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Comment by tyingq | Hacker News Reader

I'm skeptical about the business model in general, not related to any recent scandal.

The leaked financials[1] seem to indicate it's a losing proposition until self driving cars are relatively ubiquitous.

So whenever it does become financially viable, there's a pretty long payback cycle. And no obvious iron clad moat that keeps competitors at bay...ones that aren't under pressure to pay back investors for years of subsidized prices.

Of course, the leaked data is incomplete, and using unusual accounting, so perhaps I'm wrong.

[1] http://gawker.com/here-are-the-internal-documents-that-prove... and http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...

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Sounds good.

Revenues growing exponentially from 2012-2015. The revenues in 2015 were even higher than the predictions done 2 years earlier (that were actually planning for a steep exponential).

At this rate of growth. They should be making 1-2 billion in revenues per quarter now. Wish we had a recent leaked document.

That's a solid multi billion dollars business. Worse case scenario if they run out of subsidies: Stop distributing tons of incentive in unprofitable markets + fire half the staff (they have too many anyway) = back to positive.

Easily back to a profitable business that is already in a hole how big?

Anyone can drive big revenue by taking huge piles of investor cash and selling things below margin. That isn't magic. If that buys market share with a moat, it may make sense. If not, it's unwise.

The size of the hole is irrelevant.

What matters it the size of the shovel they are using (their expenses and subsidies) and the force of the wind that's refilling the hole with nearby dust (the customer revenues).

They can reduce their shovel without impacting the wind too much.

Amazon was fine throwing money into making a moat, and they have a tangible one.

I don't see what Uber's moat is once self driving cars are common. It seems they will be fighting off competition (car companies, Waymo, etc) that didn't have to spend money on lobbying, lawsuits, subsidies, and so forth.

That's your problem there! :D

Self driving cars are just hype that won't be any significant for another decade. You should forget about self driving cars.

What Uber has right now is real, a massive customer base and network of taxi, that is bringing billions of dollars. They could totally focus on that and have a strong and sustainable business.

Sans self driving cars, Uber loses cash. You seem to think shedding employees is enough to fix that. Closing a $2 to $3bn/yr loss with just layoffs seems hard. Eliminating subsidies puts competitors on a level playing field. I can sell dollar bills for 90 cents and be incredibly popular too. I just don't have the panache to sell that plan to Saudis.

Think of competitors as friends.

They bring you business. Yes, it helps you that the taxi can have a phone with lyft in the same car. It gives the illusion of choice and it gives an alternative to the driver.

In the end, your business has 90% market share. It's not going away overnight. Market share is actually self sustaining and it's giving you a strong edge for the future.

Competitors don't have 1/10th of the cash. If they get try to compete on subsidies, they'll get a peak of traffic and run out.

Sans self driving cars, Uber's competitors are also losing cash, and they are losing cash faster than Uber

https://news.ycombinator.com/item?id=13772168

Yes, that seems logical. I'd mentioned competition in my comment as Waymo and car companies.

"Sell at a loss but make it up in volume" probably doesn't work well for many :)

I read your comment twice. You only mention Uber and not "Waymo and car companies" unless your referring to a different comment of yours than the one I replied to here.

This was the only spot where I said anything about specific competitors: It seems they will be fighting off competition (car companies, Waymo, etc) that didn't have to spend money on lobbying

The bigger thing, though, is that you keep implying that I said Lyft was somehow in a better spot. Now you're noting I never mentioned Lyft.

Nothing I'm saying is affected one way or other by Lyft. Pointing out that they have the same problem doesn't change the rationale.

Given Lyft's leaked financials versus Uber's leaked financial, it looks like Lyft (and others) are going to be the ones trying to pay back investors for years:

https://news.ycombinator.com/item?id=13772168

I don't understand how so many people on HN falsely believe that Uber is the only one subsidizing rides. My only explanations are ignorance and astroturfing.

That might make sense here if I'd thrown a rant about how Lyft was going to eat their lunch.

But I didn't.

I said, roughly, that the current model is unsustainable and loses money. If Uber is losing $2-3bn/year, and Lyft is losing $600/mn, that doesn't contradict that. People talk about Uber because they are the market leader, and because their hubris and antics add additional risk to the already shaky model (like the Waymo suit).

Define hubris and provide evidence of it. That seems like an odd accusation to levy if someone is trying to be dispassionate and objective in their argument against a business model instead of a particular company.

Er, okay. You don't objectively think the Waymo lawsuit is a concern?

I think its a concern, but how is it hubris on Uber's part? It's an allegation not a proven fact based on weak circumstantial evidence. In America you can sue anyone for anything. The fact that they knew about these downloaded files since well before he left Google but only did something now when Uber has a negative PR firestorm makes me very skeptical about Google's motives. If you know an employee download files, you deal with the situation immediately and make sure your IP is returned. If you're being ethical, you don't wait almost 1-2 years until a convenient time to use that incident to attack a competitor that out-executed you fair and square.

If you're on the fence as to whether Uber demonstrates hubris, we're probably too far apart to have any meaningful debate.

On the "knew about these downloaded files", that's not the story Waymo presented[1]. They said an email from a supplier had attached files of a Uber lidar board that looked a lot like a Waymo proprietary board. That is what prompted a look into the logs.

[1]https://medium.com/waymo/a-note-on-our-lawsuit-against-otto-...

If you don't think self-driving vehicles face an enormous uphill regulation battle, you are sorely, sorely mistaken! Politics haven't even entered the self-driving game yet. They will and every union associated with driving is going to freak the fuck out. It will be a bloody political mess.

I think you may be misreading me. I'm not saying they are imminent. I am saying Uber's business model sucks without the lower costs they deliver.

Anything that delays them means Uber burns more cash subsidizing cheap prices to hold back competition.

And once they do arrive, competitors can enter the market with lower costs.

Or, maybe Uber isn't losing as much as it seems? (Estimates are $2+bn/yr) Or there is some moat that protects them? I just don't get it.

If they need self-driving cars to be profitable, they might as well hang it up, seriously its not happening for a long while. I don't think that is the case, however.

Everyone is blinded by the large number like $3 billion. That's not the number that matterS. All the companies in this market are subsidizing rides (except maybe the traditional taxis). What matters is how much each ride is being subsidized.

A while back another user did this math using leaked financials from Uber and Lyft and Lyft deserves more criticism for subsidizing rides than Uber:

https://news.ycombinator.com/item?id=13772168

Sure. But noting that the same model isn't working for anyone doesn't change anything I said.

It does change it a bit. If one is more efficient than the others and is improving efficiency/utilization faster than others, then eventually that company will eventually be able to compete on price while others are forced to subsidize. At that point they can just wait out the other competitor until the investors in those competitors tire of throwing good money after bad.

Subsidies don't work at scale. The bigger the ridesharing market gets, the less a company can meaningfully provide a subsidy that changes consumer behavior. Whichever company can get to breakeven before R&D and capital investments are taken into account is going to clean up because at that point they can outlast their competitors indefinitely.

So, wait it out, and then raise prices? Assuming that won't affect demand I suppose. Give me a mountain of cash and I'll start a flat rate $25 airline and put everyone under. Then I'll raise prices when it's over. Guess what happens when the mountain of cash is gone and I have to charge something that makes margin? We're back to competing because my moat was artificial. Nobody has demonstrated a profitable quarter yet in this nuevo taxi game.

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