Ultimately Uber wants to corner the market on providing automated cars. Having drivers is just the stepping stone. If you are synonymous with providing rides then when automated transportation is available, everything thinks of you.
Leaked Uber financials from 2012 to 2014
81–90 of 107 posts
Re: Leaked Uber financials from 2012 to 2014
#82Earlier quoted context omitted.
Despite popular belief, apps and communities don't run themselves. Uber is scaling at an ungodly speed, and they're hiring a ton of people to do so. Seriously, look at how many jobs they're hiring for right now: https://www.uber.com/jobs/list (then realize they're doing this in hundreds of cities simultaneously, in addition to the hundreds they're already in). I'm actually blown away that they're losing so little , g…
Another thing to keep in mind is that über would have to pay corporate income tax, to the tune of 30%, on any profits made in the US. It seems like they're doing a good job (or are insanely lucky) at reinvesting their gross income back into their company growth while keeping their burn rate relatively low to the $6.9b in raise capital. (e.g. they've only cut $0.5b into their $7b cash stash).
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Re: Leaked Uber financials from 2012 to 2014
#83Earlier quoted context omitted.
They're spending an awful lot for control of a market that is expected to disappear within a few years when self driving cars mature. Of course, they are aware of it and are investing in being a leader in that market - but they're fighting with global giants over there, not the local Taxi outfits.
'Expected to disappear' within a few years? Go on, name me a year when there will be significant numbers of driverless cars on the road.
Most opinions I've read expect taxis to be the first casualties of driverless cars.
But you know what they say: prediction is hard; especially predictions about the future.
Re: Leaked Uber financials from 2012 to 2014
#84Earlier quoted context omitted.
There is evidence of this all over the press if you want to search for it. Take for instance The 'non-profit' "People's Uber" in China. They guaranteed wages for drivers and capped rates at auto rickshaw prices. This spring in Guangzhou I was taking 20 minute rides and paying around $1.50. It was ridiculous. While they were trying to maintain a foothold in Germany as more than a legal taxi hailing service (which is w…
> they are definitely paying a price for expansion. Of course, that's the whole reason to raise capital (so you can expand rapidly on a model which has attractive unit economics). The point is that we don't have to speculate about what will happen once Uber raises prices. Just look at their mature markets, where pricing is on par with taxis, and you can see a profitable model.
I think that the profitability in mature markets has a lot to do with how sane existing taxi regulations are. Even with the subsidized prices in Berlin, taxis there are so plentiful and relatively affordable that aside from heavily subsidized rides Uber didn't have a huge edge over the taxi+mytaxi combo. It was never really faster to get a car via Uber than with MyTaxi, or more often than not, just walking to the street and waiting 1-2 minutes. They've never had close to the same participation from Taxi drivers as MyTaxi and others have had. Incidentally, most Berlin Taxis are independent and pay only a small fee to get licensed. They must carry commercial insurance, but almost no one thinks that is unreasonable.
It's ironic because if the cities where Uber is madly profitable actually responded to their criticisms and reformed their protectionist taxi regulations, Uber would lose much of their pricing edge to competition.
Re: Leaked Uber financials from 2012 to 2014
#85Of course, Uber could hunker down in one market and start making a profit. But they are trying to form a global monopoly in all the major urban markets. New capital is going to dry up pretty soon unless they are prepared to go public. Either Uber has to lower its sights to limited regional domination, or it has to go public. Given their MO I would think they are preparing for the latter option.
Re: Leaked Uber financials from 2012 to 2014
#86Earlier quoted context omitted.
I do wonder what will happen once Uber starts charging market rates. Right now, your ride is subsidized by Uber. Once it comes time to turn on the profits, you'll have to pay more - substantially more in some markets. Will you still use Uber? Probably. But many who started using Uber instead of, say, taking their own car or using public transport, just might go back.
> I do wonder what will happen once Uber starts charging market rates. That's an excellent question and the answer is it wont be cheap. That's why, in countries where Uber operates, a clear legal framework is needed so that Uber doesn't end up with a monopoly. If Uber is allowed to operate somewhere then anybody should be able to do that without the need for an army of lawyers and lobbyists or it's just replacing the…
You bring up an interesting point, though - Uber could very much suffer from being the first to break through all of these regulations, only for a second comer to step in, debt-unhindered, and destroy their business.
Re: Leaked Uber financials from 2012 to 2014
#87Earlier quoted context omitted.
So what happens when they've aggressively expanded into all their target markets and are still not profitable and have nowhere else to go? Pure expansion is pretty much the sign of a first-mover bubble company who will collapse with their advantage being copied by calmer second-movers...
Expansion costs money, running operations is cheaper. So when growth stops, profit happens almost by default. Simple math. Suppose opening a city costs $10 (once) and returns $1/year in revenue. Year 1: Open 1 city, loss = $10. Year 2: Open 3 cities, loss = $29 (spending $30 on new cities, gaining $1 from year 1's city). Year 3: Open 9 cities, loss = $86. Year 4: expansion stops, profit = $13.
Your math suggests that it will take at least 9 years to be profitable again.
Re: Leaked Uber financials from 2012 to 2014
#88Earlier quoted context omitted.
Uber is active pretty much everywhere. They're truly aiming to corner the entire global transport market. They're putting in $1B in India alone. When the dust is settled, you're going to get a company that controls the private transport industry in an area that stretches from San Francisco to Kolkata For an industry that was once dominated by small local players, this is truly mind blowing. I don't think there is a s…
> When the dust is settled, you're going to get a company that controls the private transport industry in an area that stretches from San Francisco to Kolkata Yay! Disintermediation! Smashing monopolies! Oh, wait.
Can we start calling this Transintermediation instead?
Re: Leaked Uber financials from 2012 to 2014
#89Earlier quoted context omitted.
So what happens when they've aggressively expanded into all their target markets and are still not profitable and have nowhere else to go? Pure expansion is pretty much the sign of a first-mover bubble company who will collapse with their advantage being copied by calmer second-movers...
Expansion costs money, running operations is cheaper. So when growth stops, profit happens almost by default. Simple math. Suppose opening a city costs $10 (once) and returns $1/year in revenue. Year 1: Open 1 city, loss = $10. Year 2: Open 3 cities, loss = $29 (spending $30 on new cities, gaining $1 from year 1's city). Year 3: Open 9 cities, loss = $86. Year 4: expansion stops, profit = $13.
>So when growth stops, profit happens almost by default.
That's a pretty bubblicious thing to say. Your model depends on the nature of the costs. Expansion costs aren't 100% and operational costs aren't 0%. I realize it was just a quick example, but profit will depend on how their costs are actually distributed. Certainly not automatic.
Re: Leaked Uber financials from 2012 to 2014
#90Earlier quoted context omitted.
1200 job openings... that's impressive. I agree that you need people to expand, but it never hurts to question how many people you actually need. Nobody denies that megacorps probably have many redundant positions, it's not possible for a company with 3000 employees to have them either.
My understanding from talking with people close to the company is that they have a process for opening one city. It's a specific number of people in exact positions (15, if I remember correctly)? They go out and clone the exact process/number of people in each new city. It starts with one person who is responsible for spearheading the operation; that person is supposed to find, hire, and manage the other 14. It's lik…
It actually sounds quite a bit like the "cell group" system that some popular 'megachurches' use.