Uber Turns to Saudi Arabia for $3.5B Cash Infusion • Hacker News Board

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#81

Post by readme » Wed, Jun 01, 2016, 9:50 PM UTC

CPLX wrote: post #5

Sincere question, can someone explain to me a plausible scenario at this point by which early investors actually receive a payout even slightly commensurate with their supposedly incredible investment? For example, how can someone in the seed round genuinely be able to cash out given the unbelievable amount of dilution that has taken place. What are the plausible scenarios where this occurs? EDIT: Specifically asking…

Doesn't matter for Saudi Arabia. As long as their investment in Uber starts paying out before their oil runs out they'll be golden.

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#82

Post by methehack » Wed, Jun 01, 2016, 9:51 PM UTC

I've always been a little confused about uber's capital needs. When I first heard about uber, the part I thought was super-clever was that you wouldn't _need_ lots of capital because all the drivers would have their own cars. Leveraging the latent capital of one side of the two-sided market was the genius of it. (Airbnb too)

Same for the staffing -- hook up both sides of the market. No need to pay anyone out of your pocket -- in fact, probably there'd be some float for you there. Sure, maybe you have to subsidize one side at first, but not forever.

So where's all this cash going? Is the driver side being subsidized to a ridiculous degree still (this is, actually, my guess)? Is there a moonlander (driverless car) in the works? Are the G&A costs off the charts? How could that be, give that the software does the connecting? Is the software _that_ hard to write? I mean, it's good, but it ain't rocket science. (I'm not sure rocket science is even rocket science anymore.)

If I'm right that all the cash is still going to make the fares cheap to encourage up-take, it seems to me like Lyft (or another/any fast follower) is in a fantastic position. Let uber burn the capital to sell the idea to consumers, and then step in when it stumbles and walk away with the glory and gold. Place your bets.

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#83

Post by eruditely » Wed, Jun 01, 2016, 9:52 PM UTC

rock57 wrote: post #53

according e.g. to the stories linked below and many previous reports, Uber actively aims to reduce the number of cars on the road, and its efforts, especially Uber Pool will reduce the oil consumption and, as a result, oil prices... And now they get the largest investment yet from a party that is NOT interested in falling oil prices... What am I missing here? https://newsroom.uber.com/us-new-york/taking-1-million-car…

earlier this year the deputy crown prince declared his intent to sell 10% of saudi amarco and said he wants to diversify holdings. they're in really bad shape right now.

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#84

Post by dragonwriter » Wed, Jun 01, 2016, 9:56 PM UTC

Mendenhall wrote: post #59

What I find particularly interesting is Uber now has someone on their board who thinks women should not be allowed to drive? It will be interesting to watch this play out and take note of their policy and public statements. I can see many sources of conflict in such a decision.

Women are not allowed to drive in Saudi Arabia, but that doesn't mean that the particular official given a board seat believes that they shouldn't be allowed to drive (or even that the monarch believes that that's the way things should be, generally; just because its not a democracy doesn't mean that Saudi government policy isn't shaped by a desire to appeal to particular constituencies.)

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#85

Post by johansch » Wed, Jun 01, 2016, 10:05 PM UTC

So Uber will not be moving to electric cars anytime soon then, I guess.

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#86

Post by Fricken » Wed, Jun 01, 2016, 10:05 PM UTC

kirykl wrote: post #65

tomcam wrote: post #42

Earlier quoted context omitted.

Their long-term play is driverless cards--buy or lease fleet cars, then charge people a subscription to commute or use the cars a certain amount per month. The current business is building brand awareness and inertia.

I've seen this idea but can't understand it. By owning or leasing a fleet of driverless cars Uber only increases its operating costs

Well, for Uber it's do or die.

But for the manufacturers of autonomous vehicles- why would they sell cars Uber at a ~5% margin per car when they can offer the robotaxi service themselves and command a ~25% margin per trip?

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#87

Post by cylinder » Wed, Jun 01, 2016, 10:06 PM UTC

methehack wrote: post #82

I've always been a little confused about uber's capital needs. When I first heard about uber, the part I thought was super-clever was that you wouldn't _need_ lots of capital because all the drivers would have their own cars. Leveraging the latent capital of one side of the two-sided market was the genius of it. (Airbnb too) Same for the staffing -- hook up both sides of the market. No need to pay anyone out of your…

Exactly. They are burning cash to gain market share and will lose that share as soon as they stop. Not many barriers to these apps. Uber is going to implode.

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#88

Post by cylinder » Wed, Jun 01, 2016, 10:11 PM UTC

SilasX wrote: post #44

CPLX wrote: post #5

Sincere question, can someone explain to me a plausible scenario at this point by which early investors actually receive a payout even slightly commensurate with their supposedly incredible investment? For example, how can someone in the seed round genuinely be able to cash out given the unbelievable amount of dilution that has taken place. What are the plausible scenarios where this occurs? EDIT: Specifically asking…

I haven't worked out the specific numbers, but $60 billion is reasonable if you expect Uber to become a global near-monopoly on hired ride services and related logistical services they're branching out into. Whether that scenario is reasonable, is itself an open question, of course.

There are no monopolies in this business. In NYC, Juno already has lots of drivers aboard. All the drivers here just keep all the apps open.

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#89

Post by semi-extrinsic » Wed, Jun 01, 2016, 10:13 PM UTC

maxerickson wrote: post #54

Animats wrote: post #48

Latest Uber worry: When the Tesla 3 comes out, Uber drivers clogging the fast-charging stations. "Free power for life" is a great deal when you're a cab.

I was going to speculate that they will charge for access, but Googling to get the Supercharger name right lead here: http://arstechnica.com/cars/2016/06/no-free-superchargers-fo... Announced today, they will charge for access.

Wow, based on the access fee for the early lowest power Model S, along the lines of $2500, if not more?

That's what, more than two years of fuel for an economic petrol car?

Re: Uber Turns to Saudi Arabia for $3.5B Cash Infusion

#90

Post by hencq » Wed, Jun 01, 2016, 10:13 PM UTC

CPLX wrote: post #57

nugget wrote: post #38

Earlier quoted context omitted.

The only thing that can ''take out'' Uber is widespread adoption of autonomous vehicles, whereupon ride sharing becomes a physical-capital intensive business (cars) rather than the current human-capital intensive business (drivers/their driver network). Autonomous vehicles (and the infrastructure to support them) significantly reduce the amazing network efforts that Uber has enjoyed to date. An investment into Uber a…

> The only thing that can ''take out'' Uber is widespread adoption of autonomous vehicles That's ridiculous. It's not even a little hard to imagine that they could be overtaken by a similar competitor such as Lyft given a plausible sequence of events. In fact it's basically a certainty that they would be if they ever abandoned competing based on price. Which defeats a hell of a lot of the point of paying to acquire a…

Agreed. They wouldn't even need to be overtaken. It seems that a lot of the valuation is based on the premise that this is a global winner takes all market. If it turns out that's not true and there is in fact space for multiple competitors then the valuation could turn out to be a lot less.