Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue
bloomberg.com
bloomberg.com
This isn't a start up trying to figure out how to make money (Twitter) or a company that can't/won't change (Blackberry).
This is a company making money that is pursuing a blitzkrieg on the industry. They can sit back any day and rake in billions. I agree there isn't a high entry barrier, but I don't think they've lost the first-to-market advantage.
I have always looked forward to self-driving car networks because of what I perceived to be their ultra-competitive and ultra-low margin nature.
Then two years ago everyone started talking about an Uber monopoly and I got super upset. Are we seriously seeing another industry ultra centralize due to technology?
But I'm beginning to suspect that this may be a massive miscalculation on the part of Uber and its investors. Maybe it is a low margin, highly competitive industry and Uber will be remembered as that one company that subsidized everybody's rides for a few years until it just faded into the background.
As great as that would be, those are still a decade away from common use, probably much more.
I don't know if this is accurate. They're fending off lawsuits pushing them to recognize their drivers as employees, their prices are artificially low (in the sense that it's subsidized by VC money), and they're racing both cab companies and car companies at once (if Tesla/GM/Ford gets autonomous cars first, who needs Uber?).
At a ~$70B valuation, they have no margin for error. Their only realistic positive option at this point is to IPO. Right now, they're valued higher than Ford ($50B), GM ($55B) and Tesla ($33B), and currently Uber is reliant upon them (and others) to manufacture the cars they rent to people; if they are beaten to autonomous cars, they have no reason to exist.
This is why I think Uber is in a tough spot; they've raised a ton of money at an enormous valuation, and have to somehow convince the public markets that they're worth it. Whether they can do it, who knows? I've been wrong on these things before (Zynga and KING seemed like obvious flops, but the public bought into them).
The problem here is that ridership at current prices is rather higher than ridership at 2x current prices... and 2x current prices only brings you up to break-even. you want to bring that up to the point where Uber is making billions? ridership is going to fall off a cliff.
I use uber a lot mostly because it's really cheap; For five bucks? yeah, for five bucks, I'll have someone drive me to work. if that goes to $10 or $20? Yeah, I'll still use it when I go to the bar or when my car is broken or something, but for that kinda scratch I'm probably taking a shuttle, driving myself, or using a bicycle to go to work.
The point here is that Uber's competition isn't really lyft or the cab companies, it's the car I have sitting in my own driveway.
The few experiences I've had with local Taxi systems, coming from a everyone-drives-a-car suburban background, have been awful. Overcharging, credit card machine breakdown, and unreliability of driver arrival estimation have made me seek out more expensive alternatives, just to avoid the hassle.
I now live in a city where I take public transport 90% of the time. But that 10% has been made so much easier by Uber and Lyft(they offer the "same" features, so they are the same in my book). They tell me; How long until the driver is here(often incorrect, but only by a small factor), how long the trip will take(often incorrect, by only by a small factor), and how much it will cost(often correct or guaranteed).
None of the features above sound unique to Uber/Lyft, the only difference between them and Taxi's are subsidization by Capitalization. I've heard of Flywheel offering the same app features Uber/Lyft do, but Uber's are often under ~$10 where I am, which a Taxi can take anywhere from $25-$45. But if Uber's subsidization goes dry, as long as there's an feature-like alternative, I'd still pay for that.
Expect Austin to occur elsewhere (Uber and Lyft leaving due to local regulation, and competitors filling the void).
Uber is not an angel, but at least with one app we have a lot of people pointing out privacy violations. With two (say, Lyft in US cities), there's some choice. If Uber really fails and the taxis end up running the streets again, I don't see any real pressure to make good ride hail / pay apps.
The real advantage Uber has is brand trust when taxis go back to their shady and anti-competitive business practices and the regulatory environment relaxes. The important question is if brand trust will be worth anything.
Sounds like you're suffering from a pretty severe filter bubble.
I'd say it is bad form to base an argument like this as fact, when there is clearly significant evidence of the inverse. We know that Uber has targeted airport usage, with a seemingly offline cache of airport GPS locations baked into the app - to tap the travel market... I'd be hesitant to say this doesn't alone make an impact.
They may not go where you want, they may not be available where you are, because you are not in the right part of the city.
Features were pretty much on par with Uber.
Depends on a market I guess. Here you have a single app for all local taxi companies (actually, there are few competing apps, but you get a point), you can even select which companies do you want to use via checkboxes, because their price differs. Same centralized service works with SMS too, if you don't want to install app or have an ancient cell phone.
And in the UK the competitors must be much smaller, everyone I knew there always used uber.
Have still never taken an Uber and don't feel the need to.
It will however be horrible if Uber dies because of government's protectionist (Trump like) regime trying to protect inefficient taxies.
Uber has helped us bring more fuel efficient vehicles as rides, helped us pool rides etc. making travel cheaper yet causing less pollution.
If uber has no barrier to entry, neither does facebook.
Thus, I think one could easily argue that FB could be supplanted very quickly by a new service that offers many of its features but is more attuned to the use cases of the younger generation. In Uber's case, the situation is much different because their only appeal (low fares) is unsustainable.
I don't care if my friends use Uber, if a different Taxi company offers me the same service for cheaper.
If the Taxi app has a significant number of users you might convince driver's to jump through those hoops. But if the Taxi app has no users it's impossible.
This is an easy problem to solve.
Not sure, when they will just have to accept that those drivers are their employees(maybe a lawsuit is needed in India as well).
If we were talking about Uber's current model then you're 100% correct. But if we look at all to where they're going there's tremendous potential.
They bought Otto - which is arguably the leader in self driving trucking and they have self driving trucks on the road right now. If they're able to capture say 20% of the trucking market 10 years from now that's tremendous. They're in a legal fight in SF because they're trying to get self driving cars going. What are their numbers going to look like when they aren't paying drivers anymore?
I'm skeptical of the notion that the big auto manufacturers (who had a conniption fit at the mere notion of Tesla selling cars direct, instead of through a dealership) nimbly setting up autonomous, on demand fleets of vehicles which destroy their dealership network and also cost them half of their revenue.
Yes, they are losing money, but they're playing a very different game than the local taxi company.
> They bought Otto - which is arguably the leader in self driving trucking and they have self driving trucks on the road right now. If they're able to capture say 20% of the trucking market 10 years from now that's tremendous.
Otto until now is not a truck company. They are not producing any truck. They are just retrofitting their technology in existing trucks. It is like what Google does and what I told everybody and laughed at me. Google had and has no interest in building cars. They have a very bad track record in building hardware for consumers. That said, Google is a software company. Google wants to sell their Software knowhow to the car industry. The very same seems to be true for Otto. Otto is just a technology company that does retrofitting. But all the truck manufacturers are building their technology directly into the trucks. Remember, that Freightliner and other Brands are a Daimler company. Daimler has self-driving technology for their cars and are integrating them into the trucks. The future for Otto would be a partnership with at least one big truck manufacturer, which is not in sight. Otto will become obsolete, when it does not get such a partnership. So for Uber that is a high risk investment.
> They're in a legal fight in SF because they're trying to get self driving cars going. What are their numbers going to look like when they aren't paying drivers anymore?
You forget, that in the case of self-driving cars, then Uber has to buy (or lease) those cars. Today, they pay the drivers only for the work done, while the driver has to pay for the car and the service. So the risk and costs are distributed to the drivers. But with self-driving cars these costs are becoming Uber's costs. But Uber has until know no knowledge on handling own property. What about Car2Go, Zipcar, and alike? They can easily exchange their existing car fleets. They have knowledge and experiences on handle car fleets. Think about that.
> That said, Google is a software company
..is because Google is not primarily a software company.
Google is first and foremost an advertising (or 'profiling') company which uses whatever tool (software, hardware, service, complete stack) at their disposal to increase profit derived from -you guessed it- advertising. What Google wants is to have their software and service in every car in the world. Cars are akin to Android devices. At best, Google would make reference models to give the right example (this is what Nexus originally was as well). Google goes for volume (like it did with Android, and like Microsoft did with Windows and Office), Tesla is the Apple who goes for the top segment.
Facebook is in the same league. Microsoft, with Windows and Office, used to be a software company, selling software licenses. They're reinventing themselves away from that ever since Mr Nadella's been behind the steering wheel.
Don't mistake an advertising (or 'profiling', or even spying) company for a software company. Even then, traditional software company is vastly different from SaaS which even Oracle is heading towards. Tesla, Apple, and -sortof- Microsoft have very different business models than Google and Facebook.
All the big 4 accounting firms have HR, legal, PR people, in addition accountants but the reason why they are called accounting firms is because accountants dominate their hiring.
In other words, accountants make up the bulk of the people in their revenue centers.
Same with Google: they hire a lot of software engineers that contribute directly to their revenue.
(I know nothing about accounting, so can't comment on that.)
Yes, in that sense it is true.
In the sense of the end product (software licenses not being the primary source of income), and the way profit is gained (advertising), it is untrue.
I guess it depends on perspective.
As engineers that how we'd like to view the world, but that's not how accounting and business management work. Those engineers are a cost, nothing more. The sale of ads is Google primary source of income. The fact that engineers had to build the tools and platform for selling those ads is irrelevant. The technical stuff is "done" at this point, and now the sales people need sell enough inventory to make up the cost of production.
Even if you're a pure software company, one that sells software, the developers are still a cost, that does not directly contribute to revenue, only the sales department does.
Logically it's a bit silly, because you need to build stuff to sell it, but that's not how account and management view the world.
No, the sale of AD SPACE is Google's primary source of income. And that AD SPACE is primarily in Google's own software products (Search, Mail, Maps etc) although of course they've built a platform for others to sell related ad space...
>the developers are still a cost, that does not directly contribute to revenue, only the sales department does. Logically it's a bit silly, because you need to build stuff to sell it, but that's not how account and management view the world.
The recent season of Silicon Valley had a hilarious arc depicting this thinking. But it's important to note that not all business organizations maintain that philosophy
Self-driving trucks and, even more so, cars, are by any reasonable measure decades away. There are technical challenges that we have no answer for. Like all technical challenges, they can probably be overcome, but no one knows when or how, and what hardware advancements are necessary. That's not even getting into the regulatory hurdles.
Put out a demo proof-of-concept and people think that the product is ready. It's like those 'life-like' Japanese robots that have some people thinking that we are almost ready to replicate humans, just because they put a pretty silicone skin on top of a simple mechanical contraption.
Uber really wants to be a logistics company.
Rs. 100 works out to under $1.5.
Or effectively, $0.10/km if you take a 15km trip.
How the hell is that ever going to be profitable?
You say this as if 75% of the reason people take Uber isn't price, and that one day Uber will simply be able to jack up all their prices and make money. Demand doesn't work that way.
Why does a drug dealer give free samples at first? ... Creating demand.
What they will not have for long though is a monopoly on supply in India.
I don't know how many potential competitors are willing to blatantly ignore existing laws (I guess this is the mythical ethics barrier). Ability to raise money given there's Uber (and Lyft etc.) is also a strong barrier since the model only works with massive VC money to keep cost artificially low. Brand recognition is another one.
At the end of the day Uber seems to prefer the classical (as in 5 forces) cost leadership strategy, currently powered by VC funding. Which means long term the play has to be autonomous vehicles. Since the chain of operations requires vehicles in some way I agree with the many posters in this thread who have said their real competition will be the Teslas of the world. Which would worry me a great deal as an investor. I think they should push to IPO quickly while joe doe still thinks yeah Uber sure I use them every now and then take my moneyz (if that's ethical...I won't judge).
I believe that Uber miscalculated the total sum of money in the "taxi-ride"-pool.
Agree. Steve Blank argues that the first-mover or second-mover strategy has never worked [1]. Uber is a second mover, Lyft was first.
[1] https://shift.newco.co/why-startup-pioneers-have-arrows-in-t...
Its nice that if Uber does implode (not that they will) that only VC's will lose their money, of course Uber drivers will be out of their jobs as well but they hopefully won't be greatly finanically hurt. And of course a lot of employees that thought they were millionaires will realize that they aren't (been there, done that, got the t-shirt :-()
I hope at some point in the not too distant future we can get some more transparency on their financials. I really do consider them the poster child for the 'dynamic' economy (one where service suppliers and service demanders are paired in real time for a fee). If they can't make it work it will really call into question if it is even possible to make it work.
Although don't forget the VC funds' lending partners are often pension funds and other traditional investment vehicles that you or I might use.
I thought it worth clarifying for people like those I regularly meet who aren't aware of the LP role in the industry. There's a misconception that the VCs are just investing their own money.
They may claim to be building a moat, but to me it looks more like they're buying overpriced water.
Google search changed that, over time it became easier to find a phone number online than it was in the books. Then with the smart phone it combined both the phone and the number database (search engine) into a single device and now very few people use phone books.
But that habit changed slowly, over a decade at least to go from early adopters to the majority of people out there using their phone (or the web) to look up numbers. So the habit for calling a cab is changing slowly. From regulated livery service to less regulated ride share service. During that transition Uber is apparently "spending" billions[1] to connect in peoples brains 'Uber' and 'rideshare' so that as ride sharing becomes the expected norm, people will think of it as Uber not "any number of ride share companies."
[1] It is an odd definition of spend, they are perhaps purposely under pricing their service (so subsidizing) in order to encourage use.
At least anecdotally, here in SF Lyft is almost always more expensive than Uber.
But Uber kept sending me drivers who were like 0.5 miles away or more, in SOMA at rush hour, and after the second time I waited ten minutes and then the driver canceled, I decided I was willing to pay a small surcharge to get a drive in less than 5 minutes and for it to, you know, actually happen.
I should probably try out Uber again to see if they've resolved their problems with driver supply. This was SOMA (5th & Bryant) at like 5:15-6:00pm, several times over the course of a month.
The cancellation fee only kicks in after 5 minutes.
For one thing, Lyft takes less of a cut and passes more to the driver.
More than one driver I'ved talked to complained that Uber was in the habit of delaying earned payments to drivers. Some complained that Uber was in the habit of under-paying and making drivers spend time to fight for money they've already earned. They do not seem to have similar experiences from Lyft.
In general, all else being equal (and the products are pretty close to equal), I'll prefer siding with the working stiff than multi-billion dollar multinationals.
Also the app is much nicer. The Uber app drives me crazy.
Specifically, Lyft can only deactivate drivers for cause, and it has a clear appeals process through binding arbitration, for which Lyft foots the bill.
I'm not fond of clauses that require arbitration or which prohibit class action suits, but at least Lyft allows for and pays the costs of that arbitration.
I've mostly been taking Uber recently due to their low prices. However, last month Lyft had a Line promotion and I got to take about 60 rides. The vast majority of the drivers were clearly fired Uber drivers and the experience was way worse. Dirty cars, unable to follow navigation, bad driving, no English, and one driver was just a straight up weirdo. They are clearly passing anyone at the in person interview now. And they all had high ratings of 4.7-4.9. I've had similar bad experiences on Uber but they are much less frequent and the drivers were almost always rated 4.3-4.6.
In the world of venture-capital subsidized transportation, no one ever pays full price [1].
[1] Can Uber Ever Deliver? Part Two: Understanding Uber’s Uncompetitive Costs - http://www.nakedcapitalism.com/2016/12/can-uber-ever-deliver...
Also see Part 1: https://news.ycombinator.com/item?id=13079023 / http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...
1. being able to scale supply to meet demand.
In the traditional taxi model, the number of taxis and drivers are mostly fixed. during times of low demand more fixed costs brings more waste (cars driving around not making money) and in times of high demand represent lost profit (cars not capturing market potential).
taxi company's can try and scale 'fixed costs' better, but then they basically just become uber. Having drivers use their daily driving cars as taxi cars allows scaling of supply much much easier than having to use purpose built taxi cars.
They also updated their own phone app to provide all the functionality of the upstarts, but with local staff to deal with problems.
Edit: http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/
Cost is not the only factor. In fact, it's not even that important in terms of why Uber is trouncing taxis in terms of ridership. Uber has some very important UX advantages -- much lower wait times, integrated payment, fewer no-shows, ratings, less scummy drivers that people -- are willing to pay a premium for. Price is not the only variable in whether Uber can compete, your first link forgets that. UX is much more important IMO in terms of how shitty cabs are compared to Ubers.
Even only in regards to price, can uber compete on costs? your first link misses the bigger picture. Traditional taxi companies and Uber are efficient at different niches.
Traditional taxi companies (yellow cabs) are best at higher density areas due to being limited by the need for close-by depot, and 'base load' rides due to having a fixed supply of cars and not being able to dispatch new drivers as quickly.
Uber-models are good for all densities, and particularly areas with wide fluctuations in demand.
Taxis will need to adopt many Uber strategies in order to compete. They already have begun as you said. Taxi cabs sucked. Still do. And I would have no issue paying a premium to Uber to fuck it to the taxi cab companies. Especially when we are talking 10% difference in costs. UX dominates in terms of which ill choose to ride with.
Uber models are not going away, even if your first article thinks they will be slightly more expensive in certain scenarios and thus not able to compete at all, lol. What a leap in logic.
That said, will Uber be the long-term company that dominates? Maybe not. But their model will be.
I would have been happy had they just notified me first instead of my bank. Terrible UX to be frank. I actually got in contact with Lyft support on Twitter, but they did not care and just claimed that it was "standard policy".
At least they inform you in most hotels. I have not used Lyft - I would hope they do the same.
Any tips would be appreciated of course.
Truly reliable and useful public transit is a luxury in the United States that isn't available to a huge majority of the country.
Walking also isn't an option for many people due to safety, health reasons, scheduling, childcare needs, and not to mention just too much stuff to carry.
Uber isn't a cash venture, and several activities in the US require either a credit card upon which temporary authorizations can be placed, or a full (and sometimes, over-)payment on a debit card, the difference being that the debit card isn't backed by a line of credit that becomes due in at least 20 days, but rather it is spent directly out of a checking account.
You need this for:
- gas stations
- hotel stays
- car rentals
- sit-down restaurants or bars
The SV/HN is out of touch argument doesn't fly here. Rather, there is a wide gulf in the spending ability and access to services between a US credit card owner therefore a participant in the mainstream banking system, vs. someone with only a checking account, vs. a person who can't qualify for either and conducts their affairs with cash. This is a problem much older and much more foundational than the Bay Area vs. everyone else and the techies and non-techies divide, and is a significant delineation between the US middle class and lower class.
Is ride-sharing that big of a cost for your day to day?
Most gas pumps authorize $100. Use a credit card.
With a credit card your maximum liability for fraudulent charges is $50 even if you don't timely report a stolen card or suspect transaction; $0 if you do. For debit cards, it's unlimited.
So, for example, somebody could fraudulently use your debit card number to buy a stick of gum, hoping the charge goes unnoticed. Then, 60 days later, they drain your entire bank account, and possibly other linked accounts if you have automatic overdraft protection. If you failed to notify the bank for the gum purchase, your entire life savings is lost. Even if the bank account is only used for small purchases and only maintains a small balance, it can still create huge headaches.
Debit cards are for ATMs, and preferably ATMs inside bank buildings. Credit cards are for transactions everywhere else.
For similar reasons, you should be careful who you write checks to--because similar rules that govern debit card transactions also govern ACH transactions. And if you can help it, don't link a checking account on which you draw checks and make other payments to any of your other accounts; or at least, don't then enable automatic overdraft protection.
I do not see what the issue is with having a $25 hold? It's not a charge.
I'm still building credit (no history), which is why I'm not using a credit card. I believe holds only take place with debit cards.
Sorry, I assumed you used a credit card.
If you got a $25 authorization hold from Lyft there's a couple possibilities that come to mind. The first is that Lyft thought your ride would in fact come somewhere close to $25 (after tip). The second is that if you're a new customer, they likely consider you a much higher risk of fraud, and therefore want to err generously on the side of overshooting the estimate, instead of trying to place a lower hold and risk not being able to capture the real cost of the ride. Also, if you hailed your ride without providing a destination, they wouldn't have been able to produce a usable estimate.
Interestingly, I use Uber semi-regularly, and they don't hold anything. They probably only did it for the first ride.
The short term problem is that they can't burn through money long enough for it to work. The barrier to entry to create an Uber or Lyft competitor is very low - anybody with a car and a laptop can create a viable Uber competitor. Nobody's doing it because Uber, Lyft, and taxis are everywhere, but when there's only Uber, and they're suddenly expensive, they'll get disrupted just like taxis did.
The long term problem is that even if they succeed, purposely creating a monopoly and then raising prices is illegal. It's a great way to get in even more trouble with the government.
> anybody with a car and a laptop can create a viable Uber competitor
Source: was principal server engineer for flywheel, an Uber competitor.
"competitor" is a little generous considering their site barely makes page 1 of Google.
But we were plenty successful in creating a system in which people who wanted to get a ride were able to hail our drivers and our drivers could come and pick up the passengers and they could cancel and see ETAs and so forth. We served hundreds of thousands of rides while I was there, and presumably more in the two years since I left.
Uber still has the most drivers and the cheapest prices.
Even if I were entirely selfish it wouldn't be in my interests for them to be stressed and rushing to cram in as many jobs as they can.
This is why I don't get why Uber tries to "undercut competitors". Even if they succeed, the second it stops bleeding money and raises prices competition will reappear. It's not like it is hard to install another app.
People spend money on that sort of thing.
That aside, getting drivers is half the battle; even choosing on a selfish basis (and I choose ride-share services on a selfish basis) - if you have more drivers, I have to wait less. For a while, in my area, lyft consistently had more drivers and got there quicker, while uber was consistently cheaper; when I was in a hurry, I'd use lyft.
(my perception is that this has changed and that lyft no longer has that advantage in my area, but point being, if you can't get there in 5 minutes and your competitor can? I might be going with your competitor, even if it's more expensive.)
So they're even shittier and greedier than I thought.
Fearfully, since their survival means going driverless and they are now losing $800 million a quarter, they will race to get driverless cars on the road, it will be rushed, and it could be reckless. I'm thinking the two driverless cars filmed blowing red lights in SF recently (at the very start of their SF driverless program), not to mention possibly many other traffic violations that no one happened to be filming. They are going to wrangle regulators and skirt laws to make it happen with urgency. They now have an advisor to Trump.
I'm just here watching the rushing of driverless cars onto the road by Uber so that their company doesn't collapse. We'll see what happens.
There are plenty of times of year where I'd be wary trusting a human driver from the bay area in a Minneapolis snow storm much less a computer designed by them. I can see how it would be easy not being able to imagine difficult road conditions when you spend your whole life in a place where the worst weather is a tiny bit of rain.
Multiple instances of running red lights right when they start testing? To me that says driverless cars are decades away and some people are so optimistic that they aren't going to see it before there are several tragedies and driverless cars are legislated away.
There are lots of very common driving mistakes that are orders of magnitude more common than stopping for a red light.
Quick calculation: Lets think about people who drive their whole lives, not city folks. Lets think about work hours driving as it's likely to be the most by quantity, and vacation or pleasure driving should be roughly equivalent.
30 minutes each average way 5 days a week starting at 16, so by 40 they've driven 5/7365 = 260hrs / year. 260 24 years = 6240 hours.
8 Hours a day, 5 days a week, with salaried level vacations is 2000 hours a year. Many drivers are likely to work way more than that. Anyway, 6240 / 2000 = 3.12 years. That means that if you started driving at 18, you'd have the same hours driving as a 40 year old.
This also means that by the gladwell definition of 10,000 hours, you don't become an expert driver till 54.5 years.
However a pro driver becomes and expert after 5 YEARS of driving.
This also means that only 22% (those over 55) of america is likely to be an expert driver. http://www.infoplease.com/us/census/data/demographic.html
If HN population is the same as americans (it's likely skewed older), then 78% of hacker news isn't a gladwellian "Expert".
So self driving cars don't need to be better than most people they need to be better than a group of people who are very likely to be experts.
1) Average driver drives ~13.5K miles/year (http://cars.lovetoknow.com/about-cars/how-many-miles-do-amer...) with an average speed of ~32 mph (http://www.ridetowork.org/transportation-fact-sheet). This translates into 420 hours/year. Or a person becoming an expert driver by the age of 40, if we accept the "10,000 hours rule"...
2) But the Gladwell's "10,000 hours rule" was proven wrong (http://journals.sagepub.com/doi/abs/10.1177/0956797614535810). For example, if we follow FAA that recently changed the rules to require 1500 hours for ATP (i.e. airline pilots) license, then you are talking about 3.5 years (for average driver) vs. 9 months (for taxi driver). Not that big of a difference.
This means that on average the US driver becomes an "expert" by the age of 21-22. This actually matches quite well with the insurance company rates that drop drastically at about this age.
The majority of car accidents are correlated with someone's fault, related to altered state, inexperience, distraction, or bad judgment. Some types of people are prone to accidents, others are less prone.
But in the self driving car world it's all equal - it's completely arbitrary who is a victim of an accident.
Someone who has never run a red light or had an accident in their life because they are an alert, careful, experienced, defensive driver suddenly has all that stripped from them and now they are driving at just an "above average" level.
Why should the good, consistent drivers be punished? (And they absolutely would if we settle for just "better than average"). I'm all for driverless cars, but only with patience; no one should even entertain mass adoption of self-driving cars without a minimum of multiple years of testing in live traffic with zero accidents or major traffic violations (by fault of self-driving car).
Seeing the traffic violations at the start of the SF program, we probably ought to expect the mass adoption minimum 5 years out, more likely 10-15.
And that, my friend, is a very good thing. We slowly raise the bar and eventually get rid of bad drivers - because in the future only people with a near perfect driving record will be granted a license.
I did say "much better than average" I agree that if "just above average" this would be a fail.
I wonder if the most advanced autonomous vehicles already have those sensors installed and how well the signals are integrated into the prediction and decision making processes.
Once they go driverless, they won't have to pay drivers anymore, but they will no longer have drivers renting them their car at a discounted rate.
IMO no. Others mention the network effect, and while it will certainly be a factor, I don't think it will be anywhere near strong enough to make the monopoly plan work.
The network effect for Uber is really local - at the city level. An "Uber, but only in Austin" service can easily compete with a national-level Uber, since the vast majority of cab rides are taken within a user's home city.
You need a critical mass of cars/drivers to present real competition in this space, but you don't need to do it at national, or even state-level scale. A small upstart that can achieve critical mass in a single city can present real threat to Uber in that city.
The network effect of cabs between cities is so little that while a lot of consolidation of cab companies have occurred in each city, until Uber there was never a major cross-city network. I'm not convinced that a unified worldwide fleet has a significant competitive advantage. It'd be useful for tourists, maybe.
And this is already happening - Juno here in NYC is gaining real traction by charging drivers less, getting drivers to evangelize to each other. Uber won't be toppled by Lyft or any other megalithic ride hailing company, it will more likely be toppled by hundreds of smaller, geographically narrow companies.
How do you compete with that? You'd be burning money to compete, and Uber would just wait it out until you're bankrupt.
If you launch a global competitor that gains traction, Uber would just lower prices worldwide. If they can sustain a billion dollar loss every quarter, then you're quickly going out of business, and once that happens, they'd raise prices again and return to be profitable.
Not really. Uber customers only pay 41% of the cost of their rides. The rest is subsidized by Uber's investors. This is what allows them to compete with (read: severely undercut) taxi companies.
Local ridesharing won't have this massive advantage.
But for Uber apart of China [3], Uber is winning and all VCs will make it that way anyway. Uber is the clear winner and they will continue to pool cash to the winner until it breaks all competitors. And then it will rise its prices and start piles of cash.
[1] https://www.bloomberg.com/news/articles/2016-05-04/u-s-outpu...
[2] https://www.bloomberg.com/news/articles/2016-12-10/non-opec-...
[3] http://qz.com/746930/the-battle-between-uber-and-its-fierces...
If Uber ever tries to raise prices too high competitors wil swarm into the market.
Also with Uber investing on autonomous cars and how they are the only one with real tests with several cars on the road, this is going to be a huge barrier of entry. Even more when we see how the best tech giants like Apple and Google are struggling to develop one.
Really? I took three trips this weekend, price checked both apps, and Lyft was consistently cheaper. There is definitely a price war going on.
Network effects don't seem that strong. People will download an app to save money, and drivers will download an app to make money. It doesn't cause any major inconvenience.
In fact, it seems like a market that may approach perfect competition in a matter of years. There are only two companies now because there are only two companies willing to lose money. After they start making money, that could change quickly.
If it's the combination, then I still don't quite get it. Wouldn't any good self-driving tech pretty easily adapt to ride hailing?
Let's say it's a best case for Uber: there are only few self-driving techs out there, and Uber is one; and they dominate ride hailing, and start turning a profit. Couldn't another self-driving tech company snap up Lyft and bundle in the ride hailing, too?
The theory being less people will own cars. The savings made on storage/parking, fuel and maintenance will be greater than paying for individual rides (with no labour costs).
The car manufactures would no longer be the company the consumer interact with. i.e. How much does the average consumer care if they are picked up in a Lexus or a Toyota for the average ride?
This would put the car manufacturers in competition for the taxi companies business commoditizing the car industry.
Who knows what will happen? Maybe regulation will prevent self driving cars becoming ubiquitous? or maybe some advance in manufacturing makes it much cheaper to own self driving cars.
But speculation that Uber pulls this off is the only way that I can see how Uber is worth over $60Bn (more than ford $50Bn ish, GM $50Bn ish, Nissian $45Bn ish) while making a $0.8Bn loss on $1.7Bn revenue - as a gamble for what might end up owning a $400Bn+ market.
I'd like to see how much utilization the drivers in a typical market are getting. In order for the self-driving fleet-ownership model of future-uber to work, I think the vehicle utilization would need to be relatively high to make it economically competitive with car owning.
It also occurs to me that ride-hailing may not be a good substitute for those who use a car to commute. $70B starts to look awfully high if most people still need to own a car to get to work....
No, they also need to spend an enormous amount on marketing.
This makes Uber a risky investment in my opinion. Once Uber decides to make money, the real game will start. You'll see lots of competition and not much appetite for losing money like now.
Driverless cars?! That's going to make barrier to entry even lower but it's science fiction for next decade anyways.
Many drivers drive for both Lyft and Uber so what exactly is that brand? The app? I don't see a lot of brand to be loyal to.
I believe this is incorrect. Many drivers stick to one because they get a guaranteed wage if they're online for 50 minutes per hour and pick up every call they get.
As for customers, switching costs might be low, but unless there's a reason to switch, why would they?
One person downloads the app to chat. The other downloads to reply. And here we are. Still using WhatsApp:)
In transportation, all these taxi companies are using the same roads; the same network. I don’t have to make sure AcmeRideShare has permission at both the pickup and drop off points.
And I can change my mind tomorrow and go with ABCRideShare if I have a coupon. I can’t just arbitrarily decide to use ICQ tomorrow to talk to my Facebook friends.
> Saying that the roads are the network is like saying the internet is the network.
Fair enough.
Uber and Lyft are wonderful, because the drivers show up and don't complain about where you're going.
Similarly, nobody will download another app if it doesn't have any drivers, and drivers will not install another app if there are no riders.
To compete you need a very large amount of capital and nobody is going to give you that money now that there is an Uber. You don't just have to replicate Uber, you have to then steal their drivers & customers, which is drastically more difficult than just replicating Uber (extremely difficult unto itself despite what the MVP crowd pretends). See: try raising large sums of money to go after Google's search business in the last decade.
But the moment a car manufacturer that has significant production capacity deploys self-driving cars on it own, with an app to rent-a-ride on its platform, and the caveat that the self-driving tech cannot be used on the Uber service (Tesla, I'm looking at you), Uber is toast.
Many Uber drivers are already logged into Lyft at the same time, despite a disparity in demand.
And that effect is even larger for things like Uberpool, where a smaller network means they may have to go way out of the way to find another rider going to a similar destination, making your ride take longer and the service worse.
Network effect also extends to their other services, like Ubereats, where they can get you your food faster and more accurately-timed than their competitors, because of their larger network of drivers.
The handful of times we have used taxi drivers, none of them can find the place where we are staying even with written directions in english and in hindi or even with a hindi speaking person instructing them via the phone. There is always some niggle over pricing and whatever you pay them they claim you are shortchanging them.
With uber they go to the right place EVERY TIME, there is no haggling at all, they dont try to angle for tips but are very grateful if they get tipped. It is a complete gamechanger for travel in these areas.
They've already said no more dilution, so that limits new sources of financing. Tick-tock.
that's probably why it makes sense to dominate the market while they still can.
Even if the tech were ready in 100% of situations (it isn't), just working out the legal / regulatory stuff could take that long.
TBH I think profit is a terrible metric for them. Profit measures cash, and why does Amazon want cash? To buy back shares? To pay dividends? No. We should measure Amazon by annual growth of book value.
1. Collect a huge pile of money at sky-high valuations from those who really should know better.
2. Ignore any sensible unit economics and undercut local taxi/transport services until those small businesses go bankrupt since they don't have Uber's money pile.
3. Evade local regulations that everyone else follows in the name of 'innovation' even though the reality is they are just taking a free pass on conducting background checks, and skipping safety guidelines.
What's the endgame here? When they replace all taxis, do they really think they can just permanently ignore all driving laws?
Can prices ever be "too low?" The short answer is yes, but not very often.
Generally, low prices benefit consumers. Consumers are harmed only if below-cost pricing allows a dominant competitor to knock its rivals out of the market and
then raise prices to above-market levels for a substantial time. A firm's
independent decision to reduce prices to a level below its own costs does not
necessarily injure competition, and, in fact, may simply reflect particularly
vigorous competition. Instances of a large firm using low prices to drive
smaller competitors out of the market in hopes of raising prices after they
leave are rare. This strategy can only be successful if the short-run losses
from pricing below cost will be made up for by much higher prices over a longer
period of time after competitors leave the market. Although the FTC examines
claims of predatory pricing carefully, courts, including the Supreme Court, have
been skeptical of such claims.
Pricing below your own costs is also not a violation of the law unless it is part of a strategy to eliminate competitors, and when that strategy has a dangerous probability of creating a monopoly for the discounting firm so that it can raise prices far into the future and recoup its losses. In markets with a large number of sellers, such as gasoline retailing, it is unlikely that one company could price below cost long enough to drive out a significant number of rivals and attain a dominant position
That's not the case here. I don't see Uber creating a monopoly in any way. If they raise prices to unreasonable levels (i.e., more than people used to pay for regular cabs), people will go to Lyft, Juno, or the next ride-hailing startup. If there's no competitor remaining, new ones will show up. Or regular cabs will be back.
IMO, the endgame for Uber is not to raise prices; it is to reduce costs. They're betting the farm on driverless cars.
Not too different than Amazon with retail. Amazon doesn't need to charge more than the local retailers they've put out of business; they just need to have a lower cost structure.
Regarding your point about probability of creating a monopoly:
"Brishen Rogers, an associate professor at Temple University’s Beasley School of Law who has studied Uber’s effects on the taxi market, said traditional cab companies are clearly threatened by newer competitors, and he expects many more will go out of business as a result.
[Many] lenders, including Citibank, expressed concerns about the effects that “nontraditional ride-sharing companies” would have on the city’s traditional medallion-based business model. "
http://www.wsj.com/articles/san-franciscos-biggest-taxi-oper...
Developing a basic app for taxis (calling a cab, paying, ETA) will probably not cost more than a few millions. Getting people to drive for you (in addition to other companies) is also very easy at the moment. That makes barriers to entry extremely low in the market. It's not an Amazon with huge warehouses and not a Google with a highly sophisticated search algorithm. Uber just competes by price, they have no real technical advantage here.
The framing I see sometimes of Big Mean Uber vs 'poor little guy cab driver' seems wholly out of touch with my experience. At least in Boston the taxi system is/was rife with corruption and cronyism. Neither riders or drivers get a good deal, just medallion owners and the regulators they captured[0]. The money isn't staying in the 'local economy', to 'small business owners', it is, by and large, going to rent-seeking medallion owners, many of whom live out of state to monopoly holders who use that power to prevent competition through regulation. I'd happily pay the same to take an Uber driven by someone who wasn't being exploited and who was accountable for the quality of the ride than a crappy medallion cab with a driver who is on the phone, the whole time being forced to watch ads on their "entertainment screen" with no off button.
Uber isn't a monopoly (yet), but they are breaking a monopoly, and that's a good thing.
What special advantage does Uber have there, though? Many companies are working on driverless cars. When that reduces costs, it'll reduce costs for Uber's competitors too.
Thorny legal issues in a nutshell ;)
(1.7b / 0.8b + 1.7b) = 68% of their costs. 3.25 * 0.68 = 2.21$, but Uber charges more than that and would like some profit. aka Uber has higher costs than cab companies making them a long term dead end.
Sure, they are probably subsidizing other markets more, but even then that are gong to run out of money long before the self driving car thing takes off.
Many people here would dodge Uber if they expect surge pricing (And something along these lines was said today on one of the popular for young people radios stations, here).
Also, there are plenty of taxi just waiting around everywhere downtown.
Many (older?) people, would never get Uber to go to the airport, which is a very good profit opportunity.
So, I don't see Uber having a 100% monopoly in any future, as various people have various needs and opinions and it's not a race to the bottom on price in this segment.
They will both coexist, but for people taking the cab in the first place, $0.75 is not even on the list of thoughts in downtown Toronto. You get out of a Johny Cash event, $200 a person ticket, it's snowy, and you'll wait few minutes for uber when the Taxis are parked up front?
As you move outwards from the core, more people drive Uber, and one was even my ex coworker, so he told lots of stories.
So, to conclude, you can't assume race to the bottom on price alone. Or IPhones, rolexes, Alienware PCs, etc would have been long gone.
Notice that they've stopped displaying the surge price multiple on their hail screen. Previously I would have hesitated at 1.4x surge, but now "fares are slightly higher due to increased demand" just makes me shrug my shoulders.
http://globalnews.ca/news/2430713/alberta-man-furious-over-1...
Ended up all over the news.
Not sure if Uber caps surge in Canada now.
You misunderstand me. That's the verbiage they display now. "fares are slightly higher due to increased demand", rather than the actual surge multiplier. If the surge multiplier is higher than that, it'll say something to the effect "fares are a lot higher due to high demand". It doesn't tell you the exact multiplier anymore, which makes me at least a bit more price insensitive.
Outside peak hours (and on the intl airport which isn't São Paulo proper) I still find Uber more convenient/cheaper, but otherwise they have a tough competition with taxi services.
"It's faster than the fucking taxis... of which there are five."
What laws do you think they'd need to permanently ignore? And no, I doubt that's their belief.
I know because I received over 30 pieces of direct mail in the two weeks leading up to the vote from whatever clown-show operation they hired. Twelve of the direct mail pieces were the same mailer.
Given the waste of paper and their previous history (especially the behavior of the executives), I don't care if Uber ever "comes back."
"News of assaults by ride-hailing drivers has been a frequent occurrence. Reports of rape, battery and harassment have grabbed headlines in California, Georgia, Illinois, Texas, Washington, Florida and many other states. While some of these drivers have clean criminal histories, others had prior convictions that Uber and Lyft's background checks didn't find."
https://www.cnet.com/news/california-law-tightens-background...
Disclaimer: I work at a background check company
Within this thread, your parent has at least provided some support for their position. If you're aware of evidence to support yours (e.g., information regarding taxi-driver attacks or counter to the info in the cnet article), that would be a worthwhile contribution. Dismissing out of hand the commenter as naïve isn't civil.
http://www.whosdrivingyou.org/rideshare-incidents
Why are you so invested in ignoring what's right in front of you?
The end game is a company with self driving cars, having SIGNIFICANTLY less overhead than they currently do with human drivers. And, probably a ton of technology patents to boot?
Yea, they're definitely a brazen company, but do you really expect anything less from a unicorn company? Very few make it this big without cutting some corners, having some connection, etc.
If the entire value proposition is "taxi using self-driving cars", then surely they would be much better off dropping the money burning ride-hailing operation with cars they don't own to spend more on R&D...
Market share. Or more precisely, establishing market dominance by undercutting the competition.
There is simply no scenario where having a network of poorly paid drivers, their heterogeneous fleet of unmaintained cars and a load of debt is an advantage in a rollout of self-driving cars, the first useful version of which will surely be limited to one particular manufacturer, model and sensor suite.
And Uber couldn't double down on their existing strategy of heavily subsidised rides to undercut self-driving cars? I mean, this is assuming that self-driving taxis are cheaper off the bat, which kind of ignores the fairly large capital expenditure of buying a fleet.
> A first-to-market competitor will have 747s full of money landing on their doorstep begging them to take it.
I don't think it's that simple. That's not taking into account how difficult it would be for Competitor X to build enough of a network to rival Uber, and how easy it would be for Uber to replicate/steal/buy the tech and steamroll Competitor X. Having superior tech and being first to market are not enough alone to trump market share.
Right now Uber is really just proving that if you burn billions and billions you can create a "market" for your "product." It has yet to show that it's a real company with long term prospects. There's a difference between losing money because you haven't hit scale (when Facebook was losing money in the early years) and losing money because you're at scale and just undercutting everyone to show you can make "revenue" or by investing in "innovation" that everyone and their brother is doing and doing it better than Uber.
Driverless cars on the other had and still decades away, whether the tech is ready or not. Society is not yet at a place that will allow the use of full driverless vehicles on public roads. It doesnt matter how much statistically better a driverless car is than a human, every single accident will be magnified. Driverless cars could be our first foray into truly autonomous robotics within the general public, it is not something that will occur lightly.
Google is a league ahead of the competition with their Autonomous OS, and they're getting close to implementing robotaxis commercially in limited capacities. However, Chris Urmson, ex CTO of the self driving project doesn't think they'll be able to go everywhere a human can for ~30 years.
Uber's autonomous program is looking pretty sketchy at the moment, but now that they have Anthony Levandowski to play Darth Vader to Kalanick's Emperor Palpatine, the project is in capable hands.
Uber's robotaxis need only augment their human network of drivers through the mid-term, and as the capabilities of their Autonomous OS improves they take over more responsibility. Still, this is capital intensive and it'll be still be many years before autonomous vehicles have any measurable effect on Uber's bottom line, and even then, Uber will still be facing competition from other companies with robotaxi networks in development, including but not limited to GM/Lyft/Cruise, The Tesla Network, Waymo, Zoox, and any Automaker willing to license from the Mobileye/Delphi/Intel partnership.
Uber is currently playing hardball with the California DMV, in some sort of attempt at asserting their dominance over the law. I'm not sure if they've got some kind of legit strategy here or not, because I'm skeptical they'll have as much luck leveraging popular public support against regulators in the Autonomous Vehicle space with as they've had in the taxi industry.
It's also an inevitability that Uber's labour will organize for better bargaining power. Legislators seem to side with drivers as 'employees' rather than 'contractors' in the few regional cases that have made it through the courts.
Nonetheless, these incomplete financial reports that have been leaking out make it easy to spin a negative narrative about Uber's future prospects. That narrative may be on the mark, but we can't know for sure.
This is never going to happen. This is a pipe dream. Self-driving cars are so far away from being a reality that you might as well assume you'll never live to see them, and Uber will certainly expire long before they arrive on the scene.
As it seems that is their only chance at profitability, then they should be plowing a lot more of their capital into driverless R&D.
This softens the depreciation in the medallion market. The cab drivers who paid a lot of money for their medallions would be furious if they're worthless overnight. This way it takes 10-15 years for them to fully depreciate.
Then Uber showed up and decided they didn't need a proper license or anything and shit got crazy.
A more gradual phasing out helps to ease the pressure on this system and move to a more market-driven approach.
When they replace all taxis, do they really think they can just permanently ignore all driving laws?
Since when do hackers bleat about obeying laws and regulations? What happened to having a "we can do better" mindset? Has everybody wigged out and flipped their "I want a nanny state to protect me 24/7" bit?
And as far as that goes... I guess no "certified" taxi driver has ever turned out to be a criminal or done anything to harm a passenger? Me personally, I prefer to exercise some personal discretion and simply decide whether or not I will ride with a particular Uber driver, or cabbie, or Lyft driver, or whatever, based on my own judgment in the moment, as opposed to abdicating responsibility to either the State or a corporation.
Hacker News is fairly progressive/authoritarian. The kind of attitude you describe can still be found on slashdot.
https://tech.slashdot.org/story/16/12/15/1559226/uber-we-don...
It has become more so over the past few years for sure. It was a lot more balanced in the past, as I recall.
This is one of those places where people will happily sit around and argue that breaking laws is moral and necessary, no matter what the law.
And of course, in their regular operation, many companies routinely pollute the environment: http://www.prwatch.org/news/2011/05/10722/koch-industries-to...
Funny how libertarians never seem to consider dumping millions of lbs of poison into the environment an "initiation of force", but god forbid government raise taxes by one cent.
It's also worth noting - both of your examples involved the state actually doing the dirty work.
Funny how libertarians never seem to consider dumping millions of lbs of poison into the environment an "initiation of force"
Citation needed - AFAIK there is no such consensus.
This is one of those places where people will happily sit around and argue that breaking laws is moral and necessary, no matter what the law.
It looks like there are about two of us in that camp, in this discussion, versus pretty much everybody else. It's pretty clear the pendulum has swung and this site is largely oriented towards big government interventionism.
Sure you can. Laws aren't magical and there's nothing about the State that gives it any actual innate authority.
What gives the state its authority is that me and three hundred million other people continue to give the state its authority. Break a severe enough law and we'll take away your freedom of movement for a while.
Behold, society!
Please stop perpetuating this myth- started by Eric Raymond and happily encouraged by SV "thought leaders"- that hackers must, by definition, be laissez-faire capitalists who love Ayn Rand and treat breaking laws as a noble goal in and of itself. I do none of those things, because I recognize that many times regulations are vital for ensuring human health and happiness, and think that free-for-all capitalism leads mostly to misery for all but a few in the plutocracy. "We can do beter" implies not settling for a world like that.
Other people don't have to agree with my politics, but if they want to say I'm "not a hacker" because of that, they can take their very-politically-motivated prescriptivism and... well, I got told by dang the other day and I'm trying to cut down on the angry HN posts because of it, but you get the idea.
I agree. The regulations created for the war on drugs has lifted millions of African Americans out of poverty and into group-oriented communities that promise shelter, free food, and at least one hour of happiness per day.
Nice strawman. Luckily I didn't say anything about esr, laissez-faire, capitalism, or Ayn Rand in the post you replied to. Hell, I didn't even say that breaking the law is a "noble goal in and of itself".
All I'm saying is that it's disturbing to me how so many HN'ers have just completely sold out to the idea that the State is their proper master, and should regulate / control pretty much everything and anything. It seems to me that in the past, there was a more individualist / freedom oriented mindset around sites like this - whether it was from "American style libertarians" or socialist anarchists or whatever. Personally I find the change to be a bit depressing.
Since when does hackerdom constitute blindly following dogma, whether it be libertarian or not?
Furthermore, even supposed would-be laissez-faire capitalists know this- I doubt that startups pass up the chance to use government policies to their own advantage, or pursue rent-seeking behaviors that help their startups. The perfect libertarian society you envision exists next to the perfect communist society, as utopias that contravene human nature.
In theory. I think we're pretty far removed from that in reality.
Remarkable.
"ultimately, though, the state is still made up of the people it rules."
Well, that's one reason why it can be so dangerous. It's made of humans! :)
Bleat? People would give Uber a pass if they actually created new and innovative technology.
Right now they're much more of a financial services (attracting VC funds) and DC lobbying firm than a technologically innovative company. They have a few (albeit NP complete) interesting technological problems. The rest is mostly legal and finance.
Why wouldn't people complain about companies who try to muscle in with money and lobbying featuring products that are not noticeably superior at all?
Why wait? https://www.wired.com/2016/12/ubers-self-driving-car-ran-red...
4. Dump all your drivers once your self-piloting cars come fully online
The driver plus bring your own vehicle model is a mostly operational cost model where the cost slides based on region, which makes it perfect for rolling out on a global scale.
The self driving taxi service model has a significant capital cost associated with it and that cost won't slide much based on region. It would take far too long to see meaningful returns on self driving taxis in India for example.
Could you share some specific information to substantiate this?
I frequently hear this statement on Hacker News, and (as far as I can recall), every time I've asked for a source or evidence for the claim, I have not gotten a satisfactory answer.
Black car services where you arrange pickup with a specific driver ahead of time have always been regulated differently than taxis. Uber has cars that operate as taxis, and they're properly licensed.
I'm not looking for flawless proof, suitable for a court of law, just some kind of cogent allegation of what happened and what law was broken would suffice. These kind of vague claims about Uber breaking the law do nobody any good; they are middlebrow mud slinging.
Here is an example of what a cogent allegation might look like: "Zenefits broke the law by allowing salespeople to act as insurance brokers in seven states despite lacking the licenses to do so." [1]
Has Uber broken the law? Who knows? There have certainly been accusations that Uber tried to sabotage competitors by placing fake rides, for example. I am not trying to make any kind of moral claim about Uber, so please do not misunderstand. I am simply to hear the evidence from people who make comments like "Uber evades local regulation".
From my casual research into the matter, no, black car services or any kind of private, pre-arranged transportation for hire are not considered taxis in most municipalities. Uber actually offers taxis in certain places through UberTAXI [2]. The key difference seems to be whether the trip is arranged ahead of time through an existing business relationship, versus whether it might be solicited or formed directly on the street at the beginning of the ride. This seems to be how law works in most places in the USA, anyway. If you know of examples of municipal law where it works differently, I'd be glad to hear the details.
[1] https://www.buzzfeed.com/williamalden/zenefits-under-scrutin...
This practice is illegal in many countries. Legalities and ethics aside (it's easier to discuss this in 'value neutral' terms), the strategy only works if you've got a bigger bankroll than your competitors (i.e. they go bankrupt before you do). By the sounds of it, Uber have a pretty big bankroll thanks to VC funding?
[Value Free Zone]
Also, they're going about it in a fairly clever way. It's almost like a market version of the 'blitzkrieg' strategy. By progressively moving through one localised market to the next, it's essentially Uber's bankroll vs. whatever the largest local market incumbent can muster. In addition, they're ignoring regulations because it further lowers their costs.
And here's the blitzkrieg part: when they encounter a market (e.g. Austin) with particularly strong regulators or incumbents with larger than usual bankrolls, they bypass it (for the moment), just as the Nazi's did if they encountered heavily fortified positions on the Maginot line. They'll just bypass and move on to softer targets.
I imagine once those are monopolised, and they've replenished their bankroll by charging monopoly prices where they can, they'll come back for the more 'fortified markets'. Except this time they'll:
- Have a bigger bank roll
- Have a constant stream of cash rolling in from their monopolised markets
- Possibly have a more favourable regulatory environment due to 'lobbying' (i.e. political 'donations')
Given the position they will be in by the time they swing back to the 'holdouts', they may not even see the need to flaunt local regulations to crush their competition.
[/Value Free Zone]
Personally, and assuming I'm right, it's pretty despicable behaviour. It's not innovative; it's illegal. And it's not 'disruptive' either; it's destructive and exploitative. I wouldn't deny these guys are smart, but so were most 'robber-barons' throughout US history. If 'hacker culture' is synonymous with 'destroy all who might oppose us, then turn around and screw consumers', then yeah, they're hackers (and I most certainly am not).
But if SV gives a fig about its reputation, and believes that hackers can 'break the rules' while maintaining some shred of personal integrity, then I wouldn't be so keen to hitch my wagon to the likes of Uber.
Note: I have no stake in this one way or the other. Frankly, I'm not a big fan of the traditional taxi industry in my country; they're essentially a government protected oligopoly and a bunch of rent-seekers to boot. Just calling it like I see it.
Can you explain this? Not challenging, just curious.
In all seriousness, Uber drives down price to a point that no one can really figure out if being an uber driver is profitable. Uber makes money, but none of that proffit is spent in the local economy. Capitalism doesn't work at that scale... look at the loss they can endure, compare that to a local cab firm, or even somewhere like NY.
How is it 'cheaper' to manufacture extra yellow cars and have them drive around aimlessly searching the streets for fares vs. hitching a ride with my neighbour who drives for Uber part-time with the personal car he'd have bought anyways?
That's not how Taxis work in my neck of the woods.
I call a company, get a cab at the time I want it.
Or I use their app or website, share my location, and get a cab arriving at the time I want it to.
And yes, they still pay the driving a living wage, take care of the insurance and don't treat me like crap unlike Uber.
> Even in the U.S., Uber's home market, the company continues to lose money. After turning a slight profit in the in the first quarter of this year, Uber lost $100 million in the U.S. in the second quarter. The loss increased in the third quarter, the person said.
I thought that they'd turned the corner in the US too, but go figure. I guess the claim that Travis makes about driverless cars relates to their profit margin as much as it does to their long term competitive advantage [0]:
> Developing an autonomous vehicle, he adds, “is basically existential for us.”
[0]: https://www.bloomberg.com/news/features/2016-08-18/uber-s-fi...
Why does the idea of venture capital charity seem so hilariously backwards?
Burning up $800m to subsidise an app with the justification of "market share" decades before self driving vehicles become the norm is totally fine by me, as long as it's not my money being incinerated.
Their own incompetence
So I always write back to their support team and they usually refund the extra charged money, but it's tiring to have to do this for every long trip I make with them.
(I'm talking about Uber in Mexico City).
However, Uber is staying private, so they don't have to cater their long term plans to the whims of random people who have no idea what they are talking about. (I include myself in this category)
I always thought revenue was income before costs, and profit was revenue minus cost. Gross revenue would make sense as "total income", but net revenue doesn't make any sense to me. Clearly I'm missing something.
Can someone explain?
http://www.theverge.com/2016/9/22/13019688/singapore-self-dr...
Meanwhile, Uber's been in the self driving car business half that time? They already looks more likely to actually have these things on the road, and, they have the incentive, and cash pool to do it.
Another reason people "get this impression" is that Google has a history of interesting projects that never made it to market. Waymo gives me more confidence, but I'm still skeptical.
Google has been in the self driving car business since 2009. Uber was FOUNDED in 2009.
Google has a history of starting cool projects, which never make it to market (Wave, Video, Glass, etc.)... That alone, doesn't inspire much confidence that their self driving car project will reach production.
Uber has the incentive, far more than Google, to actually see this through. If they can cut out drivers, their overhead shrinks significantly and their core business grows.
I also believe Uber will probably go wide first because the risk (people get injured, they possibly go down in flames from legal issues) is worth the reward (they have a chance of surviving as a business by automating human drivers out of the equation).
Google has money falling out of their ears and will do a wide release when it's boringly safe.
I much prefer companies waiting until it is boringly safe but I don't think that's compatible with the money fire Uber has built.
engineers don't have the luxury to do many things they could otherwise do on their server side software. You break a server, you fire-drill it, get the resources, roll back the release or so on. You lose money, sometimes tens of millions of dollars, but not human life. You write your post mortem, and put the protections in place, you learn from it.
Noone can afford to lose a life.
There is difference.
Just like my last few Uber drivers.
They're dead.
Isn't it just an app with some staff and lawyers? Where did all the money go?