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I don't understand his point. Maybe I'm dense (today, ha). If Uber has a (simplified) split cost per drive consisting of vehicle (+maintenance) and/or fuel & driver. If subsidised part is generally covering the driver part. When you replace driver with autonomous vehicle and you remove subsidies, you're left with a sustainable (presumably) model on a certain margin that is already rolling. Rolling in a sense that it…
I don't necessarily agree with the above, but I think it's what he was trying to communicate in the piece. I think that network effects will provide a huge advantage for Uber. The larger your market share, the more predictable your demand and the more optimized your service can be. Uber is more like Adsense for Content than like cabs. They are doing a lot of intention matching/prediction in real time and that is very hard to compete against without scale.
Yes the drivers are subsidized but the prices fluctuate based on supply throughout the day. On friday night in the city you can find uber prices surpass taxi drivers. The future of Uber has too many variables to have a strong stance on it's "success".
In my opinion, giving large scale subsidies to customers seems like a business anti-pattern, and is surely gonna kill a lot of startups in near future. I have been sold to the Idea that Investors are killing any Internet "Business" by advising Founders against simple & straight-forward business plans. They constantly ask founders not to monetize earlier and wait until founders have no choice but to trash out the comp…
People said similar things about Facebook/Instagram. Or even the internet as a whole (Paul Krugman).
In my opinion, giving large scale subsidies to customers seems like a business anti-pattern, and is surely gonna kill a lot of startups in near future. I have been sold to the Idea that Investors are killing any Internet "Business" by advising Founders against simple & straight-forward business plans. They constantly ask founders not to monetize earlier and wait until founders have no choice but to trash out the comp…
two words: amazon prime
If I could bet against Uber, I would do it
Because I'd be willing to make a bet (say 1k) for Uber, depending on the terms.
I'd also make a bet for Lyft, depending on the terms.
So now, their only way to grow is to race to the bottom on price and undercut their competitors. And the only way to do that is to light billions of VC dollars on fire in the form of subsidized trips. That money isn't being invested in R&D or any form of innovation, just bridging the price gap between what the ride should cost (because of driver + vehicle costs) and what they are charging (which is a stupid low price most of the time).
The longshot they're taking on innovating by transitioning to self driving cars is downright reckless considering nearly all experts agree we're at a MINIMUM 5 years off from anything feasible in the real world, more likely 10+ years.
So they're going to have to raise their prices, or continue raising funds at an absurd rate (mind you, they've already raised $13,000,000,000 damn dollars). And they'll have to continue to light that VC money on fire in subsidized rides, rather than innovating on their product, because there's not really any other way to innovate on these rides.
As for the subsidies, I can't even understand why they are lowering their prices so aggressively anymore. It feels like each time I get into an Uber it's slightly cheaper. I was happy paying $25 for an uber to the airport rather than $30 for a cab, but now it's something like $14, which is great for my wallet, but I really don't even need it that cheap. It's bizarre.
Earlier quoted context omitted.
The author's not making the point that there is no margin, but rather that with self-driving cars it'll be a quick race to the bottom against competitors, thus eroding whatever margins Uber is left with after replacing human drivers.
Question is, who are competitors with same scope as them? I don't know any. They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right.
Presumably traditional car manufacturers (GM, Ford, Toyota, BMW, etc.), upstart car manufacturers (Tesla), and even other large tech conglomerates (Google, Baidu, etc.).
> They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right.
Uber won't have a monopoly in self-driving tech. Their running start will get eroded (some would argue quickly) by new challengers (probably regional upstarts rather than a global competitor) that have easy access to self-driving tech (think car manufacturers).
Also, Uber's network is mostly on the software and human (drivers) side of things. If self-driving tech becomes a reality, they'll have to quickly pivot to purchasing and maintaining a large fleet of cars. That's not an easy task at scale and not something that Uber necessarily has an advantage over others.
In my opinion, giving large scale subsidies to customers seems like a business anti-pattern, and is surely gonna kill a lot of startups in near future. I have been sold to the Idea that Investors are killing any Internet "Business" by advising Founders against simple & straight-forward business plans. They constantly ask founders not to monetize earlier and wait until founders have no choice but to trash out the comp…