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Comment by jsemrau | Hacker News Reader

I still believe that Uber artificially creates a market by subsidizing a price point that is attractive to the drivers.

If their unit economics are positive than this is not true. If their unit economics are negative then it will be a spectacular show when the music stops. This is aside from promotional costs for the first few months when they enter a new market, as long as those costs actually decrease within the first year in a new market.

That view doesn't look at the big picture - it's very possible that they are allowing for, and happy with, losing money to grow market share for many more years, maybe even until they can offer driverless rides to turn market share into profit.

Waiting for driverless cars to make them profitable seems like one of the worst bets you could make. Even if they were content to wait, say, 20 years, when driverless cars hit the market, what's to stop anyone from buying a small fleet of them and tossing their own uber-like app up on the store?

Heck, I can even see it in the distant future, turnkey Uber-like businesses, you get your choice of franchise to buy into. You supply the cash for the cars, they supply you an app and a little branding.

Saying "Uber's playing a long game by waiting for driverless cars and THEN..." just seems totally implausible.

Its not playing the long game. Its playing the short game. Self driving cars are going to be here for consumers by 2020.

What protects Uber is the network effect. Even if I had a million self driving cars right now, nobody has my app installed, and I don't have an optimized pricing and logistics set up yet.

And if you have your own fleet of self driving cars, why would you build the whole setup yourself? Why not just rent them to Uber?

> Self driving cars are going to be here for consumers by 2020.

I doubt this is true, at least if you're talking about all-weather driving. Not even the optimistic researchers I've chatted with are that optimistic; this timeframe would require all-weather driving to be basically solid at the research level by 2018 or so, which is not totally impossible but unlikely. Maybe if it's limited to Uber Phoenix, though.

All weather no. But a partial roll-out still makes Uber a lot of money.

Self driving cars that work 90% of the day means Uber gets 90% of potential profits, and continues to use human drivers for the other 10% "surge" time period.

To be fair, a lot of the self-driving car testing and research thus far has been done on rather linear freeways in immaculate California weather. It's pretty easy to become overoptimistic.

At least, Uber ATC is in Pittsburgh, where it can become more grounded in reality by potholes, haphazard construction, thin windy two-way roads without markings or lanes, and unexpected acute precipitation.

If you're Apple/Google you laugh at Uber while you make your app a default on every iPhone/Android.

I doubt very much customers will have much brand loyalty to Uber. There is very little differentiation of the actual service.

Uber must be prepared for a world with self driving cars. But if their entire model requires self-driving cars in order to work, if they are simply burning cash every year until then, then I think they will burn-out long before self driving is a reality.

"Self-driving cars in 3 1/2 years" seems, to me, like "consumer electricity from fusion in 10 years".

For fans of a technology, that's a familiar optimism. I was young once, 20 years ago, I felt that way about fusion myself, hah!

Right, and by the time we get self-driving cars, whatever Uber is doing now will already be commoditized (cf. Arcade City).

good luck finding any competitor willing to sell you a small fleet of them and let you launch a competing service, not only that they are the ones in control so if you launch a competing service with them, they could disable your cars.

Uber, Apple and Google have all taken the approach that they will rely on their own autonomous systems retrofitted onto existing cars or potentially build new cars instead of relying on anything the existing car companies make, otherwise it makes no sense for any of them to be investing billions of dollars into research if they think they can just go to Ford/GM/Tesla/etc. in 2020 and buy enough cars to launch a fleet service.

So this is an interesting thought -- will the general public even be able to own their own self driving car? Or will self-driving functionality be locked down with DRM to such a degree, will the developers of the technology hoard it / control it to the point that they are the ultimate arbiters of what you can even do with a self driving car?

What scares me is that there is absolutely precedence for companies to act like this, and I can even imagine legal arguments about the hardware requiring certain oversight and maintenance to allow self-drive to be enabled. Kind of like John Deere exerting control over their tractors but even worse.

So to your point, in such a world, no one could go out and buy a self-driving car, and certainly not a fleet of them, and then just try to independently run this service. If you want the car to drive you from Point A to Point B you would be signing a TOS saying it was for personal use, yadda yadda, and all the APIs would be completely locked down like a walled garden preventing people from taking the self-driving platform and building on top of it. This would all be in the name of safety and limiting liability, of course....

Here is tesla's comment on it, but it seems like they will be fully in control of the fleet/app software and could potentially favor their own cars in cities where they are running their own fleets over your own cars you have added into the fleet as it benefits them financially more.

Potentially "jailbreaking" and building your own fleet/app would be an option, not sure how legal but if tesla issues a critical security update and the vulnerability gets published by the researcher and the the jailbroken ridesharing provider you are using hasn't updated yet/can't because it will break their jailbreak in the short term, you are exposed

"When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.

You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.

In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are."

https://www.tesla.com/blog/master-plan-part-deux

I think Tesla has shown that jailbreaking the car is definitely not an option -- they will remotely brick your vehicle if they catch you.

So I think this a great example where you can add your Tesla to Tesla's own on demand service, but if you don't like the rates Tesla offers, and you want to put it in rotation with someone else's service, you likely run afoul of the ToS and risk bricking your car.

This probably helps explain why so many different companies, including Uber, are racing to develop their own self driving platforms. Because it won't be a bolt on feature by a supplier that anyone can build on, it will be a highly controlled and locked down service funneling the profits to the platform owners.

Uber is already lobbying for more regulation against competitors, and is making anti-competitive moves in the areas where they have the upper hand.

It’s clear they’re using the standard startup strategy: Getting a monopoly in a new market or by replacing an existing market, then abusing that.

Definitely. Even as a consumer, I am able to order food from UberEats, and the total costs less than the cost of the food on the menu at the restaurant because of Uber's promotions.

Key word, promotions. CAC is a thing, so is CLTV. But negative gross margins are something different.

Well, that was a rather condescending explanation of concepts of which my post didn't necessarily imply I didn't already know about.

Yes. Unfair competition.

Wouldn't it be more than competition since the market would not exist in the first place?

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