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

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

#251

Post by thesimpsons1022 » Thu, Jun 02, 2016, 5:27 AM 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…

if you know the predictable response then why not answer it?

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

#252

Post by klackerz » Thu, Jun 02, 2016, 5:43 AM UTC

discardorama wrote: post #196

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? Is the driver side being subsidized to a ridiculous degree still (this is, actually, my guess)? I was in India recently. The driver said that when Uber started out, they'd give each driver Rs. 60K/mo (about $1000/mo) just to sign in for 10 hours/day, even if they did not give a single ride. Now, Uber pays by the number of rides and not a portion of the actual fares. So, for example,…

What happens when there is a surge? There is also Pay by Cash option for Uber now to in India. Who gets the money at these times.

Uber also offers bonuses if they complete a set amount of rides per day. There was a problem recently due to this when a driver fall asleep and the passenger had to drive the car. [0]

I have also experienced Uber drivers asking for a new ride to somewhere nearby using the Cash option after I completed a ride just so that they can increase the number of completed trips.

[0] http://thelogicalindian.com/story-feed/awareness/watchread-u...

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

#253

Post by sandworm101 » Thu, Jun 02, 2016, 5:50 AM UTC

If Uber really is so unprofitable that it need saudi cash to keep things ticking over, then how is this not dumping? Few would doubt that Uber is disrupting taxi markets all over the place. That's fine so long as they are the better mousetrap. But if they require billions in cash at this point, long after they are a household name, then they aren't the better mousetrap. They are a cash-rich company trying to drive others out of the business by dumping below-cost product on the market.

If their goal really is to survive long enough that they can do away with drivers, this is exactly the sort of practice that trade rules are meant to prevent. We cannot allow corporations to buy out entire markets because we know what happens once they do.

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

#254

Post by rasz_pl » Thu, Jun 02, 2016, 5:53 AM UTC

hyperbovine wrote: post #244

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.

> Not many barriers to these apps. Two words: network effect. More drivers means more users. More users attracts more drivers. This is precisely why we have eBay and Craigslist despite them both offering, by modern standards, objectively terrible user experiences. Suffice it to say I am extremely bullish on Uber, Airbnb, etc. sticking around for a whole.

Except taxis also experience network effect. There is no central 'hail a taxi' telephone number(at least in my part of the world, might be different in NY), every company has its own numbers, own dispatch, and own rates. They all compete with each other, and while some bigger companies might ride on the too lazy dont care just come and pick me up tail of the market, majority still chooses their ride based on the rate and previous experience (nice driver, clean car, speed).

In Europe small scale transportation is as competitive as cellphone market. Hmm now I am beginning to see the problem, in US you might not understand what a competitive cellphone carrier market looks like in the first place? :) Here you can transfer numbers freely between carriers, there are usually 3-5 providers to pick from and they all compete fiercely on price, level and quality of service. Changing companies is not a mayor ordeal, merely an ~hour of work to optimize your phone bill.

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

#255

Post by bastawhiz » Thu, Jun 02, 2016, 5:59 AM UTC

klackerz wrote: post #252

discardorama wrote: post #196

Earlier quoted context omitted.

> So where's all this cash going? Is the driver side being subsidized to a ridiculous degree still (this is, actually, my guess)? I was in India recently. The driver said that when Uber started out, they'd give each driver Rs. 60K/mo (about $1000/mo) just to sign in for 10 hours/day, even if they did not give a single ride. Now, Uber pays by the number of rides and not a portion of the actual fares. So, for example,…

What happens when there is a surge? There is also Pay by Cash option for Uber now to in India. Who gets the money at these times. Uber also offers bonuses if they complete a set amount of rides per day. There was a problem recently due to this when a driver fall asleep and the passenger had to drive the car. [0] I have also experienced Uber drivers asking for a new ride to somewhere nearby using the Cash option after…

Surge is a multiplier. It pays out a multiplied fare to the driver and to Uber. Incentives like the one described are usually applied after the fare is calculated.

Paying with cash has the same distribution of money (more or less), it's just handled differently.

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

#256

Post by bastawhiz » Thu, Jun 02, 2016, 6:01 AM UTC

downandout wrote: post #98

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 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.

While price increases do happen, they generally have nothing to do with driver incentives. Incentives for drivers are (usually) meant to build supply, not cut the cost of rides.

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

#257

Post by mandeepj » Thu, Jun 02, 2016, 6:05 AM UTC

discardorama wrote: post #196

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? Is the driver side being subsidized to a ridiculous degree still (this is, actually, my guess)? I was in India recently. The driver said that when Uber started out, they'd give each driver Rs. 60K/mo (about $1000/mo) just to sign in for 10 hours/day, even if they did not give a single ride. Now, Uber pays by the number of rides and not a portion of the actual fares. So, for example,…

> it removes the incentive for the driver to dick around and do a TSP around the city to drive up the fare

With GPS, drivers can't do this.

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

#258

Post by froo » Thu, Jun 02, 2016, 6:06 AM UTC

woah wrote: post #224

em3rgent0rdr wrote: post #210

Earlier quoted context omitted.

Uber's biggest competitor will be an open-source p2p-system, like openbazaar, that achieves the basic functionality of uber.

What advantage will such a system have?

Probably none. By having an open system, prices will invariably get pushed down (better for end users) which will deincentivize drivers (worse for end users)

There may be some equilibrium somewhere, but I don't believe it will be in the users best interest having to wait for cars.

Just my thoughts. I'm probably wrong.

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

#259

Post by nfc » Thu, Jun 02, 2016, 6:16 AM UTC

toomuchtodo wrote: post #238

bduerst wrote: post #143

Earlier quoted context omitted.

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.

> 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. This is the non-profit I want to invest in.

If you are serious about it my contact is in my profile, the project description is in www.alfiv.org and some of the products already created at www.alfiv.com. Completely bootstrapped up to now. We've got a small prototype api.

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

#260

Post by DavidWanjiru » Thu, Jun 02, 2016, 6:34 AM UTC

discardorama wrote: post #196

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? Is the driver side being subsidized to a ridiculous degree still (this is, actually, my guess)? I was in India recently. The driver said that when Uber started out, they'd give each driver Rs. 60K/mo (about $1000/mo) just to sign in for 10 hours/day, even if they did not give a single ride. Now, Uber pays by the number of rides and not a portion of the actual fares. So, for example,…

If Uber, at first anyway, pay drivers regardless of rides made, then aren't such tactics philosophically similar to the medallion racket in America? To subsidize some part of the equation strikes me as underhanded, as opposed to purely being innovatively disruptive.