In Search of Uber’s Unicorn • Hacker News Board

Re: In Search of Uber’s Unicorn

#41

Post by arjie » Tue, Oct 28, 2014, 9:38 PM UTC

jordanpg wrote: post #12

JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network ef…

But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor. If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not…

Not sure about this. I would have taken public transit more often before. At UberX's price point, I ask for a ride more often than before.

Re: In Search of Uber’s Unicorn

#42

Post by kilroy123 » Tue, Oct 28, 2014, 9:39 PM UTC

2pasc wrote: post #38

pshin45 wrote: post #20

This is not based on any kind of deep analysis whatsoever, but I'm starting to get the same vibe from Uber as I got from Groupon several years ago. Groupon's promise to local business owners was that offering a Groupon deal was an easy way to attract new long-term customers en masse, despite the sizable up-front loss. History showed that that did not happen for many businesses who used Groupon. Similarly, so much of…

Quite honestly - do you believe that making more than $50,000 per year for a HS grad is a bad thing? I am not saying that they should not make more, but for most non college educated individuals - $50,000 is above US average income. Uber may have shady tactics, and might be deceiving drivers - that's true. But the reality is that the opportunities they are giving drivers are not insignificant. Unfortunately - these d…

How are drivers making $50,000? According to the article it's more like ~$12 an hour. Working full-time, 40 hours a week, that's only ~25k. 12 * 2048 = $24,576

Re: In Search of Uber’s Unicorn

#43

Post by avani » Tue, Oct 28, 2014, 9:40 PM UTC

xorcist wrote: post #35

cissou wrote: post #28

Earlier quoted context omitted.

That's the amazing thing about Uber: it does increase demand. By making it easier and simpler to ask for a cab, and actually providing an enjoyable experience in a market where expectations are very low, they managed to attract people who didn't really "need a ride" before.

This does come up in every thread that touches Uber, posted from different accounts. But do you have any idea if this is actually the case? It sounds a bit implausible that measurably more people would suddently get a burning desire to call a cab just because the app is so cool. Numbers, or any facts at all, could certainly help make your case.

Even if the only difference between Uber and taxis was that Uber seamlessly takes credit cards, that's enough to increase demand vs. walking / public transit for the growing population that doesn't carry cash. Add in that an uber is much more likely to show up when called than a taxi, and all of a sudden it seems worthwhile compared to an airport shuttle or wheedling a ride from a friend. Finally, knowing you can get home after a late night without relying on the uncertainty of the taxi system may make you more likely to go out in the first place, again, increasing demand.

Re: In Search of Uber’s Unicorn

#44

Post by 2pasc » Tue, Oct 28, 2014, 9:40 PM UTC

pshin45 wrote: post #20

This is not based on any kind of deep analysis whatsoever, but I'm starting to get the same vibe from Uber as I got from Groupon several years ago. Groupon's promise to local business owners was that offering a Groupon deal was an easy way to attract new long-term customers en masse, despite the sizable up-front loss. History showed that that did not happen for many businesses who used Groupon. Similarly, so much of…

Quite honestly - do you believe that making more than $50,000 per year for a HS grad is a bad thing? I am not saying that they should not make more, but for most non college educated individuals - $50,000 is above US average income. Uber may have shady tactics, and might be deceiving drivers - that's true. But the reality is that the opportunities they are giving drivers are not insignificant. Unfortunately - these drivers are paying with their wages the price of a market equilibrium that has not been found yet in terms of finding the right pricing model to match supply and demand. This is the problem that has existed in all major Internet marketplaces where you deal with people's businesses - with eBay, Uber, Amazon, oDesk, etc....

Re: In Search of Uber’s Unicorn

#45

Post by ForHackernews » Tue, Oct 28, 2014, 9:40 PM UTC

SilasX wrote: post #34

ForHackernews wrote: post #22

Earlier quoted context omitted.

I think you're misunderstanding what "network effects" means. A product or service benefits from the network effect when it becomes more useful the more users it has. For example, a telephone by itself is completely worthless. A telephone when all your friends also have telephones is great. Uber doesn't benefit from this effect in any meaningful way. If my friends all use Uber, that doesn't make Uber inherently more…

>Uber doesn't benefit from this effect in any meaningful way. If my friends all use Uber, that doesn't make Uber inherently more useful to me than Lyft (or a cab). Its utility is totally divorced from the number of other people using it. True for the general model, but IIRC they're adding (or have added) features that do exploit network effects: - The fare-splitting feature [1] gets more useful as more of your friend…

Those are much better examples of where network effects would come into play.

Re: In Search of Uber’s Unicorn

#46

Post by 7Figures2Commas » Tue, Oct 28, 2014, 9:44 PM UTC

pshin45 wrote: post #20

This is not based on any kind of deep analysis whatsoever, but I'm starting to get the same vibe from Uber as I got from Groupon several years ago. Groupon's promise to local business owners was that offering a Groupon deal was an easy way to attract new long-term customers en masse, despite the sizable up-front loss. History showed that that did not happen for many businesses who used Groupon. Similarly, so much of…

A key difference between Uber and Groupon is that with Groupon, unhappy business owners simply ceased their dealings with Groupon. With Uber, unhappy drivers may be able to inflict far more damage beyond quitting or jumping ship.

Most threatening to Uber's long-term viability are putative class action lawsuits, such as one alleging that drivers were misclassified as independent contractors[1]. If Uber is forced to reclassify its drivers, it could literally upend the economics of Uber's business overnight.

Because of the legal and regulatory challenges it faces, I think Uber is actually in a far riskier position than Groupon ever was and Uber's valuation seems to indicate that investors have too significantly discounted these risks. At this point, I actually think Uber might for some investors prove to be a binary investment. That wasn't even the case with Groupon, which still has a $4 billion valuation despite its decline.

[1] http://uberlawsuit.com/

Re: In Search of Uber’s Unicorn

#47

Post by jessejhernandez » Tue, Oct 28, 2014, 9:48 PM UTC

Really cool article I found it pretty informative. I think the Uber/On-Demand Taxi Service was a revolutionary idea but the question is how successful will it be in the long term, and how much power does uber truly have over controlling the price? I think they've taken a risky route and may be susceptible to failure without some type of change.

Re: In Search of Uber’s Unicorn

#48

Post by wilbo » Tue, Oct 28, 2014, 9:53 PM UTC

xorcist wrote: post #35

cissou wrote: post #28

Earlier quoted context omitted.

That's the amazing thing about Uber: it does increase demand. By making it easier and simpler to ask for a cab, and actually providing an enjoyable experience in a market where expectations are very low, they managed to attract people who didn't really "need a ride" before.

This does come up in every thread that touches Uber, posted from different accounts. But do you have any idea if this is actually the case? It sounds a bit implausible that measurably more people would suddently get a burning desire to call a cab just because the app is so cool. Numbers, or any facts at all, could certainly help make your case.

Just an anecdote, I sold my car after moving to Seattle because public transit + bike, Uber, Lyft, and Flywheel (yes, normal taxi) + Car2Go + car rentals, was cheaper than owning (including opportunity cost), storing, and paying insurance on my car.

I started using Uber and Lyft a few months after selling my car. Flywheel was a good enough and cheap enough alternative for my needs.

I highly doubt more people are calling cabs based on the technology, but I would definitely believe fewer people are buying cars (or people are selling cars) because alternatives are easy and plentiful.

Re: In Search of Uber’s Unicorn

#49

Post by jessejhernandez » Tue, Oct 28, 2014, 9:54 PM UTC

pshin45 wrote: post #20

This is not based on any kind of deep analysis whatsoever, but I'm starting to get the same vibe from Uber as I got from Groupon several years ago. Groupon's promise to local business owners was that offering a Groupon deal was an easy way to attract new long-term customers en masse, despite the sizable up-front loss. History showed that that did not happen for many businesses who used Groupon. Similarly, so much of…

Really good points, I feel the same exact way towards Uber. I think if they don't change something they will inevitably fail.

Re: In Search of Uber’s Unicorn

#50

Post by aetherson » Tue, Oct 28, 2014, 10:05 PM UTC

mchusma wrote: post #31

JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network ef…

Driverless cars is exactly the play. Once driverless cars arrive, their margins will jump from 20% to something like 50-80% overnight.

If they started to have a 50-80% unit margin, why wouldn't people compete with them? Why wouldn't, say, Amazon compete with them? It doesn't sound like a tough business to get into for Amazon -- just buy a bunch of driverless cars. And Amazon excels at competing at close to 0% margins -- why would we imagine that Uber would be successful at competing against Amazon in this scenario?