171–180 of 413 posts
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What prevents other logistics providers from driving the price down to commodity levels?
Normal logistics providers have their own fleets and have to deal with the depreciation and maintenance costs. Uber shifts all those costs onto their drivers.
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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 de…
This is why Uber and Lyft end up in driver subsidy cost wars.
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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…
New cars and executive cars and ludicrously thirsty sporty models sell well enough and secondhand Korean superminis badly enough to suggest manufacturers don't have too much to fear from people switching to alternative modes of car use on the ground of price. (I'm sure you could find a cheaper-to-run vehicle if you really wanted to too) And for commuters that need a car to get them to work at 8-9am and home around 5-…
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It lost 2-3 billion dollars last year and shows no signs of improving its margins anytime soon. How is that a success?
They created a product that people love. I live in Mexico City and my experience is similar to the one described in Singapore plus the fact that, so far, nobody has ever been kidnapped while hailing an Uber. Riding a cab has gone from slightly dangerous and more often than not displeasing experience, to having a private driver that knows exactly where I want to go and how to get there. Besides, not having to use cash…
Succeeded at making money? Or, failing that, succeeded at building a business that someday may be able to make money?
The network effects are pretty obvious actually: as the number of people on the platform increases, the amount of time a driver has to drive to pick you up becomes increasingly shorter, thus enabling the drivers to spend more of their time with a passenger in their car (which is when they are earning money). If drivers are making more money, Uber can pay them less (reduce the subsidy). Old taxi cab companies can't co…
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You mean brand recognition? (What prevents a user from using more than one service?)
What prevents a user from using more than one service? Customer inertia, among other things.
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Removing the driver reduces the price significantly, so the business model of cars on demand is probably viable outside of dense areas with self driving cars. That being said, for Uber to win the self driving car race they have to beat Google, Apple, Tesla, Didi and the automotive incumbents as Sarah Lacy has been pointing out for at least 12 months.
they don't have to beat those companies, they have to negotiate good rates for vendor services with those companies.
Uber doesn't lock in customers or create any switching pain whatsoever so their current customer base doesn't given them much of an advantage. Their software is slick and robust but it's not so technically advanced that a competitor couldn't create their own ride-calling and dispatch system (as evidenced by Lyft).
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In my opinion self driving cars are a shiny object to distract VC's from Uber's massive operating losses. When they start making money with self-driving cars on a large scale then I'll take notice.
wait 5-10 years? there aren't any self-driving cars in commercial use right now. VC investors often have long term timelines (depends on the fund and it's objectives). It's not exactly a distraction tactic to say "our timeline projects out for a decade and we expect to be operating in the red until the technology and politics aligns and comes to fruition, at which point we make infinite money forever."
Expect an even bigger fund raise where they hope some other idiots, with even deeper pockets, will keep picking up the tab.
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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 (o…
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How would one short a pre-IPO company. Betting sites?
The difficulty of shorting something like Uber is getting the timing right. Not only do you have to bet that Uber is over-valued, you also have to bet about the timing of when Uber runs out of starry-eyed investors to fuel the valuations. That is dependent on when it runs out of money, how quickly Uber decides to burn, and when the financials become clear enough to enough people that the public decides that the emper…