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Can Uber ever make money?

economist.com

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Re: Can Uber ever make money?

#71

Post by hannasanarion »

massung wrote: post #63
govg wrote: post #17

I can only see them making money in three ways : - They scale up massively and capture a huge fraction of the ride sharing market, thus allowing them to offer low cost / low margin rides, but making up for it by volumes : At least in India, they are in a good position, but they seem to have conceded the other markets with high potential for growth like SE Asia and China. - They have a premium offering that is actuall…

Option 4: sell your ride data to a 3rd party. Knowing who you are, where you travel to, what's around those areas. They - or a 3rd party - could advertise what's in the area you were taken to, track where you frequent and recommend riding to places you haven't been to in a while showing you what's "new" in those areas, etc. I don't Uber (and have only used Lyft once), so maybe they already do this or are planning to.

I can't imagine there's that much data to sell. I don't think a lot of people use uber on a daily basis, the takeaways are gonna be "people travel to and from airports close to them".

Re: Can Uber ever make money?

#72

Post by hi5eyes »

dcolkitt wrote: post #32
govg wrote: post #17

I can only see them making money in three ways : - They scale up massively and capture a huge fraction of the ride sharing market, thus allowing them to offer low cost / low margin rides, but making up for it by volumes : At least in India, they are in a good position, but they seem to have conceded the other markets with high potential for growth like SE Asia and China. - They have a premium offering that is actuall…

Option 4: Uber uses the expertise, infrastructure, and brand it built in ridesharing to expand into the becoming the de facto standard for timely last mile delivery. This is why UberEats is such a major strategic focus for the company. It's proof of concept that they can do more than be a taxi. An efficient platform for quickly and cheaply ferrying around stuff around town is a way bigger market than ridesharing. We'…

option 4 is closer to the full scope of the company. uber has positioned to be more than simply a taxi company and a strong logistics competitor

Re: Can Uber ever make money?

#73

Post by amelius »

tjpaudio wrote: post #57
amelius wrote: post #41

Earlier quoted context omitted.

Patents are not valid indefinitely. Given the ridiculous amounts of money thrown at this, patents will probably expire long before the break-even point is met. Besides patents, Uber has no way to bind customers. Yes, it's a commodity business, and I see no way around it. Users can simply use a different and cheaper car, which will inevitably exist and become popular.

Both rideshares subsidize about half of what they pay drivers, but their deficit is not nearly half of their total revenue. Take out the drivers, profit tomorrow. Patent good for 20 years. That's about as juicy as it ever gets.

The patent may last for 20 years, but that might also be the time required to develop driverless cars and get them approved.

Re: Can Uber ever make money?

#74

Post by rchaud »

Looking at Uber, WeWork, JustEat etc., I get the feeling there's a growing gap between what we were brought up to believe about entrepreneurship and innovation vs. what the reality is.

We're all familiar with the '>50% of small businesses fail' stat (not the real number) and that we should be toiling and not taking a salary for years until we break even, i.e. reach a point where we're no longer losing money on every project/sale. If you aren't able to achieve this, your pricing, product-market fit, etc. have failed, because the all-knowing, all-equilibrium-izing market has spoken.

Every politician out there shows reverence for the 'small businessperson' taking risks and bringing jobs and tax revenue into their communities. But once in office, the people they meet with are Travis Kalachian and others, people who cannot make a profit, but are excellent at convincing rich investors that they should make Travis a millionaire.

The reality is that a VC-backed company can simply outprice any competitor, and if it's not enough, can lobby city hall to change the laws to favour them. And this cash spigot can stay on for years, as long as you can show you're gaining customers every quarter. If you're a big enough play, you can move your whole HQ to a low-tax friendly country and administer local operations from there.

The jobs that are created by this are right around minimum-wage level, so how is this supposed to create wealth for anybody except the shareholders who got in early with cheap valuations?

Re: Can Uber ever make money?

#75

Post by slfnflctd »

kiran-rao wrote: post #13
rat9988 wrote: post #8

Earlier quoted context omitted.

If uber drivers make enough to make their cars a worthwile investment, then I'd assume a fleet of driverless cars are profitable.

Do Uber drivers make enough to cover complete vehicle costs? I remember reading that after total costs of ownership (depreciation, insurance, gas, maintenance, etc) Uber drivers really aren't making much.

There are so many ways to slice and dice those numbers. Drivers who already own a car they aren't going to get rid of would be paying a lot of those costs anyway (other than wear & tear and fuel). Taxes are all over the place; some pay 30%+, others nothing.

What it really comes down to is the ratio of cost of living for the driver to the amount they take home after buying gas. If I'm almost broke, want to buy more stuff than I can afford, and know I can get $100 worth of rides for $20 worth of gas in less than 2 days, the decision has already been made. As long as I have close to the same buying power, this will remain true.

It's a delicate balance, though, and when you're competing against people in more dire straits who maybe aren't as good at math, at a certain point it could become unviable.

Re: Can Uber ever make money?

#76

Post by xtian »

dcolkitt wrote: post #60
idlewords wrote: post #45

Earlier quoted context omitted.

Saying that we're going to work to dominate a low-margin sector at a staggering loss for years, so that we can enter an even lower-margin established industry and recoup our losses there, is a gutsy proposition.

Sure is. But remember, that playbook's almost exactly how Amazon became the largest company in the world.

You’re saying cloud services is lower margin than retail? I don’t think that has ever been true.

Re: Can Uber ever make money?

#77

Post by macspoofing »

perfmode wrote: post #35
tjpaudio wrote: post #34

I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are. Wall Street is not paying for a taxi company, they are betting that Uber and Lyft are the best poised to first rollout driverless ride sharing, i.e. one of them will own and monopolize patentable tech that the mass public wants to use. The existing experience…

Driverless ride sharing isn’t coming, in a meaningful way*, in the next ten years, I’m willing to bet my house on that. Meaningful such that it actually delivers monetarily

>Driverless ride sharing isn’t coming, in a meaningful way*, in the next ten years, I’m willing to bet my house on that.

You'll have to expand on 'meaningful'. I can see driverless tech being used in specific use-cases between specific locations along controlled or established routes (example, moving cargo between a seaport and the train depot).

I don't see driverless being available as a general purpose consumer vehicle that you can summon to pick up your buddy and drive back to your work.

Re: Can Uber ever make money?

#78

Post by JimboOmega »

rchaud wrote: post #74

Looking at Uber, WeWork, JustEat etc., I get the feeling there's a growing gap between what we were brought up to believe about entrepreneurship and innovation vs. what the reality is. We're all familiar with the '>50% of small businesses fail' stat (not the real number) and that we should be toiling and not taking a salary for years until we break even, i.e. reach a point where we're no longer losing money on every…

The question (with Uber in particular) is that if this business model really covers up a huge ponzi scheme.

Before the last decade (or even 5 years?) the amount of money some of these companies have been raising would have been unheard of and required an IPO.

But if you can keep finding ever bigger investors to give you ever more money...

It's a really weird reality, because typically the worst kind of place to start a company is one with huge barriers to entry that requires a ton of money to get started. Yet that seems to have done quite well recently.

Squashing minimum wage service providers seems to be merely a side effect... these companies can't really make money EVEN WHEN they ignore regulations and exploit their not-technically-employees.

Re: Can Uber ever make money?

#79

Post by Skunkleton »

parksy wrote: post #58
skywhopper wrote: post #15

There is literally no way for a mass-market taxi service to make money unless they have a monopoly, or some unexpected disruptive technology comes along that gives one company an unassailable advantage in lowering costs. The Uber app was the original innovation, but it's not particularly innovative anymore. Besides Lyft, traditional taxi companies have similar apps in some markets. Skirting regulation and good labor…

But in a way, that's the beauty of disruptive use of technology. Without the innovation of the Uber app, the traditional taxi cartels would have no incentive to improve their services and the fact that they have been forced to do so in order to compete benefits the consumer. They're not quite there yet, and are still catching up. The next logical step is a lift aggregation service that creates a marketplace. I want a…

As it stands the price you pay for a ride in an uber is unfairly low. Driving it even lower would be irresponsible.

Re: Can Uber ever make money?

#80

Post by grey-area »

skywhopper wrote: post #15

There is literally no way for a mass-market taxi service to make money unless they have a monopoly, or some unexpected disruptive technology comes along that gives one company an unassailable advantage in lowering costs. The Uber app was the original innovation, but it's not particularly innovative anymore. Besides Lyft, traditional taxi companies have similar apps in some markets. Skirting regulation and good labor…

Self-driving cars are already here (Phoenix, Arizona). That and falling electric car prices will be the key advantage.

Uber won’t be the one to benefit though, as the other companies at the cutting edge are too savvy to let them (Waymo, Tesla). It is very hard to get right and I think will give those companies an advantage for years.

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