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

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

#111

Post by mikeash » Wed, Jun 01, 2016, 10:46 PM UTC

CPLX wrote: post #107

ng12 wrote: post #96

Earlier quoted context omitted.

Here's the thing -- ride sharing is the least interesting thing about Uber. Uber's expertise is on-demand logistics which is a totally new field at this scale. Ride sharing just happened to be an easy first step. Once they're able to move things around in real-time at a global scale the opportunities are massive.

People say this a lot, so I am not picking on you, but I don't get this argument at all. Amazon does it, so does Lasership and Seamless and Fedex and WalMart and a million other variations. I don't see any real reason Uber is more adept at adjacent non-core market verticals than any other top tier entrant.

Don't forget Domino's. They and others in their business had this whole thing with drivers using their own cars for short notice transportation jobs decades ago.

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

#112

Post by [deleted] » Wed, Jun 01, 2016, 10:47 PM UTC

cc439 wrote: post #91

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 Or their customers losing interest as driver/fare subsidies are slowly dialed back. I've already begun planning on Uber with hesitation as I have now twice been left "stranded" for ~30 minutes without an active driver available in my city. I'm fine with the surge pricing which comes along with that but Uber is becoming increasing…

[deleted]

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

#113

Post by Thriptic » Wed, Jun 01, 2016, 10:47 PM UTC

taxicabjesus wrote: post #105

downandout wrote: post #98

Earlier quoted context omitted.

I believe that your assumption of insane driver subsidies is indeed the reason they are sucking down so much money. That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. The only strategy I can see with the absurd amounts they are raising is that they are trying to get enough money to sustain the subsidies until they kill a…

> The only strategy I can see with the absurd amounts of fundraising is that they are trying to get enough money to sustain the subsidies until they kill all existing competition, at which point they can raise their prices and people will have no choice but to pay them The taxi company I drove for has contracts with many government agencies to transport poor & unfortunate people around. People have to get to their do…

I've heard that Uber is going after those contracts as well.

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

#114

Post by Retra » Wed, Jun 01, 2016, 10:49 PM UTC

godembodied wrote: post #71

jd3 wrote: post #43

Earlier quoted context omitted.

While this is somewhat true, it's a somewhat ridiculous argument to bring up when talking about saudi arabia. I think the west has come to the general consensus that women have rights, and that people should not be beheaded in the streets for denouncing their state religious authority. This hermeneutical matter-of-interpretation crap is no defense for the crimes against humanity that saudi arabia commits regularly.

All of the things you mentioned are relative to a culture. Since you were born in the West, you think of all these things as bad. The indoctrination is so strong that you feel that your opinion is an objective fact. But, the same seriousness and objectivity you attach to your opinions they attach to their. Morality is kinda religion - everyone thinks their God or prophet is the TRUE one, when in fact they've been ind…

Unless you're about to say you don't have a culture, maybe you should accept that people will argue according the culture they have and leave it at that.

It's like I said "I like pepperoni pizza," and you're trying to say "no one kind of pizza is objectively better than the rest, so you have no right to choose pepperoni pizza over any other pizza." But in fact I do have this right, being that I'm the one choosing which pizza to eat.

If I disagree with someone's morals, it's because I'm the one who's choosing which morals to disagree with. The "who I am to judge" is the one who's doing the judging. Just like you are with your inane position here.

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

#115

Post by dharmon » Wed, Jun 01, 2016, 10:53 PM UTC

ng12 wrote: post #96

cylinder wrote: post #87

Earlier quoted context omitted.

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.

Here's the thing -- ride sharing is the least interesting thing about Uber. Uber's expertise is on-demand logistics which is a totally new field at this scale. Ride sharing just happened to be an easy first step. Once they're able to move things around in real-time at a global scale the opportunities are massive.

This is the oft-repeated argument in favor of Uber ("they're a logistics company!"), and to be honest, it's quite hand-wavey.

Why is the expertise they have built up in car-hailing directly applicable to other logistics problems, and what advantage will they have going in that creates a barrier to entry for newcomers?

I think there is one answer to this for Uber, and its the same strategy Amazon stumbled into: have your "main" business be breakeven, but provide the scale needed for a pure profit business. In Amazon's case, the main business is retail and the profit center is AWS.

In Uber's case, this would look like individual ride-taking customers providing the demand to keep a critical mass of drivers on the road. This business is breakeven at best, likely slightly money-losing (sorry folks, but an increases in ride costs will quickly stamp out demand to pre-Uber days).

Then, with this "infrastructure" of drivers on the road, they can leverage it into nearly pure profit areas like last-mile delivery.

There's a huge catch, though. Amazon just has to buy new machines every 3-5 years. Uber's driver turnover is much much higher, and is absolutely killing them. All the claims of profitability are deceptive, because they assume current demand with current set of drivers; those statements do not factor in driver recruitment costs next month, or tomorrow.

Unfortunately this appears on the surface to be a structural problem. Current pay with driver-owned vehicles is probably not a long-term or full-time possibility for most candidate drivers.

Edit: to save a step, the predictable response to my objection is always, "but... self-driving cars!"

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

#116

Post by mnglkhn2 » Wed, Jun 01, 2016, 10:59 PM UTC

This might have to do with uber's recent effort to become a capital provider for when someone wants to lease/finance a car in order to drive for uber. Those $3.5bn are most likely capital to fund this operation. Uber is getting into financial services.

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

#117

Post by Retric » Wed, Jun 01, 2016, 11:07 PM UTC

jessedhillon wrote: post #39

rexreed wrote: post #19

Earlier quoted context omitted.

Let's revise "solid business model" to "solid ability to sell the company's value". A solid business model doesn't require this sort of continuous cash infusion.

> A solid business model doesn't require this sort of continuous cash infusion. Where is this assumption that this cash is required coming from? A very common use for investment is to accelerate plans which would otherwise unfold over long/impractical timelines. Another common use is to get ahead of competitors. I know much of HN is very eager to see all billion dollar valuations deflate so as to prove that extremely…

Loans are vastly cheaper than selling stock. Companies sell stock when they are overvalued, they take loans/issue bonds when they are undervalued.

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

#118

Post by jsemrau » Wed, Jun 01, 2016, 11:14 PM UTC

ng12 wrote: post #96

cylinder wrote: post #87

Earlier quoted context omitted.

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.

Here's the thing -- ride sharing is the least interesting thing about Uber. Uber's expertise is on-demand logistics which is a totally new field at this scale. Ride sharing just happened to be an easy first step. Once they're able to move things around in real-time at a global scale the opportunities are massive.

Good point. However, it is a huge operational risk to rely on on-demand hires for logistics. In addition, ride-sharing works because humans are moved with a given market price given by the taxi network. In logistics you compete not only against UPS and FedEx but with Amazon as well. And *mostly free shipping is hard to get cheaper.

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

#119

Post by cylinder » Wed, Jun 01, 2016, 11:19 PM UTC

dharmon wrote: post #115

ng12 wrote: post #96

Earlier quoted context omitted.

Here's the thing -- ride sharing is the least interesting thing about Uber. Uber's expertise is on-demand logistics which is a totally new field at this scale. Ride sharing just happened to be an easy first step. Once they're able to move things around in real-time at a global scale the opportunities are massive.

This is the oft-repeated argument in favor of Uber ("they're a logistics company!"), and to be honest, it's quite hand-wavey. Why is the expertise they have built up in car-hailing directly applicable to other logistics problems, and what advantage will they have going in that creates a barrier to entry for newcomers? I think there is one answer to this for Uber, and its the same strategy Amazon stumbled into: have y…

Yep. Uber Eats is a joke, horrible experiences with that, it just seems like a joke they're running almost.

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

#120

Post by tim333 » Wed, Jun 01, 2016, 11:31 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…

>plausible scenario

Uber becomes the cab of choice for 2.5bn people, the rough number who have cell phones. Value those at $50 each and you have a $125bn valuation for the floatation.

Not sure it'll happen but that's probably the kind of thing the investors are thinking.