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I don't think Uber is going to completely turf out, but I believe they will experience a correction in their valuation.

It looks like they last raised money at a $62.5 billion valuation [1], which suggests that investors are expecting the company to operate at a global level. Unfortunately, Uber is facing extremely stiff competition in China [2] and India [3]. There's also the well-publicized tension between Uber and various European companies. And that's not even taking into account increased regulation in US cities like San Francisco [4].

So, while Uber is clearly a successful company - how successful will it be? $62.5 billion dollars successful? My guess would be no, which would drive a correction for the company.

[1] http://www.bloomberg.com/news/articles/2015-12-03/uber-raise... [2] http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding... [3] http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-s... [4] http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Ube...

Agree - Uber suffers from the same problem as Square. They created a new product expecting it to be stickier than it actually turned out to be.

In Uber's case it turns out "better than a yellow cab" is a pretty low bar to clear, and neither drivers nor consumers have much loyalty and are highly price sensitive, creating a race to the bottom.

In Square's case it turns out merchants will gladly use a slightly-worse iPad UI for payments if the fees are lower, and consumers don't really care regardless. Again, race to the bottom.

Right now it looks like Uber is engaged in an epic price war in many markets where the prices are unsustainably low - and these prices are sustained by a combination of setting VC cash on fire and squeezing driver pay. Having no insider information into Uber, I'm a bit skeptical that they're that close to be sustainably profitable.

Uber's problem seems to be that they need to raise prices and cut driver rates once they've captured a market and driven out competition. Either that, or they need to switch to driverless cars to eliminate that component of their business - but that seems to be a ways off, and there's no reason to think other players won't be just as successful when you're able to remove drivers, one of the larger variables, from the overall equation.

https://twitter.com/neilanalien/status/627873374505562112

Squeezing driver pay: indeed.

My mother drives in SF for Uber and Lyft. She makes about one quarter (with the same time/schedule) she did less than two years ago.

Some call this _market efficiency_ and point out this is functioning as designed.

My mother, she's moving back to Washington State.

> "better than a yellow cab"

Better than a yellow cab (UberX) isn't the interesting part of Uber's business, Pool (and a swarm of dynamically routed cars buzzing around a city, picking up and dropping off people and cargo) is. Further, that swarm becomes more cost-effective the larger it is.

What matters more, driver loyalty or user loyalty? Uber feels like the Kleenex of its industry. Outside of the tech hubs I don't feel that most people are even aware that non-Uber ride services exist. I certainly here people asking their friends "should we get an Uber?" all the time.

> Uber feels like the Kleenex of its industry.

I agree but not, I think, in the way you intend. If someone asks for a Kleenex and they get passed a non-Kleenex brand tissue, they rarely object. "Uber" could just become the 21st Century "Hoover".

Tissue paper is bought at a grocery store with each brand sitting next to each other. If tissue paper brands each had their own store, like ride sharing apps do, then I think Kleenex wouldn't have the problem you describe.

Uber still has to compete on price, for sure. But there's certainly friction to A) download non-Uber ride sharing apps and (even greater IMO) B) open multiple apps to compare prices.

If Uber's price doesn't seem unreasonably high, what reason is there for people to compare?

>open multiple apps to compare prices

that gives me an idea...

http://www.whatsthefare.com

There was a similar app during the check-in app craze (where a half-dozen competing apps existed) but that didn't stop Foursquare from eventually winning the space (even though it was arguably not the best of the options).

Aw, poor Gowalla.

And loopt, brightkite, whrrl (spelling?) and probably more. And that was just within the "check into a place" category. There were also other categories like checking-in to what you're watching on tv (GetGlue), checking-in to what you're eating (Foodspotting), checking in to what you're drinking (Untappd).

Some of these are still around but most are not. Not sure if the ride-sharing space will turn out the same or not. I feel at least Uber and Lyft are probably safe.

This may be related to my provincial ignorance (I was in Ann Arbor during the check-in boom), but I remember Gowalla being the Lyft to Foursquare's Uber. Of course, there is an actual business model for the ride-sharing companies, so maybe there's room for multiple players.

It's not a great comparison because Gowalla had essentially no competitive advantage, whereas Lyft at least has the chance to have one. Gowalla competed on "better design" for a while but ultimately the network effect of Foursquare mattered far more. Lyft is making headway in some cities so I think they're doing fine.

They invented the concept, so far as I was aware, in the form of Dodgeball. Foursquare was just their relaunch of Dodgeball after the failed Google acquisition.

It's a fair point, honestly Lyft or whoever should be doing this themselves. If they just listed competing prices (heck, even link out to the other apps) that would be a strong reason to use their app as your default.

Tangential, but this is exactly what's happened in some parts of the adtech market, it's called "mediation".

> >open multiple apps to compare prices

> that gives me an idea...

...for the ride service fare and time comparison feature in Google Maps?

I wonder how difficult it would be to build an app that lists and estimates fares for different local car services.

> I wonder how difficult it would be to build an app that lists and estimates fares for different local car services.

Google Maps (on Android, at least, but I assume generally, I just haven't checked elsewhere) has that feature already, though when I've checked what it showed it only listed Uber. Even if it is currently Uber-only, the feature's UI makes very clear that its intended to be a ride service time & cost estimate comparison feature, so...

https://goswift.ly/

My friend wrote it. Includes other modes of transportation like buses and scooter-shares.

Not sure I agree. I'm in Boston and my friends (mostly not in the tech industry) use Uber, Lyft, and Fasten pretty equally. Its all about where we can get a cheaper ride from

That's probably more commonly true in cities where people already heavily use public transportation and cars are not necessities; much more likely to be aware of these sorts of things. In contrast, cities where you only use ride-sharing on weekend nights a couple of times a month when you drink too much, there's less of a need.

A big part of Uber's advantage is corporate nullification. I'm sure their app is nice, but avoiding regulation appears to be their big advantage. Government may be slow, but it will catch up eventually. There are already several cities moving to update regulations so that Uber and the local taxi companies are playing by the same rules.

Brand loyalty is practically a myth at this point. I don't use any service or any product without some reservations about the company that made it, especially when it comes to apps and cloud stuff.

People I talk to about this sort of thing USE online services, but we're also fully backed up and ready to move at a moment's notice. Probably a consequence of watching so many of these things go up in smoke.

Yeah, I see the same thing. Multiple apps open. Zero driver loyalty. Ride-sharing companies commodified drivers, so drivers commodified ride-sharing companies.

And so have customers. It's like grocery shopping. One store might be a little cleaner than another, have longer hours or feel safer, but, mostly, you go with the low-price leader.

What I think could/should happen is someone releasing an open-source version of Uber/Lyft and selling support for city governments to run city-owned ride-sharing services. If the Uber app only worked in the city I live, I wouldn't mind at all. It would also be no trouble to download the local ride-sharing app when visiting a new city.

This would be a win-win for many reasons, one of which would be that cities would keep the revenue from these services, or they could run it at cost and send more money to the drivers (thus stimulating the local economy and not VC valuations)

It's worse than that: not only are there plenty of competitors to Uber (especially on a local scale), but in a way, Uber sowed the seeds of its own destruction. Before Uber, all the regulations around the taxis business were a pretty high barrier to entry. But with billions of dollars of VC backing, Uber has done a pretty good job of clearing the regulatory hurdles out of its way... and out of the way of its competitors too. I suppose we should be thankful to the venture capitalists for so generously donating money to improve competition in the taxi industry.

Worst case scenario they pull out of China (where they are purposely hemorrhaging money). Their profitability in America, means they are in no threat of "dying".

But will they continue to be profitable?

Imagine a new startup launches today offering ridesharing in NYC. Drivers - who already have Lyft running - add the app to their roster. After some advertising spend, so do users. What is Uber's strategy to stop them? Spend more money, usually - more advertising! More drivers! Is that sustainable?

What is Uber's moat?

Driverless cars and state of the art engineering infrastructure.

Driverless cars at least half a decade if not a decade away from widespread adoption in cities. Who's to say they'll last that long? What does "state of the art engineering infrastructure" give users? I don't recall Lyft's app ever failing on me.

Finally, Uber get's pushed out of relevance by driverless cars, from BMW, Mercedes-Benz, Chevy, Ford, etc., who will ultimately never let them have this market.

Driverless cars don't exist and there's literally zero evidence that Uber has a stronger claim on that market than any other aspiring company.

Engineering for an app like this is non-trivial but hardly insurmountable.

The one advantage they do have is network effect, the more drivers and users they have the quicker it is to get a ride and more lucrative for drivers. That does matter, the question is how much.

If anything Driveless cars is a huge threat to uber. Buying the cars would be a massive capital investment. Right now they rely on their employees/contractors to bring a 20k+ asset to work with them.

Someone like Hertz or a General Motors already have fleets and know how to manage them. All they have to do is engineer an app.

What is easier? A nationwide vehicle fleet or an app that connects drivers to riders.

And you know GM is invested in and partnered with Lyft, right? GM also fully acquired Sidecar, the recently shuttered Lyft/Uber competitor.

Driverless cars will happen at the same time for everyone. Uber's competitors will get them at the same time they do. It will not amount to a long-term or even short-term advantage.

If you compete on price through dumping, then the party with the most cash reserves (Uber) survives and bankrupts the competitors (Lyft).

That's completely iffy.

Maybe the party with biggest publicity budget wins, or maybe it's the one with lower overhead (in things like publicity), or maybe it's the one that pays better the drivers...

Or maybe there comes a company with a really open network, and destroys the entire market in exchange for a couple million (what is a good thing, by the way).

But Lyft is now partially owned by General Motors, who have every incentive to make Lyft the winner here.

Pool. One-off rides are fungible; shared ride infrastructure is only cost-effective with scale.

  Their profitability in America, means they are in no 
  threat of "dying".

Ha.

http://www.businessinsider.com/uber-says-its-profitable-in-t...

  Citing previously undisclosed financial documents, 
  Bloomberg pegs Uber’s February US profit per ride at 
  $0.19 (not including “interest, taxes, and equity-based 
  compensation for employees").

Nineteen cents per ride. Before tax!

They're doing more volume than the entire taxi industry though. It adds up.

http://www.barrypopik.com/index.php/new_york_city/entry/we_l...

The article isn't specific enough to know for sure whether that's average profit per ride, or whether that's the margin they skim off the top per ride

Does that $0.19 come from (total margins from US rides - total US operating expenses) / (total number of US rides), or is it (total user payment - total driver costs) / (total number of US rides). The former means that they're actually bringing in about 10m in total net profit per month, which isn't terrible. The latter means they're probably not doing so well.

Lyft seems to have the right attitude. I hope they gain market share, and overtake Uber.

Yea--Uber has always rubbed me the wrong way, on so many levels.