Uber is Fucked
medium.com
medium.com
Self-driving != Driverless
Self-driving cars is largely a technology problem, and one that we have made great advances in the last 5-10 years. Driverless cars are a legal/social/political problem that we have barely started to look at yet. Self-driving is a driving tool, like cruise-control, but the human driver is still ultimately responsible for the vehicle. Driverless on the other hand places the responsibility for the vehicle, and it's occupants, onto the vehicle itself. Driverless implies that you should be able to use it while you yourself are not capable of operating a vehicle. That is a massive step, and it is something that has never been done before. All other forms of transportation, despite advanced automation, still defers to a human in the end. I would say that true driverless cars is still a significant amount of time away, despite our advances in self-driving tech.
I don't think you are taking into account UberPool. HN comments almost never do, perhaps because programmers are generally upper income and do not feel a need to trade money for inconvenience, but UberX is basically a legacy product and now presented as more of an upgrade if you're in a hurry, rather than the default mode.
UberPool is everything. A network of cars buzzing around the city dynamically routing from one task (transport passenger, transport package, deliver food, etc) to the next, and each task is cheaper because it can share ride segments with other customers.
That is where the winner-take-all argument comes from - the bigger the network, the more efficiently Uber can pack multiple tasks into the same driver-hours, with less delay (more jobs means the car doesn't have to go as far out of its way to share capacity).
Uber is more than dispatch - it's quality control, reputation, dispute resolution, capacity planning, payment escrow, (soon to be) routing (it bought a few mapping companies), commercial insurance (try buying that on your own), and increasingly, the efficiency provided by combining multiple tasks in each car.
When people call Uber a taxi service - when is the last time a taxi offered you a cheaper ride if you agreed to share the car for 5 blocks with a guy 10 blocks down the road?
Disclaimer: I used to work there. Throwaway because I'd rather keep identifying information off my personal account.
Opinion is my own, I do not speak for Uber, etc.
I still don't think that most of those checkboxes is terribly important to either drivers or riders. If I were an Uber competitor, I'd thank Uber for screening the drivers for me. Now I can offer them fares at half the price Uber can offer them for. You have a point about delivery, but in the end that's just another fare. There will certainly be good dispatch networks, and Uber may be one of them, but none of them will be able to maintain high margins, certainly not margins that would support Uber's valuation.
Search up "The horse manure problem:
"...In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows. ..."
https://nofrakkingconsensus.com/2011/03/29/the-horse-manure-...
Every single car manufacturer will launch their own uber-like app, market their app directly to the end-user, and maintain a fleet of taxis nationwide, in order to compete with Uber.
I find the above premise hard to believe. Why would a company like Nissan take on the massive marketing/logistics challenges required to run a nationwide taxi service? Do we really think the market can support 10+ car manufacturers each running their own Uber-like app?
It's so much more likely that each car manufacturer will simply continue trying to sell as much as possible, and let the buyers decide how they want to make use of the car. Even if they do decide to "put their inventory cars to work," they will do so by loaning the cars out to an aggregator like Uber, who will then use these cars in order to run a taxi service. The idea that every car manufacturer will decide to cut Uber out, and enter the taxi business directly, just doesn't sound plausible nor smart.
They would sell support or host each city's car-sharing service for a fee, or just let people set up their own.
This way, cities could run the service at cost (or maybe even subsidize it) and drivers would take home more. Or they could use the revenue for the city instead of having it leave the local economy.
I actually think the form factor most cars come in will become obsolete-- I think they'll be mostly vans and buses to cope with economies of scale on the rider front and to handle rush hour surges. Who makes the bus you last rode on? Do you know? I know I don't, nor do I care.
I mean, Uber is totally fucked if this comes down the pipe and they're not running things, that's undeniable. Their value proposition is running this two sided marketplace that's going to turn into a one sided marketplace. And yeah, putting together a mobile app is a completely different universe than becoming a major auto manufacturer, or a robotics manufacturer of unprecedented scale. (Or in reality, both.)
Decoupling car use with car ownership also makes short-ranged EVs much more viable. Once the car drops you off, it heads back to the mother ship to recharge. A different car most likely would pick you up later anyway.
Why I think driverless cars will beat driverless buses is privacy and flexibility. A bus still has to run on a schedule, driver or no, and let's face it, sharing space with people has its downsides.
Hypothetically, Uber could still co-ordinate rides as a spot market, or get into the "car subscription" / "transportation as a service" industry. But the first movers in that space will likely have to own their fleets.
Technology and economic growth often increases the number of "single person/family" consumer products, rather than decreases them. The "sharing economy" isn't necessarily the default goal that everyone progresses towards for all products (although it may seem like that at times, living in a tech bubble), and "cars" have historically been one of those products that people buy more of, rather than less, as time goes on. Whether this will hold true in the future, who knows? But I don't see it as a given that the market will drastically decrease.
People like customizing their cars, storing things in them, the familiarity of them, and treating them as a "home away from home" even if it's just going to the grocery store. My husband even gets anxious when he's away from home without his car (if, say, we're on vacation or we took a cab somewhere. He never takes public transportation). It's a guaranteed safe place, a way back home, and something he can count on. Sure, you may feel very differently, but you are not every person.
And when you say: "Who makes the bus you last rode on?" Well, I did't have the dubious pleasure of experiencing a city bus until I was 22. Sure, now I ride one every day, but I know plenty of adults who have never been on a bus, much less have convenient access to a route. And while driverless vehicles may facilitate the expansion of public transportation to increasingly rural areas, at some point, you'll hit an absolute mathematical wall at which "the cost of the car transporting itself from customer to customer" will be greater than "the cost savings/reduced environmental impact of sharing the car"
Long story short: I think your assessment of the market is a little premature and somewhat egocentric. Sure, it could absolutely happen that way, but I could also see driverless cars becoming an even more "single user/personal consumer product" than they are today. It's hard to say.
I think a combination school-bus-for-adults/carpool would have a lot of traction if you could automate it. How much is that gonna cut into the car market? Remains to be seen. But not nothing, for sure. And moving cars into a service model is, in my opinion, gonna make a lot of the pricing more transparent. You want an SUV, you'll have to pay for it per ride. You want your own private car, pay per ride. I think consumers, when faced with spending the extra buck on an a la carte basis, are going to start looking into cheaper options.
Rush hour surges are gonna be a big strain on the system, and I really think that school bus model is going to take off. Everybody going more or less in the same direction at the same time, get on the bus and save a ton of money.
Maybe it just turns multiple car families (the default) into single car families. But even that would be a seismic shift in the auto industry.
[1]: http://www.theverge.com/transportation/2015/5/19/8622831/ube...
I think this is probably a solvable problem, though.
Valley has better environment, friendly government/regulation support.
The next version Tesla (in 5 years) might allow the car owner to get to work and auto "uber out" the car to "earn $$$" for the own - start with just Bay Area.
Or Google can
Step 1: Build a few thousand self driving "beta" cars to shuttle only their employees to/from work in year N.
Step 2: Uber out (Guber out) those self driving cars to pickup/drop off anyone in Bay Area, in year N+1.
If the model works for Bay Area, I can see other congested cities will clone it immediately to solve their own traffic problem.
Sorry but there's so much BS condensed in just these two sentences that it immediately disqualifies the whole article.
Of course robotics software isn't based on giant decision trees, wtf. Then what's a self-learning algorithm? Who says that Uber couldn't just license self-driving tech or data? And by the way the plural of AI is AIs, without the apostrophe.
I don't know, I think Uber and Lyft are well aware of the progress in self-driving vehicle technology and their actions point more towards them behind involved in the process as opposed to being left in the dust. The only group of people that are "fucked" are the current drivers whose jobs will be automated.
Uber is in a low-margin business where the only way to really increase profit is to screw your customers or employees or both. If self driving cars are supposed to be the company's savior, good luck being the only organization on the planet that can use them. Having lived through Webvan, Groupon, Zynga, and countless others, I see disturbingly similar patterns in Uber.
Let's see:
> Let's say that's true; the folks at Google are smart and they'll figure out artificial intelligence. Why does anyone think Google will be able to maintain an advantage with that? What's to stop anyone from buying artificial intelligence tools and opening their own AI service? How does the whole industry not become a race to the bottom? Hell, given the price wars going on now, I'd argue it already has.
> Let's say that's true; the folks at Apple are smart and they'll figure out personal computers. Why does anyone think Apple will be able to maintain an advantage with that? What's to stop anyone from buying some computer parts and opening their own computer store? How does the whole industry not become a race to the bottom? Hell, given the price wars going on now, I'd argue it already has.
> Let's say that's true; the folks at SpaceX are smart and they'll figure out re-usable rockets. Why does anyone think SpaceX will be able to maintain an advantage with that? What's to stop anyone from buying some re-usable rockets and opening their own space travel agency? How does the whole industry not become a race to the bottom? Hell, given the price wars going on now, I'd argue it already has.
Apple: The whole industry has become a race to the bottom, except for Apple which has built a phenomenal brand (also see Nike for example of a valuable brand). I don't think the Uber brand is worth all that much.
SpaceX: I think it's fair to say setting up a rocket company has significantly higher barriers to entry than building a taxi dispatching app.
But Groupon I think fits:
Let's say that's true; the folks at Groupon are smart and they'll figure out online coupons. Why does anyone think Groupon will be able to maintain an advantage with that? What's to stop anyone from hiring some web developers and opening their own daily deals website? How does the whole industry not become a race to the bottom? Hell, given the price wars going on now, I'd argue it already has.
In the case of Uber, I'm arguing that the barrier to entry for other companies will be buying several cars in a retail market, because various manufacturers will be selling them.
Until they remove the ability for drivers to actually drive, they are going to be legally responsible. Uber is fine for the next 30-50 years.
Self-driving cars are very certainly the future of Uber, and once self-driving tech is mass-available Uber will have the same accessibility to it that Google or Tesla or whomever else does. At that point, they're competing on price and service quality, just like they do with Lyft and Sidecar right now.
I don't see self-driving tech becoming a major sticking point, because it's not like manufacturers are going to only be manufacturing self-driving cars for their own usage once the regulatory hurdles are cleared.
See some nice photos here: http://qz.com/688003/ubers-self-driving-cars-are-on-the-road...
At least in some countries and cities getting a taxi at the right times have been a hassle, and somewhat expensive. So even if, like Uber, you can expand the marked and steal customer from traditional taxies, how much money is there really to be made? Getting the profit that currently falls to the drivers seems like a logical next step, if they want to increase their own profit.
I'm skeptical that manufacturers would be that nimble to capitalize on the inevitable. That's also not their business model. Building out such an effort in such a large organization would be a challenge. It would be much cheaper for car manufacturers to partner with or buy a company like Uber.
In regard to Uber not having data to create the machine learning models needed for self-driving cards, they could buy that data or start building it up themselves. Google doesn't have a monopoly on strapping cameras and sensors to cars. And Uber certainly has enough capital required. Besides, this is a core strategy for Uber while it's still a moon-shot for Google.
While car manufacturers are hardly the nimblest they're not brain dead and are already exploring related stuff (example: https://www.washingtonpost.com/news/dr-gridlock/wp/2016/07/1...)
If we reach a day where there is some company, call them company U which has a successful dispatch app business, and another company, call them company C, which has just successfully demonstrated (and passed regulatory hurdles for) a self driving car, what do you think will be easier and cheaper and quicker? For U to develop/acquire/license self-driving car technology or for C to develop/acquire/license a dispatch app?
C could probably pay very little to license a dispatch app from any of the many vendors. Even if it's not popular before, it will be once it's the only dispatch app that dispatches SELF DRIVING CARS! But if U tried to license self driving from C, U would probably have very little leverage and end up signing a contract where U runs the show but ships most of the revenues to C. C would be like Microsoft in the 80s/90s, and U would be like a generic IBM PC compatible computer vendor.
Something about the Ninety-ninety rule seems appropriate here:
https://en.wikipedia.org/wiki/Ninety-ninety_rule
I think self driving cars are much closer to 10 years out than the "today" that the author asserts, but I think everyone agree's that we've reached the point where they are coming no matter what.
To give the author credit I went into reading this thinking he was absurd but he does make a good point, some of the points I think are over sold, like planned obsolescence but I think his thesis is sound.
One point I'll make on Uber's behalf......
Two of my all time favorite books are:
https://www.amazon.com/Startup-Silicon-Adventure-Jerry-Kapla...
This history of Go computing.
and Ben Horowitz The hard thing about hard things.
https://www.amazon.com/Hard-Thing-About-Things-Building/dp/0...
Both do a very good job of bringing the reader into the chaotic environment that occurs when startups are in trouble and both have a very similar message. When startups get in trouble having very powerful investors and mentors can make a huge difference.
Uber has some very influential backers. See:
https://www.crunchbase.com/organization/uber/investors
If/When times get tough, they have people who have a vested interest in seeing them succeed. People who can get them talking to the correct people at the car manufacturers to convince them to use Uber's platform over an internally created one.
If self driving laws drag on many years before they are settled then Uber may be fucked in the end but there isn't any reason why they can't be a cash printing machine over the next 10- 20 years while self driving cars replace humans.
As to car companies cutting out uber, there is this.....
http://qz.com/688003/ubers-self-driving-cars-are-on-the-road...
My experiences are vastly different. Neither my Mercedes nor my wife's Honda have "fallen apart" after the warranty period. MB is 216K miles and 18 years old and Honda is ~170K miles and 11 years old. Both have averaged under $200 in parts per year, mostly brakes and tires.
- technical or functional obsolescence (eg. no rearview backup camera, carburetors replaced with fuel injection), or
- style obsolescence (eg. station wagons, quirky headlamps) because styling is a subjective fashion statement. While this is arguably a sub-type of planned obsolescence, it affects every single object that has visual presence, from clothes to smartphones to household appliances.
The kind of 'intentionally crippled engineering designed to fail after the warranty period' the author proposes does not exist, because new cars are perfectly capable of getting themselves sold on their merits, and not because all old cars have been intentionally crippled. In fact, selling secondhand cars is quite often profitable, while selling new cars, outside of the luxury/SUV segment, has notoriously low margins.
Music cos. were supposed to do something similar to iTunes etc. Didn't happen.
> Cars will appear when ordered through the app. They will drive off and disappear when you step out of the car. When running low on fuel, cars will coordinate trips to tucked away re-charging depots to be smartly refilled with electricity.
You mean in about 20 years time?
> Then car manufacturers will drastically start reducing the cost of operating these vehicles.
With magic?
- has few barriers to entry in it's business besides brand.
- scaling up, maturing is dulling the brand
- as a dominant player with a large war chest it may engage in price wars but as a dominant player it will risk regulatory trouble when overdoing it.
- established players will adjust e.g. Taxis orgs. with their app or regional/local public transport integration with car sharing
- while self driving cars may be a little off the concept of ad-hoc renting a car without a driver is catching on in Germany. Like a taxi one rents a car by the minute and drops the car when arriving. Daimler/Smart, BMW and German public railways are all in. This seems also the proving ground for small electric cars - operating a fleet of your own vehicle is probably providing some insights.
Millennial car ownership is dropping vs. earlier generation. So the underlying fundamentals for new transportation solutions are strong. However it is far from clear what role Ueber will have in the medium term.
Come to Boston.
I don't believe this, and I don't believe the author knows anything about cars, from reading this.
One crucial thing to remember, when considering the threat Uber faces from traditional car manufacturers, is that Uber is a software company and they are not. It has a huge advantage in product development, and stands just as good a chance as they do of coming out with self-driving cars for ride-sharing.
Anyone can hire programmers, children can ship products, MLB created a Netflix-like platform to offer media companies as a service, Walmart have made important contributions to open source etc.
The number of steps between Uber's competitors becoming as competent as Uber at software is basically "1. decide to".
The software engineers I have known and tried to recruit tend to want to work for companies that are more like Google and less like General Motors.
The statement Anyone can hire programmers, children can ship products is manifestly untrue. It's hard to get the right people, and it's equally hard to coordinate all their activities to get a successful product over the finish line.
The companies that have healthy cultures of software engineering and digital product management and design are way, way ahead of everyone else. And those companies are in the minority.
http://fortune.com/2016/03/11/gm-buying-self-driving-tech-st...
Also if anything Uber is the one that stems to benefit from driverless car since they won't have to pay the drivers any more. With driverless cars I see their business model becoming something like "want to save 30% on your monthly car payments? sign up your car to Uber!", Uber can even offer financing options to people at considerably discounted rates in exchange for a mandatory opt in period. Heck Uber can go Zip car and simply manage their own fleet when driverless cars become a true reality, it might even be easier for companies like Uber to get a driverless car before the general population, they've already built their platform and have a user base, the drivers are this point are a necessary liability for them the minute they can dump them they will. And if the car makers would want to offer a similar service themselves well Uber can just come in as a service provider offer the car manufacturers access to it's user base and platform in exchange for a usage fee it would be even better for them since they could dump a huge chunk of their existing liability onto their partners.
The owners of the car fleets will be the car manufacturers because they're the ones who can pay the least per car. They don't have to pay any markup!
The self-driving tech will come from Google, Tesla, Apple, or the like, not Uber. See the blog post for the reasons why.
Only 34 states have a primary seat belt law and that took decades of legislature to push through. Legislation takes time, if you think it would be 10 years before we have enough data on autopilot you are fooling yourself, and going from autopilot to driverless will not happen overnight. If we take the US then again it's unlikely that the federal government would get involved on any reasonable time table, this means that the driverless car makers would have to lobby each state individually. Until the big car makers would have a foolproof driverless car Apple and Tesla can do whatever they want they will not match the power of the auto industry lobby just look at how much problems Tesla is having over dealerships.
It doesn't matter who's making the driverless car, Uber has the user base and the platform saying that Tesla is making a driverless car is meaningless unless you would want to make the same argument that Uber should only onboard drivers that drive a Honda or a Ford today because they their cars come in blue.
If Uber survives until driverless cars really pick up (and BTW the 10-20 year window isn't only my opinion, I don't think even Tesla thinks that their car would become driverless road ready or road legal before 2025) and is not torn apart but anti-Uber legislation and sentiment then the driverless car would be the thing to save it not kill it.
Yes, and Uber is working on them. On HN as the same time as this article: http://qz.com/688003/ubers-self-driving-cars-are-on-the-road...
2. Like the article says, Uber indeed is collecting sensor data in Pittsburgh, to train self-driving algorithms. They may or may not be able to deliver an algorithm rivaling the quality of Google or other players. It's contradictory to say Uber has access to no car data, while pointing out that Uber is collecting car sensor data on their own.
The passengers who use Uber may not be very brand-loyal, but that assumes their business model is entirely predicated on customer fares. In truth, their business model is entirely predicated on burning VC money to establish first mover advantage and mindshare, and if they successfully pivot into profitability they will presumably alter business models. Licensing self-driving tech, charging for rush parcel deliveries, providing concierge services -- those are all viable directions in which they can pivot.
3. Being in the business of fleet maintenance is not so fun, and location-aware dispatching, load balancing, etc, requires the sort of secret sauce that, among a few others, Uber has developed. Car manufactures won't engage in this as their core business; they're far more likely to partner with some startup Uber competitor, or Uber itself. But car manufactures aren't like airplanes where the cost of a single unit is so high that it's much more economical to lease indefinitely. Many people in fact own cars -- the very, very profitable used car market is evidence of this, which unlike most new cars, actually has decent margins. While it's true that carmakers have subsidiary banks that offer financing, those instruments enable a larger portion of people to 'buy cars' than otherwise, increasing the total volume of cars delivered. Extremely widespread, mainstream car-hailing on demand would drastically drop the demand for car ownership (in terms of raw numbers) across the board, making it an awful value proposition for car manufactures.