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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

#141

Post by amclennon »

Keyframe wrote: post #70
Qworg wrote: post #55

Earlier quoted context omitted.

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.

I imagine a company like Ford, Chrysler, or any other large car manufacturer would have equal if not greater brand recognition compared to Uber.

These would be the biggest threat to Uber's market share since they could easily compete on cost and distribution alone.

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

#142

Post by sonotwhat »

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 live in Singapore and this is already happening here. In Singapore to own a car you've to get a certificate of ownership that can cost around $70-$100k and you've to bid for this. Ever since Uber began to get popular here we've had rental companies (who only rent if you become an Uber driver, essentially partners of Uber) try to undermine the bidding system by artificially boosting prices.

It has never been easy (or cheap) to privately own a car in Singapore but the situation right now is exactly like you mentioned in your comment.

However I'm also a resident of the US and I don't think it's gonna happen over there anytime soon.

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

#143

Post by niftich »

niftich wrote: post #93
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…

Let's forget about aviation flag carriers and the 'orthodox' legacy US airlines for a moment. How do 'low-cost' airlines make any money, especially in Europe where they advertise fares for paltry amounts? Even with charging extra for bags, food, early boarding, decent seating, etc., does the money they make per passenger cover fuel costs and landing fees alone or is profitable in any sense of the word? What are the b…

In short:

I propose that Uber's long-term business model is to win lucrative government contracts and absorb subsidies, by operating a transportation network big and elastic enough to meet criteria and provide the requisite level-of-service.

It's essentially a purpose-made PPP (public-private partnership) company, the transportation equivalent to Skanska, Fluor, Strabag (if you're familiar with large-scale infrastructure projects), or, an automobile-based version of school transportation contractors, charter services, and the like. This is irrespective of whether they have human- or self-driving vehicles.

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

#144

Post by CoffeeDregs »

EpicEng wrote: post #119
CoffeeDregs wrote: post #92

Earlier quoted context omitted.

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.

Why would you assume that software-as-a-whole has lost money? The industry is full of un-subsidized, non-cyclical, high profit companies... Microsoft, Apple, Google, Oracle, Autodesk, IBM, EMC, CA Technologies, Saleforce.com, etc.

Not sure why it's a silly way of looking at an industry's long term performance. It shows that, while occasional profits are made, the industry is prone to brutal, un-differentiated price competition...

So you're saying you believe the Delta CEO when he says "Industry May Never Again Lose Money"? [1] Considering the above, I'd be skeptical they're experiencing more than temporary, cyclical profitability.

[1] https://skift.com/2016/06/14/american-airlines-ceo-says-indu...

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

#145

Post by shkkmo »

rnernento wrote: post #64
onion2k wrote: post #60

Earlier quoted context omitted.

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?

I assume they meant reduce and eliminate the subsidies without having raise prices.

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

#146

Post by mayerzahid »

A large assumption I keep on seeing is because Uber will lead with self driving cars people will just stop purchasing cars and use just self driving ride sharing. I think that a portion of people will but many will still buy their own self driving cars for multiple reasons. Time saved, comfort and control of passenger experiences, and cash generating vehicle that can be plugged into self driving network while it is not being used.

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

#147

Post by rm_-rf_slash »

notahacker wrote: post #117
avn2109 wrote: post #68

Earlier quoted context omitted.

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 th…

Can't say I speak for everyone but I mostly walk to get to places and drive when I have to. I live close enough to an ALDI to get most of my groceries by walking and I can walk to work too.

Owning a car means always needing a parking space, going out to get gas, paying for insurance, inspections, etc, having to be capable of driving (because when I'm sauced on a Saturday night I really want to get greasy food, but I can't drive soooo...).

If an autonomous car-share program cost about as much as the car payments and gas alone for the the amount we would use it, we would sell our car in a heartbeat. A car isn't much of a status symbol when most of your friends can't afford a nice one either. Kinda makes you look like a dick, in comparison.

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

#148

Post by klipt »

msoad wrote: post #18

> Uber’s growth is fueled by subsidies A lot of people think if their Uber/Lyft ride is cheaper than their traditional taxi because it's subsidized. The lower fare for the most part is due to extreme efficiency difference between a taxi company and Uber/Lyft. 1. Uber/Lyft don't own the cars. They are leveraging car owners capital 2. Uber/Lyft drivers are more efficient because they don't have to roam around the city…

> The network effect is huge!

For now. Network effect requires connecting two populations: drivers-passengers (Uber, Lyft). Sellers-buyers (eBay, Amazon Marketplace). Etc.

As soon as self driving cars arrive, the Uber/Lyft network effect evaporates. Anyone with capital will be able to field a fleet of self driving taxis.

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

#149

Post by notahacker »

acchow wrote: post #105
hmate9 wrote: post #75

Earlier quoted context omitted.

Technically you are correct, but you are just nitpicking. We understood exactly what he meant.

My point was the meta-search engine will eliminate the friction and eat the whole pie.

A corollary of this is that whilst meta-search engines didn't take very much of the pie for themselves, the fiercer price-competition they imposed did take a much bigger chunk out of airlines' margins, and particularly the margins of travel agents reselling airline tickets.

Uber at present is a travel agent, not an airline

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

#150

Post by niftich »

dageshi wrote: post #95
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.

Amazon is in a low margin commodity business with massive amounts of competition, but they're still massive and becoming even bigger because they do what everyone else can do just that little bit better that there's no real reason to switch away.

And now with them having become an online-only warehouse club [1] with Prime, there is even less reason to switch away.

[1] https://en.wikipedia.org/wiki/Warehouse_club

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