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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

#161

Post by ryanfreeborn »

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…

I can't imagine the incessant legal and legislative battles they are fighting are coming cheap. That means hiring legal and policy people, paying a ton of money to outside counsel, lobbying expenses, the hidden costs of building influence.

And it's at a huge, because most of this isn't happening at the federal level (yet)—it's all state and city—which means they don't have the luxury of concentrating on the familiar, well-tread (and very insular) game of DC politics. Instead Uber has to have boots on the ground in a ton of places, and they have to have people knowledgable on the nuances of regional politics and culture. Things like the dynamics of a state's house vs senate, country executives, the port authority, taxi unions, legal systems, initiative systems, local elections, Chambers of Commerce. The list really does go on and on. It's a huge and complex footprint to manage.

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

#162

Post by ceejayoz »

zeckalpha wrote: post #157
dharmon wrote: post #115

Earlier quoted context omitted.

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…

Amazon's profit center is AWS?

http://www.wsj.com/articles/amazon-reports-surge-in-profit-1...

> The cloud division’s sales rose 64% to $2.57 billion. While that is less than one-tenth of Amazon’s overall revenue, AWS generated about 67% of the company’s operating income in the quarter.

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

#163

Post by dreamdu5t »

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.

That's what they tell everyone when people start questioning the fundamentals. It's what they told me two years ago when I interviewed there. Linking drivers with riders is not a complex problem. It doesn't even require machine learning. It doesn't require ongoing research. The whole dispatch infrastructure is mostly node and redis running predetermined matching algorithms.

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

#164

Post by advertising »

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…

I would imagine it's to put out the first driverless fleet. How else could this valuation be justified.

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

#165

Post by tedmiston »

baddox wrote: post #152
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…

> 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. It depends what you mean by "actual costs," but I would suspect that Uber's will still be lower than cabs' under any reasonable definition.

> I would suspect that Uber's will still be lower than cabs'

What people pay for an Uber still varies a lot by city.

At home in Ohio, Uber is more expensive than taxis in several cases, for example, to/from the airport, and short trips from the city center to the bars (2-3 miles). Taxis are also generally cheaper here for longer trips (maybe 30+ miles).

Similarly taxis can still be cheaper (and are still ubiquitous) in NYC.

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

#167

Post by ValentineC »

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…

> So where's all this cash going?

In Singapore, Uber owns and operates a car rental subsidiary that has singlehandedly driven up the total cost of owning a car. [1] I suspect that this has been the case in some other cities that Uber operates in as well.

[1] http://www.straitstimes.com/singapore/transport/uber-bids-co...

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

#168

Post by ng12 »

macspoofing wrote: post #153
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.

>ride sharing is the least interesting thing about Uber That's the only interesting thing about Uber. Sure they have delusions of grandeur and they certainly have no qualms about putting out glossy marketing material extolling how they will change humanity, but today they are a taxi company.

That's the whole point of investing -- you're betting money on the fact that they can make their "delusions" a reality.

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

#170

Post by Mendenhall »

dragonwriter wrote: post #84
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.)

I agree with your statement completely. The thing I notice is he works for the government and I would think he would never be able to say that openly. A competitor could instantly draw that into question and make them defend the point and use it as a propaganda tool. If he says women should be able to drive he goes against the kingdoms laws and those constituents, if he says they shouldnt or stays mute the propaganda one could spin is legion. "Uber board member thinks women shouldnt be able to drive for them"
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