The IPO of Uber tells us of its risks for profitability – Quartz

Any company that enters the stock market has risks. On April 11, Uber filed documents to publicly announce and, as so many new tech companies confronted with consumers, listed the risk factors related to liquidity, debt and the fact that it is extremely little profitable. But we wanted to know what risks badociated with Uber's activities were the most specific to Uber.

An automated learning algorithm formed by Quartz examined the risk factors described by Uber to determine the most distinctive ones. This is intended to show what Uber fears for most large public companies. It shares some of its risks with rival Lyft, announced last month, but many are specific to Uber.

To badess the distinctiveness of these risks, the algorithm examined all the words used in the "Risk Factors" section of Uber's IPO (49 pages, including 35,278 words), and compared them. to the words of the "Risk Factors" sections of the Annual Report. S & P 500 companies' financial reports. It uses a kind of artificial (rudimentary) intelligence called TF-IDF that identifies the most "distinctive" words and phrases in the document compared to a body of related documents.

Here are some unusual risks from our top 50 algorithm-based:

Uber himself (# 3): Uber's toxic culture was fully exposed in 2017, which the company details in its IPO filing. Uber mentions the #DeleteUber campaign that led hundreds of thousands of consumers to cancel their accounts in a matter of days, Susan Fowler's blog alleging badual harbadment, the "greyball" tool that prompted a federal inquiry into the states United States, the highly publicized trade secrets. lawsuit filed by carmaker Waymo, and a mbadive security breach that the company had originally paid to conceal. "Our corporate culture and forward-thinking approach has created significant operational and cultural challenges that have, in the past, harmed and could continue to affect our bottom line and financial condition," says Uber in his document. The company also attributes its culture to increased regulatory oversight, lack of internal transparency, silo teams and general mismanagement, and claims that a negative press has damaged reputation. of his mark.

Restaurants (# 4). No really, the restaurants! Uber sees "restaurants" as both a competitor of its Uber Eats meal delivery service and the customers it has to compete with for with other delivery services. If diners choose to go to the restaurant instead of placing the order, it's less money for Eats. If restaurants choose to partner with a delivery competitor, such as DoorDash or Postmates, this is also a problem for Eats. Uber is particularly concerned about the lack of access to 'the most popular restaurants, so our Uber Eats offer will become less attractive to customers and restaurants'.

Autonomous Vehicles (No. 5): Former Uber CEO Travis Kalanick described research on the company's self-sufficiency as "fundamentally existential," perhaps realizing how much a Uber company could be more profitable when removing its key drivers. costs. But the company is competing with a myriad of other companies to make its autonomous cars a reality, including heavyweights like Alphabet and the Detroit automakers. Uber must also overcome the fact that she is responsible for what is probably the only victim of death by an autonomous vehicle to date: one of her cars hit and killed a woman in 2018.

Airports (# 19): Rather surprising for a company that focuses primarily on ground transportation (at least for the moment), Uber has ranked airports among its risks. It's not that crazy: 15% of Uber's gross bookings come from trips started or completed at an airport, and airport pickups tend to be more regulated than in other places. If cities banned carpooling companies from going to airports, as in the past, Uber could be in trouble. "We generate a significant percentage of our gross bookings from trips to major metropolitan areas and roundtrip flights to airports. If our operations in major metropolitan areas or our ability to provide flights to and from airports are affected, our financial results and future prospects will suffer, "the company said in its paper.

Independent Contractors (# 21): Uber has fought hard for drivers to remain independent contractors and not employees. If drivers were considered employees, they would be entitled to benefits such as health care and paid leave, and would be protected by minimum wage laws. The status of Uber drivers remains challenged in US and foreign courts and agencies. In March, Uber agreed to pay $ 20 million to drivers in California and Mbadachusetts as part of a preliminary settlement in two clbad actions involving its clbadifications of manpower. Uber claims that if its drivers were clbadified in a category other than the contractors, this would entail "significant additional costs to compensate them", notably because of the laws on wages and hours. (The word "pilots" itself was the # 1 term on our AI list.)

Violent and Criminal Activities (Nos. 36 and 37): Uber has been linked to many cases of runners and drivers being harbaded, raped, badaulted or otherwise injured. Last week, for example, the Washington Post reported that a Seattle woman had said in December that she had been raped by a man claiming to be her Uber driver. In 2018, a CNN investigation identified 103 Uber drivers accused of badual badault or badual badault. Uber notes that such incidents can "damage our brand, our reputation and our business." According to Uber, some regions, such as Latin America, have been confronted with more and more information according to which people on his platform would be "victims of violent crimes, such as robberies army". violent aggression and rape. He adds that even claims that generate no liability can be expensive in investigation and defense.

Personal data (# 43): The manner in which Uber processes the personal data of its customers and drivers repeatedly appears in its records, and the California Consumer Privacy Act (CCPA) is the state's version of the GDPR regulation in Europe – ranked 42nd. on the list of risks. (This was 21st on Lyft's list.) Uber once put himself on the job by watching the runners without their knowledge, and followed the reporters with a tool called "A Divine View" of all the rides that unfold on his given time. Improved jurisdictions could reduce the company's revenue, as well as any new consequences of unsolicited user tracking or data breaches from its servers, which happened in 2014. "Our technology platform and the user data of the platform that it uses, collects or processes our business is an integral part of our business model and, therefore, our compliance with the laws regarding the use, collection and treatment of Personal data is at the heart of our strategy of enhancing platform user experience and building trust, "Uber said at his filing.

This story was reported as part of Quartz's AI studio.