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Why I don't believe in Uber's Success

blog.benjamin-encz.de

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

#111

Post by vannevar »

CoffeeDregs wrote: post #92
vannevar wrote: post #69

Earlier quoted context omitted.

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 a…

That is clearly not true. See, for example: [Industry publication] A clarification: I meant that if you would show a net loss if you summed the net income of each airline in the industry since inception. To be fair, while it definitely isn't clearly not true, my statement certainly is not clearly true... ;) Some non-industry pubs backing my not-clearly-true statement: http://faculty.haas.berkeley.edu/borenste/downloa…

Maybe so, since it would include a lot of government-owned and government-controlled airlines whose fares were subsidized by tax money in the interest of the public good. In that sense, they're a bit like Uber, which is subsidized by its investors in the interest of...well, attracting even more investors and keeping the whole pyramid scheme going.

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

#112

Post by iamcasen »

What OP, and everyone in this thread don't seem to understand is that Uber has waaaay more up it's sleeve than a mere taxi app.

Uber has more data about traffic patterns in every major city they operate in, than any other entity, including the cities themselves. Uber can use that data as leverage in so many ways.

They have an API, they are a logistics platform in a sense. Uber's endgame will be allowing people to plug into that platform for a price.

If they can manage to become the defacto cab platform for all major US cities alone, they are close to being worth their current valuation as is. Expand this all over the globe.

Do not forget they have a 20% stake in Didi as well now, which will more than make up for their 2 billion loss while trying to capture the chinese market.

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

#113

Post by LordHumungous »

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.

Wait, what? How can that be possible? Wouldn't the airlines cease to exist if they never generated profits?

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

#114

Post by secabeen »

avn2109 wrote: post #68
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 Ca…

I think that market is smaller than you may think. There are lots of factors that will drive people to own their own self-driving cars rather than rely exclusively on Uber/Lyft/Tesla Mobility, etc.

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

#115

Post by LordHumungous »

avn2109 wrote: post #68
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 Ca…

>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

...which is exactly what cabs are. In major cities cabs exist because it's cheaper and easier to hire a cab than to drive yourself. That cabs only really exist in densely populated urban areas should tell us something about the economics of this business model.

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

#116

Post by vannevar »

moultano wrote: post #106
vannevar wrote: post #80

Earlier quoted context omitted.

This is a good point, but it doesn't change the prognosis. Uber will run out of runway long before that vision can be realized. And even if by some miracle it doesn't, it will find itself in a low-margin commodity business. Unless it can muscle its way into a monopoly, it can't win. Which explains the company's aggressiveness and anti-competitive nature.

It's a business with natural network effects. The service that has the most cars on the road has the most liquidity to clear the market, and will have the shortest wait times. People pay for rides in both time and money, and you can be "cheaper" by getting a car to show up faster.

The problem is that in this case, Uber doesn't own the car network. It's trivially easy for a driver to shift between networks, or even work for multiple networks simultaneously. Uber not only has to talk a rider into giving them the fare, they also have to talk the driver into taking that fare. There's just nothing special about Uber for either party unless Uber can be the one that performs that matchmaking service at the lowest possible transaction cost. Welcome to Uber's low-margin world.

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

#117

Post by notahacker »

avn2109 wrote: post #68
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 Ca…

I can believe that's their goal: I see little reason to believe they'll succeed in it, beyond making the market a bit bigger than the current taxi/minicab market.

Just because they're very good at supplying an unlicensed minicab service (apparently subsidised by VC money in many areas) doesn't mean they can (i) run a minicab business at a profit so much more efficiently than every other minicab business in history that the average American decides they can sell off their four-wheeled status symbol and commute in a surge-priced Uber or (ii) compete with the manufacturers in supplying self driving cars on demand, whilst likely operating at a huge disadvantage in vehicle acquisition and maintenance costs

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

#118

Post by jdpedrie »

kin wrote: post #104

Investors are giving Uber a near infinite bankroll so it's hard to say that they'll be allowed to fail. I was in Southeast Asia recently and it's insane how cheap Uber is. It almost doesn't make sense to take any other form of transportation. I imagine once the competition dies, they'll have complete control over the market.

The problem is that the moment Uber is in a position to exploit its newfound monopoly, new competition springs up. Without regulatory constraints, transportation on public infrastructure just isn't a natural monopoly business.

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

#119

Post by EpicEng »

CoffeeDregs wrote: post #92
vannevar wrote: post #69

Earlier quoted context omitted.

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 a…

That is clearly not true. See, for example: [Industry publication] A clarification: I meant that if you would show a net loss if you summed the net income of each airline in the industry since inception. To be fair, while it definitely isn't clearly not true, my statement certainly is not clearly true... ;) Some non-industry pubs backing my not-clearly-true statement: http://faculty.haas.berkeley.edu/borenste/downloa…

OK... Using that approach I would assume that software has also lost money over the entirety of its existence. Perhaps not completely "untrue", but a silly way of looking at it and not what anyone would assume you were talking about.

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

#120

Post by erispoe »

moultano wrote: post #106
vannevar wrote: post #80

Earlier quoted context omitted.

This is a good point, but it doesn't change the prognosis. Uber will run out of runway long before that vision can be realized. And even if by some miracle it doesn't, it will find itself in a low-margin commodity business. Unless it can muscle its way into a monopoly, it can't win. Which explains the company's aggressiveness and anti-competitive nature.

It's a business with natural network effects. The service that has the most cars on the road has the most liquidity to clear the market, and will have the shortest wait times. People pay for rides in both time and money, and you can be "cheaper" by getting a car to show up faster.

Network effects don't accumulate to a natural monopoly in this case. Yes you need a fleet large enough to get to a sweet price / waiting time optimum, but each new car in your fleet has a diminishing marginal effect.

You could say exactly the same for airlines: there's network effect. Each new plane allows your to fly more rotations, have more frequent lines, open new routes... The reality is that most people take decisions based on price.

We know most people are pretty bad at valuing their time, and even so, waiting a minute more for a cheaper service is something people will do for sure. As long as you're below an acceptable waiting time for your car, you can compete on price.

I'm curious about how Uber will avoid being a commodity just like airlines are.

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