Dara Khosrowshahi, Uber CEO
Photo: Philip Pacheco/AFP via Getty Images

Protocol Index: How bad will it get for Uber?

Protocol Index

Good morning! This Thursday, Lambda School's CEO on what mass unemployment means for the company, Uber's got an airport problem, and Google employees want to expense their meals. Want Index in your inbox each morning? Subscribe here.

What Matters Today

  • 5:30 a.m. PDT: It's Thursday, which means another initial jobless claims report. Economists expect 3 million people to have filed for unemployment last week, with continuing claims for the week ending April 24 expected to be just shy of 20 million.
  • 1:30 p.m. PDT: Uber hosts its earnings call. Keep reading to find out what to expect.

Layoff Watch

  • Uber laid off 3,700 people across customer service and recruitment divisions. The company suggested more layoffs are coming.
  • StackOverflow reduced its staff size by around 15%, affecting 40 people. Most were furloughed rather than laid off, the company said.


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Today's News

As of 4:55 a.m. PDT: Nasdaq Futures: 1.52% | Euro 600: 0.93% | Nikkei: 0.28% | Hang Seng: -0.65%



  • PayPal earnings missed expectations, partly due to reduced consumer spending in travel and live events. The company said things were starting to recover, though, citing May 1 as its biggest-ever transaction day.
  • Square also missed earnings estimates, with the company's exposure to in-store retail seemingly hitting it hard.
  • An apparent Facebook SDK bug took down apps including Spotify, TikTok and Tinder last night.


  • Liberty Global's Virgin Media and Telefónica's O2 will merge, creating a new U.K. telecoms company worth almost $40 billion. Liberty and Telefónica will have equal ownership of the new venture, with a potential IPO planned in three years. The new business will have 46 million customers, almost 70% of the U.K. population.
  • SIMC is planning a Shanghai listing, hoping to raise more than $3 billion.
  • Endeavor reportedly plans to sell its Epic Games stake in its next fundraising round. Epic is expected to be valued "well north" of $15 billion.
  • Volvo said it would use Luminar's lidar technology in cars from 2022.
  • Loon partnered with AT&T to help its disaster coverage.
  • Latin America VC funding doubled year-on-year in 2019, to $4.6 billion.


Will investors stay interested in ISAs?

Remote education startup Lambda School has an interesting business model. It teaches students how to code without charging them upfront tuition, taking a percentage of their paychecks when they graduate as part of an income share agreement (or ISA). To finance that, Lambda gets external investors to cover some of the upfront cost, giving them most of the ISA payments in return. In boom times, that's all well and good. When unemployment's soaring … maybe not so much?

  • "We live and die by alumni repayment," CEO Austen Allred told me in a recent interview. If students start missing payments, that could cause a problem.
  • But Allred said the problem is mostly Lambda's, not its investors'. Because of the structure of the ISAs, "Lambda is taking the hit," he said. Cash only flows to Lambda once investors have received their advance plus interest (reported to be 13%). So for now, ISA investors still seem interested.
  • "I'm not worried about the investors," he said — before quickly backtracking, saying "we need all constituents to be happy, but we've built conservative models that will allow that to continue to be true."

It might be the perfect time for a product like ISAs, in fact.

  • "We are seeing people who are looking to retrain and short on cash," he said. And with many universities about to hit real financial trouble, this could be Lambda's moment to shine.
  • Not that it's all good, though. Allred said he's worried about the overall reputation of remote education being negatively affected by universities that don't know what they're doing. "I do worry about getting caught in the crossfire of that," he told me.

We spoke about much, much more, including Allred's fears that this crisis will "force a reckoning" across education: You can read the full profile on Protocol.


  • "COVID-19 has created a lot of awareness from investors and the public in general that video is not a bad way of doing meetings." — Odd Sverre Østlie, CEO of Pexip, said the videoconferencing software's IPO is oversubscribed.
  • "It was shocking to us that in these conditions Twilio delivered the largest absolute revenue beat since IPO." — Piper Sandler analysts were amazed by Twilio's huge revenue beat, despite its exposure to ride-hailing and travel. Its stock surged 25% after hours.
  • "I don't think anybody really knows what the next few months hold." — Sonos CEO Patrick Spence told Protocol that the company has been looking for ways to weather the storm, including by reducing costs through a hiring freeze.

Diving Deeper

Uber's big problems

Ride-hailing yesterday was a tale of two companies. Lyft had a glorious day, defying all expectations with a 23% year-on-year rise in revenue. But don't expect the same from Uber later today: The larger service is in a much trickier situation.

  • Uber has "greater exposure to business and airport travel," according to analysts at Wedbush. That means it's likely to be more affected in the long run, with international travel looking like it will be slower to recover than local travel. And because airport travel is more expensive, a drop there could take a big hit out of revenues.
  • Uber's international presence is also a threat. Unlike Lyft, the company has huge operations in Europe and Asia — both of which were affected by the pandemic earlier in the year than the U.S. was.

And while Uber Eats should have been a lifeline, heavy discounting in such a competitive market is putting margins under threat.

  • In short, don't expect good results from Uber when it reports earnings today. And things will get worse before they get better.
  • On Jan. 1, analysts expected Uber to bring in $4.41 billion in revenue for Q2 2020, according to Koyfin data. They now expect just $2.34 billion.

Closing Bell

No, you can't expense your WFH meals

An important thing in business is to manage expectations. It's always better to underpromise and overdeliver, after all. That's a lesson Google could learn. After years of free food in offices, employees apparently need to be told that they can't expense their meals at home, according to CNBC. I've also heard that years of free food have left many tech workers unable to cook, making the problem even worse. The world's tiniest violin plays on.

Thoughts/feedback/tips? Email me — shakeel@protocol.com — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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