Uber operating at big losses, suggests document leak
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I know the comparison is a little strange, but these big startups/tech companies (i.e. Uber/Amazon) feel remnant of the old Standard Oil days. Standard Oil would routinely operated at a loss to hamstring competition. A tech company (similarly) can operate at a loss, undercut it's competition, and skirt regulation until it reaches an economy of scale. At which point competition has been decimated and a monopoly (or oligopoly) is established. The ideal scenario for a profit maximizing business.
Sure they are. Their investments in self-driving cars I think is an excellent comparison: self-driving cars will become a fundamental backbone of transportation in the future, kind of like AWS is for the internet right now. Uber's not the only one of course, but if they can grow to lead the pack with research, production and use of a large fleet of self-driving cars, then they are in a very good position for the future.
I'm not holding my breath for great engineering from Uber, but that's a bias and at least I can see that.
If you have insider information you may have more reason than I to have that bias.
I'll say this: uber will be the next groupon, zynga, webvan, ... it's laws of physics, we've seen it before -- take a simple but good profitable product with early user growth, a big market (ppl needing cabs, groceries, stuff at discount, addictive entertainment), and then completely kill it through over-investment. Then they use the money to buy the growth they need to justify their ever-higher valuations.
Market growth really looks more like a sigmoid than a hockey stick. Towards the top, near the plateau, it's possible to buy growth to feed the myth of the hockey stick. By doing this, you are incurring a sort of technical (real?) debt that is harder to pay back than people realize, particularly as margins get squeezed by inevitable competition.
In Uber's case, they will also mostly lose in court.
[1]http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why...
Did anyone really think that $5 Uber pools were money makers?
I don't think that they're supposed to, that's potentially dangerous thinking, depending on their business strategy. It's not an uncommon practise though.
Sure they need developers, infrastructure, marketing and all the stuff required to run any business, but the drivers and vehicles aren't costing them money. So why do they need $1bn in cash? It would be very interesting to see the Uber yearly budget.
UberPop did not provide those insurances, and instead said the drivers would have to pay them themselves. As that is not acceptable for the drivers, and Uber directly suggests the drivers to just drive without insurance, the courts ruled that Uber will be fined 240k€ for every business interaction its UberPop service does without providing this insurance.
Remember, not all taxi regulations in Europe are crazy, most actually make sense.
That's a bold claim. No government is immune from protectionism legislation and corruption, in fact this is the defacto mode of almost all governments. I'm getting a little sick of Europeans thinking their shit doesn't stink. Paris cab drivers were throwing cinder blocks onto cars with impunity last month. You people aren't special, you're just unbelievable statist to the point of not questioning your government. The German laws sound corrupt as well. Everything about the taxi industry is a shitshow. Lets all accept that. This is why Uber is so exciting and popular. The cab industry deserves to be disrupted. Considering political corruption over the decades, this path won't be easy, but its worth doing.
Uber is not even treated legally as taxi service, but as chauffeur-for-hire service, meaning they only need to do 2 things: Their drivers have a drivers license, their cars are insured.
The drivers license for taxi drivers, chauffeurs and bus drivers costs 55€. fifty-five Euro. That’s nothing.
And one can reasonably demand that cars on the street are insured, as especially in car crashes it is helpful.
Depending on the city the promotions may get more aggressive, they also have a Get $25, Give $25 deal for referring new riders.
Alternatively you can just search "uber invite" on Twitter and you'll find any number of people hawking their own referral links. There was an article earlier in the year about someone who gained tens of thousands of dollars in Uber credit through taking advantage of the referral system: http://www.businessinsider.com/blake-jareds-50000-uber-credi...
Basically, they're spending up to about $50 for each pair of users engaging in that way. It's likely the users will eventually become loyal Uber customers, but Uber might not realize that return in the short-term. It's the cost of growing so quickly, and the money they've raised is essentially to fund this.
Usually there is a international growth employee that comes to a city, establishing an office and looking for key hires such as marketing and operation analysts. At least in Brazil, they also spend a good amount of money hiring security for big events for preventing assaults from regular taxi drivers, lawyers and also paying the bills for when Uber cars are towed away by city law enforcers.
They are constantly issuing vouchers for free and discounted rides, as well as making promotional campaigns where they deliver ice cream or nail-care services for free.
Well, this is a failed experiment.
Investing in growth > short term profitability (which they could do of they wanted to miss future markets)
UberPop was banned (not UberBlack, though) because Uber refused to only hire drivers who had a chauffeurs license; because Uber refused to pay insurance.
And anecdotal evidence of the uber pricing is that it’s not a bit more expensive than any other taxi or chauffeur services.
Paying drivers 'badly': There were multiple submissions about this topic on HN, use the search.
This meme is really winding me up lately. Sure, it seems like in the US market there are protections in place for existing firms - tax medallions etc.
This does not apply everywhere and some of the regulations around this industry are genuinely for consumer protection. Uber may well have a case for some of the regs to be reviewed, but you can't just blithely dismiss every rule as protectionist.
I've only used uber twice, but it was about half as much as a taxi would have been.
Not much of a story here...
If they keep burning cash like this I dont think they will make it 5 years and still be in a position to purchase automated cars without additional funding.