legendary short seller goes long__ [0].

[0] [https://www.marketwatch.com/story/tesla-stock-skyrockets- aft...](https://www.marketwatch.com/story/tesla-stock-skyrockets-after- legendary-short-seller-goes-long-2018-10-23)

</comment><comment><AUTHOR> One thing to consider that an analyst pointed out. Telsa has alot of net 60 and 90 and 120 day relationships with suppliers, but gets paid from car sales much quicker. This means that they can "financially engineer" quarters to make their cash flow look much better than it would if the payment periods were all net 30.

Pre Close:

\- bit of a perfect storm for Tesla to make a profit

      - Model X ramp up spend is mostly done, Model Y ramp up spend hasn't really started yet.

      - Model Y ramp up could be $250 million/quarter drag

      - Started selling dual motor Model X, more than single motor, (probalby push for more expensive cars first to try and get profitable)

      - this will mean we'll ahve to watch per car margins going forward as less profitable models are rolled out.

\- Solar weighing on results, Spent 2 Billion to buy Solar City, and assumed alot of debt in the transaction

      - solar installations have fallen through the floor since then,

      - Tesla is no longer largest solar company in the US

      - with multiple layoffs in Solar City division

\- The Model 3 outsold all but four sedans in the U.S. last quarter.

\- Tesla Junk Bonds trading at 86 cents on dollar, an 8% Yield, not too spicy, probably means bond market expects to be paid off in cash not shares.

\- Good quote from car analyst "So Tesla going from 0% to 1% U.S. market share and not profitable or cash-flow positive for the ytd -- `Yay, Tesla!' \-- but let's not get crazy. This is still a niche brand building vehicles by hand in a tent."

Numbers:

\- 3Q Adj EPS $2.90, Est. Loss/Shr 15c

\- 3Q revenue $6.82 billion, estimate $6.31 billion

\- 3Q capex $510.3 million, estimate $612.9 million

\- 3Q adj. automotive gross margin +25.5%, estimate +19.5% (BD

\- 3Q Free Cash Flow $881.0M, Est. $280.0M __holy shit that 's incredible __

\- Tesla has made money!!! net income of $300 million, now can they show that they didn 't just cook the books for a quarter?

\- back to 3 Billion of cash in the bank

\- even without ZEV(Zero emission credits) Tesla would still be well into the black

Misc:

\- 15 days of inventory, for Model 3, about a quarter of what other companies have

\- building an average of 4,300 Model 3's per week

\- labour hours are down on the assembly line by 30%

\- little under 20% of Model 3 pre orders have cancelled

\- Musk said he wants to start producing cars in China next year, this is a put up or shut-up situation as they've sat on the factory and done nothing since announcing it.

\- China acceleration seems to be pretty darn Tariff driven

AutoPilot:

\- now on software upgrade 9.0, which can change lanes and exit highways on its own.

<comment><USER55> I take issue with your market share comment. You are referring to an installed base of 1%.

Market share is a sales based number, which according to the document the Model 3 is the number 1 selling car in America by revenue over the last quarter.

<comment><USER7> I had the same question and ran the numbers in my head, but I don't think that's accurate; there are 253m cars on the road in the US according to the googles, they're nowhere near 1% installed base.

But it's also disingenuous to compare a single electric car from a single carmaker to the entire body of every kind of passenger car for sale in the US. At least compare ALL electric car sales to ALL gas car sales.

</comment></comment></comment><comment><USER56> It appears Tesla shorts have _lost_.

* Free cash flow of $881M for the quarter equates to $3.5B annualized. Current market cap is around $50B, so Tesla is trading for $50B / $3.5B = 14.3x annualized free cash flow. Even if this figure is not sustainable in the short to medium term, Tesla no longer looks _that_ expensive.

* $3.0B of cash and cash equivalents at quarter-end, increasing by $731M during the quarter -- consistent with reported free cash flow. Tesla no longer seems to be facing a cash crunch in the near term.

Very impressive.

It remains to be seen whether this kind of profitability is sustainable, especially as more competition enters the market for EVs... but for now, Musk, his team, and his shareholders are looking like big winners.

<comment><USER57> Why is there this obsession with trying to defeat shorts in the Tesla community? Every negative comment or story about Tesla or Elon is accused of being fake news purpotrated by shorts. It's really weird, I've never seen it in any other community, and it doesn't seem healthy.

<comment><USER58> Because it is the most shorted stock in the history of the stock market.

<comment><USER59> It's not, there are and were many other stocks with higher short/long ratios.

</comment></comment></comment></comment><comment><USER60> Absolutely positively jaw dropping numbers. So much for predictions of bankruptcy!

Hopefully this will give pause to the hate campaign, but for some reason I think it'll just make them scream louder.

Couldn't be happier to be scheduled to take delivery of my Model 3 in 2.5 weeks. Should have bought shares too!

</comment><comment><USER61> For anyone interested, here is a link to the earnings call: [https://edge.media-server.com/m6/p/omd73p8r](https://edge.media- server.com/m6/p/omd73p8r)

</comment><comment><USER62> It would be interesting if they bought Workhorse, the electric delivery drone and pickup and van company. Low market cap, lots of good projects out, and possibly complementary capabilities.

</comment><comment><USER63> Congrats not only to Musk, but the whole team that pulled this off!

</comment><comment><USER64> NON-Gaap reports are a joke. Honestly, why are they still legal? All reports should be GAAP. Accounting mechanics make it easy for non-gaap to show a profit!

<comment><USER65> They give both in this report, and GAAP first, why the complaint?

</comment></comment><comment><USER66> The revenue for one quarter seems high. Did they carry over some sales from the past or is there something it drawing from future quarters?

Edit: Congratz!

<comment><USER67> Well You can't count future sales as revenue. To recognize revenue you have to deliver the product.

Here are the things from wikipedia:

        Risks and rewards have been transferred from the seller to the buyer
        The seller has no control over the goods sold
        Collection of payment is reasonably assured
        The amount of revenue can be reasonably measured
        Costs of earning the revenue can be reasonably measured

<comment><USER68> I see, thanks. So you could delay deliveries.

They claim to remain profitable next quarter. Which is a good sign. I just couldn't help noticing. I also don't see an expected revenue for next quarter.

Crossing my fingers for them.

</comment></comment></comment><comment><USER69> I was confused because my ticker shows TSLA down about 2%, but it is up ~12% in after hours trading.

</comment><comment><USER70> Congrats Elon. Now go get some sleep

</comment><comment><USER2> Cross posting from the other thread:

One massive advantage that I'm not sure most people realize quite yet is the Supercharger network. No manufacturer (other than Porsche talking about it recently) has actually built out chargers for their cars. Every other electric car has to rely on a broken, sparse, expensive charger network. Blink chargers and some ChargePoint chargers are expensive in many places ($2 an hour!), and Blink is notorious for having broken charging stations. There's 4 ChargePoint stations in a garage near me that have been broken and unmaintained for years, and they're out of warranty and the mall doesn't have a financial incentive to fix them.

And then there's the DC fast chargers. I'm not aware of a single BEV (Volts or other PHEVs are excluded here) that can travel across the US with a reasonable route without worrying about finding chargers along the way. In fact, last time I looked, there was no physical way I could do a road trip I've been meaning to do through the western US in my i3 (my car, of course, has half the battery range of a Bolt) because of a lack of chargers.

Tesla's Supercharger build out is extremely important to their future. Until other companies step up and install DCFC stations everywhere (and figure out the CCS vs CHAdeMO format war), Tesla is going to have a massive advantage. Sure, not everyone is going to want to do a multi-thousand mile road trip, but driving one of Tesla's cars might make them.

<comment><USER71> > Cross posting from the other thread

Please don't. It lowers the signal/noise ratio and makes it harder (a lot harder!) to merge threads.

Instead, let us know at firstname.lastname@example.com if there are two discussions going on about the same thing. We'll happily move your comment over along with the other on-topic ones.

</comment></comment><comment><USER72> Congrats to Tesla!

This is HILARIOUS to see after the thousands and thousands of negative articles and press over the last year.

<comment><USER18> > This is HILARIOUS to see after the thousands and thousands of negative > articles and press over the last year.

I wouldn't hold your breath just yet, the last quarter posted a loss, the one before a gain, and the one before that was a loss.

Tesla is showing some signs of long-term capability here, but they're far from out of the woods and into a complete success story.

<comment><USER7> They will absolutely continue to print money for another quarter or three.

They need sustained demand domestically, though.

Followed by international sales (lots of pent-up international demand already, so that's not an issue in the short-mid term)

Of course, then they need to start gearing up (read: sink massive piles of cash into) to produce the Model Y, and the Roadster, and refresh/redesign the S and the X.

And scale superchargers.

And scale the repair network.

They're certainly not out of the woods, but I think this is one of the best signs yet that they will make it.

</comment></comment></comment><comment><USER73> The last few big Tesla threads on HN were non-stop piling the shit onto Tesla talking about how untenable they are, bad business model, inability to scale, etc, etc. Is that just an indication that the short sellers have sock puppets here on HN as well? HN happens to be an important source of Tesla news.

<comment><USER74> I got smacked with waves of downvotes for repeatedly stating a few obvious things: the Model 3 would sell at least 100,000 units this year and that Tesla wasn't going bankrupt anytime soon or going to run out of money soon. These outcomes were not difficult to compute at all. I was mocked for it here, the responses were wildly emotional in nature instead of rational and analytical. You basically couldn't hold a disciplined conversation about Tesla on HN at the time. Despite that abnormal behavior (abnormal for HN), I don't think the very aggressively negative posters on HN were shills at all, they were merely incapable of being objective about Musk & Tesla, falling back on emotional reaction instead. Musk generates an unusually strong negative reaction in some people, they either plainly dislike his personality, or are just falling into the common psychological trap of wanting to see someone brought low (cutting the tall poppies). That reaction then colors how they see Tesla and how they judge the facts of a situation. Failure to correctly assess a situation is almost always a better explanation than something malevolent as motivation.

</comment></comment><comment><USER75> Saudi Crown Prince is pleased with his investment.

</comment><comment><USER76> Just shows how fake all of the "expert analysis" is. It's so painfully obvious that all of the expectations of losses of 15 cents/share were just paid for by either the govt./big oil.

<comment><USER21> Or maybe that "expert analysis" is really difficult, with a lot of complicated factors that are hard to reason about effectively?

<comment><USER70> That's what they say when getting it wrong. Yes it's complicated, I agree, and all predictions should be taken with a boulder of salt

</comment></comment></comment><comment><USER77> Massive beat. Free cash flow chart demonstrates the magnitude:

[https://pbs.twimg.com/media/DqTLT1SU8AA92uB.jpg](https://pbs.twimg.com/media/DqTLT1SU8AA92uB.jpg)

My prediction is they ramp up R&D spend and hoist a slew of consumer products. Or even get into aviation. Such as this drone spinoff from a former battery engineer.

If you are a recent engineering grad, next couple of years will be a great time to join ;)

[https://impossible.aero/](https://impossible.aero/)</comment>


The Great Dithering - <AUTHOR> https://medium.com/p/217009c21cd3

<comment><USER2> I used to be scared of buying real estate in coastal cities for this very reason.

Now I think of it this way... Maybe it's inevitable. And if it is, perhaps it's cheaper to build walls around cities if the cities are worth saving. Let's say it costs $100 billion to protect NYC - that's a cost they'll bear. It's still just on the order of 10K per person. If you amortize that over 10 years, it's not much. And there's too much valuable real estate to not do it.

For the rest of the world? Well, there are ghost towns everywhere. New cities can be built that are inland. And again, that may be cheaper than trying to stop global warming. Or perhaps more feasible - we can start building cities as the waters rise, once there's less uncertainty.

Just being the devil's advocate here.</comment>


4 Reasons We Bet On MongoDB - <AUTHOR> http://perfectmarket.com/four-reasons-perfect-market-bets-on-mongodb/

<comment><USER2> I think this is true:

"For a technology startup with limited resources, broadly adopting a new DBMS means betting its own future on the DBMS. "

It has become popular to attack MongoDB, but I think it is difficult to get an objective view of what people are doing with it. If you want to read a really scathing attack on MongoDB, consider this post:

[http://www.sarahmei.com/blog/2013/11/11/why-you-should- never...](http://www.sarahmei.com/blog/2013/11/11/why-you-should-never-use- mongodb/)

But I recall reading that essay and thinking "These people don't want a document store, they want a relational database" and most of their criticism amounts to "MongoDB is not a relational database."

In my experience, you have to love map/reduce if you are going to have a positive experience with MongoDB. I mean this in the abstract sense: both your project and your mind need to be able to fit with that pattern of data flow that is called map/reduce. I'm thinking of map/reduce in broad terms: use a filter to get some data, use reduce to produce some aggregate.

I will here briefly mention a criticism I have of relational databases. Consider Wikipedia's explanation of Edgar F. Codd's life:

[http://en.wikipedia.org/wiki/Edgar_F._Codd](http://en.wikipedia.org/wiki/Edgar_F._Codd)

"Codd's theorem, a result proven in his seminal work on the relational model, equates the expressive power of relational algebra and relational calculus (which, in essence, is equivalent to first-order logic)."

and Codd's theorem:

"The domain independent relational calculus queries are precisely those relational calculus queries that are invariant under choosing domains of values beyond those appearing in the database itself. That is, queries that may return different results for different domains are excluded. An example of such a forbidden query is the query "select all tuples other than those occurring in relation R", where R is a relation in the database. Assuming different domains, i.e., sets of atomic data items from which tuples can be constructed, this query returns different results and thus is clearly not domain independent. Codd's Theorem is notable since it establishes the equivalence of two syntactically quite dissimilar languages: relational algebra is an imperative, variable-free language, while relational calculus is a logical language with variables and quantification."

Clearly, this assumes that the relations among the data are known. I work mostly with early stage startups. The entrepreneurs I work with have no real idea about what relations they want establish among their data. They are an exploratory phase. I believe these entrepreneurs should be described as "pre Codd". If you force them to specify relations among their data, you will get answers exactly as useful as these:

[http://blog.jimmyr.com/Funny_student_Exam_Answers_13_2008.ph...](http://blog.jimmyr.com/Funny_student_Exam_Answers_13_2008.php)

MongoDB is useful in this context. Start acquiring data. Don't pretend you know what your schema is. You do not know what your schema is. The entrepreneur who perfectly understands what sort of data they want, and what the relations will be among the different sets of data, before the startup has launched, is a bit like Newton and Einstein: you can expect 1 such person every 200 years.</comment>


Google to bring free Wi-Fi to New York City - <AUTHOR> http://money.cnn.com/2013/01/08/technology/mobile/google-wifi/index.html

<comment><USER2> The title of the article is horribly misleading. The coverage area is thirteen blocks. That's maybe 1/3 of Chelsea.

</comment><comment><USER3> It appears to me that Google is simply sponsoring the deployment, and did not build and will not actively manage the installation. According to the coverage map [1], technical support is provided by Sky Packets, a company that plans, builds, and maintains wifi networks in municipalities. Also, the Chelsea Improvement Company's webpage [2] says: "Google's sponsorship paid for the capital cost of the network."

[1] [http://www.chelseaimprovement.com/static/pdfs/wifi/CIC_Free_...](http://www.chelseaimprovement.com/static/pdfs/wifi/CIC_Free_WiFi.pdf)

[2] [http://www.chelseaimprovement.com/neighborhood/free_wifi.htm...](http://www.chelseaimprovement.com/neighborhood/free_wifi.html)

</comment><comment><USER4> Not only is it just 13 blocks around that Google HQ, they somehow got a local group to pay 1/3rd of what looks like a very jacked up pricetag.

$45k a year to operate 13 blocks of wifi? Really?

<comment><USER5> IMHO that pricetag is very good. Consider backhaul costs, upgrades and other maintenance, monitoring, etc. All covered by about the equivalent of a 1/4 NY sysadmin salary.

<comment><USER6> Not sure if everyone has ridiculously high salaries in the US, or HN people always exaggerate.

<comment><USER7> If it was a fully loaded cost (ie - what the employer pays not what the employee receives) then I can believe it in a place like NYC

<comment><USER8> $180k?

</comment></comment></comment></comment></comment><comment><USER9> I suppose 'free' also means 'unencrpyted'. Let's hope everyone has https enabled on their Facebook account.

<comment><USER10> If it's like their Mountain View coverage, there'll be a secure (WPA) option.</comment></comment>


FCC chairman seeks to keep voice call ban in place on airplanes - <AUTHOR> https://www.usatoday.com/story/news/2017/04/10/voice-call-ban-planes-cellular-service-airlines-federal-communications-commission/100291108/ <comment><USER2> > Frank Wake of Anchorage said allowing calls would be "cruel and unusual > torture for those of us trapped."

> 96% favoring the ban, 2% favoring the ban with exceptions for emergencies > and 2% saying airlines should set their own policies.

People don't like other people.

<comment><USER3> That is a funny ratio, given far more people casually whip out their phone in public transport and start yapping away.

<comment><USER2> Flights seem like a bigger deal than hoping on a bus/train. There is a much higher barrier to entry, more regulation, and people take it pretty serious. You don't get a pat down on the bus.

<comment><USER4> > You don't get a pat down on the bus.

Nobody's worried that you'll destroy valuable property or kill people by driving a bus into it/them. They probably should be.

</comment></comment></comment></comment><comment><USER5> Mind-bending how the same person can say that personal data privacy should be the domain of the market, but cell phone usage on airplanes should be disallowed based on a preference for quiet on an airplane.

I can respect the position that regulation is bad, and careful application of new regulations. I won't necessarily agree with it, but I can respect it as simply coming from different fundamental values. But this is such blatant hypocrisy that I'm having trouble suppressing rage heh.

<comment><USER6> Yea, this is pretty mind boggling.

> Pai told USA TODAY in a statement. "Taking it off the table permanently will > be a victory for Americans across the country who, like me, value a moment > of quiet at 30,000 feet."

</comment></comment><comment><USER7> So the primary reason for this ban is nothign to do witih communication or interference, it's just some notion that if cell phones were allowed on flights it would be annoying to the people around you? This is why the judiciary should abandon the "rational basis" approach to evaluating legislation (i.e. you don't have to actually justify your laws/rules) in favor of something where the government has to make the case that something should be banned for a specific reason.

Regulating the social norms of airline behavior is _not_ the job of the FCC, and it astonishes me that anyone thinks otherwise just because the FCC happens to have some power over one lever to control this.

</comment><comment><USER8> IANAL: I can see how, from a legal perspective, FCC could disallow cell towers from connecting to obviously-flying devices. I could see them forcing device manufacturers to switch off in flight. I _don 't_ see how FCC can legally insert itself into the commercial environment of air travel in the way it has inserted itself here. FAA could, but this is not FCC's bailiwick. This is like them deciding that we can't use mobile phones in the waiting room at the dentist's office. If anyone gets to make that stupid regulation, it should be the agency that regulates dentistry.

<comment><USER9> It's not that it's "disallowed", it's the technology isn't designed to do it. Cell towers aren't aimed at the sky for a myriad of reasons (they use sector antennas), and the protocols are designed at much slower velocities than an airplane. An airplane also has line-of-sight to hundreds of cell towers, which would make cell selection very difficult, and the networks would quickly run out of spectrum since one handset signal would reach hundreds of towers rather than the handful they do on the ground.

Theoretically, the data services offered by planes could host a picocell tower. But the data service used by airplanes is much different than cell networks. Sattelite based services use antennas on top of the plane and have to have specialized tracking antennas. ATG based systems use a network of land based stations and special antennas pointed above the horizon. ATG uses a modified EVDO protocol (yep, that old cell protocol) to work at higher base station velocities.

<comment><USER10> The arguments against allowing voice calls are not based on the technology but the idea of not wanting to listen to other people's conversations.

> Pai told USA TODAY in a statement. "Taking it off the table permanently will > be a victory for Americans across the country who, like me, value a moment > of quiet at 30,000 feet."

> But Pai's predecessor as FCC chairman, Thomas Wheeler, argued that the ban > had become obsolete because many airliners basically carry their own > cellphone towers for in-flight entertainment.

<comment><USER11> I think airlines should have policies disallowing it, but I don't see how the in-cabin ambience of an airplane is even remotely what the FCC exists to regulate.

I would hate to be in an airplane with people making voice calls, but I don't think it's even remotely the FCC's job (and I'm somewhat dubious it's even properly the government's job) to do it, and, while I'm neither, I'm closer to a socialist than a _laissez-faire_ supporter of unregulated capitalism.

</comment></comment></comment></comment><comment><USER12> Why can't we just let the airlines decide for themselves if they want to allow voice calls on their flights.

</comment><comment><USER13> This does not seem like something that should be regulated. The airline should be able to say yes or no.

</comment><comment><USER14> I thought Pai was against regulation.

<comment><USER12> Only regulation he disagrees with.

</comment></comment><comment><USER15> I don't understand. How does this benefit Verizon?</comment>


Ask HN: Best startup marketing ideas you've come across this year - <AUTHOR>

<comment><AUTHOR> The creative use of Green Graffiti has been one of my favorites:

[http://www.environmentalgraffiti.com/featured/moss-grass- gra...](http://www.environmentalgraffiti.com/featured/moss-grass- graffiti/2147)</comment>