Google Ventures Puts $258M Into Uber, Its Largest Deal Ever
techcrunch.com
techcrunch.com
The highest cost for taxis is not the cars, nor the gas, but the drivers. Get rid of them, and it's all gravy.
Something like this is most certainly the "mass" transit of the future. It would be lower cost, more convenient, and would actually pollute less than buses during non-peak times.
Do you have any source on this?
Edit: Maybe I goofed, mattmcknight accurately points out that in many cities the taxi medallion is the most expensive part of the taxi equation. I'm not intimately familiar with Uber; do drivers still have to obtain medallions in their respective cities?
However, the structure was created for old style limos: I.e. fat cat or prom kid books for hours, days in advance, not competitive with a taxi.
One could reasonably argue booking an uber 1 minute before pickup for a ten minute ride is a lot more like a taxi than a limo.
Note I am not criticizing Uber, as they clearly are obeying the law! But to some it looks like they are skirting it, benefiting from a loophole.
- permit (medallion, whatever)
- labour
- write-off on the taxi
- taxes
- fuel, tires
- insurance
- inspection
- credit card processing fees
Top all of that off with a healthy profit otherwise your taxi operator goes out of business quickly.
All of these to a greater or lesser extent contribute to the costs and result in a price-per distance unit (mile/km) driven and a wait tarif.
Taxis have considerable down-time between jobs so utilization is a factor as well.
Assuming you're not driving a Mercedes, is your monthly car payment + insurance more than your monthly income?
You see where I'm going.
Of course, the vehicles are probably getting twice the MPG, and the drivers are getting paid more, so the number of miles is probably much higher.
Quite a bit beyond "organizing the worlds information"[!]
However, with Uber, as far as I know, all drivers own their own vehicles. They just subcontract to Uber.
Further, there is a massive black market for drugs and prostitution in every city and every Black Limo market, SF Uber being no exception. I wonder where this will wind up....
http://en.wikipedia.org/wiki/Holographic_principle#Energy.2C...
I understand that the establishment will always attempt to maintain control, but I think the situation is too different and complicated for the taxi establishment to overcome. I think that Google Ventures agrees.
Whether a taxi service with self-driving cars should be subject to taxi regulations is a separate issue. Some of the concerns that led to taxi regulations are no longer relevant to a self-driving taxi (e.g. people picking up tourists and robbing them). Some of the concerns that led to taxi regulations are still relevant to self-driving taxis (e.g. companies focusing coverage on high-demand areas and ignoring poorer areas).
It makes no sense today, but it will make sense in 5 ~ 10 years. I bring up individual ownership of self driving cars because that is the environment in which the debate will happen, not the current one in which no self-driving cars exist. What does a "taxi" service look like when Hertz can deliver a self-driving car to my door? How is it any different from what we call a taxi today? Hence, either every self-driving car will be called a "taxi", or none of them will. Or, there needs to be a clearer differentiator between them.
Whether the current service that Uber provides is a taxi or not is irrelevant to the future debate involving cars with no drivers, unless those cars have a fare printed on the side and a light on the roof. It's likely that the taxi lobby will push for NYC to charge every car in the city a non-linear congestion fee unless you have a medallion.
Some relevant research is in [1], which i think is implemented in the new finish public transportation service kutsuplus.fi.
And such a service could be great help in rapid transition to self driving cars - capital demands will be smaller, and profitability higher, and much faster to reach critical mass/lockout.
[1]http://www.floating-content.net/~esa/pub/files/jokinen-fists...
In Montreal, cab to the airport costs $50. Cab arrives in about 1-2 minutes most locations, and drives you there as fast as taxis go.
I don't doubt that Uber's great - this is a serious question. How much of a premium do people pay, and what are the main benefits in cities that already have developed taxi networks?
> "You have no idea who is picking you up" - 99% of the time this is a moot point.
> "Often times they wont even show up if you aren't at a hotel" - I've never encountered this in my entire life.
I've had cabs refuse to take me to my apartment building, saying they would only go to hotels. Others stating up front 2-3X what the meter rate would be, which of course I refuse. I've had them drive in circles, "miss" the exit to stretch out trip, and not a one seems to know where anything other than major hotels and the airport are in the city, or have GPS. Only half the time will they bother to turn the meter on. Very few will take credit cards without a fight.
Those are just some of my first hand experiences, everyone I know that uses cabs frequently in ATL has the same and/or worse stories. Cabs here basically seem to only want to ferry out of towners to and fro the airport to hotels downtown. Unsurprisingly, Uber has been a huge hit in Atlanta. You can actually get a car in 5 minutes or less some times, that's unheard of.
Second, the cars are much nicer. Fairly new black cars and large SUV's vs smelly Ford Crown Vic's.
Also all payment happens on the backend so you never exchange any cards or cash. I expense Uber rides all the time and believe that enterprise sales might end up being one of their largest markets.
Contrast with Toronto, where it's a no brainer on major streets (and we have Hailo here, which works pretty darn well but uses regular cabs), or in Montreal where I've had cab drivers almost get into accidents fighting over who saw me first.
In a lot of smaller Canadian cities they take a while to arrive. But I have had ZERO bad experiences in Montreal and Toronto. The system works pretty well.
It also stops discrimination of location or profile (They can't say they don't go to X place or not pick you up).
I'm not doubting your anecdote, just adding my own. I have definitely had a handful of disappointing Uber experiences; however, 90%+ have been fantastic.
This is just false in NYC. Yellow cabs are 1/3-1/2 the price.
The Uber cars and drivers are pretty nice though. Sometimes I'm willing to pay a premium for that.
Yes, there is a market for luxury transport, but is this really a high growth market? How many more young and overpaid software engineers can there be?
Look at the real rate of unemployment, the rise of the part-time labor force, record usage of food stamps, record high student debt, national debt, etc.
Lyft and the kool-aiders claim it's a beautiful new sharing economy, but in truth it's a shitty economy, where people are willing to drive a stranger across the city for 10 bucks, or task-rabbit themselves for a fiver.
My opinion is that there simply aren't enough wealthy folk out there to justify the valuation of these companies.
Overpaid? Really?
Classic strategy... conquer the premium market first (BMW 3,5 and 7 series) then start going more mainstream (1-Series BMW) once the brand is established and is viewed as prestigious.
Apart from the basic benefit of not having to get your wallet out, I'd say it's the option of choosing between different type of rides that I like the most. In SF via uber we can get taxis, uberx (basically Lyft, some drivers do both), black cars, and SUVs.
In Montreal I don't remember ever getting a black car, but I was student at ÉTS so maybe that's a moot point :)
For your last question, SF has a developed taxi network but it's really bad. Montréal in that regard is much better, but maybe when leaving the bar at 3AM you'd rather get a black car to take you home rather than a taxi from Hochelag, and uber would make that really easy for you.
The pricing is far too high. Only on one occasion out of a dozen did i get a luxury vehicle.
FYI Uber a base specification Mercedes E class is not a luxury vehicle. They are also usually not particularly clean and often with not a particularly competent driver.
I was having a bad day and needed to go from office->home->office->airport. I had to wait 40 minutes for a car (luckily i had thought of this in advance so that didn't bother me). The driver did the first trip then begged me to let him complete the fare there as he didn't want to go all the way to the airport. So I had to get out and book a new journey from scratch.
That's got to be the summit of conceit, to say an E class is not a luxury vehicle!
Wonder what you'd think of my golf :)
Cabs are always clean and drivers very polite - I've never had a problem with them for years and I use them for all my personal taxi usage as well.
I'm not sure what advantage Uber would have in this market.
With a premium business like Uber that will be a big problem. Plus those cabs aren't gonna stay shiny and new forever.
-Car just passed a turn when I call it. -Car looks close, but really isn't. For example, its on a highway and you are a block over. -Misread on the direction the car is traveling, usually from signal interference.
Predictions, I don't know anyone at the company so this is what I expect they are doing. If they don't, a competitor will:
-Within 5 years we will start having driverless Ubers. -Service can scale and they plan on it, they have taken the start at the top of market and work down.
The thing that has kept me thinking is, by the time cars are driverless, will taxi cab medallions (in NYC and Hong Kong at least) go up in price because you don't need a driver, or will they be worthless?
As a price point, I've always managed to go Docklands to Luton for under £50.
Why does a company need to raise so-much-money before going public? Isn't the whole point of "going public" to raise money?
Sarbanes-Oxley was instituted in the wake of the Enron and Worldcom (and others beside) scandals (which led to the demise of accounting giant Arthur-Andersen, which - surprisingly - survived in some form because the verdict against them from the Enron debacle was eventually overturned by the supreme court) which severely undermined the public confidence in Wall Street.
As a result the already substantial reporting requirements for public companies were ratcheted up several notches further increasing the overhead. So yes, Sarbanes-Oxley made it more expensive to be listed on the stock market and therefore to be trade publicly but the difference was always there, also before SOX.
Companies would prefer to stay private (and away from the limelight) while they're still figuring out product/market fit etc
If you don't want to dilute the hell out of existing shareholders, you'll want a high IPO price. You get that by moving the company as far forward on venture cash as you can.
If you take a look at the biotech industry, IPOing too early can result in not raising enough for your cash needs, so you offer more shares, diluting your existing stockholders.
The public markets definitely are for venture investing that was their origin and still is a main function today.
However it is not rare for founders and early investors to cash out during or shortly after an IPO, typically after a hold-back period called a lock-in.
In my opinion this is a red flag, it shows that founders and early investors would rather sell at the current price than stay in, and they typically have a bit more information (insider trading laws notwithstanding) than the general public.
The stock market is an excellent place for fools and their money to be parted, think of it as a giant casino where the house controls the games and the information available, the SEC controls some of the rules and the public is (usually) clueless.
Early investors are another matter, of course. They usually have other ways of diversifying so that's not a plausible motive for sales in most cases.
If it is a relatively small portion then it makes sense as a risk diversification strategy.
When people float companies they built and worked at for a long time with little tangible reward it is not unreasonable for them to want to take their money and actually enjoy it.
I guess it all depends on what you call venture investing. I don't think that Sergey and Brin could have IPOed 6 months after founding Google - the public would have found the idea of investing absurd. So instead they went to VCs who can actually realize value in a "idea" and are willing to invest at a reasonable valuation.
Raise enough VC money and you can advance the company forward enough so that the general public see value in your company (usually revenue). At that point you can IPO and actually get a decent valuation.
Actually, the point of an IPO is to raise money, from the public markets. It's an Initial Public Offering, and the company can raise more at a later date by issuing more shares. The liquidity wouldn't exist if people didn't want those shares.
The IPO just happens to be a convenient time for current shareholders to sell their stake (as part of the offering) but even then, there are rules about how they can do that (lock-in periods, etc)
To spend it on a drastically raising revenue before the IPO: "...Our revenue grew by 785% last year so buy shares of our $xx billion company..."
*Isn't the whole point of "going public" to raise money?" Nope, many times (if not most) it's to get the money back and then some for the early investors.
It used to be. Regulations introduced in the past decade have made it very expensive to be a public company - there's a lot of accounting and legal overhead. These days it's easier to raise large sums of money privately and only IPO when those investors want to cash out.
1 AMSTERDAM
2 ATLANTA
3 BALTIMORE
4 BERLIN
5 BOSTON
6 CHICAGO
7 DALLAS
8 DENVER
9 DETROIT
10 HAMPTONS
11 HONOLULU
12 INDIANAPOLIS
13 JOHANNESBURG
14 LONDON
15 LOS ANGELES
16 LYON
17 MELBOURNE
18 MEXICO CITY
19 MILAN
20 MINNEAPOLIS
21 MUNICH
22 NEW YORK CITY
23 ORANGE COUNTY
24 PARIS
25 PHILADELPHIA
26 PHOENIX
27 PROVIDENCE
28 ROME
29 SACRAMENTO
30 SAN DIEGO
31 SAN FRANCISCO
32 SEATTLE
33 SEOUL
34 SHANGHAI
35 SINGAPORE
36 STOCKHOLM
37 SYDNEY
38 TAIPEI
39 TORONTO
40 WASHINGTON D.C.
41 ZURICHSo a towncar hire service, with an app, is worth over $3bn ? Really?!
Maybe there's one or two other metropolitan cities in the US where the taxi service isn't up to scratch, but where is the growth going to come from?
I doubt whether regulators and taxi unions in London, Tokyo or Hong Kong would sit idly by when some Silicon Valley kool-aid types come knocking.
* Build out the service so that Uber is the central dispatch to any ride option based on price - also playing into the whitelabel/building of tech
* Provide Uber a significant fund with which to seek M&As of existing taxi cos all over the place
* Provide an investment sizeable enough to serve as national/global free PR for the service, investment
* Provide an investment large enough to back a significant legal team that can take on any metro taxi service's bitching
* Provide an investment large enough to lobby the hell out of local/national representation
Is it worth $3B? I don't know... but it's certainly not as insane as some other valley companies.
It may happen, but there is such an enormous gap of time between then and now that I wouldn't exactly be picking winners just yet.
They might now be at the point where they have to pick a winner to start integrating. Their engineers have already been driving these things around for years. They probably already have a v1.0 release date in mind.
Uber isn't really a tech company, in the same way Amazon isn't really a tech company. The Secret Sauce(tm) behind Uber is logistics - in managing a highly fluid workforce, dispatching, etc.
Not much of which transfers into this post-human-driver world. I like Uber, but I don't think Uber being Uber really confers a large advantage over new entrants when the autonomous cars become reality.
It would seem to me that, when the time comes, any number of companies run by reasonably talented people with capital backing can start a car service. Uber's edge applies to their human-driver business.
If Google want to hit the ground running with a robot taxi service, they need Uber to be growing into something that my parents might use in parallel with the finishing touches being put on their AI cars.
I see great opportunities here as they are not limited to traditional taxi services. Once you have the infrastructure in place, you can for example start doing something that is between traditional taxi and tradinaional public transportation (in Finland there are trials running for this kind of system[1]). And once you have self driving cars, it would be interesting to evolve into car sharing scheme style of things [2], where can summon a car to your door with smart phone app.
[1] https://kutsuplus.fi/tour [2] http://www.citycarclub.co.uk/
Disclaimer: I will be working for Hailo soon, the London start-up which is Uber's competitor. I believe both companies have their strengths and tackle different bands of the same market.
I think what I'm saying is: if Google actually created a fleet of driverless cars, would anyone still use Uber?
Please explain how it makes a difference whether humans are operating the vehicles or whether they are self driving. In either case a larger network is making the pickup, dropoff and navigation decisions, not the driver.
It's only difficult because Uber has to deal with humans - will their cell phone be charged? Will they hear the notification on their phones? What if they forgot to indicate that they've taken the rest of the day off? What if they claim to be available but are actually in the restroom at a fast food restaurant? It's supposed to be a 6 minute drive but what if they make a wrong turn? What if they glance quickly at the map of where they're supposed to go but saw it wrong, then muted the turn-by-turn so they could blast some daft punk? Working with human agents is hard.
If you have always-online self-driving cars, then you've already done the hard part. Directing them where to go is trivial.
I'm only using 5 people with 3 cars as an example. In reality it's hundreds upon hundreds of people and proportionally fewer cars. I understand there are challenges with dealing with humans that will disappear when we switch to robots, but I can't see the API changing very much. The concept of a vehicle network, customers, app, doing clever things to anticipate traffic and customer desires on certain days, all of these things take (I would imagine) years to understand and optimize.
Your claim that operating such a network with humans versus robots, on a logistical (API) level, have "almost zero in common" is rather brash.
Also, the travelling salesman problem is hard because you're looking for the best solution not a good solution. A good one is pretty easy.
https://www.quora.com/Uber-1/How-can-Uber-survive-driverless...
http://techcrunch.com/2013/07/30/california-regulator-propos...
I think Uber will evolve to become a service that even regular people can use, not just a speciality service for the relatively wealthy tech community (though it is necessary to start out as such; ala Tesla). I also think that taxis aren't the only thing that it will offer in the future. There is a wealth of potential for what they can do. They sometimes do fun one-off Ubers like Helecopters or Ice Cream Trucks which don't quite capture this potential but shows us that they realize that there's much more to experiment with and that they're not afraid to experiment.
Imagine when we have self driving vehicles (which, incidentally Google is helping develop).
"DCTC passed a new set of regulations which bans mid-sized, fuel-efficient vehicles from being hired, as well as places color restrictions on those cars."
http://www.wjla.com/articles/2013/08/uber-and-d-c-taxicab-co...
UberX is under attack in DC. The Limo/livery (black car and SUVs) businesses is now well protected by DC law and the definitions passed earlier this year. The DCTC rules will classify the UberX hybrid vehicles as Sedans and subject to the new rules. However, Uber has secured enough allies in the DC Council, including the DC Transportation CMTE Chair.
I've watched this fight play out a few times now, and I think the worst case scenario is no UberX through the end of 2013 prior to the next set of DCTC rule-making or council intervention. Uber rightly gins everyone up in DC about these issues, but the truth is they've done a great job in this market attracting the right allies and have been consistently winning their battles.
I look into the future and I primarily see "Google".
This page...
http://www.googleventures.com/investing
...touts "Uparallelled Access to Google", and supposedly GV won its share in Uber's round with the help of direct lobbying from Larry Page.
So GV may be ostensibly empowered to seek return without regard to Google's other objectives... but it doesn't appear there's a "Chinese Wall". If theoretically the GV partners wanted to do something Larry Page absolutely didn't want, I'm not sure I'd bet on the GV partners having their way.
> “If a company comes in the door and it looks like something important for Google to acquire,” says Maris, “we will defer to Google’s corporate development department to take a look.”
http://techcrunch.com/2009/04/04/the-google-ventures-cheat-s...
Step one: buy car service
Step two: replace drivers with computers
Step three: profit, optimize traffic patterns from within the swarm, decrease accidents, increase fuel efficiency, etc.That's a deal killer for me.