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Why I don't believe in Uber's Success

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

#201

Post by btilly »

LordHumungous wrote: post #113
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?

This is possible thanks to Chapter 11 bankruptcy.

In most countries when you go bankrupt, you go out of business. In the US you usually go into Chapter 11. This lets you default on some of your debt, renegotiate contracts, and then come out of bankruptcy stronger than before.

The problem with this is shown with airlines. They would all make a profit if they could just lose some of them. Unfortunately whenever that looks like it might happen, the loser goes into Chapter 11, enjoys a competitive advantage, recovers, and comes out of it stronger. Then someone else goes bankrupt.

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

#202

Post by [deleted] »

hmate9 wrote: post #78
Animats wrote: post #71

Here's a table of Uber's funding rounds.[1] What's keeping Uber going is Saudi Arabia's sovereign-wealth fund, which put in $3.5 billion last summer. They also took on $1.15 billion in debt last year. That's real debt at 5% interest, not some convertible deal. Bloomberg says Uber is losing $800 million per quarter.[2] Unless they can find a bigger sucker than the Kingdom of Saudi Arabia, they run out of money in 2018…

$800 million / quarter = $103 / second. Wow.

[deleted]

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

#203

Post by prostoalex »

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…

> The day they can get cost per mile one penny below what you'd spend owning a Toyota Camry

Car makers have falling commodity prices (when they're indeed falling) and rising automation working in their favor. What does Uber have working in its favor?

It seems that scenarios with rising car ownership costs involve mainly cost of parking or general low ridership pattern. Those specific scenarios are associated with dense urban environments, which also have a competitive vector of public transportation, frequently already subsidized by the taxpayer.

I will admit though that Uber has a very attractive offering in LA, with $5 UberPOOL downtown to West side or a UberX ride cheaper for 3-4 people than the cost of metro/bus. Don't know whether LA market is profitable for them or subsidized.

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

#204

Post by notahacker »

rm_-rf_slash wrote: post #173
notahacker wrote: post #158

Earlier quoted context omitted.

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-…

What about when your commute, without any concern for parking, is 10 minutes, max? I doubt it would be that expensive. Besides, I would only opt for transport if the weather was shitty or I was tired (which is the current case today).

> What about when your commute, without any concern for parking, is 10 minutes, max? I doubt it would be that expensive

If you want a car at the precise time everybody else happens to be commuting and commuters are the principal users of on-demand car services, it doesn't really matter whether your commute is shorter than some of the others. It's one extra car needed to be available every day at the time when all the other cars happen to be in use and (like most of the rest of the cars in the commuter pool) it'll spend the rest of the day sat in a parking spot, costing little in mileage but plenty in depreciation.

Of course if commuters needing to be around for the start of a normal work day aren't the principal user of the service, then cars can be used more efficiently throughout the day, but then they're not "competing with private car ownership" to any significant degree.

For edge cases like you whose car use consists of occasional ten minute drives, it might already be cheaper to just take taxis/Ubers

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

#205

Post by metaphorm »

GVIrish wrote: post #177
metaphorm wrote: post #129

Earlier quoted context omitted.

they don't have to beat those companies, they have to negotiate good rates for vendor services with those companies.

What does Uber have that would not be feasible for any of those companies to build? 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).

> What does Uber have that would not be feasible for any of those companies to build?

usage data. they know where people that use their app actually go on a daily basis, and how much they're willing to pay for that service.

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

#206

Post by LordHumungous »

xux wrote: post #156
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…

Airline is a classic case of an industry that has too much competition. All these airlines cause inefficient routing, and they're continuously forced to cut prices to compete. This results in bad margins and bad service. Literally no body wins. Uber / Lyft could be profitable as duopolies though. As in the case of Pepsi and Coke, both can happily carve out their niche and don't rock the boat too much.

Except for consumers who can fly around the world for insanely low prices.

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

#207

Post by mmagin »

As far as I can tell from how frequently Uber and Lyft give me discounts whenever I don't use them for a few days, they're burning crazy amounts of VC money just to grow.

If investment dries up before they get profitable, I think they're screwed.

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

#208

Post by JonFish85 »

iamcasen wrote: post #107
kr7 wrote: post #57

Earlier quoted context omitted.

"Subsidies for Uber's drivers are responsible for the majority of the company's losses globally, [head of finance] Gupta told investors" https://www.bloomberg.com/news/articles/2016-08-25/uber-lose...

Uber only uses subsidies when trying to break into new markets to expand. If they stopped expanding, they would become profitable rather quickly. Many of their losses were due to the turf war in china, which is now over. They have a 20% stake in Didi now, which will almost certainly recover their losses.

>> Uber only uses subsidies when trying to break into new markets to expand. If they stopped expanding, they would become profitable rather quickly.

Are you sure that's true? That sounds like the marketing speak that Travis K. spouts, but I wouldn't be surprised if that weren't the whole truth. Like any other "startup", you can claim to be profitable pretty easily -- you just have to find a hand-wavy way to qualify that ("if you exclude debt and operating expenses we're net margin profitable!").

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

#209

Post by benchaney »

beezischillin wrote: post #54
Keyframe wrote: post #22

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…

The Uber we know right now will probably transition into the self-driving car-based company for freight, passenger transport and ride sharing. It'll be a bit unsettling to see what'll happen to the drivers they're using right now. I personally think that Uber is not an ethical company (I do live in Europe). They are exploiting tax and legal loopholes to profit off of both drivers and countries, simply because regulat…

>Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation.

I don't really understand this mentality. You don't want to let them exploit the situation by profiting off of making things better for consumers?

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

#210

Post by BigCatStuff »

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…

> but it is already a success. wake up.

Your statement depends on what people define as 'success'. Is Uber a product people love? Yes. So, by a product measure it's a success. Is it currently or will it be in the future a profitable business (without VC money subsidies)? We don't know, so therefore people have differing opinions on whether it will be a successful business.

People also loved products like Napster and The Pirate Bay, but does it mean they were a success? I'd say that they're not successful businesses, but were successful products that many people used.

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