Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion • Hacker News Board

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#21

Post by jcampbell1 » Thu, Dec 04, 2014, 6:08 PM UTC

untog wrote: post #14

Investment rounds like this worry me - Uber is already doing fine, and making money. An injection of cash like this will help them expand to new markets (fine) and also absolutely flatten competition in existing markets (bad). They could drop the price of Uber X (again) but absorb the cost to drivers, edging Lyft out of the market. As long as they beat Lyft before the investment cash runs out, they win the market and…

This business is a natural monopoly, which is exactly what the VCs understand. There won't be competition, because whoever has the most customers can offer the best prices to customers, and the most earnings to drivers. The winner can suffocate the competition.

It's basic game theory, if I run an operation that does 10,000 rides a day, and my competitor does 5000 rides per day, I can tweak prices and wait times such that the competing service is strictly inferior for both drivers and passengers.

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#22

Post by SyncTheory13 » Thu, Dec 04, 2014, 6:10 PM UTC

jliwjoi3wqd wrote: post #11

Hey look, the cancer is spreading. Though, I'm sure that the people here will justify Uber's merely superficial bad behavior. After all, silicon valley can do no evil, and accumulating profit at all costs is the best way to advance human society, right? Stay classy HN.

I will never use an Uber car due to the activities they have been caught participating in. Everybody around me knows that I have intense dislike for them and recommend Lyft instead.

However, I feel like your comment is unfair in attacking HN - Most of what I've read against Uber has come from this site.

Either way, I was very disappointed to see today's news.

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#23

Post by ProAm » Thu, Dec 04, 2014, 6:10 PM UTC

toomuchtodo wrote: post #15

dr_ wrote: post #12

Earlier quoted context omitted.

The rides are not really cheap. At best, in nyc, uber x is advertised to be cheaper than a taxi but that is really not always the case.

Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

> why is the cost the same as a taxi paying that expense

Uber is trying to maximize their revenue

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#24

Post by prostoalex » Thu, Dec 04, 2014, 6:16 PM UTC

jcampbell1 wrote: post #21

untog wrote: post #14

Investment rounds like this worry me - Uber is already doing fine, and making money. An injection of cash like this will help them expand to new markets (fine) and also absolutely flatten competition in existing markets (bad). They could drop the price of Uber X (again) but absorb the cost to drivers, edging Lyft out of the market. As long as they beat Lyft before the investment cash runs out, they win the market and…

This business is a natural monopoly, which is exactly what the VCs understand. There won't be competition, because whoever has the most customers can offer the best prices to customers, and the most earnings to drivers. The winner can suffocate the competition. It's basic game theory, if I run an operation that does 10,000 rides a day, and my competitor does 5000 rides per day, I can tweak prices and wait times such…

On-demand business maybe. But pre-arranged car service business (where majority of transactions is airport pick-ups/drop-offs) is very fragmented, and Uber is just another player there.

If you don't need on-demand availability, Blacklane.com or Limos.com are consistently cheaper than Uber Black.

And if you are okay with waiting for maybe an hour or so, Sidecar is usually a better deal for longer distances.

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#25

Post by [deleted] » Thu, Dec 04, 2014, 6:16 PM UTC

toomuchtodo wrote: post #15

dr_ wrote: post #12

Earlier quoted context omitted.

The rides are not really cheap. At best, in nyc, uber x is advertised to be cheaper than a taxi but that is really not always the case.

Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

[deleted]

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#26

Post by DigitalSea » Thu, Dec 04, 2014, 6:18 PM UTC

Umbrellas at the ready, the mess is going to be big when this bubble eventually bursts. Sure, I see the value of services like Uber, but there are so many ridesharing services in the market offering a decent product, Lyft arguably has a better app. While I don't doubt its usefulness, I don't think Uber is worth $40b. Especially considering it was only valued at roughly $17b in the summer which was what, like 6 months ago? A $23b jump in value in six months, seems kind of unrealistic to me, but that's how it works in tech.

I don't want to see Uber fail, because I hate catching taxis, but I think there needs to be a serious reality check here. The business model that Uber runs upon is still relatively unregulated & fragile, and as shown in Vancouver, cities and Governments have the power to easily drive out services like Uber. Not to mention the pressure from taxi lobbyists.

I don't want to see Uber become a monopoly, but this cash injection can only mean that Uber will aggressively attempt to drive out its competitors therefore becoming a monopoly and in the process, a splitting image of the broken taxi industry they are trying to disrupt. As history has shown, when you have next to no competition, you stop innovating. Lets just see how this plays out.

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#27

Post by maxmcd » Thu, Dec 04, 2014, 6:19 PM UTC

ProAm wrote: post #23

toomuchtodo wrote: post #15

Earlier quoted context omitted.

Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

> why is the cost the same as a taxi paying that expense Uber is trying to maximize their revenue

Why would they do that? They have competition, even if it doesn't seem so obvious right now, and a larger percentage of nyc's cab market share seems much more valuable. Especially if it's so easy for them to raise money.

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#28

Post by smeyer » Thu, Dec 04, 2014, 6:21 PM UTC

[deleted] wrote: post #25

toomuchtodo wrote: post #15

Earlier quoted context omitted.

Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

[deleted]

I don't remember the exact numbers, but I think renting a medallion for a year in New York is going to cost you several tens of thousands of dollars a year. With medallions costing 800k, it doesn't really matter whether you're renting by the shift or paying interest on a loan used to purchase the medallion, it's going to be a significant expense.

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#29

Post by potatolicious » Thu, Dec 04, 2014, 6:21 PM UTC

toomuchtodo wrote: post #15

dr_ wrote: post #12

Earlier quoted context omitted.

The rides are not really cheap. At best, in nyc, uber x is advertised to be cheaper than a taxi but that is really not always the case.

Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

Because it turns out the medallion cost is only a small part of the operating cost of a cab.

"TLC’s medallions held by fleet owners, who collect rent of up to $132 a shift from drivers"[1]

NYC cabs run on 2 12-hour shifts a day. This works out to ~$13/hr to pay for the medallion itself. This isn't nothing, but ultimately the cost of the car, gas, insurance, etc, are still the dominant factors in operating a cab.

So yeah, theoretically without the medallion cost Ubers can be cheaper than a regular taxi, but probably not by all that much.

[1] http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/

Re: Uber Confirms New $1.2B Funding Round, Looks to Asia for Expansion

#30

Post by smeyer » Thu, Dec 04, 2014, 6:23 PM UTC

ryanhuff wrote: post #16

applecore wrote: post #2

It's a popular meme in tech journalism that Uber is "under attack" for its nefarious business practices, but how much has this sense pervaded outside the tech bubble?

Its bubbled up to the New York Times. Otherwise, if fails my "mom test", so its still a niche service IMO.

What's your "mom test"? My (mid-60s) mother uses Uber, as do some of my middle-aged friends, even if it's far less popular there than it is among my friends in their 20s.