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Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

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Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#291

Post by MarkMc »

surfmike wrote: post #285
MarkMc wrote: post #278

Earlier quoted context omitted.

There is most certainly a network effect. It's similar to eBay: Buyers and sellers can switch to another eBay clone, but they don't because there are no buyers or sellers on the clone. Similarly, nobody will download another app if it doesn't have any drivers, and drivers will not install another app if there are no riders.

Doesn't this analogy stop holding with self-driving cars?

Yes, it probably does - good point! When that happens the Taxi market will probably be analogous to airlines: companies will have huge capital investments but will receive low returns on that investment because the service they are selling is essentially a commodity.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#292

Post by adventured »

surfmike wrote: post #285
MarkMc wrote: post #278

Earlier quoted context omitted.

There is most certainly a network effect. It's similar to eBay: Buyers and sellers can switch to another eBay clone, but they don't because there are no buyers or sellers on the clone. Similarly, nobody will download another app if it doesn't have any drivers, and drivers will not install another app if there are no riders.

Doesn't this analogy stop holding with self-driving cars?

Only if you assume Uber isn't going to get there first, with their billions in capital and other vast resources. Meanwhile you have to convince a VC firm or similar to give you an extremely large amount of capital, to build out your fleet, enable/create the self-driving car tech, hire the people to make it all work, market to customers / convince them to even try you, all the while Uber is racing forward. Uber's present advantages are providing the springboard to lead in the next evolution of that business. Similar conceptually to what Netflix managed in transitioning from physical to digital. The advantages of your present can provide for your continued dominance in the future if you're willing to eat your own business when necessary. In five to ten years when self-driving cabs are increasingly common, Uber will already have been there the entire time. You still have to steal their customers (a lot of marketing $$$), build out a huge infrastructure, have a large fleet of vehicles, convince someone to give you a lot of money, compete against a super famous brand (that has already achieved Kleenex type status), and be able to survive the blood-letting competition with a very entrenched and very rich company (see Amazon vs Diapers.com).

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#293

Post by function_seven »

xapata wrote: post #289
function_seven wrote: post #267

Earlier quoted context omitted.

You really can’t. I can use any taxi company I want to get from A to B. I can’t use any chat app I want to talk to my cousin Alice or my brother Bob. I have to choose one that they’re already on. That’s the network effect. In transportation, all these taxi companies are using the same roads; the same network. I don’t have to make sure AcmeRideShare has permission at both the pickup and drop off points. And I can chan…

In the chat app comparison, your cousin Alice is the driver. Saying that the roads are the network is like saying the internet is the network.

But Alice is NOT the driver. Alice is whatever destination I want to get to. And any taxi company will be able to get me there.

> Saying that the roads are the network is like saying the internet is the network.

Fair enough.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#294

Post by chris_va »

MarkMc wrote: post #278
jeffdavis wrote: post #253

Sincere question: what protects Uber from competition enough to imply huge profits in the future? Network effects don't seem that strong. People will download an app to save money, and drivers will download an app to make money. It doesn't cause any major inconvenience. In fact, it seems like a market that may approach perfect competition in a matter of years. There are only two companies now because there are only t…

There is most certainly a network effect. It's similar to eBay: Buyers and sellers can switch to another eBay clone, but they don't because there are no buyers or sellers on the clone. Similarly, nobody will download another app if it doesn't have any drivers, and drivers will not install another app if there are no riders.

I think this analogy breaks down with ridesharing services because there isn't any lock-in, and barrier to entry is low (now that Uber has plowed through the regulations).

Many Uber drivers are already logged into Lyft at the same time, despite a disparity in demand.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#295

Post by dsil »

jeffdavis wrote: post #253

Sincere question: what protects Uber from competition enough to imply huge profits in the future? Network effects don't seem that strong. People will download an app to save money, and drivers will download an app to make money. It doesn't cause any major inconvenience. In fact, it seems like a market that may approach perfect competition in a matter of years. There are only two companies now because there are only t…

Network effects are incredibly important for the service they're able to give. Where I live they have so many active drivers that I never have to wait more than 5 minutes if I request one sometime between ~8am-10pm.

And that effect is even larger for things like Uberpool, where a smaller network means they may have to go way out of the way to find another rider going to a similar destination, making your ride take longer and the service worse.

Network effect also extends to their other services, like Ubereats, where they can get you your food faster and more accurately-timed than their competitors, because of their larger network of drivers.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#296

Post by Naritai »

MarkMc wrote: post #282
automatwon wrote: post #276

Earlier quoted context omitted.

Facebook has network effects. I use it because my friends use it. I don't care if my friends use Uber, if a different Taxi company offers me the same service for cheaper.

Uber has network effects too. Facebook has friends, Uber has drivers. You certainly care how many drivers the Taxi company has because it affects the time you have to wait to be picked up.

This is addressed elsewhere on this thread, but I'll repeat: drivers have no compunction about having multiple apps open at the same time. Nothing ties them to Uber.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#297

Post by obstinate »

czep wrote: post #275
letterthief wrote: post #268

Earlier quoted context omitted.

> The Uber model has no barrier to entry If uber has no barrier to entry, neither does facebook.

I think that says more about Facebook than it does about Uber. Not to derail the conversation but it's entirely possible that FB will be gone in ten years. They already have a demographic problem: far lower penetration among younger cohorts than in years past. And engagement metrics among new younger users show that they are using FB differently than older cohorts. Thus, I think one could easily argue that FB could b…

People have been gabbing about Facebook's demographic problems almost since Facebook debuted public access. Not that you couldn't be right, but people are going to keep making this statement until someday it becomes true, then congratulate themselves that they're great prognosticators.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#298

Post by alex- »

jeffdavis wrote: post #262
deepnotderp wrote: post #259

Earlier quoted context omitted.

Self driving cars change everything.

Can you be more specific? Their self-driving tech is worth $70B? If it's the combination, then I still don't quite get it. Wouldn't any good self-driving tech pretty easily adapt to ride hailing? Let's say it's a best case for Uber: there are only few self-driving techs out there, and Uber is one; and they dominate ride hailing, and start turning a profit. Couldn't another self-driving tech company snap up Lyft and b…

I think a lot of people see todays taxi company being tomorrows ground transport ruler, once self driving cars are ubiquitous.

The theory being less people will own cars. The savings made on storage/parking, fuel and maintenance will be greater than paying for individual rides (with no labour costs).

The car manufactures would no longer be the company the consumer interact with. i.e. How much does the average consumer care if they are picked up in a Lexus or a Toyota for the average ride?

This would put the car manufacturers in competition for the taxi companies business commoditizing the car industry.

Who knows what will happen? Maybe regulation will prevent self driving cars becoming ubiquitous? or maybe some advance in manufacturing makes it much cheaper to own self driving cars.

But speculation that Uber pulls this off is the only way that I can see how Uber is worth over $60Bn (more than ford $50Bn ish, GM $50Bn ish, Nissian $45Bn ish) while making a $0.8Bn loss on $1.7Bn revenue - as a gamble for what might end up owning a $400Bn+ market.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#299

Post by michaelbuckbee »

animex wrote: post #167

Uber will be a dead Unicorn in the medium future. They've got too many legal pressures, competitors with native advantages (i.e. the automakers), and their expansion plans have them overextended. Here in Edmonton, AB, Canada, regulatory changes have pushed the Uber prices to almost 2x during non-surge times over regular taxis. Taxi's have stepped up. Local competitors have sprouted. Carshares are abounding. It's all…

I think this is like arguing that Amazon would never be worth a Billion dollars because there aren't enough book buyers.

If we were talking about Uber's current model then you're 100% correct. But if we look at all to where they're going there's tremendous potential.

They bought Otto - which is arguably the leader in self driving trucking and they have self driving trucks on the road right now. If they're able to capture say 20% of the trucking market 10 years from now that's tremendous. They're in a legal fight in SF because they're trying to get self driving cars going. What are their numbers going to look like when they aren't paying drivers anymore?

I'm skeptical of the notion that the big auto manufacturers (who had a conniption fit at the mere notion of Tesla selling cars direct, instead of through a dealership) nimbly setting up autonomous, on demand fleets of vehicles which destroy their dealership network and also cost them half of their revenue.

Yes, they are losing money, but they're playing a very different game than the local taxi company.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#300

Post by sangnoir »

matt_wulfeck wrote: post #261
anexprogrammer wrote: post #258

Earlier quoted context omitted.

Quite a few of the cab firms did - many used the same app skinned for each taxi co. I forget who made it now.

Yes but you needed a different app for each taxi company. That's a terrible experience.

It's not that bad: Lyft, Uber and Hailo don't share a common app either.
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