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Comment by asabhi | Hacker News Reader

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the technology is ready it will be commoditized, and Uber will have no advantage.

As a rider, it's great to use it while you can, but there is no actual business there.

Airbnb on the there hand has all the advantages people like to see in a business.

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Re: "all costs are the same as before"

If you mean the same as running a Taxi, you're ignoring the higher prices caused by the artificial scarcity imposed by the medallion system, and ignoring the cost / fee for of the medallion itself. Uber could absolutely return some of that to the user in the form of lower prices than traditional taxis; and keep some for itself, of course.

Uber also has some efficiencies - its ability to pair customers and drivers makes robust taxi markets in a lot of places that wouldn't otherwise have them. (I honestly don't even know if my city has a traditional taxi company, but it definitely has Uber and Lyft)

I'd be surprised if it doesn't. I know someone who lived in West Virginia for a while. Before she got a car, she had to call a taxi to get to and from the grocery store.

(To be fair, this was the eastern panhandle, which has the capital and the tourist attractions.)

If you're going to count that, you'll also have to figure out the costs for negative externalities like congestion, pollution, accidents, social services for drivers (health care, retirement, food stamps, etc), bankruptcies, and regulation.

The medallion system had its issues, but there were reasons it existed. City after city decided it didn't want infinite unregulated taxis in circulation.

I disagree. Uber facilitates the process of becoming a driver, therefore there will be a larger supply of drivers. I believe the price of a fare will decrease due to the increased competition.

Also facilitates becoming a rider through ease of use/payment. And more riders, more revenue even with the same margins.

The app is much smoother than the 2011-era cab experience — call a phone dispatcher, hope a cab shows up eventually. (Of course, Lyft provides exactly the same experience for consumers and even taxi companies are attempting to provide an app nowadays.)

Has Uber stopped operating at a massive loss, subsidizing every ride with VC cash? Fares are already artificially and unsustainably depressed, and without Lvl 5 automation (clearly not incoming soon) the fares eventually have to rise. Those fares will rise even more as driver backlash against how little they’re paid increases with time.

Amortization over say 20 fairs per day * 20 days a month * 12 months a year, reducing the cost by 1 cent per ride per ~50$ dollars in cost savings. Suggests it's just not a meaningful savings.

Where are you getting the 1 cent reduction quantity? My only point was that a greater supply of drivers could yield a lower price, but I never asserted to what degree the price would decrease.

Increasing costs to add a driver does not prevent company's from adding new drivers it just makes that more expensive. Thus, you need to consider it as another form of cost savings not a difference in the number of drivers.

A company that pays 50$ less to get an employee can reduce fairs on the order of 1 cent or make an extra 1 cent per ride. It's possible Uber might add a few cents per ride this way, but it's not particularly significant even assuming the average driver does not last that long.

Having ridden in thousands of cabs, and hundreds of Ubers, calling Uber a “taxi company with an app” is like calling an airplane a car with a crossbeam.

You must have some pretty poor apps - my local one doesn't even need an app.

In the UK when I call my normal cab company it knows where my phone is and asks you to press 1 to book a cab to my location - I then get a SMS confirming the booking another when the cab is dispatched and one when it arrives

I have never used an app to call a taxi. I used taxis for decades, and when Uber came out it was such a night and day difference that I have taken exactly one taxi in the last five years, when my phone battery was dead.

My impression is that Uber is making money of the rides.

It loses money on all its other research and investment schemes.

I don't know if there are any actual facts out?

No, "Uber passengers paid only 41% of the cost of their trips for the fiscal year ended in September 2015." Prices have not changed much since then, so they are a long way from break even.

https://www.reuters.com/article/us-uber-profitability/true-p...

That's assuming the only reason they paid that much of those trips was because of price. That's not true of how Uber operates.

They do a lot of things like driver incentives (for being logged on a certain amount of time etc, or for signing up in the first place - a lot of this is during market setup for a given city), complete discounted rides based on new signups for riders, etc. You can assume as their penetration into the market saturates for both drivers and riders that both of these costs will diminish.

A lot of people on Hacker News being US based also ignore the fact that Uber is highly international. I use it almost everywhere I travel for work, I think Malta was one of the few places they weren't. Lyft and similar competitors are mostly either US-specific or even city-specific. There is a lot of different economies in other regions to look at.

Prices haven’t changed much in the US but Uber has divested some of its most expensive investments around the world (China, Russia, APAC).

thats 3.5 year old data (data started in FY Sept 2014) in a hugely changing and dynamic market, so basically not useful.

I work at Uber. We have publicly released financial statements each quarter. For q4 last year, our rides business was contribution margin positive (aka, it makes money). What loses money for us is R + D, and growth in new products (freight, eats, etc)

I notice you don't actually provide actual data to make a point. Which destroys your argument.

41% is such a ludicrously large way from 110% you need some real data to back it up. Further pretending the start date is means the data is a full year older is silly. At best you can have 2 more years of fiscal data.

I just don't get where the money goes if that's true.

If I pay $10 for a ride, $7 goes to the driver, which covers all the cost for the car, gas, his wage etc.

$3 goes to Uber. What marginal costs do the have for my ride that are anywhere close to that?

16,000 employees. Salaries, benefits.

Global facilities and infrastructure.

Numerous exploratory business ventures, like Uber Eats.

What you're saying is that you've never built a $10 billion sales, global corporation before. Which is very understandable, few have.

> Numerous exploratory business ventures

This is my original point!

Self driving cars have massive network effects, just like any product dependent on machine learning. More users -> more data -> better product -> more users.

It's the same reason Google is invulnerable in web search.

Google isn't invulnerable in search because of a network effect, which is about your product becoming more valuable because you connect your users to your users (e.g., the Bell System or Facebook). Google is invulnerable in search because search has a very long tail, requiring massive investment to reach adequacy for most users. Google's advantage is economy of scale.

Self-driving cars definitely don't have a network effect. They also don't have the came kind of economy of scale as Google. A person who learns to drive in one, specific part of the US is able to drive, with minor additional learning, in any part of the US. Yes, there's some minimum size necessary to get the data for self-driving cars. But unlike with search, where the minimum size is generally "the whole web", the minimum size for self-driving cars is much smaller. That's why we're seeing many different companies work on it.

Network effects are not limited to products that connect users. A network effect is when more usage increases the value of the product [1]. More Google users means more click data, which means better search ranking.

But yes, Google also has scale economies.

[1] https://en.m.wikipedia.org/wiki/Network_effect

I don't think that qualifies, as network effects keep increasing with the size of the network. Click data's value tails off pretty rapidly once you nail the top few things that people click on, which is the great bulk of the usage.

It's actually exactly the opposite. Google's most valuable data is the long tail, which is substantial in search, since they have some data for rare searches, whereas Bing as none.

The network effect for google comes from it's relationships with users and advertizers. This is why Microsoft couldn't overtake them despite spending so much on bing.

More users -> more data -> better product -> more users

s/b

More users -> more labeled data -> better product -> more users

ML systems need lots of labeled data, not just lots of data. This is one of the primary why game playing AI's have had such great successes, tons of labeled data are relatively cheap. Great discourse on this and other related issues here:

https://medium.com/@karpathy/alphago-in-context-c47718cb95a5

Supervised learning requires labels. Unsupervised doesn't. Self driving cars use elements of both. This is why companies like Cruise and Tesla are rushing to get basic self driving cars out there. They need driving data.

Fair enough. I guess I'm in the camp that unsupervised learning is of limited utility.

You can get creative about labels. For instance, with known velocity of the car, predict where an object in view of the camera will be 5 frames in the future... This makes all data recorded by the camera effectively labeled, and is actually a useful thing to have.

Human input in normal cars with sensors provides supervision.

Things like uber pool & friends is something that is hard to do efficiently as a dude with a few weeks. While airbnb is a fancy ecommerce website ;).

"Airbnb is just a fancy ebay CRUD app for rooms, anybody can code that!"

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