Uber revolution will not last | Hacker News Reader

Uber revolution will not last

washingtonpost.com

70 pointsdannylandau117 comments

This is gold...

"So, yeah, it’s great: you hit the app, and the car shows up now in 10 minutes instead of a 35-minute wait. But now the traffic congestion is so bad that you’re sitting in that car for 20 minutes longer to get anywhere... cities now are starting to discuss and deal with: traffic congestion. The traffic congestion is so much worse.

Now, is it all because of Uber? Not it’s not...you suddenly have a new service that’s committed to just flooding the streets with cars, putting thousands of more cars on the street. Is it any surprise that now the streets are more congested?"

This is total stream of consciousness. Is Uber multiplying the taxi fleet? How can one put so many competing statements together like that and think it's coherent? Should we revert to poor taxi experience? Will that bring down traffic congestion? What's the point?

Exactly the part where I stopped reading

I still went ahead and stopped at the following:

> having a few self-driving cars on the public streets of Pittsburgh looks to me like an act of desperation — come on, what a joke: a few cars driving around Pittsburgh, and the human “non-drivers” still have to be sitting in the drivers seat? This is supposed to be a sign of progress?

Medallions (whether or not they were a good solution), were intended to restrict the number of cars on the road during peak hours, and enforce some uniform regulations on all taxis (pick up people of all races, etc.)

Uber's' innovation leads to a fleet that's easier to regulate due to constant monitoring, and pre-booking data. However, when it comes to traffic congestion, their solution is pure demand-side economics: increase prices as high as the market can bear. This means with no cap on supply, more and more cars will get put on the road to serve as part of the private fleet and it's the cities that have to bear the increased costs of road construction & maintenance.

My only hope is that rather than make cities crack down on Uber to maintain the status quo, they'll instead invest heavily in public transportation so all cities can have something on par to NYC today, and NYC tomorrow can have something on par to Tokyo.

That's not exactly true, cities can and do still have limits on the number of cars, case in point Seattle:

hhttp://blogs.seattletimes.com/today/2014/03/seattle-city-cou...

That's true, and is what I meant by my worry that cities will crack down to maintain the status quo.

Doing so is easily done as a consequence of Uber being centrally controlled, with full tracking on all its cars. A city can trivially know exactly to the minute how many cars are in operation via Uber at one time.

However, regulation of that sort isn't what Uber wants, they want a situation where supply is unbounded and people only compete/control demand.

That's what the consumer would want too

Those cars are registered and taxed to the state, county, and city where the driver lives. These aren't scofflaws driving in from out of town- the municipalities are getting at least their fare share from the drivers to maintain the roads.

"fare share"

I assume this was an accident, but it's actually better.

Ha, Freudian slip I guess.

The creation of medallions had nothing to do with the number of cars on the road at peak hours, or regulations about race. They were created during the depression in NYC to protect jobs for taxi drivers.

Taxi licensing has been around since before cars. The "medallion" system with tradable permits may be from depression era New York for all I know, but just about every locale in the world has come to the conclusion that there needs to be a limited set of permits.

You can push the prices down a little with unlimited competition, but the few dollars you save aren't worth the indirect costs associated with taxi driver desperation: tax fraud, gouging, barely running cars, outright extortion, etc. (Of course, if the municipality decides to pad their coffers by auctioning the permissions/medallions, you get all that in addition to lower competition.)

http://www.nyc.gov/html/media/totweb/taxioftomorrow_history_...

just about every locale in the world has come to the conclusion that there needs to be a limited set of permits.

Any city that is allowing Uber or Lyft hasn't come to that conclusion, or is changing their mind. And so far, I don't see barely running cars, i see nicer cars, free water, price predictability.

> And so far, I don't see barely running cars, i see nicer cars, free water, price predictability.

Because the new ride services are using VC money to subsidize operations cost to build marketshare. The experience you are reporting is essentially a massive marketing promotion, not a sustainable service.

>and it's the cities that have to bear the increased costs of road construction & maintenance.

So raise taxes on cars to disincentive this behavior.

I won't believe cities are serious about reducing congestion until they fix the traffic lights to dynamically maximize flow.

No, it isn't done already. Too often, I am in a platoon of 20 cars that has to slam to a stop so one car can cross the intersection on the cross street, and then there's yet another minute of red with nobody in the intersection.

You'd think with cameras already installed on the lights that this would be a far, far simpler job than self-driving cars.

There are also more static variants. I know that Yandex collaborated with Zelenograd [0] (city to the north of Moscow) to optimize timings of city traffic lights. Yandex has similar data to what Google does in other places, due to Yandex.Maps app, and they reported to increase average car speed at many intersections without dropping average at any other one.

On the example shown, average car speed at one particular intersection improved from 10 km/h in rush hours to 30 km/h, which is fairly significant.

For many cities which do not want to spend money to replace all traffic lights, such collaborations could be less-than-optimal, but still a great improvement.

[0]: https://yandex.ru/blog/company/38835 (Russian)

Using statistics is one way, but is suboptimal. An optimal system would use the cameras to adjust to each situation like a traffic cop would. Though I bet even a modest adaptive light system could do better than a cop, for the simple reason that lights could coordinate with their neighbors.

I think your original comment was spot-on, and far more interesting than the hackneyed discussions taking place in this thread. For a little context:

"In 1922 traffic towers were beginning to be controlled by automatic timers. The first company to add timers in traffic lights was Crouse Hinds. They built railroad signals and were the first company to place timers in traffic lights in Houston, which was their home city. The main advantage for the use of the timer was that it saved cities money by replacing traffic officers. The city of New York was able to reassign all but 500 of its 6,000 officers working on the traffic squad; this saved the city $12,500,000."

Crouse-Hinds was still getting sued in the '90s for liability in accidents at intersections. I don't know if these lawsuits are still happening, but I assume liability has something to do with why your suggestion of a more adaptive light system is not tried.

In Paris the idea is to make the city more hostile to cars (any car, your private car, taxis, ubers) by reducing the number of roads they are allowed onto.

The city voted yesterday to close the main road through the city ("quais rive droite") after the equivalent road in the other way ("quais rive gauche") had been closed 3 years ago.

I think London is thinking of doing the same (plans to close Oxford Street?)

How it will end is a mystery to me; not everyone is comfortable using public transportation (esp. the elderly). In London the subway is kind of okay... in Paris it's horrible.

I was in Rome recently and they seem to do something similar. It makes for a lot more pleasant city when you have so much less traffic and the associated noise.

Yes, London is planning to close Oxford street, it just has to figure out how buses can be redirected in a smart way to allow shoppers to get there easily. Furthermore, one of the busiest intersections (bank) will be closed to all vehicles but buses from next year on. The fact that it will even be closed to black cabs is a strong signal.

In addition to that there are also plans to revert some of the 70's car-friendly areas in the city. Mainly roads that were designed to be one-way to ease traffic flow will be made less car-friendly. This is supposed to slow down traffic which should make it safer for cyclists and pedestrians. ("The one-way system encourages high traffic speeds, which is at odds with the City's aspiration for safer streets within the Square Mile.") [0]

I'm not aware that there is any project in London at the moment that will ease congestion, it's all about making life for pedestrians and cyclists easier. As a cyclist, I really welcome that trend. The new cycle-superhighways [1] are a great thing, IMO.

[0] Project 48: https://tfl.gov.uk/travel-information/improvements-and-proje...

[1] https://tfl.gov.uk/modes/cycling/routes-and-maps/cycle-super...

Congestion in an inner city can reach a point where fiddling with the lights won't accomplish anything. But in moderate traffic areas, big improvements should be possible and practical.

After all, once an adaptive system is created, it could be installed on most intersections.

I keep thinking of adaptive car fuel injection systems that Ford uses. It's so adaptable that they're pulled off of 90's Mustangs and installed on Mopar V8's from the early 70's, despite being a completely different engine with different firing order, etc., and people have reported great results.

I never understood the interior layout of subways in Paris... they have seats positioned right at the door, where people would stand normally. It seemed to me like everyone was always stepping on each others toes, and on each stop the whole train was shuffeling around for people to get in and out.

That's because those seats are supposed to not be used when there's too many people.

This will be hard to believe but it's true: for years and years, the Paris subway authority considered that people would not accept to "be transported laterally", which means seats HAD to be either facing the front or the back of the train, NOT the side.

It still goes on today; some of the newer trains now have a few seats facing the side, but that's as far as they'll go.

This thinking, based on absolutely zero evidence but deeply ingrained, wastes an incredible amount of space aboard subway trains.

> In London the subway is kind of okay... in Paris it's horrible.

Having commuted in both London and in Paris, I would say it is quite hard to make this kind of statement.

When comparing my commute on the Northern Line to my old one on Line 2 and 1 in Paris, I can definitely say it was better in Paris.

And I'm sure that someone who could compare commuting on Line 13 versus, say, the Victoria Line, would have a very different opinion.

Unfortunately, I wouldn't hold my breath. Even Bill Gates couldn't fix this problem (literally -- who remembers TrafOData?)

Apparently, cities don't want smooth traffic flow. It's bad for their public transit agenda.

London does it. http://abstracts.aetransport.org/paper/index/id/2041/confid/... https://www.youtube.com/watch?v=w4oeMB0tYII

The video is a bit cheesy, but it gets the point across.

Most of these points become moot with driverless cars. They can be small two-person smart cars that can drive bumper-to-bumper and wheel-to-wheel. First they'll get their own roads and then inner cities will ban manual-driven cars.

> I won't believe cities are serious about reducing congestion until they fix the traffic lights to dynamically maximize flow.

> No, it isn't done already.

Its obviously not done most places yet, but adaptive traffic control [0] is a thing.

[0] https://en.wikipedia.org/wiki/Adaptive_traffic_control

That link leads to this:

https://en.wikipedia.org/wiki/InSync_adaptive_traffic_contro...

which is exactly the kind of system I've thought of. I didn't know it existed. Thanks for the pointer! This is great news.

>This is total stream of consciousness. Is Uber multiplying the taxi fleet? How can one put so many competing statements together like that and think it's coherent?

It might actually be multiplying the taxi fleet. I personally use uber to go to work every day and before I'd just use the subway.

This graph on reddit, suggests uber creates a lot of demand rather than just converting it from taxis. https://i.redd.it/1s8w5uqjkvnx.png

This explains why Uber is valued so much more than the taxi industry. Because it's growing the industry.

This is the tip of the iceberg. What do you think will happen with self-driving cars on the road, or self driving trucks and other commercial vehicles? Parking lots will be long-gone as people's cars endlessly circle the blocks. The highways near storage depots will be filled with self driving trucks endlessly looping back on to and off of the highway in lieu of having the costs of a paved lot. There will be MORE cars, not less, as the total $$$/mile costs start a race to the bottom. The road's condition will deteriorate as the numbers of cars/minute/foot skyrockets, causing more construction and lane closures. It will be a glorious time for junk car dealers as the cars become as disposable as Abercrombie shirts. I can guarantee that someone with no friends or close family will set their car to circle the block and then die in the middle of their manicure. This car will not be 'valet'd' for and will just circle, drive itself to a recharge station, and then continue to circle until it catches on fire or is blockaded by thieves and left as a 'navigational' hazard for pedestrians. It's windows blown out, a headlight dangling, covered with graffiti, and filled with dusty pine needles and empty beer cans, it continues to circle the nail salon like some Flying Dutchman of the 21st century. That or it's tires blow out and it yelps at the roadside for it's dead owner to put it down. There will HAVE to be a lot of regulations as cars turn into public goods like PG&E or AT&T. Google, Uber and Lyft will conglomerate their businesses into GL&U, and the robber baron nature of capitalism takes over. No, these self driving cars will be scourge as car subscription services become like so many lite beer brands; all offering the same thing, so a race to the bottom for costs ensues. Quality falls down to the question of what a 'car' is legally allowed to be, and we are inundated with ever smaller, ever cheaper, and ever less safe "cars" to the legal minimum. It will be a nightmare for the climate and all of us. Keep your keys close and your state rep's number closer.

That's still about 50 years away.

As a legally blind person living in the urban sprawl of LA, I rely on Uber and Lyft heavily to be able to commute and run errands. There is a lot about these companies that remains ethically and economically questionable, but until the public transportation options in the area are as quick and accessible as these services I will continue to use them. The pricing is the most unnerving thing for me. In some cases, I am now able to get an Uber for less than the bus. I am not sure how profitable that pricing is, but it is amazingly helpful that I can now go almost anywhere a sighted and licensed person can go and not have to carve out huge chunks of my day, plan for walking with potentially heavy loads or paying too much for this service.

Recently, I took a trip to Africa. It was interesting to me that even though they do not have a fancy app, you can walk out the door and find someone to take you almost anywhere you want to go. Part of our current situation is due to societal and cultural factors that don't necessarily exist everywhere. But, if we don't have Uber, I think there's still a market for affordable, on-demand rides.

Yea, in Africa they have what is called a free market. Here we have local political corruption in the name of 'safety regulation'. I suppose it is cultural in the sense that we have come to expect terrible service and products.

The "labor-exploiting" argument seems a bit disingenious to me. It's not like someone sees an ad for Uber and tells their boss to shove it, as they're quitting their full-time job, forfeiting all the benefits and 401(k) matching to start a brand new career as an Uber driver.

The alternative for many drivers is simply unemployment. While there's zero possibility of labor exploitation, it reminds me of Flight of the Conchords quote "There is no more unethical treatment of the elephants. - Well, there's no more elephants, so..."

One wonders if driving for Uber could compete with basic income.

The Internet keeps telling me that all Uber drivers are unhappy. I use Uber from time to time, and about 90% of the time, the driver seems super happy to be driving for Uber. They seem happy with their compensation. Maybe all the drivers are new, this is their first week, and it all sounds good on paper. But maybe they actually like the job. I don't know.

I'd be afraid of a bad review if I told a passenger I'm not happy driving for Uber.

What do I have to gain from sharing this info? At best I'm where I was before and at worst maybe an Uber employee is testing me for fidelity and I could be punished. The truth is somewhere in between, and a non zero number of passengers would rate me a non-5 star if I complained about my condition.

So take the info with a grain of salt.

I don't mind a driver mentioning they're not happy driving for Uber and Lyft, or that the rates have gone down in the area, or that they've had a lot of short trips today. That alone wouldn't cause me to rate a driver poorly, though I can imagine that it might for some people.

I do mind when I get a 20-minute rant for the duration of the trip, though. I've had that happen once or twice, once accompanied with a less than subtle "it's possible to tip in cash".

Usually I would not mind but then again if I am tired or busy which I usually am when commuting. I don't feel like listening other people problems.

I don't ask anymore (for exactly these reasons; why would anyone trust me with this information), but you can kind of get a picture of how much the person likes their job by the general interaction.

Except they're "disrupting" the taxi industry to get to that point. So they're destroying jobs and replacing them with less secure, less paid ones.

(Wether or not that disruption has a positive effect for society in the big picture is another debate - but in terms of labor you can't ignore it)

> replacing them with less secure, less paid ones

My understanding is that people got in deep debt to the medallion owner, which they slowly repaid from taxi revenues. Are taxi jobs at the lowest rung that secure and well-paid?

The "medallion" system has its own problems, usually relating to monopoly power. The debt issue you mentioned is an example of that.

However, Uber (and similar businesses like airbnb) are really little more than the exploitation of legal loopholes to bypass the usual costs of employment law and industry-specific regulations. Socializing expenses is always profitable, and its easy to beat existing players if you aren't paying the same expenses.

Regarding job security, normal employees at least have a collection of legal protections that cover the employer-employee relationship. It's obviously not going to stop every type of abuse, but it's better than nothing. Some jurisdictions have started to catch up and force Uber et al to act properly, but as usual law is (very) slow to update.

Taxi drivers were already considered contractors. In fact, they are in a lawsuit against the taxi companies over that: http://articles.chicagotribune.com/2014-03-26/news/chi-suit-...

Which costs of employment that taxi companies paid is Uber bypassing? Please be specific instead of relying on rumor and propaganda.

Taxi drivers are actually employees in some places? I had assumed most drivers were already under some non-employee structure in most jurisdictions pre-uber.

That's certainly the case here in Australia where taxi drivers were making under minimum wage with working conditions that would not be allowed were they employees. It's hard to see Uber as any worse than what existed before.

Of course having a job is better than no job. That doesn't excuse Uber from having good working conditions, though.

You understand that the people at WaPo who you got that argument from are just using it as an excuse to take back control of the industry with political maneuvering. The solution to not enough high paying jobs is to raise demand for workers, and lower supply. Not pass a law requiring all workers to get lots of benefits they may not want coming out of their paychecks.

Several of the Uber/Lyft drivers I've talked to are actually former small business owners; they owned bakeries and pizza shops, and are now retiring from that by driving for Uber or Lyft, which over much better and more flexible hours than having to work 12 to 16 hour days that they do running their former businesses.

Others are people with seasonal or part time work; they work in real estate or as relationship therapists, but use driving for Uber and Lyft to cover for the times when they're less busy.

Some more are people who are just bored during the day, and want to give people rides.

A few are college students, trying to make ends meet as they pay their way through school.

And a few more are doing this full time; some are former cabbies, who find they get a lot more business this way, some are people who never would have been cabbies, but are able to find some income from Uber or Lyft.

The most common alternative, and the actual net change, is taxi driver. The only difference being a 50% reduction in wages.

It's a giant app-based redistribution of wealth from the front seats to the back seats.

And even if the alternative were unemployment – how does that mean that there shouldn't be a standard for such kinds of work? If people have to accept any working conditions because otherwise they'd starve to death, is that really an argument for the mighty benevolence of the free market?

Considering that it appears as if there's plenty of food to go around, it doesn't strike me as the perfect outcome of 300 years of capitalism that we apparently still need to have 10% of every generation suffer, not because of any real scarcity but as a necessity for the other's motivation.

It would be a redistribution only if Uber drivers are earning less. Do you have data to prove that?

Maybe the lower prices and better quality of service are incenting more people to take Ubers than taxis, which may mean that drivers are earning more, in aggregate and/or individually.

I've taken a couple of dozen Uber trips that I wouldn't have taken by taxi. That's a redistribution from me to a poorer driver — a good thing.

Their employment is only temporary unless they are developing skills that are in demand.

I don't understand the point he's making about traffic congestion. He's claiming that "Uber is putting more cars on the street". More compared to what? Compared to everyone driving themselves?

If Uber wasn't around, the alternative would not be people taking public transport. The alternative wouldn't be people waiting 35 minutes for taxis. The alternative would be people driving in themselves, causing greater congestion, because they'd rather sit in traffic for an hour rather than stand out in the rain.

That's an interesting question. I know I've tried to get a cab during a busy time and just given up and caught public transit home. Generally this is Friday and Saturday nights, when most people are in no condition to be driving themselves.

I also find Uber fares are about price comparable to public transit when travelling with multiple people, and so for that reason I could see it displacing trips previously taken with public transit.

Are you aware on any data on what transit modes the increased ridership of uber is displacing?

Besides that I would rather walk than ever take public transit, I agree; Uber is comparable in price and definitely (much, sometimes 5-8x, but mostly 3x) cheaper than regular taxis. Public transit, in my mind, should be gov owned and be free, but I know a know that won't happen any time soon. So then I would always prefer Uber. Yesterday I had some snafu with my Uber registered phone number and had to take a normal cab in Hongkong; crap old car, pissed off driver, tried to take another route and more expensive than an Uber Black. Sorry, but how does that work? I sit in a dangerous vehicle that in my country probably would not pass ITV vs a monster of a new Toyota Vellfire or Audi A8 for more money???

In the UK when I travel with my colleagues an Uber is frequently not much more expensive and sometimes cheaper than public transit; I really don't get why people pay for that stuff if you can get door to door while being able to work in quiet and comfort. It's basically like a private driver for the price of a few train tickets...

The most heard complaint is that public transit is more reliable and no traffic jams... But a warm/or AC car, quiet and comfortable is a work place you can trust; I don't mind jams in those. I do mind standing in a station for a cancelled train with 2000 of my best friends in the rain and then not even getting to the door of my destination for (almost) the same price...

So I do think Uber does entice more cars on the streets; I am not sure if that's the case right now, but I definitely see that it is possible.

Edit: on the other hand, if I would live close to / in a city with Uber, I would not buy a car... I use it way too little to warrent the hassle. I have no idea if there are more people who have that though; seems people still have this thing about owning a car even if it makes no sense. That's not some judgement; it makes sense in very many cases but it doesn't for me and it doesn't for many others but still they have one or two :)

Uber is not available in Germany but when i can't get a cab i will usually resort to public transport because i mostly use a cab when i am not allowed to drive anymore or parking in that area is impossible. Also a 20 minute Taxi ride alone can easily be 15-17EUR in Berlin, so it's kind of a pricy alternative when public transport would be 2,70 EUR for the same distance.

Europe is not comparable to the US. Your public transit systems are far more developed.

Even in Seattle, (which has a decent public transit system compared to where I grew up) you can be expected to wait an hour or more for a bus if you're traveling in off-peak times. Buses from the city to the inner-ring suburbs stop running around 11:30pm, so if you're planning on staying late in the city, driving or Uber are your only realistic options, given that many taxis show extreme reluctance to take people out to the suburbs.

What's worse, is that sometimes the buses don't even show up. I remember once I showed up to the bus stop 10 minutes ahead of the last bus. I waited for an hour and the bus didn't show up. I tried calling a taxi, but as it turns out taxi companies want you to be at an actual address - giving them a random intersection doesn't cut it. Fortunately, I was able to call a friend who, to his eternal credit, drove me home, but if I'd had Uber in that situation, it would have been a lifesaver.

It was available in Berlin last year. Did they get "banned"?

> If Uber wasn't around, the alternative would not be people taking public transport.

Even in this thread you can find someone commenting that they stopped using public transport and are now using Uber.

One of my Uber drivers in the SF Bay Area told me that she went from making about $30/hr working in IT at a Fortune 500 company to making $40/hr driving for Uber. She has been driving for over a year, and quit her job about 9 months ago and had been driving full time, during the day. She knew how to work the incentives and the surge so that she maximized her earnings, and instead of working 8+ hrs a day, she opted to work 5-6 hrs a day and maintain the same life style. I asked her about the costs, and she has that all accounted for, including gas and depreciation. She wishes she had known about the Uber lease plan because she said that was superior because it gave free maintenance and the ability to change cars once a year. I don't know enough about it to comment, but she seemed to be pretty happy about it and 90% of the drivers I've talked to are more than happy.

Just wait till they all get laid off at once in favor of self driving cars and then ask how happy they are. This job isn't here to stay.

It's the same with any industry that's automated - it's not going to all happen at once. Self-driving cars will start to be introduced, and slowly human drivers will begin to pull out. The rug isn't going to be swept out from under them and they'll have time to adapt. In the meantime - a driver is free to capitalize on it how they see fit.

Can't Uber dictate the price? Like if Uber doesn't feel like being expensive at rush hours to promote their service, drivers are paid less, aren't they? Also, what happens if more people learn about this and start driving for Uber? Wouldn't this lower the price for everyone?

I feel like your Uber driver is gambling with their income by quitting a stable paying job. Then again maybe the job wasn't that good.

I don't think you will find many uber drivers who quit a stable job in order to drive.

From the title I hoped it the article would make an interesting argument, but most of it was the same complaints about Uber that we have heard for years including that Uber evades livery laws. Well, livery laws are terrible and unjust, as are taxi medallions. Complaining about Iner drivers not being professional also misses the mark because they are much better than regular taxi drivers in my experience. Has this guy actually tried Uber?

The whole article sounds like a PR piece, I'm surprised it was so well received here.

I agree. Found myself liking Uber more after the first couple of questions.

The quality of the article isn't that great. But it made me think about this anyway. If Uber can achieve Kalanick's stated end game goal of driverless cars, it will absolutely last. A lot of Uber's pressures come with having to deal with drivers. I don't know what percentage, but it's significant. Variable costs, legal issues, ride quality, and so on. If all of that disappears, Uber is playing an entirely different game that it is much better poised to stick around for long-term.

That the OP criticizes Uber's Pittsburgh efforts is disingenuous because it's only a beta-phase pilot. Of course, it's that simple right now. You'd want them to go through this careful pilot phase because the concept released on the streets without full testing is so dangerous. It's an extremely tough nut to crack. But IF they crack it, they're in for the long haul. "Big Taxi" as he calls it doesn't have the desire, technical expertise, freedom, or guts to achieve the self-driving car vision. For one thing, the business is structured too much around drivers paying franchise fees. In the meantime, Uber has already multiple times shown a willingness to throw a big FU at its own drivers, so it's not actually that hard to see them one day discarding their drivers for self-driving cars and keeping all of the profit rent.

It's the opposite.

Once fully self-driving cars are completely actualized, then ridesharing companies like Uber will collapse, because the entire thing becomes a commodity. Right now, there's a lot more to Uber and ride-sharing than just matching cars and riders. There are layers of complexities that are created because you need to deal with real humans on both ends.

Once you get rid of human drivers, anyone can build a ride-sharing system. It just takes enough money to buy enough cars, and the ride sharing app, and that's it. Uber would then be competing against anyone and everyone, and then it's a race to $0, maybe even it turns into a free ride if you watch ads all drive long.

Yeah, but the self-driving tech is a proprietary trade secret. Tesla's not sharing their self-driving tech. GM is not sharing their self-driving tech. Uber is not sharing their self-driving tech. If that moat is not easily surmountable, Uber has a long-term fighting chance. Uber does not have a long-term fighting chance if they stick with traditional drivers.

It's like ISPs, no? Back in the day, anyone could become an ISP, just lease various telephone lines for running 33.6kbps to customers, and if you wanted to go fancy, T1. At the end of the day, telecom providers found it much nicer to keep their lines and become the ISPs themselves. It wasn't profitable for 3rd parties to lease those lines and try to be an ISP. Ridesharing companies similarly don't have their own cars and tech, they need to use someone else's cars and tech. Car manufacturers are making a similar switch as what ISPs did; they see a logical road that leads to becoming ridesharing companies. Uber is trying to flip the game and develop their own technology to become an ISP that owns its own lines. They're not trying to manufacture the cars though. They're just trying to manufacture the tech that goes on top of the cars, since they don't have manufacturing expertise. It'll be enough to just buy the cars from someone else and put their tech on top.

> Tesla's not sharing their self-driving tech. GM is not sharing their self-driving tech. Uber is not sharing their self-driving tech.

Tesla, GM et al will gladly share their tech, in the form of a car.

Vertically-integrated self-driving-with-app companies will be slaughtered by Google and others setting up auction sites for such services.

> Once you get rid of human drivers, anyone can build a ride-sharing system. It just takes enough money to buy enough cars, and the ride sharing app, and that's it.

Cars have to be cleaned. A small percentage of people leave trash behind. A driverless car won't know or care that the last passenger left their odor in the back seat...

As others have already noted, uber is not about replacing human drivers with human drivers, but about going driverless.

To me a more interesting question is the whole sharing economy and it's relation to traditional regulation.

Restaurants, hotels, taxies, etc have long been heavily regulated to ensure that so you don't get salmonellosis, don't have to deal with cockroaches or die in a car crash because of an incompetent driver.

As the whole "sharing economy thing" is about information - the question is - can better movement of information replace the need for traditional government regulation in those fields (in the form of ratings, web of trust, etc)?

Bizarre answer to this question. How is he shorting Uber? In his own mind?

Q: Do you really think Uber is going to collapse or be bought up by another company?

A: Look , I don’t have the internal numbers to – I’m not like . . . the hedge fund guy, Jim Chanos, who shorted Enron. He had lots of research and researched this stuff. . . . Let’s put it this way: I’m shorting Uber.

yea this globalist hack is saying that uber is doomed because they will get laws passed to put them out of business. It has nothing to do with research or investing

Yeah I think he means he's bearish rather than he's actually got money invested in Uber losing value

As criticism of Uber goes, this is kind of weak.

Uber's big problem is simply that they lose money. They still have to use investor capital to buy market share. That shouldn't be necessary at their present size.

Also, Uber has run out of investor financing and is now using leveraged loans.[1] Those have to be paid back. Their 2015 financing was a six year convertible bond. The bondholders get the right to participate in any future IPO at 20%-30% below the IPO price. Their 2016 financing is similar.

Uber may be Webvan 2.0. Anyone remember when Webvan had their little trucks running around everywhere in major cities?

[1] http://www.wsj.com/articles/uber-raises-1-15-billion-from-fi...

Ironically, Amazon has resurrected Webvan with several of its former higher-ups [1].

Maybe Amazon will wait for the Uber/Lyft flameout and hire the nascent companies' experts to make its own profitable service.

[1] http://www.reuters.com/article/net-us-amazon-webvan-idUSBRE9...

Not quite the top "higher-ups". Amazon had no use for George Shaheen, Webvan's CEO. The people Amazon got were the operations people and the Kiva robotics guys.

Certainly, sooner or later the liliputians will come in and tie Uber down, but it's a giant now. It's a little too late to be proselytizing about the company's imminent demise.

And in spite of supposedly losing in China, Uber managed to negotiate some pretty favorable terms. Uber now has a board seat and a 20% stake in Didi, a 30 billion dollar company growing about as fast as Uber was when it was that size.

Unlike the USA, China doesn't allow foreign companies to compete there. The only exception is Apple, and that's after they almost had a revolution from the unmet demand, and Apple is still given a hard time.

Was there a regulatory obstacle to UberChina that was in the news? I was under the impression that Didi simply outperformed UberChina, from having a superior local perspective. The difference between Didi and dead or dying car-sharing services was that Didi had enough financing to withstand the race-to-the-bottom on pricing and driver incentives.

GM invested $500 million in Lyft earlier this year. I guess, they have a different view on where the market is headed.

http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN...

Direct quote from the article "Hill believes ride-sharing may be here to stay, but Uber is not"

I wish he would have expanded on that. Why would one fail and another not, when the companies have the exact same model?

I explained above, but Uber is way over-valued to the point that they cannot have a reasonable IPO and acquisitions are off the table to all but a few companies that don't need that business and can acquire a direct competitor at a more reasonable expense.

Box and Facebook both had IPOs that priced them below the last private round, and yet are limping along. Seems like positive cashflow is the key.

For Facebook, that is absolutely false. Their last known valuation prior to IPO based on a raise was $65B (March 2011), they IPO'd at $104B.

And Box had a small downward valuation shift (-36%, -$0.9B), between last raised valuation and IPO.

Uber's numbers even giving them liberal growth potential of 500% places them at around $33.75B (-50% current value, -$34B).

Well, you're right, FB initial IPO price on day 1 was above the pricing in the last private round. However, shortly after, and by "shortly" I mean within 3-4 months after the IPO when most of the insiders were still under lock-up, a single share of FB could've been bought for high teens, which was at a significant discount to the last round.

That discussion isn't that relevant, when you're trying to figure out this kind of valuation though. The reason for that dip was largely 90 and 180 day lock-ups increasing supply of shares traded as employees sold stock. Also there were economic fears helping pressure the stock down.

FB's valuation at IPO was still smaller than it's primary domestic market's (ad spending) size ($165B in 2012).

Uber's primary domestic market (taxis) is only valued at ($20B), so if they captured all of the US taxi, their current valuation requires them to capture over 300% of the market.^

Now obviously that's not a perfect barometer. There are other variables and adjustments to make, but it makes it very clear that there is limited upside potential. Without claiming another market (ownership), it's actually damn near impossible. They've also ceded competition in the Chinese market to DiDi, so they can't make it up via global expansion either.

^edit (Obviously, this is a 1x multiple, as you increase to more reasonable values it drops the share required, but you have to push it pretty hard to reduce market share to a decent level.)

The valuations and conditions between Lyft and Uber are drastically different.

Lyft with the funding from GM has only raised $2B over it's lifespan which is comparable to that of Uber. Uber has raised nearly $13B and blown through most of it.

At their last round, Lyft is valued at about $6B and Uber is valued at $68B. One of these is reasonable based on the taxi market size (domestic $20B), the other is about 2x over the assumed value with decent market share and margins it could attain.

The only way for Uber to express the value on the books is to replace car ownership, which is unlikely with the turnover rate of individuals replacing their cars, they'll need about a decade or more runway to justify the current valuation.

Lyft and GM have an advantage in the race to replace ownership, with their partnership. Lyft gets a partner that can reduce cost of vehicle supply costs and maintenance, while GM gets a hedge against a possible headwind to their current business model.

Thanks for the answer, makes perfect sense.

The problem with Uber is not the business model, it's the hype that leads to overvaluation as you properly show. Too bad the article does not make that crystal clear.

Part of it is business model, they've outsized their market potential which is a failure of their model.

It's a bit of a chicken and the egg, because it's absolutely related to their valuation. That valuation is based on a flaw somewhere in their model potential, which feeds back into the model of potential (via expressing oversized outside interest).

People can say all they want: That self-driving cars will take over, that Uber is over-valued, that Uber shouldn't have bet on China, that the industry won't last, that people don't want xyz.

Things aren't so black and white - and the market is different in different parts of the world, for better or worse.

I've been living in Indonesia (I'm an American citizen) for the past year and GO-Jek is the big runner here. It's huge, all of my friends use it, and it's damn well the most convenient thing I've used in a while - and it offers even more than Uber: Motorbike rides, car rides, cleaning services, massages, food delivery, item shipment, etc. It definitely has some kinks - but it's growing, and fast.

Now Uber came in last year and I've watched it's growth - they're subsidizing drivers by 50%; what would cost me normally $20 from a taxi driver on the street costs me $8-10 with Uber, and the drivers get paid the same. But there are also issues they have to deal with - such as restricted zones for pickups.

The idea as a whole is here to stay; it will be improved on continuously, features will be added and removed, run-ins with governments and failed investments will be a part of the process - but peer-to-peer transportation and delivery will increase 10-fold.

It's called race to the bottom..

And Internet is just a fad

> And Internet is just a fad

I think a statement like "...and AltaVista is just a fad" is more appropriate, considering that ride-sharing is likely to continue being relevant but the companies that provide it will come and go.

That's a typical canned response, but there's many things about the early Internet (and Internet I assume you mean the Web) that didn't make it because they were unsustainable.

Headline grabber, but not much more. That the 'sharing economy' will not continue as today should be obvious though. Governments have to react to avoid a breakdown of regular services like taxis, assuming that they want to save them. More importantly, governments won't tolerate the tax evasion and externalisation of costs - like unemployment benefits, health care, etc. That's the main reason uber is cheaper, and it's simply not sustainable - all taxis replaced with 'volunteer' drivers makes the streets not just a bit less safer, but also will cause huge costs on welfare budgets that are not paid through the regular cut taken from salaries.

Lyft and Uber primarily market driving as a part-time way to get extra cash, not as a full-time job. Lyft has targeted typical, otherwise-employed drivers since its inception. Uber pivoted from a black car service to catch up with Lyft and its pooling service, Lyft Line.

Though both services offer generous incentives to full-time drivers (extra cash per 1000 rides in a month), I would expect this to recede after enough part-time drivers can take over.

When it's a side job, the lack of benefits don't matter.

Many governments offer centralized health care that companies don't contribute to. I think you should limit your scope to the United States.

The points the article makes about Uber's drivers are kind of meaningless anyway since Uber won't even have drivers in a few years.

>in a few years

I think you're vastly overestimating the sophistication of driverless systems.

But it may very well be a few years before a majority of riders would ride in a driverless car

It's going to be far longer before driverless cars are even on the road

I'm thinking 12-16 months

Sorry, but they're already here in Pittsburgh

No they're not, those have people in the driver's seat. Completely different ball game.

But they are not driving

Uber's biggest problem is the rate at which they burn cash and their $70B valuation which imo will be very hard to justify in the next 5 years. If that hype train stops getting funded, it might crash badly.

I have welcomed Uber to Europe with open hands but I really don't understand why they consider they should not apply to same laws as it has been put to Taxi drivers?

Because the laws are outmoded and terrible.

I'm sure uber just needs a blockchain.

The transportation industry is just a fad, everyone.

I'm sure in the early 1900s someone said that automobiles are just a fad.

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