Uber to Seal $3.1B Deal to Buy Careem This Week • Hacker News Board

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#31

Post by creato » Mon, Mar 25, 2019, 4:28 AM UTC

logicx24 wrote: post #25

Uber's strategy right now is to maximize horizontal integration across as many markets as possible. They're leveraging cheap credit and an infusion of private money (mainly from Middle Eastern investors looking to diversify their portfolios) to expand as quickly as they can in local transportation. This growth, combined with their subsidization across all their products, is producing huge near-term losses. However, I…

> The hope for them is that through this rapid expansion, they've bought enough leverage to raise prices without losing too many customers.

In other words: sell at a loss, run all the competition out of business, then raise prices?

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#32

Post by slorward » Mon, Mar 25, 2019, 4:47 AM UTC

Ozzie_osman wrote: post #16

As great as this will be for the tech ecosystem in the Middle East, this type of consolidation should be blocked for antitrust. It'll be bad for customers and drivers. But it won't be blocked. Uber and Careem share common investors (aka Saudi) and this would be a huge win for them.

While this is largely true. The Middle East needs large exits like these (e.g. Souq, Maktoob) in order for investors and carpenters to be motivated. The Middle East (except for Israel) is really lacking in this arena.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#33

Post by logicx24 » Mon, Mar 25, 2019, 4:59 AM UTC

creato wrote: post #31

logicx24 wrote: post #25

Uber's strategy right now is to maximize horizontal integration across as many markets as possible. They're leveraging cheap credit and an infusion of private money (mainly from Middle Eastern investors looking to diversify their portfolios) to expand as quickly as they can in local transportation. This growth, combined with their subsidization across all their products, is producing huge near-term losses. However, I…

> The hope for them is that through this rapid expansion, they've bought enough leverage to raise prices without losing too many customers. In other words: sell at a loss, run all the competition out of business, then raise prices?

Essentially. I'm not endorsing it, but Uber's strategy is the classic monopoly strategy. It reminds of nothing more than Standard Oil giving it's competitors a "good sweating."

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#34

Post by Gustomaximus » Mon, Mar 25, 2019, 5:00 AM UTC

jussij wrote: post #27

googlemike wrote: post #19

Earlier quoted context omitted.

$50b in revenue last year is nothing to scoff at. They have levers for profit but instead re-invest every dollar. Your argument sounds exactly like what people said about Amazon years ago.

That $50b figure is not their revenue, but their gross bookings. For example Uber's last quarter revenue was $3 billion on some $14 billion in bookings, with a loss of about $800 million.

My understanding;

$14 billion is revenue

$3 billion is their earnings after driver costs.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#35

Post by TuringNYC » Mon, Mar 25, 2019, 5:12 AM UTC

deogeo wrote: post #29

logicx24 wrote: post #25

Uber's strategy right now is to maximize horizontal integration across as many markets as possible. They're leveraging cheap credit and an infusion of private money (mainly from Middle Eastern investors looking to diversify their portfolios) to expand as quickly as they can in local transportation. This growth, combined with their subsidization across all their products, is producing huge near-term losses. However, I…

It's interesting how little of this strategy involves providing a better service. But I don't think they're alone or even special from this perspective (e.g. similar to the rise of Microsoft). I think the prevalence of "business strategy", as opposed to product/service improvement, in the growth of corporations, warrants much more scrutiny than it gets. After all, corporations should serve society - how do strategic…

Good for Uber, but I'm disappointed as a customer. I did extensive travel overseas in Qatar and the Careem app was excellent. They had a clear local strategy with local customization to capture users. For example

- [Local flavor] Using a button called "Yallah" instead of "Go"

- [Local Knowledge] Pre-coding airport pickup locations (unlike Uber which had you try and figure it out directly with drivers, who often did not speak English.)

- [Local Knowledge] Understanding that many parts of the world do not have street addresses!

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#36

Post by plumeria » Mon, Mar 25, 2019, 5:38 AM UTC

TuringNYC wrote: post #35

deogeo wrote: post #29

Earlier quoted context omitted.

It's interesting how little of this strategy involves providing a better service. But I don't think they're alone or even special from this perspective (e.g. similar to the rise of Microsoft). I think the prevalence of "business strategy", as opposed to product/service improvement, in the growth of corporations, warrants much more scrutiny than it gets. After all, corporations should serve society - how do strategic…

Good for Uber, but I'm disappointed as a customer. I did extensive travel overseas in Qatar and the Careem app was excellent. They had a clear local strategy with local customization to capture users. For example - [Local flavor] Using a button called "Yallah" instead of "Go" - [Local Knowledge] Pre-coding airport pickup locations (unlike Uber which had you try and figure it out directly with drivers, who often did n…

It would be great if Uber accepted plus codes (https://plus.codes/) when setting a destination.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#37

Post by dmode » Mon, Mar 25, 2019, 5:46 AM UTC

googlemike wrote: post #19

emilsedgh wrote: post #2

How much capital does Uber have left? My understanding was that they only had a few billion dollars left and were burning > 1B a quarter. And they are still not profitable right? On what basis exactly are they going to IPO? What's the angle for buying shares of a company that is losing so much money?

$50b in revenue last year is nothing to scoff at. They have levers for profit but instead re-invest every dollar. Your argument sounds exactly like what people said about Amazon years ago.

$50bn is total bookings, which is impressive. Revenue, I believe is $11bn runrate. But that doesn’t address cash flow depletion. I do believe they have runway though

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#38

Post by kinkrtyavimoodh » Mon, Mar 25, 2019, 6:07 AM UTC

TuringNYC wrote: post #35

deogeo wrote: post #29

Earlier quoted context omitted.

It's interesting how little of this strategy involves providing a better service. But I don't think they're alone or even special from this perspective (e.g. similar to the rise of Microsoft). I think the prevalence of "business strategy", as opposed to product/service improvement, in the growth of corporations, warrants much more scrutiny than it gets. After all, corporations should serve society - how do strategic…

Good for Uber, but I'm disappointed as a customer. I did extensive travel overseas in Qatar and the Careem app was excellent. They had a clear local strategy with local customization to capture users. For example - [Local flavor] Using a button called "Yallah" instead of "Go" - [Local Knowledge] Pre-coding airport pickup locations (unlike Uber which had you try and figure it out directly with drivers, who often did n…

> Pre-coding airport pickup locations.

Uber does this in many countries. Perhaps not yet in Qatar.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#39

Post by aorth » Mon, Mar 25, 2019, 6:49 AM UTC

TuringNYC wrote: post #35

deogeo wrote: post #29

Earlier quoted context omitted.

It's interesting how little of this strategy involves providing a better service. But I don't think they're alone or even special from this perspective (e.g. similar to the rise of Microsoft). I think the prevalence of "business strategy", as opposed to product/service improvement, in the growth of corporations, warrants much more scrutiny than it gets. After all, corporations should serve society - how do strategic…

Good for Uber, but I'm disappointed as a customer. I did extensive travel overseas in Qatar and the Careem app was excellent. They had a clear local strategy with local customization to capture users. For example - [Local flavor] Using a button called "Yallah" instead of "Go" - [Local Knowledge] Pre-coding airport pickup locations (unlike Uber which had you try and figure it out directly with drivers, who often did n…

In Jordan the Uber cars I've used are always cleaner than Careems. The Careem app also used to send me annoying notifications about deals.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#40

Post by m3h » Mon, Mar 25, 2019, 6:57 AM UTC

As an end user of Careem, I'm waiting for the impending doom of price increase and bad service.

Uber and Careem are the only two service providers in my country (Pakistan); before Uber entered, the prices were quite high because Careem had no competition and they cashed in their monopoly. Uber entered the market and caused a price war driving prices per km down significantly and causing both providers to add new features to cater for the local market as well. However, Uber is usually thought to have a low quality of service here; drivers on their network quite literally abuse the platform; they will refuse to drive to the destination if they don't want to go there; they will use tactics to get the ride transferred from them if it's not profitable enough for them. The end result is that the customer receives a slightly cheaper but vastly inferior service from Uber. Compared to this, Careem's quality assurance and customer care is a winner.

With Uber buying Careem and eliminating competition, I can't imagine how much pain it is going to be to call a ride now, if they absorb Careem's customer-base completely and close its app. I thought there were anti-competition laws that prevented this from happening; I guess they don't apply if both the companies are foreign and the deal is happening overseas.