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Comment by Retric | Hacker News Reader

Uber needing 3.5B is a huge negative sign IMO. Clearly something is broken with their business model.

> Uber needing 3.5B is a huge negative sign IMO. Clearly something is broken with their business model.

If someone is willing to give you $3.5 billion dollars I'd argue you've got a solid business model. Either that you're just really good at raising capital.

Let's revise "solid business model" to "solid ability to sell the company's value". A solid business model doesn't require this sort of continuous cash infusion.

require != want

> A solid business model doesn't require this sort of continuous cash infusion.

Where is this assumption that this cash is required coming from? A very common use for investment is to accelerate plans which would otherwise unfold over long/impractical timelines. Another common use is to get ahead of competitors.

I know much of HN is very eager to see all billion dollar valuations deflate so as to prove that extremely conservative risk profiles are the only strategies worth considering, but there's nothing inherently troubling about a highly-valued, late-stage company raising so much money.

> much of HN is very eager to see all billion dollar valuations deflate

where do you get this from? HN is news for the people building startups and I would imagine they like high valuations :)

> where do you get this from? HN is news for the people building startups and I would imagine they like high valuations :)

Nah most of us are getting the popcorn ready.

Loans are vastly cheaper than selling stock. Companies sell stock when they are overvalued, they take loans/issue bonds when they are undervalued.

>but there's nothing inherently troubling about a highly-valued, late-stage company raising so much money.

Maybe not troubling, but interesting. There's definitely something interesting there. For one thing, nobody wants a representative of the Saudi government to sit on their board and yet they took their money. Clearly they didn't have a lot of suitors willing to dump money on them and clearly they had some (major?) need of capital.

> For one thing, nobody wants a representative of the Saudi government to sit on their board and yet they took their money.

Says who? If you want to expand in the Middle East then having high level officials with skin in the game is a plus. I wouldn't put it past them to ban the competition and pressure their allies accordingly.

> For one thing, nobody wants a representative of the Saudi government to sit on their board

I think there is a faulty assumption here; I don't see much evidence that the Saudi government is treated as some kind of pariah investor that everybody wants to avoid being represented on their board, such that they have to offer substantially more favorable terms or be the only player around before people accept their money.

> For one thing, nobody wants a representative of the Saudi government to sit on their board and yet they took their money.

Why do you assume that? It guarantees them favorable treatment in a growing market.

uber's got a solid ability to sell the "driverless car fleet monopoly" dream to possible investors. thus valuation = dream selling while acquired invesment = subsidizing current transportation. all those in uber dominant countries, you should enjoy cheap transportation while you can. all other should pray that uber gets significantly big yet still not all powerful so that there is some competition left to keep the prices in check.

That "someone" in this case is a notoriously poor investor, so maybe scale back that optimism.

There's a perverse logic in your statement, the fact that someone is willing to give you money does not mean that you have a solid business model. It does say something about the other party's risk tolerance however.

In my simplistic mind, their business model is to spend a lot of money today in order to create a monopoly tomorrow.

In what way is the ride-share market any sort of monopoly when there's little barrier to entry. In fact, I see new entrants in this market all the time. Hardly any chance to be a real monopoly unless they can somehow carve their way to exclusivity in a market, which is never going to happen.

The ride-sharing market stops being a free-for-all once many people start to share a car and it's critical to find the most optimal route for them. Than having large masses of users become critical.

The only thing i find curious - why is UBER/LYFT so slow in attacking the true sharing market ?

Because people don't actually want to share a cab with a stranger, and wait while that stranger is dropped off.

At least, that's my bet.

Yep. I've been creeped on by drivers before. Not many, but it's enough that I've taken to cancelling more rides than I would have in the past (generally: male driver I don't know + low rating + nighttime = cancel). Having to deal with sharing a car with not just one stranger, but two or more strangers? Nuh-uh. At least most drivers won't creep on me because they want to keep their jobs; fellow passengers, on the other hand, don't have that incentive.

Their long-term play is driverless cards--buy or lease fleet cars, then charge people a subscription to commute or use the cars a certain amount per month. The current business is building brand awareness and inertia.

I've seen this idea but can't understand it. By owning or leasing a fleet of driverless cars Uber only increases its operating costs

Well, for Uber it's do or die.

But for the manufacturers of autonomous vehicles- why would they sell cars Uber at a ~5% margin per car when they can offer the robotaxi service themselves and command a ~25% margin per trip?

That's easy. Because don't have to worry about finding customers, fighting off competition, and competing with their customers (like Uber). They just have to worry about building cars.

Further, they're also collecting massive amounts of data about commuting patterns that will give them an edge over new entrants once driverless cars are a thing.

Ahem. "cards" = "cars", "inertia" = "momentum"

Sorry if I was not clear. I meant that it sounds to me that this is their plan. I didn't say they will succeed.

I wouldn't be surprised if Uber and Lyft start lobbying for legislation that will make it difficult for new entrants in the market.

If you look at the Uber blogs and public statements, the company is far more ambitious than simply being the ride sharer with the largest market share.

The company's vision is to make transportation as seamless and reliable as running water. They have other projects going on right now, such as delivery truck automation and self-driving cars. I would consider them to be competing not only with Lyft but also with Hertz, Budget, and Enterprise.

Please, this is all hype to capture investors. What does Uber have other than money that gives them an advantage in self driving cars? Having users doesn't matter either. Google could add self driving taxi summoning to Google Maps overnight and we'd all be using it.

On my Android phone, when I look up directions for something, it shows something like this in Google Maps:

    Drive | 10 minutes
    Bus   | 35 minutes
    Walk  | 75 minutes
    Bike  | 25 minutes
    UberX | 13 minutes

This could be some add-in from having the Uber app installed; I have Lyft installed as well and it doesn't appear.

I agree that this "like running water" tag line is a bit over the top.

Its a standard feature on mobile, it does require the providers app installed, and there are a limited number of supported providers:

https://maps.googleblog.com/2016/03/your-car-has-arrived-mor...

To me it seems like they're realising that there aren't actually that much money to be made by taxiing people around. Now they need another infusion of cash to transition or expand the business, hoping to find some other source of profit.

I tend to agree however its completely plausible the raising is used just to chase after new markets.

I don't think UBER has finished discovering their business model, and they probably knew so all along. their end model might be something like via(ridewithvia.com, just raised $100 million, an in-depth user review here[1] ) - shared transportation, filling each vehicle with 3-7 people at peak times at much lower costs.

The question now is: can UBER go from here to there ? and how fast ?

My answer is yes, i think they can. Assuming via has some unique software/skills(maybe), they can just buy them, and scale that service(drivers will be happy for more business, taxi users will share a good deal letting UBER reach non-taxi users fast).

[1]"I took Via to work everyday for a month. Here's what I learned" - http://www.brickunderground.com/live/commute-via

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