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Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

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Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#51

Post by amerkhalid »

EpicEng wrote: post #21
emodendroket wrote: post #5

Earlier quoted context omitted.

Well, the idea is that they kill off every competing service and then can raise prices. Also that they can beat everyone else to self-driving cars and eliminate the cost of labor. Other articles on NC have called the feasibility of both of those into question.

Sounds like a terrible idea given that this would just open the door for another company to do the same to them. They don't produce anything novel which can't easily be replicated.

Except there is a network effect. You will have to lower the cost for both; passengers and drivers for them to switch. Most of passengers I know, use one app, either Uber or Lyft. I don't know which one is cheaper but no one seems to compare prices even if they had both apps on their phone.

The way I see is that once Uber is a monopoly, it will start using advertisement model to subsidize rides. Should be easy enough, after requesting a ride at full cost, you can watch 5 minutes of videos until your ride gets there to get 10% discount. Or they can ask drivers to put tablets playing ads in their cars. They have history of places you visit, they can probably show highly targeted ads. "Going to a bar in downtown, checkout this other bar on the same street."

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#52

Post by MediumD »

maxxxxx wrote: post #40
matte_black wrote: post #13

The only thing Uber can ever deliver is people and things to their final destinations. When Uber shuts down and goes out of business I as a consumer will just roll into the next service, and will not shed even a single tear for all who invested in Uber. Sorry, but thanks for all the cheap rides.

Yes, they are a pure commodity.

Sure, but we need commodities and there are tons of profitable commodity businesses. If Uber is able to deliver ride cheaper than everyone else, they can make a ton of money, and the logistics and scheduling competencies can be applied to other verticals. That being said, I'm still pretty bearish on Uber's longterm success, and their current numbers do look pretty bad.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#53

Post by Animats »

hkmurakami wrote: post #25
Animats wrote: post #10

"Uber released new financial data this week, showing full year 2017 GAAP operating losses of $4.5 billion, and an operating margin of negative 61%." Finally, Generally Accepted Accounting Principles numbers from Uber. And they're awful. Lots of startups whine about having to produce GAAP numbers (all US public companies have to) because they can't exclude "extraordinary expenses". But GAAP numbers are real, not "earn…

How much of that $10B was secondary sales that didn't put anything into the company's coffers?

A lot. It was a down round and provided an exit for some earlier shareholders.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#54

Post by moduspol »

Jasper_ wrote: post #28
moduspol wrote: post #9

Earlier quoted context omitted.

Then apparently it is impossible to run a SaaS app connecting drivers and passengers for a ~25% cut of current prices. That seems pretty unlikely. We need to move on from this unsupportable "ride sharing pricing is unsustainable" narrative.

The expensive part of Uber isn't the SaaS app or even the engineers. It's the overhead of running a law-avoiding lobbying business that explicitly seeks out to just do everything as evil as possible. Hell, Uber tried being a predatory car loan business for quite some time, which you would think would be one of the easiest ways to make surefire money, but they lost on that one too: http://www.businessinsider.com/uber-…

Even if your claim were supportable, it wouldn't explain how competitors not "seeking out to just do everything as evil as possible" have competitive prices.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#55

Post by maxxxxx »

MediumD wrote: post #52
maxxxxx wrote: post #40

Earlier quoted context omitted.

Yes, they are a pure commodity.

Sure, but we need commodities and there are tons of profitable commodity businesses. If Uber is able to deliver ride cheaper than everyone else, they can make a ton of money, and the logistics and scheduling competencies can be applied to other verticals. That being said, I'm still pretty bearish on Uber's longterm success, and their current numbers do look pretty bad.

"If Uber is able to deliver ride cheaper than everyone else, they can make a ton of money,"

They are repeatedly demonstrating that they are not able to do this profitably.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#56

Post by zanny »

EpicEng wrote: post #20
clairity wrote: post #11

Earlier quoted context omitted.

yes, that's how capitalism is designed to work. the window in which you can make outsized profits is meant to be temporary so companies can't just rest on their laurels. it's beautiful when it works.

Capitalism is not "supposed to be" a race to the bottom and then the emergence of a single, monopolistic entity. That's far too simplistic. Price and value are a huge component of capitalism, yes, but the general idea isn't "price below what is sustainable by taking in massive amounts of funding until all of your competitors are sunk and then increase prices."

Capitalism is absolutely supposed to minimize costs, that is how competition works. It is more a consequence of economic reality than a function of capitalism that massive vertical integration and economies of scale can let market-spanning monopolies form.

But as others have said, unless barriers are put in place (economically natural like mindshare or opportunity cost or artificial ones like bribed legislation) the monopoly can't abuse their situation without opening up avenues for new competition to arise to compete with them.

On one hand, capitalism is obviously not optimal - a monopoly is only held to a price ceiling of what the most nascent newcomer is capable of. They are almost always able to take home the profit of their scale and integration even in the presence of competitors. On the other hand, the only way historically nations have battled this is to micromanage a market to guarantee enough strong entrenched and scaled competition to keep there from being a decisive market leader. But over time all markets trend towards that kind of centralization.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#57

Post by ovi256 »

albertgoeswoof wrote: post #32

The main value prop for Uber hasn’t changed for quite some time, probably not much since UberX, the innovation there is pretty much done. This puts Governments in the perfect position to disrupt Uber, if they build their own version, feature for feature (let’s face it, it’s a complex app but not that hard to copy) and mandate it on their already regulated taxis / ban uber, their user acquisition costs and marketing c…

Did you just earnestly advocate for a government mandated ride-sharing app ? And you main argument is that if it's government mandated, "user acquisition costs and marketing costs will be zero", so the users get lower fares ?

That's brilliantly lawfully evil. Why stop there ? That argument applies for all services. They would all benefit from having zero acquisition costs. Just nationalise everything. Could anything go wrong ?

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#58

Post by moduspol »

Someone wrote: post #41
moduspol wrote: post #9

Earlier quoted context omitted.

Then apparently it is impossible to run a SaaS app connecting drivers and passengers for a ~25% cut of current prices. That seems pretty unlikely. We need to move on from this unsupportable "ride sharing pricing is unsustainable" narrative.

Such a business can be sustainable, but the questions are whether it warrants Uber’s valuation and whether getting customers is worth the amount of money Uber pays for it. Apparently some investors think the answer to both is yes. Otherwise, Uber wouldn’t get the money they get. Other people disagree, though. I’m one of them. I think it is worthwhile to invest in getting some users to your platform, but I fear they a…

I'm responding to this question:

> what if the model of both businesses just isn't actually viable without massive injections of funds?

I don't know if Uber's valuation or investors are correct. The question is whether or not the business (or one like it) can fundamentally exist without investors pouring money into it.

By your claim, it sounds like you'd agree with me because a competitor is likely to emerge with similar or cheaper rates. I agree. But that in no way supports parent's claim that the price (or business model) may be unsustainable.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#59

Post by zanny »

moduspol wrote: post #54
Jasper_ wrote: post #28

Earlier quoted context omitted.

The expensive part of Uber isn't the SaaS app or even the engineers. It's the overhead of running a law-avoiding lobbying business that explicitly seeks out to just do everything as evil as possible. Hell, Uber tried being a predatory car loan business for quite some time, which you would think would be one of the easiest ways to make surefire money, but they lost on that one too: http://www.businessinsider.com/uber-…

Even if your claim were supportable, it wouldn't explain how competitors not "seeking out to just do everything as evil as possible" have competitive prices.

Because the competitors are like comparing Sonic to Comcast. One operates in one state between two cities and has a hundred thousand customers. The other is a national monopoly that abuses over a hundred million people.

Sonic can be competitive with Comcast where it operates, but it is still a tiny blip on Comcasts radar. Uber has way, way more market volume and penetration than any one competitor, and in many places are the only game in town.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#60

Post by emodendroket »

sol_remmy wrote: post #35
emodendroket wrote: post #16

Earlier quoted context omitted.

That's not really how it's "supposed to" work. It's called predatory pricing and the most ardent free-market defenders claim it doesn't exist because it's economically irrational (check out the contentious discussion and Frankenstein-like text of the Wikipedia entry on the topic).

"predatory pricing" So they're offering prices below cost and that is considered "predatory"? Last time I checked low prices are good for consumers

It's predatory because it is below cost and is just intended to preserve a monopoly on a market. The goal is to eliminate all competitors, then charge a price that a competitive market couldn't sustain. The harder it is for new competitors to enter your market the better it works.
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