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Is the Ride over for Uber?

smartcompany.com.au

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Re: Is the Ride over for Uber?

#11

Post by Jistern »

aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

You are missing something important. Uber is like a bit like Walmart or Costco. They all enjoy economies of scale; Uber simply has bad management.

Re: Is the Ride over for Uber?

#12

Post by bamboozled »

aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

Which wouldn't have been a problem if they hadn't spent such an obscene amount of money building it?

If it was a small team of good engineers, designers humbly building a product, then keeping it attractive to investment would've been a lot easier.

Now as you said, there's so much competition, it's not really sustainable at it's current size.

Re: Is the Ride over for Uber?

#13

Post by aetherson »

quickthrower2 wrote: post #8
prophesi wrote: post #5

Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon. So this isn't too surprising, and also the status quo for most startups to burn investor cash ad-infinitum until they reach the theoretical gold at the end of the rainbow.

Well they are not the mafia. If Uber has a monopoly, and wants to charge me $50 instead of $10 to get to the city centre, I won't go, or find another (non-ride-sharing) way to get there. I might go 1 in 100 times of course because of urgency. But then regular cabs are still a thing too. This is the problem with being the middleman in a low margin world. I don't want to pay a fortune to get somewhere, and the driver h…

Yeah, this was somewhat obscured in Uber's early days when the US unemployment rate was 7-9%, and it was easier to get drivers. But even then, it really only worked because drivers were paid more than passengers paid, with VCs picking up the difference.

In today's low-unemployment-rate world, there's pressure to pay drivers more and VCs aren't going to pick up the costs, so... it's expensive.

Re: Is the Ride over for Uber?

#14

Post by aetherson »

Jistern wrote: post #11
aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

You are missing something important. Uber is like a bit like Walmart or Costco. They all enjoy economies of scale; Uber simply has bad management.

I'm really not.

"Economies of scale" isn't a magical spell. There has to be a function by which a large companies turns its scale into an economy. Walmart and Costco both negotiate much more attractive deals with their suppliers than their competitors can, because they can place larger orders with those suppliers, due to their scale. Because Uber connects one rider with one driver (or one meal-eater with one driver for Eats), its ability to create a useful economy of scale is sharply limited.

Uber has some mild advantages against an up-and-coming rival in terms of constancy of demand, but since drivers will happily turn on multiple gig services at a time, that's not a very big deal for it. Things like Uber Pool are an attempt to turn its scale into an economy, but (predictably) not enough people actually want a ride service that puts them in close proximity with strangers and also takes a vastly unknown amount of time to finish the ride to make Uber Pool a major differentiator. Things like Uber's car loans problem comes face to face with the fact that there it's competing against other, larger entities that have better scale (like, you know, actual banks).

Re: Is the Ride over for Uber?

#15

Post by RL_Quine »

Jistern wrote: post #11
aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

You are missing something important. Uber is like a bit like Walmart or Costco. They all enjoy economies of scale; Uber simply has bad management.

What economies of scale? Their primary expenses, workers, are fixed cost.

Re: Is the Ride over for Uber?

#16

Post by michaelt »

Jistern wrote: post #11
aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

You are missing something important. Uber is like a bit like Walmart or Costco. They all enjoy economies of scale; Uber simply has bad management.

I'm not sure I agree.

I mean, it's not like Uber is buying cars in bulk at a discount smaller operators can't match, or anything like that.

And it's not like they're running a lean technology operation, with just 50 engineers globally, to get economies of scale on tech expenses.

The only economies of scale Uber has on their side is marketing.

Re: Is the Ride over for Uber?

#17

Post by nvilletraveller »

flatline wrote: post #6

I was on work travel last week. No Uber from the airport - three cancelations then I caught a Lyft. It was over $500 for a 50 mi ride to a neighboring city which I was mostly looking at out of curiosity. My friend was recently held up (well, attempted) by an Uber driver in Nashville who had canceled last second so he could not even find who the driver was to file a complaint. It seems like the former gap in user expe…

In the case of the carjacking, there are records for this driver.

Though on that note, I had a driver acting sketchy in Nashville last week exhibiting similar behavior though no one attempted a mugging. I wonder…

Re: Is the Ride over for Uber?

#18

Post by sshine »

prophesi wrote: post #5

Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon. So this isn't too surprising, and also the status quo for most startups to burn investor cash ad-infinitum until they reach the theoretical gold at the end of the rainbow.

> if they can achieve a global monopoly to charge their own prices

Since they're banned in several countries, good luck to them.

Re: Is the Ride over for Uber?

#19

Post by addicted »

aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

Let’s say there was just 1 delivery service.

Could they charge enough delivery fees to actually build a sustainable business?

How much fees would you need to charge? $4/delivery means having to make a delivery in 15 mins to be able to pay the delivery person minimum wage. Plus Uber’s profit, plus the cost of the car and maintenance expenses + tickets, accidents, etc,

It’s hard to see how a monopoly can also make money, without charging so much that people would rather pick up and restaurants would rather offer their own delivery.

Re: Is the Ride over for Uber?

#20

Post by seanmcdirmid »

aetherson wrote: post #9

The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented…

Food delivery also isn’t very practical in developed country markets without a huge increase in productivity vs labor costs. It’s just too expensive compared to a country like China where it is cheap enough to be ubiquitous.

Automation could be disruptive here…someday in the form of food delivery land and/or air drones. It really is the same with ride share: it just isn’t economical considering how much human labor is worth, self driving vehicles are more than likely required to make it economical enough to be ubiquitous.

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