Eli5: I saw that Uber is still not making money, how is that possible, they have a lot of people working for them, worldwide known and also if they dont make any money how are they still alive?

Question

Eli5: I saw that Uber is still not making money, how is that possible, they have a lot of people working for them, worldwide known and also if they dont make any money how are they still alive?

In: Economics

Answer 1

Let’s say you get an Uber that costs $30.  Uber will pay the driver, credit card company, app stores etc about $20 on average.  So Uber gets $10 of that $30.  

Then they’ll spend $5 on advertisements and marketing.  

Then they’ll pay their corporate employees (execs, customer service, app developers, product developers and others) about $7.  

So they’re spending $32 for every $30 they generate.  

They can do this because they got money from investors and not all of those $32 in Costa are cash costs, Uber pays some of their employees with stock which is a cost, but doesn’t actually require cash from Uber).