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Uber Turns to Saudi Arabia for $3.5B Cash Infusion

nytimes.com

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

#141

Post by wpietri »

martinald wrote: post #108
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…

But Standard Oil literally bought the refineries, railroad, long term contracts on crude. That would be like Uber buying every road and every manufacturer. I also don't think Uber's biggest competition is cars or taxis, I imagine it is public transport. The markets with the best scale (esp outside of US) have good public transit. People aren't going to go from paying a £10 uber to a £30 black taxi in London, they'll…

I think buying up the whole value chain is an effect of monopolies, not the cause. DeBeers, for example, got their start in diamond mining. I suppose they could have stopped there, but when you're the only supplier, it becomes very easy to buy up those of your customers that are making money so you can capture more of the total cash.

So I don't think Uber needs to buy roads. All they need to do is have a broad enough base and deep enough pockets that they can drive everybody else out of business. Or, possibly better, keep a few sickly competitors forever on the margins. That way they can pretend they're really competing.

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

#142

Post by koolba »

macspoofing wrote: post #138
jessedhillon wrote: post #39

Earlier quoted context omitted.

> 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…

>but there's nothing inherently troubling about a highly-valued, late-stage company raising so much money. Maybe not troubling, but interesting. There's definitely something interesting there. For one thing, nobody wants a representative of the Saudi government to sit on their board and yet they took their money. Clearly they didn't have a lot of suitors willing to dump money on them and clearly they had some (major?…

> For one thing, nobody wants a representative of the Saudi government to sit on their board and yet they took their money.

Says who? If you want to expand in the Middle East then having high level officials with skin in the game is a plus. I wouldn't put it past them to ban the competition and pressure their allies accordingly.

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

#143

Post by bduerst »

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. The reason that's the next predictable response is because Uber is holding off for self-driving cars, so it can become the logistics network for delivery.

That doesn't mean that they will, of course. I have a feeling that these platform-locked services like Uber and Lyft will not be able to compete with the scalability of an open auction network.

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

#144

Post by dragonwriter »

macspoofing wrote: post #138
jessedhillon wrote: post #39

Earlier quoted context omitted.

> 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…

>but there's nothing inherently troubling about a highly-valued, late-stage company raising so much money. Maybe not troubling, but interesting. There's definitely something interesting there. For one thing, nobody wants a representative of the Saudi government to sit on their board and yet they took their money. Clearly they didn't have a lot of suitors willing to dump money on them and clearly they had some (major?…

> For one thing, nobody wants a representative of the Saudi government to sit on their board

I think there is a faulty assumption here; I don't see much evidence that the Saudi government is treated as some kind of pariah investor that everybody wants to avoid being represented on their board, such that they have to offer substantially more favorable terms or be the only player around before people accept their money.

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

#145

Post by iask »

Uber is a fad...and will soon be be moved to the back seat...unless it's too late. One poster might be on to something "...they are trying to get enough money to sustain the subsidies until they kill all existing competition"...62bn for a ride-hailing company?

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

#147

Post by nugget »

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…

I didn't mean to imply they had a Windows-like monopoly. I do think there are some real network efforts around driver and rider density (especially if pool takes off). I think they settle somewhere in the middle between monopoly and commodity, and the fact that the transportation market is so huge helps them carve out a nice valuation so long as they have only a handful of competitors. I spend around $100/week on Uber and I haven't switched to Lyft even though I heard it would be a bit cheaper. On the other hand if Tesla offered me 50% cheaper fares to ride in their autonomous vehicle fleet, even if it was just available in my city, I would do it in a heartbeat.

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

#148

Post by macspoofing »

Fricken wrote: post #86
kirykl wrote: post #65

Earlier quoted context omitted.

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?

That's easy. Because don't have to worry about finding customers, fighting off competition, and competing with their customers (like Uber). They just have to worry about building cars.

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

#149

Post by iask »

cloakandswagger wrote: post #60
kafkaesq wrote: post #47

"Excuse me driver, can you pull over for a minute? I need to beat my servant." http://www.cnn.com/2013/10/31/world/meast/saudi-arabia-beati...

Rumor has it they're working on an on-demand servant beating service called Uber Beats.

Lol...you guys on a roll!

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

#150

Post by danielschonfeld »

I know this isn't new, but if companies have the abilities to raise money from international entities like this, at these kind of sums. All the while, people are locked to their country of citizenship for working rights... is globalization in its Capitalistic form not claiming as prisoners its own citizens?
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