Why I don't believe in Uber's Success • Hacker News Board

Re: Why I don't believe in Uber's Success

#61

Post by Keyframe » Thu, Jan 19, 2017, 6:23 PM UTC

ithinkinstereo wrote: post #49

Keyframe wrote: post #39

Earlier quoted context omitted.

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.

> Question is, who are competitors with same scope as them? I don't know any. 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. Ube…

Why aren't car manufacturers already in logistics business? Or are they? I'm trying to find sources. I see VW has its own logistics group, but only for their own use.

Re: Why I don't believe in Uber's Success

#62

Post by vadym909 » Thu, Jan 19, 2017, 6:24 PM UTC

earthtolazlo wrote: post #53

ahuja_s wrote: post #21

I live in Singapore and Uber is a little cheaper than the excellent cab services which operated here even before Uber. There is a big competitor to Uber here called Grab. I switched to Uber because their service is good, drivers are gracious and cars are nice and they give me good offers. Last year I took 300 Uber rides, never once taking the usual Comfort Delgro Cab because their drivers suck. If prices were the sam…

It lost 2-3 billion dollars last year and shows no signs of improving its margins anytime soon. How is that a success?

So then Amazon is not a success either?

Re: Why I don't believe in Uber's Success

#63

Post by falloutx » Thu, Jan 19, 2017, 6:24 PM UTC

dchuk wrote: post #48

Uber's current problem is they have run out of things to innovate on. They've pretty much nailed the UX in their app, and all they're left with is cars taking people from Point A to Point B. What is left to improve on there? 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 t…

> I was happy paying $25 for an uber to the airport rather than $30 for a cab, but now it's something like $14

You were happy paying $25, but they wanted more costumers, even the ones who just want to pay 15.

Re: Why I don't believe in Uber's Success

#64

Post by rnernento » Thu, Jan 19, 2017, 6:25 PM UTC

onion2k wrote: post #60

falloutx wrote: post #25

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…

I think a lot of investors and founders try to replicate the model that worked for Paypal. By accepting a high customer acquisition cost (in the form of literally giving away money) at the start you can scale up phenomenally quickly. It's a proven model. The problem is that it's hard to know if you can still attract new customers without that artificial appeal, so actually stopping is a huge risk. Your growth figures…

How is it possible to get to profit with the subsidies?

Re: Why I don't believe in Uber's Success

#65

Post by majewsky » Thu, Jan 19, 2017, 6:25 PM UTC

Keyframe wrote: post #39

ithinkinstereo wrote: post #30

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.

Any larger car company is a competitor at the same scale. And you don't even need a competitor of the same scale: It's enough if every city has a local competitor.

Re: Why I don't believe in Uber's Success

#66

Post by acchow » Thu, Jan 19, 2017, 6:25 PM UTC

CoffeeDregs wrote: post #52

The commercial airline industry has lost money over the whole of its existence. If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs). I'm not sure how Uber, Lyft, etc are any different than Southwest, American, etc. Cab companies (which I hate) and airlines saw this years ago and promoted regulations to protect their fees (and, thereby, wages). Airlines lost th…

> 250% surge pricing or $90. Lemme check Lyft. Sweet, Lyft is about $50. Our Lyft will be here in 3 minutes." There was zero friction switching from Uber to Lyft.

That's not zero friction.

Zero friction would be if you routed the directions under "Public Transit" in Google Maps and scrolled to the bottom where you can see both Lyft and Uber pricing (and clickable links) next to each other.

Re: Why I don't believe in Uber's Success

#67

Post by vitaminbandit » Thu, Jan 19, 2017, 6:25 PM UTC

Keyframe wrote: post #39

ithinkinstereo wrote: post #30

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.

As far as war chest goes, Uber basically has no competition. As far as their routing and vehicle management algorithms go, there already exist companies with more sophisticated routing systems than Uber. Uber's routing algorithm is basically nearest neighbor search at a massive scale - which is perfect for the on-demand nature of their business; the companies that I'm referring to can support on-demand routing as well as scheduling rides days and weeks in advance.

More knowledge of future rides -> better optimization -> better margins.

Once self-driving cars finally come around, it's going to come down to fleet size and routing optimization, and while Uber can win in the first category, there's no guarantee they can win in the second category.

Re: Why I don't believe in Uber's Success

#68

Post by avn2109 » Thu, Jan 19, 2017, 6:26 PM UTC

CoffeeDregs wrote: post #52

The commercial airline industry has lost money over the whole of its existence. If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs). I'm not sure how Uber, Lyft, etc are any different than Southwest, American, etc. Cab companies (which I hate) and airlines saw this years ago and promoted regulations to protect their fees (and, thereby, wages). Airlines lost th…

TFA and a lot of commenters here don't seem to understand that Uber doesn't want to compete with taxi services, which are a niche business to be disrupted en route to the real prize. It wants to compete with your car - imagine 12 lanes of L.A. traffic composed mostly of Ubers. That's their dream. They even admit this in public. [0]

The day they can get cost per mile one penny below what you'd spend owning a Toyota Camry, they'll open up the biggest transport market ever created (the intentionally-inefficient American built environment). They're taking all this VC money and expanding so aggressively not because they like the scale, but rather because that's the only way to compete with private car ownership.

[0] https://twitter.com/travisk/status/564065776005808128

Re: Why I don't believe in Uber's Success

#69

Post by vannevar » Thu, Jan 19, 2017, 6:26 PM UTC

CoffeeDregs wrote: post #52

The commercial airline industry has lost money over the whole of its existence. If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs). I'm not sure how Uber, Lyft, etc are any different than Southwest, American, etc. Cab companies (which I hate) and airlines saw this years ago and promoted regulations to protect their fees (and, thereby, wages). Airlines lost th…

The commercial airline industry has lost money over the whole of its existence.

That is clearly not true. See, for example: http://www.iata.org/pressroom/pr/Pages/2016-12-08-01.aspx

If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs).

It's true that many people bargain hunt, but the people that don't (primarily business people who need to fly on short notice and on fixed schedules) subsidize lower fares for those who do.

At the moment, it is the investors who are subsidizing lower fares at Uber and Lyft, to the tune of billions of dollars per year. You're right about the autonomous cars. At this rate, Uber will run out of money before autonomous cars can save it. And even if they do, Uber will be a low margin business.

Re: Why I don't believe in Uber's Success

#70

Post by Keyframe » Thu, Jan 19, 2017, 6:26 PM UTC

Qworg wrote: post #55

Keyframe wrote: post #39

Earlier quoted context omitted.

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.

What is scope for Uber-likes? What is network? They're simply leveraging a brand - it is almost no moat versus a competitor, especially if they have a structural advantage. An example advantage would be an autonomous car manufacturer entering the market - they can simply blow Uber out of the water on cost alone.

No moat? Do you think brand recognition is worthless or I'm missing something? They have a large user base (I presume) already. I'm not sure one could build one from scratch just like that. It would need a big player to enter the game.