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

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

#31

Post by jhonovich »

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…

Presuming you can block your drivers from working for rival services simultaneuosly.

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

#32

Post by Nursie »

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?

Uber take quite a big cut don't they?

It's why I find it hard to helieve they can out-compete in cities where there's already an open market (medallions seem to be a weird US thing?)

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

#33

Post by ChuckMcM »

DigitalSea wrote: post #26

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…

If I may make the counter argument here, nobody except perhaps the odds makers in the bay area, are going to note or care if Sequoia Ventures loses all of its investment in Uber, or if Menlo does, or if KP does. It will show up on CNBC as "Well its been a bad year for Venture Capital firms, probably not going to host lavish parties..." but for most people who don't work at a company that goes 'poof' because it ran out of money and couldn't raise more, its really a non issue.

For bubbles to really be bubbles they need broad participation, and VC funding really is limited in how many people can participate.

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

#34

Post by ryanhuff »

smeyer wrote: post #30
ryanhuff wrote: post #16

Earlier quoted context omitted.

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.

My mom doesn't really know what it is. Mind you, she lives in suburbia and has her own car.

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

#35

Post by morganvachon »

DigitalSea wrote: post #26

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…

> I don't want to see Uber fail, because I hate catching taxis

I want to see Uber in particular fail because of their horrible treatment of drivers, spying on (and publicly shaming the habits of) their riders, threatening journalists over negative press, and because of their shady business practices in general.

I want to see ridesharing as a service succeed, as I think it is the future of taxi service. But I want Uber to either go away completely, or else reorganize as a positive, beneficial company instead of a cancer with douchebags at the helm.

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

#36

Post by prostoalex »

toomuchtodo wrote: post #8
austenallred wrote: post #4

Wow. $40 Billion valuation, hiring 1 million people in the coming year, opening new sites at the rate of almost 1/day. Neither Travis Kalanick or any current senior execs sold any stock in the current round. Uber will either be the biggest boom or bust story there's been in quite some time. This will be fun to watch.

Have any of the released Uber decks show when profitability is expected and what their run rate is? Curious how long VC money can fund cheap rides for.

The cheap rides are passed on to the drivers, which some of them are not too happy about http://losangeles.cbslocal.com/2014/09/02/uber-defends-slash..., Uber still takes a cut off the transaction.

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

#37

Post by look_lookatme »

dr_ wrote: post #12
toomuchtodo wrote: post #8

Earlier quoted context omitted.

Have any of the released Uber decks show when profitability is expected and what their run rate is? Curious how long VC money can fund cheap rides for.

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.

UberX pricing feels comparable, on average, to Yellow/Green Cabs for me, in Brooklyn. Sometimes it might be more expensive, sometimes less, but it mostly around the same. I take Uber probably 5-8 times a week.

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

#38

Post by ChuckMcM »

The more interesting bit for me is that a lot of smaller players are also getting traction (GrabTaxi, Lyft, etc) so what that says to me is that folks have decided that this will be the new way rides are done and are trying to get in on that shift. It seems that a lot of the existing cab companies are private so there isn't an easy way to short their stock to double down on the bet.

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

#39

Post by untog »

jhonovich wrote: post #31
jcampbell1 wrote: post #21

Earlier quoted context omitted.

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…

Presuming you can block your drivers from working for rival services simultaneuosly.

Hardly difficult. Once you have a monopoly position you just add a clause to the terms and conditions that you may only use Uber if it's the only service you're signed into at the time.

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

#40

Post by icebraining »

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…

By that logic, all businesses with economies of scale are "natural monopolies". That's nonsense, because it assumes that everything else (particularly income per ride and cost per ride) are the same, or at least that they can be the same at a whim.

And in practice, we see smaller companies competing successfully with larger ones all the time.

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