Uber is a complete disaster. It’s autonomous vehicle program is likely a complete failure, and will never launch. Here’s what we know from inside the company:

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Amir Efrati at The Information has a beautiful new feature for us. Here’s the hook:

Uber CEO Khosrowshahi faces a reckoning. Despite cost-cutting, Uber’s losses are far higher than projected and it is losing ground in each of its key businesses. Investors and employees question whether he is up to the job of turning Uber around.

The Information

Really? We’re talking about replacing Uber’s new CEO already? What’s a few billion dollars in losses between friends?

Recall previously, that Uber founder Travis Kalanick sold all his shares and left Uber’s board.

As 2020 begins, Uber CEO Dara Khosrowshahi faces what is shaping up to be a year of reckoning. Uber’s market capitalization has dropped $29 billion since it went public in May. It likely lost five to six times as much money in 2019 as it forecast in presentations to banks two years ago. And it has lost ground in its ride-hailing, scooter and food-delivery businesses, while regulators in cities like London are threatening its ability to operate.

The Information

But don’t worry –– other than that, things are going great.

Some early investors who want faster cost cutting have privately contacted the company, suggesting the possibility of a more public challenge if things don’t improve, said an Uber executive briefed about the situation. Meanwhile, senior Uber employees as well as some outsiders are increasingly questioning whether Khosrowshahi, who took over from Uber co-founder Travis Kalanick in 2017, is the right person for the job. 

The Information

This leak is the beginning of that “more public challenge”. It seems quite likely this story was floated to The Information on purpose. It’s not Bloomberg, but all of Silicon Valley knows the deal by now.

Basically, if Khosrowshahi can’t turn things around fast his days are numbered.

“When you have a company that loses every regulatory fight and doesn’t have the ability to execute on the broader vision” around transporting people and objects anywhere, “you have a real problem at the top,” said venture investor Bradley Tusk, who received an equity stake in Uber in 2011 in exchange for assistance with some of its early regulatory battles. “It’s not a well-run company,” he said.

The Information

Uber used to win every regulatory fight. They were the company that shoved ridesharing down everyone’s throat, even if they had to break the rules in the process. Say what you want about their methods and all the damage that resulted, but they got it done. You can argue about whether that was ultimately a good thing for the world, but Uber is undeniably convenient.

The problem is the contractor-based ridesharing business model is fundamentally unsustainable. Uber got everyone addicted to cheap, instant, on-demand rides before the technology and economics really allowed for it to be done profitably. Investors facing low or negative interest rates in the aftermath of the financial crisis plowed more cash into venture capital funds, and those funds were happy to finance Uber’s losses. In the future, the thinking went, they would make some changes and become profitable.

Some investors are now starting to doubt that will ever happen. With fierce competition and new entrants like Tesla for what is essentially a commodity service long term, Uber’s future as a profitable business seems less certain than ever.

If Uber doesn’t find a way to cut its losses and its growth curve continues to flatten, its stock price could drop even more, undermining confidence in a wide array of tech startups as well as in its backer, SoftBank. Some investors have already signaled a lack of confidence: Co-founder Travis Kalanick, for instance, sold his entire $4 billion Uber stake over a six-week period in late 2019. He also left the board of directors and has repeatedly told associates he doesn’t have confidence in Khosrowshahi. A spokeswoman for Kalanick did not have any comment.

Tusk, too, said that he sold all his Uber shares—worth tens of millions of dollars—after IPO lockup restrictions ended in November. “I have no faith in them,” Tusk said of Khosrowshahi and Uber’s current management team.

The Information

Softbank’s “Vision Fund” is increasingly looking like a steaming pile of dogshit. If I were Dara, I would watch out for those guys. Everyone just assumed Softbank’s $100 billion fund of the hottest names in tech would be a huge hit… until the WeWork IPO. After that disaster, in which Softbank wrote down tens of billions of dollars in investment losses and replaced the CEO of the company, people started to question whether Softbank’s giant pile of cash had been invested wisely.

Well, guess what? It hasn’t. WeWork isn’t the only overvalued stock in Softbank’s portfolio: They invested in Uber at a sky-high valuation too. After the WeWork disaster, Softbank needs Uber to look like a success. And that might mean they need to get rid of Mr. Khosrowshahi.

The following account is based on interviews with nine managers and executives currently at Uber as well as a dozen former senior managers who have left Uber during Khosrowshahi’s reign.

The Information

This sounds good. You can read the full story below, but let’s check on how Uber is doing on autonomy together:

Uber told banks less than two years ago that self-driving cars had the potential for “paradigm-shifting” reductions in the cost of offering rides, and that the resulting cheaper rides would boost demand for Uber’s core business. But Uber’s autonomous vehicle R&D unit for years has struggled to make progress under the leadership of Eric Meyhofer, according to multiple Uber employees and executives. This has caused complaints from executives working on Uber’s core business, including CFO Chai, who wonders whether the unit is worth keeping as part of Uber, according to a person with direct knowledge of Chai’s thinking. 

The Information

So they’re about to make a breakthrough and achieve Level 5 autonomy any day now. Why would the CFO want to get rid of such a valuable unit of the company?

The unit loses at least $500 million per year, according to the company’s financial filings. Other executives have said privately they felt that the R&D unit’s leaders were not held accountable for its mistakes, which included a prototype vehicle striking and killing a pedestrian in Tempe, Ariz., in early 2018. For now, dedicated money invested by a Japanese consortium including Toyota is funding the unit, but Uber may need to raise more money or sell or spin off the unit if it doesn’t show progress before those funds run out next year.

The Information

Oh, come on it’s just $500 million. Don’t be so cheap guys.

Think about it. Some hard-working driver gives you a ride in their car. After you pay your driver, Uber takes some money out of the driver’s paycheck and uses it to fund autonomy technology that will destroy that person’s job. Luckily, it appears Uber was too incompetent to get anywhere close to achieving its goal.

And despite having spent more than $1.5 billion on development over the past four and a half years, Uber wasn’t able to get its prototype vehicles to travel reliably between two of its offices in Pittsburgh, located about one mile apart, said a person with direct knowledge of the situation. The company stopped trying several months ago. (A company spokesman disputed this, saying the company had done it successfully before, and that it wasn’t a priority shuttle employees between the two locations.) The only place where Uber is testing its prototypes publicly now is in a Pittsburgh neighborhood known as Squirrel Hill.

The Information

In their defense, some Uber rides are less than a mile.

Uber’s vehicles have lately been having what the company refers to as a bad experience—such as a sudden jerk or potentially dangerous movement—every one-third of a mile on average, this person said. That’s a minor improvement from last fall, when the cars were only able to travel a quarter of a mile on average between bad experiences, this person said. The company’s leaders had hoped the figure would rise to one bad experience every 10 miles before the end of 2019, but that did not come close to happening. 

The Information

Amazing progress!!! Only 3 bad experiences per mile, down from 4!

In all seriousness, if your autonomous car causes a “bad experience” every 10 miles why would you not just pay a human to drive? You have this LIDAR-based autonomous vehicle that costs $400,000. You need to make back the cost of the vehicle, but nobody wants a ride unless it costs a lot less than taking a ride with a human. This business model will not be successful.

The slow progress means that Uber is unlikely to roll out self-driving cars anytime in the next few years. In a presentation for employees last fall, the unit set an internal goal of generating revenue from driverless taxis in one city by 2022, and that about 100 cars would cover approximately 100 square kilometers. The same presentation said that Uber hoped to launch 20 driverless cars in one city by 2021 and by later this year it wanted 10 cars on the road for a public demonstration of “autonomy readiness” and to “earn shareholder trust.” 

The Information

Uber, the world’s biggest ride-hailing giant, will never launch its self-driving cars. Remember that big dramatic lawsuit and the criminal charges against Anthony Lewandowski? Yup, all for nothing.

If Uber can’t find a path to profits, it’s unclear what happens to the business. Keep an eye on what’s going on here –– it’s bound to be a shitshow.

Read the full story at The Information

P.S. Somebody better cal the doofus at Navigant Research who came up with this hilarious chart: