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Comment by elcomet | Hacker News Reader

> This is why Uber is worth more than all of the auto makers and taxi companies that own their own fleets of cars.

I think this is bullshit. Uber may be worth more than auto makers, but this is a bubble and will not last (unless uber manages to create an autonomous taxi service in the next few years). They were just lucky and intelligent enough to get around regulations, but regulations are catching them.

Uber's tech is simple and easily replicable. The moment they raise their prices, they loose their market share. There is no network effect in this market.

It is simply obvious that Uber provides much less added value than any automaker.

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Many people comment under your message that Uber benefits from captured market shares and network effect. In this regard, the following article https://hbr.org/2019/01/why-some-platforms-thrive-and-others... (posted here a week ago https://news.ycombinator.com/item?id=20142912) can be of interest.

In summary, the article argues that some platforms, such as Uber, benefit far less than others (such as Amazon, AirBnB) from network effects due to the fact that their userbases are clustered over multiple locations :

> Drivers in Boston care mostly about the number of riders in Boston, and riders in Boston care mostly about drivers in Boston. Except for frequent travelers, no one in Boston cares much about the number of drivers and riders in, say, San Francisco. This makes it easy for another ride-sharing service to reach critical mass in a local market and take off through a differentiated offer such as a lower price.

The article raises others points and is quite an interesting read in itself. Strongly recommended.

I'm not sure this is the main cause, but it's an interesting point of view.

For Amazon, their Network effect is huge because they have a huge delivery and storage facility network. The barrier to entry is huge.

For Airbnb, it might be closer to what this article is saying. But also it's less convenient for home owners to have their location on multiple sites (need to sync calendars, the subscription takes much longer...). So they pick one, which is Airbnb.

> Uber's tech is simple and easily replicable. The moment they raise their prices, they loose their market share. There is no network effect in this market.

I disagree that there is no network effect. When one travels to another country it is much easier to use Uber rather than to find what local brew of 'carpooling' service is available, create an account, put in credit card info etc.

Their tech is easily replicable but their global presence is not.

That isn't so much a network effect as it is burning money on 6 continents. If Uber isn't the most cost effective solution at home there isn't much incentive to use it abroad either.

I've been in lots of places - pre Uber - where I didn't even speak the local language. Even then finding a taxi was not taxing. If Uber can't make a profit on local traffic it is going to be a mighty feat if they make money off non-local traffic.

I agree that they need to be profitable in order for this to matter. If they were, it would help with local traffic too as people would still prefer to only have one app installed. In my city there is a concurrent company that pays taxes locally and almost all of the drivers work for both Uber and them. I still sometimes order rides through Uber because of habit.

Doesn’t really match my experience at all visiting a city without Uber (Barcelona).

Driver took advantage of their complicated fare system to add supplement charges that didn’t apply: charged us the baggage supplement for our backpacks that we carried in the car, and charged us a supplement for going to the train station, which should only apply from the train station.

The local taxi authority requires us to complain by post with an original receipt.

The postage costs of sending that with tracking defeats the purpose.

Most people wouldn’t even realize they were overcharged, after all, we paid what was on the meter. And issuing receipts is only by request.

We don’t have enough data to determine if the driver was excellently skilled or suicidal.

Meanwhile with Uber, you get a fancy receipt emailed to you listing route/charges, a sensible (if unregulated) complaints process, and ratings from other riders.

People who frequently travel to a bunch of different countries are a tiny niche market. The vast majority of ride sharing customers take few or zero international trips per year.

I have had opposite experience in Japan

Network effect is more than none, but less than all.

Lyft is also around, and it seems that there is very little friction for both drivers and riders to choose/arbitrage.

Well it can't be that obvious that Uber is overvalued. Are you of the belief that all the big players/investors betting on Uber are missing what you consider to be obvious? Or do you think everyone's just trying to time the bubble collapse...?

I believe they are making a very risky bet (like VC always do, and when it pays off they get huge reward which cover the other losses).

Their bet is on Uber reaching autonomous taxi service. Without this Uber stands no chance in the long term.

I think it's not quite that simple. In the end run up to a bubble, there's a lot of money floating on big bets. Some of them are going to pay off. Most won't. Maybe Uber will. Maybe it won't. They say future value is priced into a stock, and this is where margin for error is the highest.

I think smart money in Uber recognizes their position as a gamble.

Regularly you hear about hundreds of millions being poured into companies like Uber and self driving tech companies. At least one of those companies is going to win big, and investors don't want to miss out.

Right, but that's not the points that the article made. Article's author proposed that THE reason, (not A reason) for airbnb's high value is because cheap money makes non-physical assets expensive. You're explanation was that cheap money makes for "big bets", and stocks can price the future in.

Your answer is good. I agree. The stock market is Vegas. The stock market fueled by cheap money, is Vegas times a billion.

I find the article lacking. And I'm being polite.

Alternatively, perhaps the big players just don't care. They're about making money NOW, not 2 months or 2 years from now.

Uber's tech is simple and easily replicable. The moment they raise their prices, they loose their market share. There is no network effect in this market.

Ppl said the same about Facebook in 2006-2012. "Anyone can make a social network." Yes, the technology can be replicated but the network and market-share cannot.

What network?

You've got the customers because they know you've got enough drivers. You've got the drivers because they know you've got enough customers.

I have Lyft and Uber on my phone. I just pick the cheapest one when I need a ride. And drivers also have Lyft and Uber. And they just pick the one that offers them the highest rates.

No network effect here.

There's still a network effect; it's just a duopoly. The third outfit trying to make this work can't, because they don't have anyone with their app on the phone, because they don't have any drivers, and they don't have any drivers because nobody wants to drive for them because they don't have any customers.

Seems like it would be trivial for someone to do exactly what Uber has done - pick a location and undercut everyone on price using predatory pricing. People will install a new app for a buck or two savings, and drivers will install a new app to get a 5% raise.

Technology being simple is not the argument here.

Of course a social network has by definition a network effect, no one argued this.

Uber is definitely not a social network. Maybe they plan to become one, but they are not yet.

> Uber's tech is simple and easily replicable.

The same can be said for web shops like Amazon. The tech is nothing special, but the brand and network are. The promise of Uber is in becoming a trusted brand, with capacity everywhere, and convenient enough that you don't bother looking to the competition. That said, whether they can actually become this is another question.

Amazon is so much more than a "web shop"... its logistics infrastructure alone is worth actual money, to say nothing of AWS, Prime lock-in, etc.

Sure, but what I'm saying is: the largest value is in having won the hearts and minds of their customers (brand value). Amazon are often more expensive than competitors, but customers still prefer them because they know and trust the experience they will get.

Prime lock-in is not innovative or valuable as a concept in itself, it's just a way of capitalising on the loyalty of their customers, which would not work for many other retailers.

Isn't the reason it's worth more because they figured out a way to grow the pie? The amount of people using taxi services has exploded due to Lyft & Uber (reliable ondemand, good customer service, low prices, etc). Similarly many people in cities are forgoing car ownership due to these on demand taxi services. So no, not obvious it provides much less added value.

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