Twitter struggles to get new users, its revenue side is killing it

February 5, 2015 HeG

In 2009 Twitter was a 50-person company punching way above its weight in cultural impact, its micro-blogging platform blasting its way into the public imagination. But its ambitions were even higher. According to leaked internal documents, the company had privately set goals over the next few years of a billion users and well over a billion dollars of annual revenue. Many people thought that the first goal was inevitable and that the second would be a slog. After all, Twitter’s user base was skyrocketing much in the way of other Internet phenoms like Facebook and Google. But there was virtually no income and no monetization plan in sight. When a Twitter co-founder appeared on the Colbert Report that spring, the host remarked, “So I assume that ‘Biz’ in ‘Biz Stone’ does not stand for ‘Business Model’?”

It wasn’t only comedians who held that view. In that summer’s Sun Valley mogulfest, media icons Barry Diller and John Malone, on a “Making Money on the Internet” panel, called out Twitter as an example of a fad product that might never generate serious cash. Cable-TV pioneer Malone said it was unlikely that the company could build a significant advertising business.

Twitter now is a public company with a headcount of 3600 and a valuation of over $23 billion. But it has not come close to a billion users (not even 300 million). The shortfall has unleashed a torrent of criticism, and even intimations that an executive putsch will be required to address endemic product woes.

On the other hand, in 2014 Twitter did generate that billion dollars in revenue. (The final number will come in when the company reports earnings later this week, but its earlier estimate was $1.375 billion.) And the stash has been rising at an annual rate of over 100 percent. Twitter’s bottom line is not in the black, but blame that on continuing expenses in growing its business and (mainly) paying out huge amounts of “stock-based compensation” to employees. That’s not uncommon in the Internet world: more notable is that Twitter has cracked the code to making money on the net.

You heard that right: while the headlines about Twitter describe a company in crisis, the business end of the company has been nailing its targets, and its revenue team is the envy of the industry. “Twitter sold the wrong thing to investors — it sold the user story,” says analyst Brian Weiser of Pivotal Research Group of the company’s emphasis during the 2013 IPO rollup. “In spite of obvious evidence that user growth was slowing, they picked that as the story, and they failed to deliver. But revenue is doing what it should do.”

So how is Twitter making its money? The obvious answer is advertising — those “Promoted Tweets” that appear unbidden in a user’s timeline. Getting there wasn’t easy. And it takes effort to understand how those ads work. But in contrast to the well-documented turmoil in the company throughout its history, the road to revenues for Twitter has been a steady, coherent, patient and innovative path. And more recently, the company has embarked on a strategy to go beyond those ads to make money from selling products directly, and even monetizing people who don’t use Twitter. (More on this in Part Two of the series.)

What’s more, Twitter has turned this trick in its own unique way, creating a system that’s true to its peculiar culture. So here, in somewhat more than 140 characters, is the tale of Twitternomics.

In mid-2009 Twitter’s CEO was co-founder Evan Williams. (Williams is still on Twitter’s board of directors — and, I should disclose, he is also the CEO of Medium, which makes him my boss.) Just after that Sun Valley panel — Williams was in attendance— I asked him about the incident in an interview for a story for Wired. “I didn’t argue my case, but all the Internet guys I talked to were laughing at the media guys,” he said. “Are you kidding? There’s obviously a huge business there.” Later in the interview, though, he blithely admitted that Twitter had made little headway in that direction, mainly because it wasn’t yet a priority. But he noted that since Twitter was widely used by corporations to connect with their customers, the transition would be natural.

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Like the fictional animal, unicorn companies are supposed to be rare and magical. Last month, the Wall Street Journal compiled its own "Billion-dollar club" - a listof 78 venture-backed private companies with valuations of $1 billion or more. When a company hits a billion dollar valuation, most people assume the company is…
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ECB

What the ECB’s Move on Greek Government Debt Is Really All About

February 4, 2015 HeG

In a press release that jolted the markets, the ECB announced that it will no longer accept Greek government debt as collateral starting next week. But this news is not necessarily a potential liquidity disaster for Greek banks.

The Greek banking system is not particularly reliant on Greek sovereign debt as collateral. Figures from the Bank of Greece show that Greek financial institutions currently have about 21 billion euros of Greek sovereign exposure. Furthermore, this debt hasalready been subject to valuation haircuts of up to 40% when used as collateral at the ECB.

All collateral that the Greek banks use for ECB operations that is not Greek sovereign debt is still perfectly good to use. This decision of the ECB is against the Greek sovereign, not the Greek banks.

Further, any shortfall in liquidity will be fully made up by Emergency Liquidity Assistance that will be issued by the Greek Central Bank at its own risk.

So, all together, the move from the ECB should have very little immediate effect on the Greek banks – provided there is not a complete loss of confidence in the Greek banking system in the coming days – and should be viewed as what it is: The ECB is pressurizing the Greek government.

The Greek finance minister Varoufakis has been agitating for Greek debt relief since his appointment after January’s election. Today the ECB gave its answer to his moves. If the Greek government does not agree to re-enter a program, then the ECB will not allow its debt to be used as collateral.

The immediate effects should be seen as limited within market space, but huge within the political realm.

The ECB has often been accused of placing too much political pressure on governments. Today’s moves shows that it has chosen to ignore those accusations once again and do what it feels is right.

Source : http://www.bloomberg.com/news/articles/2015-02-04/what-the-ecb-s-move-on-greek-government-debt-is-really-all-about

Webcast of the ECB press conference 6 March 2014
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Press conference following the meeting of the Governing Council of the European Central Bank on 6 March 2014 at its premises in Frankfurt am Main, Germany, starting at 2:30 p.m. CET: Introductory statement by Mario Draghi, President of the ECB. Question and answer session. Registered journalists pose questions to Mario…
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BANK OF GHANA RAISES BENCHMARK RATE BY 200BPS TO 18%
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When we wait for ECB and BOE we get this news : BANK OF GHANA RAISES BENCHMARK RATE BY 200BPS TO 18%
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Here are some statistics underscoring the severity of the crisis now reaching into all aspects of Greek life
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Greece is reeling from the effects of the biggest economic crisis in its recent history. Here are some statistics underscoring the severity of the crisis now reaching into all aspects of Greek life. 25% The Greek economy has shrunk since its peak in mid-2008. 25.8% Percentage of Greeks who remain out of…
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ECB, Economy

Greek Banks Secured an Additional, Hidden €41 billion Bailout from European taxpayers

February 4, 2015 HeG

In 2013 Greek taxpayers borrowed from the rest of Europe’s taxpayers €41 billion to pump into the Greek banks. This is well known. What is not known is that, also in 2013/4, the Greek banks received an additional, well hidden, €41 billion bailout loan from Greek and European citizens. This bailout was never authorised by any Parliament or even discussed in public anywhere in Europe.

This is how it worked: Bank X would lend money to… itself. It would do this by issuing a bond which it did not intend to sell. So, why issue such a phantom bond? Why write an IOU and give it to one’s self? The answer is: In order to hand this phantom bond over to the European Central Bank as collateral in exchange for a cash loan. Normally, of course, the ECB would never accept such a phantom bond as collateral. Accepting it would have been to accept a loan it gave to Bank X as collateral for the said loan. It would have been an assault on the meaning of collateral and a gross violation of the ECB’s rulebook. So, bank X, knowing this, took its phantom bond first to the Greek government and had it guarantee it. With the government’s guarantee stamped on it, the ECB then accepted Bank X’s phantom bond and handed over the cash. Why? Because the Greek taxpayer had, in the meantime, unknowingly provided the collateral for Bank X’s loan.

How extensive was this ‘practice’? Since 2008, European governments have been guaranteeing private bank bond issues to assist them in their desperate quest for ‘liquidity’. The Greek government was no different.[1] Such guarantees were discussed in Parliament and were widely acknowledged as an emergency measure. However, what is startling is what happened in 2013: The heavily indebted Greek government borrowed €41 billion from European taxpayers (secured from the EFSF as part of Greece’s 2012 Second Bailout Agreement) in order to hand it over to Greece’s private banks as a capital infusion that would, in theory, plug their ‘black holes’ once and for all.

Athens, Brussels, Frankfurt and Berlin have been waxing lyrical about the success of this ‘recapitalisation’, proclaiming it as the end of Greece’s banking crisis. Alas, they skillfully neglected to inform us that, during the very same period (and continuing to this day), a second, hidden, rolling (and thus potentially never-ending) bailout (based on government guarantees of fresh phantom bonds) is being extended to the same Greek banks! (See Landon Thomas Jr’s recent article in the New York Times.)

So far, since early 2013, this hidden, second bank bailout has amounted exactly the same value (€41 billion again) as the official, approved by European Parliaments, bailout. This means that, between January 2013 and February 2014, the insolvent Greek state had to add to its liabilities, on behalf of the Greek banks, an astounding €82 billion or 45,6% of GDP![2] Remarkably, this second, hidden bailout was never authorised by any Parliament, nor discussed in any public forum.

The above practice raises two concerns; and the reader can decide which of the two is the most worrying.

First, in an open society, whenever the public assumes responsibility for private debts, it should be properly informed. In a democracy this means that Parliament (or Congress) should debate the assumption of such additional responsibilities. It would appear that in the Eurozone such an important principle has been sacrificed on the altar of the bankers’ interests. Is it thus odd to hear that Europe-wide voters no longer trust European institutions?

Second, the above show that the Greek debt is continuing to rise, not fall. With indebtedness being what it is, who can honestly speak of the Greek economy coming out of its black hole? Rather, it seems that this hole is getting deeper and all this to benefit a small section of society which has already received highly preferential treatment.

For more details and background briefing on the above, read on…

http://yanisvaroufakis.eu/2014/05/11/how-the-greek-banks-secured-an-additional-hidden-e41-billion-bailout-from-european-taxpayers/

ECB ready to cut rates and push banks
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The European Central Bank announced some measures to ease monetary policy two weeks ago. The euro had been on a downtrend since May and by these measures the ECB increased its support to the economy. The result? Two weeks later, EUR/USD stabilized just above 1.35. This week’s Eurozone economic calendar…
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A number of changes have been taken or proposed as a result of the financial crisis of August 2007 and the “Great Recession” that are worth discussing in terms of the euro crisis. Most important, though, are the changes of the period between late 2011 and 2012: strict budget rules,…
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It was almost exactly five years ago that the euro crisis erupted, starting in Greece. Investors who had complacently let all euro-zone countries borrow at uniformly low levels abruptly woke up to the riskiness of an incompetent government borrowing money in a currency which it could not depreciate. There…
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BOE, Central Bank, ECB, FED

No central bank had considered any of these measures

February 3, 2015 HeG

Who would have thought that six years after the global financial crisis, most advanced economies would still be swimming in an alphabet soup – ZIRP, QE, CE, FG, NDR, and U-FX Int – of unconventional monetary policies? No central bank had considered any of these measures (zero interest rate policy, quantitative easing, credit easing, forward guidance, negative deposit rate, and unlimited foreign exchange intervention, respectively) before 2008. Today, they have become a staple of policymakers’ toolkits.

Indeed, just in the last year and a half, the European Central Bank adopted its own version of FG, then moved to ZIRP, and then embraced CE, before deciding to try NDR. In January, it fully adopted QE. Indeed, by now the Fed, the Bank of England, the Bank of Japan, the ECB, and a variety of smaller advanced economies’ central banks, such as the Swiss National Bank, have all relied on such unconventional policies.

One result of this global monetary-policy activism has been a rebellion among pseudo-economists and market hacks in recent years. This assortment of “Austrian” economists, radical monetarists, gold bugs, and Bitcoin fanatics has repeatedly warned that such a massive increase in global liquidity would lead to hyperinflation, the US dollar’s collapse, sky-high gold prices, and the eventual demise of fiat currencies at the hands of digital krypto-currency counterparts.

None of these dire predictions has been borne out by events. Inflation is low and falling in almost all advanced economies; indeed, all advanced-economy central banks are failing to achieve their mandate – explicit or implicit – of 2% inflation, and some are struggling to avoid deflation. Moreover, the value of the dollar has been soaring against the yen, euro, and most emerging-market currencies. Gold prices since the fall of 2013 have tumbled from $1,900 per ounce to around $1,200. And Bitcoin was the world’s worst-performing currency in 2014, its value falling by almost 60%.

To be sure, most of the doomsayers have barely any knowledge of basic economics. But that has not stopped their views from informing the public debate. So it is worth asking why their predictions have been so spectacularly wrong.

The root of their error lies in their confusion of cause and effect. The reason why central banks have increasingly embraced unconventional monetary policies is that the post-2008 recovery has been extremely anemic. Such policies have been needed to counter the deflationary pressures caused by the need for painful deleveraging in the wake of large buildups of public and private debt.

In most advanced economies, for example, there is still a very large output gap, with output and demand well below potential; thus, firms have limited pricing power. There is considerable slack in labor markets as well: Too many unemployed workers are chasing too few available jobs, while trade and globalization, together with labor-saving technological innovations, are increasingly squeezing workers’ jobs and incomes, placing a further drag on demand.

Moreover, there is still slack in real-estate markets where booms went bust (the United States, the United Kingdom, Spain, Ireland, Iceland, and Dubai). And bubbles in other markets (for example, China, Hong Kong, Singapore, Canada, Switzerland, France, Sweden, Norway, Australia, New Zealand) pose a new risk, as their collapse would drag down home prices.

Commodity markets, too, have become a source of disinflationary pressure. North America’s shale-energy revolution has weakened oil and gas prices, while China’s slowdown has undermined demand for a broad range of commodities, including iron ore, copper, and other industrial metals, all of which are in greater supply after years of high prices stimulated investments in new capacity.

China’s slowdown, coming after years of over-investment in real estate and infrastructure, is also causing a global glut of manufactured and industrial goods. With domestic demand in these sectors now contracting sharply, the excess capacity in China’s steel and cement sectors – to cite just two examples – is fueling further deflationary pressure in global industrial markets.

Rising income inequality, by redistributing income from those who spend more to those who save more, has exacerbated the demand shortfall. So has the asymmetric adjustment between over-saving creditor economies that face no market pressure to spend more, and over-spending debtor economies that do face market pressure and have been forced to save more.

Simply put, we live in a world in which there is too much supply and too little demand. The result is persistent disinflationary, if not deflationary, pressure, despite aggressive monetary easing.

The inability of unconventional monetary policies to prevent outright deflation partly reflects the fact that such policies seek to weaken the currency, thereby improving net exports and increasing inflation. This, however, is a zero-sum game that merely exports deflation and recession to other economies.

Perhaps more important has been a profound mismatch with fiscal policy. To be effective, monetary stimulus needs to be accompanied by temporary fiscal stimulus, which is now lacking in all major economies. Indeed, the eurozone, the UK, the US, and Japan are all pursuing varying degrees of fiscal austerity and consolidation.

Even the International Monetary Fund has correctly pointed out that part of the solution for a world with too much supply and too little demand needs to be public investment in infrastructure, which is lacking – or crumbling – in most advanced economies and emerging markets (with the exception of China). With long-term interest rates close to zero in most advanced economies (and in some cases even negative), the case for infrastructure spending is indeed compelling. But a variety of political constraints – particularly the fact that fiscally strapped economies slash capital spending before cutting public-sector wages, subsidies, and other current spending – are holding back the needed infrastructure boom.

All of this adds up to a recipe for continued slow growth, secular stagnation, disinflation, and even deflation. That is why, in the absence of appropriate fiscal policies to address insufficient aggregate demand, unconventional monetary policies will remain a central feature of the macroeconomic landscape.

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Here’s what to look for from the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole,Wyoming, which runs Aug. 21-23. -- Yellen’s keynote: The highlight will be Fed Chair Janet Yellen’s speech Aug. 22 on labor markets at 10 a.m. New York time. She’ll probably reiterate the Fed’s view…
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Mario Draghi has set the bar high for the European Central Bank’s next meeting Thursday. The bank president’s warning about reduced inflation expectations, made in a speech on Aug. 22, fanned hopes that the ECB may announce additional stimulus measures to boost economic growth and prices. A report Friday showing…
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Runners have target times, golfers judge themselves by their swing, while Mario Draghi watches a technical measure of inflation expectations used by financial markets. Just one problem: it suggests the European Central Bank president is not achieving his objective – and that markets’ fears of eurozone deflation are mounting. Since…
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ECB cuts euro zone rates in surprise move. But ...
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Though ECB cut was covered by the Press in great details but only a few analyzed the results of such measure. Only independent writer/economists talked about the potential losers and winners of the situation. In this article featured in The Telegraph , an economic writer talks about critiques the actions of…
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Startup, Success

Brilliant advice for anyone running a business

February 2, 2015 HeG

If you want to build a successful, sustainable business, don’t ask yourself what could change in the next ten years that could affect your company.

Instead, ask yourself what won’t change, and then put all your energy and effort into those things.

That’s the advice of Amazon CEO Jeff Bezos, highlighted in an interesting post about Uber’s big ambitions by venture capitalist Bill Gurley.

Bezos suggests that you should build a business strategy around the things you know are stable in time — like that customers will always prefer lower prices — and then invest heavily in ensuring you are providing those things and improving your delivery of them all the time.

“When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it,” Bezos says.

To help it achieve lower prices, Uber has poured time and money into the back-end routing algorithms of its app and an intelligence system for demand prediction, congestion prediction, supply matching, supply positioning, smart dispatch, and dynamic pricing, Gurley points out. It has launched UberPool — a ride-sharing option that Gurley argues has become one of the company’s defining initiatives.

As Uber hustles away on making UberPool a success, it is perfectly achieving Bezos’ strategy. It is making a big investment in something that will never change (people wanting to pay less for transportation).

The things Bezos predicted would always be true for Amazon customers is that they’d always want lower prices and speedy shipping. So, the company has spent the last 11 years investing in those things— often forgoing profits to do so.

To work towards those things, Amazon has spent billions on building fulfillment and sortation centers all over the US and the world, a topic which came up on its fourth quarter earnings call on Thursday.

“What’s happened over the course of last several years, with all the fulfillment centers that we have added, is we have actually gotten selection closer to customers,” CFO Tom Szkutak said. “And so that’s helped us from a delivery speed standpoint. And it’s helped us from a cost standpoint too —in terms of transportation cost — because of being closer to our customers.”

It’s been a long, un-ending effort, but worth-it, since customers will always value Amazon’s fast delivery options.

Here’s the full Bezos quote, via Bill Gurley:

“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”

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“If you want something new, you have to stop doing something old” ― Peter F. Drucker A strategy is a plan of action to achieve a major aim and future result. It requires commitment because making change is difficult. To describe what’s involved, Peter Drucker said: “Strategic planning is the continuous…
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AMAZON: NOT AN E-COMMERCE COMPANY
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Uber’s New BHAG: UberPool
60
January 30, 2015: In their seminal 1994 book Built to Last: Successful Habits of Visionary Companies, Jim Collins and Jerry Poras coined the term BHAG (pronounced BEE-hag) — an acronym that stands for “Big Hairy AudaciousGoal.” Collins and Porras suggest that the very best companies set an audacious, very long-term…
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Success

Uber’s New BHAG: UberPool

February 2, 2015 HeG

January 30, 2015: In their seminal 1994 book Built to Last: Successful Habits of Visionary Companies, Jim Collins and Jerry Poras coined the term BHAG (pronounced BEE-hag) — an acronym that stands for “Big Hairy AudaciousGoal.” Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.” BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a new BHAG, and it’s name is UberPool.

A QUICK LOOK BACK

Before we dive deep on UberPool and explain why this program is worthy of being the company’s BHAG, let us first look back at some of the key strategic decisions in the company’s history. If you understand the journey that the company has taken up until now, the more clear it will be why UberPool is the obvious next step.

Uber’s founding tagline was “everyone’s private driver.” Today, the company’s mission statement is “transportation as reliable as running water, everywhere for everyone.” The common component of both the original tagline and the new mission statement is the word “everyone.” In order for Uber to serve everyone it is critical that Uber not only achieve price leadership, but that the company continually search for new ways to deliver transportation at lower and lower price points. This goal – to deliver the highest possible value to the customer – is a key catalyst for UberPool.

DELIVERING MORE VALUE TO CONSUMERS THROUGH LOWER PRICES

Of course, Uber is not the first company to choose a corporate strategy of price leadership. Sam Walton and Jeff Bezos both espoused the benefits of rewarding customers with the highest possible value by delivering to them the lowest possible prices. What is really interesting is that both make the exact same non-obvious argument – that low prices are the very best way to maximize cash flow, and therefore equity value.

“… But this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.”
– Sam Walton, founder of Wal-Mart

“We’ve done price elasticity studies, and the answer is always that we should raise prices. We don’t do that, because we believe — and we have to take this as an article of faith — that by keeping our prices very, very low, we earn trust with customers over time, and that that actually does maximize free cash flow over the long term.”
– Jeff Bezos, CEO of Amazon

In a separate comment, Bezos was more direct in his commitment to delivering the lowest possible price point to Amazon’s customers, noting “There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.” Like Wal-Mart and Amazon, this is Uber’s philosophy as well.

LEARNING FROM UBERX PRICE CUTS

UberPool is actually Uber’s second major initiative targeted at lowering consumer prices. When Uber launched its low-cost UberX offering in the summer of 2012, the company quickly realized that the demand for its transportation services is HIGHLY elastic. As the company achieved lower and lower per-ride price points, the demand for rides increased dramatically. A lower price point delivered a much better value proposition to the consumer, yet still remained a great business decision due to the remarkable increase in demand.

Armed with this new data, Uber leaned on its legendary “math department” to help drive prices even lower. This is the name that founder and CEO Travis Kalanick has given to his team of scientists and hardcore mathematicians who own the back-end routing algorithms for Uber. Uber’s technology goes well beyond its client side smartphone applications; there is also a server-side intelligence system that provides demand prediction, congestion prediction, supply matching, supply positioning, smart dispatch, and dynamic pricing. These are the systems that help balance the more than one million rides per day that are matched on the Uber system.

The “math department” and management realized that if they could increase driver utilization (the number of rides per hour for a driver), then they could lower the price for the end user while maintaining earnings quality for the driver. Higher efficiencies through higher volumes and better algorithms could help deliver the desired lower price points and better cash flows. Interestingly, these lower price points would lead to more demand, even more liquidity, an even higher utilization, and then another incremental price decrease. Pretty quickly UberX passed UberBlack to become the highest volume service on the Uber platform.

GETTING AHEAD OF THE GAME

Uber repeated this circular pattern so many times in so many different cities that some cities witnessed more than six price cuts in a brief two-year period. While these highly successful initiatives have lead to prices that can be as much as 40-50% below that of a taxi, this sheer number of price changes can be confusing to the ecosystem. This January, the company took an even bolder moveannouncing simultaneous cuts in 48 cities, and backing these up with income guarantees for drivers. How could they make such an aggressive move? Basically, the company’s immense historical database of supply and demand curves at different price points makes it easy to predict how these markets will evolve. This allows the company to “forward invest” capital to help these markets achieve lower consumer prices even faster. You might call this “betting on the math department.”

WHAT IS UBERPOOL?

Which brings us to UberPool. The concept behind UberPool is rather straightforward (see graph below). Basically a single driver picks up not one, but two passengers who are headed in the same direction. She then drops off one passenger, and perhaps picks up a third before the first is dropped off. In this scenario, customers are literally “ride-sharing.” If you can manage the system such that each driver averages more than a single rider per trip, you can achieve an even HIGHER level of efficiency, and deliver even lower prices to the consumer. As you can see, this is the natural evolution after UberX and UberX price optimization.

This program is already up and running in San Francisco, New York, and Paris, and the company is already seeing habitual behavior with many riders using UberPool on the same route, five days a week.

The idea of UberPool may seem simple, but the implementation is unquestionably not. If you previously studied combinatorial optimization in theoretical computer science or operations research you may be familiar with the “traveling salesman problem,” or TSP. TSP problems require computationally intensive integer linear programming techniques to find exact solutions. Since there are too many permutations for these problems to be accurately solved, sophisticated heuristic approximation methods have to be developed. It turns out that writing the algorithms for UberPool is quite a bit more complex than a simple TSP, because (1) you have many more than one “salesman,” (2) the destinations are dynamic, (3) new “salesmen” are constantly entering and leaving the system, (4) vehicles have limited seating capacity, and (5) new requests for rides are continually streaming in. This is not just closer to the dynamic mTSP (multiple TSP) problem, which falls under the intimidating classification of “NP-hard,” but moreso under the broader and even more formidable VRP (Vehicle Routing Problem). The math department has plenty to do.

So what makes UberPool worthy of being the defining initiative at Uber?

Read it here : http://abovethecrowd.com/2015/01/30/ubers-new-bhag-uberpool/

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Calendar

BIG MARKET NEWS WEEK 02 Feb 2015 – 06 FEB 2015

February 1, 2015 HeG

China

Monday, February 2, 2015