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Can Uber ever make money?

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Re: Can Uber ever make money?

#131

Post by jandrese »

benj111 wrote: post #107
jandrese wrote: post #40

Earlier quoted context omitted.

This is the conundrum of creating a better marketplace. An optimal market has 0 profit opportunities. In order to make money the market must be flawed in some way. Luckily in the real world perfect markets don't exist, but in certain sectors technology has made life difficult for people who had previously had a solid reliable income with the old inefficient system.

"An optimal market has 0 profit opportunities" That doesn't quite right to me. A market with the smallest profit opportunity of a selection (say worse that government bonds) wouldn't see investment to correct that inefficiency. Zero may be 'best' case, practically speaking though no one's going to arbitrage an opportunity, that's less than the opportunity cost. So it seems to me the optimal market would a profit oppo…

In a perfect market the profit opportunity asymptotically approaches 0.

But a perfect market is a mathematical model, not something that you would see in real life. As you note some entrant is not going to jump into a market and undercut the competition by 1 cent (from 2 cents) and immediately capture all of the market share.

But this does illustrate the dangers of making a more efficient marketplace if your goal is to make profit.

Re: Can Uber ever make money?

#132

Post by matchagaucho »

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…

This is really just about the dynamics of mobile hailing and logistics.

Of course it's cheaper than actually calling a Taxi dispatcher, verbally providing a pickup location, and paying cash.

But how much cheaper?

Uber, Lyft, Grab and others are in the business of figuring out those margins... and riders will pay rate increases as supply and demand equalizes.

Re: Can Uber ever make money?

#133

Post by jv22222 »

misiti3780 wrote: post #122
jv22222 wrote: post #108

Earlier quoted context omitted.

> with huge barriers to entry that requires a ton of money to get started Just a note that the proof of concept stage was very cheaply done. Travis hired someone to make an app and the "dispatch" system was just a single php page. He then tested it out with his friends. That said, I agree that ultimately to get to the position they are today required a ton of cash - just the getting started was pretty cheap. Actually…

I just spent 10 minutes looking for it and couldnt find it.

Well as I said above it's not one episode it's a lot of them. But actually I just searched and this is the first time that Uber was mentioned in the show notes:

http://techzinglive.com/page/581/95-tz-discussion-lost-in-la

So looks like 95+

Re: Can Uber ever make money?

#134

Post by mlindner »

jandrese wrote: post #40
harryh wrote: post #31

Earlier quoted context omitted.

I can imagine that running a taxi company might be a lot like running an airline (a notoriously money losing business). Four out of five of Porter's five forces are working against you: - relatively easy for new entrants to enter the market - lots of consumer substitutes - lots of customer buying power - lots of competition

This is the conundrum of creating a better marketplace. An optimal market has 0 profit opportunities. In order to make money the market must be flawed in some way. Luckily in the real world perfect markets don't exist, but in certain sectors technology has made life difficult for people who had previously had a solid reliable income with the old inefficient system.

That's rediculous. If a market with 0 profit opportunities exists them time is frozen and all future innovation is impossible. It means that every possible inefficiency of every single person working has been removed. Humans are never perfect beings, and usually far from it, so there is always opportunity for more efficiency. Also the goalpoint is constantly moving as more technology is created to replace older ideas.

If we ever reach a so called "optimal market" as you describe it then GDP growth will also stop, as will personal income growth and all manner of things..

Re: Can Uber ever make money?

#135

Post by cc439 »

joncrane wrote: post #105
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…

Don't forget the other group of people who benefit: the users of the app.

How much of that benefit is purely short-term though? In a hypothetical world where Uber and Lyft's current pathway to profitability never pans out, what are the ramifications. The most obvious one is that their fares will increase by 25-50% depending on the market, pricing them well above the legacy taxi services that existed before the arrival of these VC-backed companies. The second most obvious ramification is that many of those legacy taxi services have been run entirely out of business in smaller markets. My home county of 1m+ people is now down to 1 shady taxi service with a handful of ancient, beat up Crown Vics (last produced in 2011) and they only hang on due to the incredibly low standards for taxi regulation in our region. If Uber and Lyft fail or become far less useful due to cost increases, there are significant barriers to entry for a new, clean, and professional taxi service to enter the market as they don't get to play by VC rules and have to start a highly capital intensive (for a small business) operation by conventional rules while only being able to attract a customer base entirely through conventional means of marketing, and all at a very small cost advantage versus the ride sharing giants.

Re: Can Uber ever make money?

#136

Post by cbhl »

rubicon33 wrote: post #97
Skunkleton wrote: post #79

Earlier quoted context omitted.

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

Call me a snob, but Uber's criteria for what qualifies as an acceptable car has dramatically declined to the point where even Taxis are sometimes "nicer". Combine that with the fact that the drivers often don't know the neighborhood and rely exclusively on GPS (so tend to be worse drivers than a taxi). I'm left feeling like the fare - strictly from the perspective of a consumer - is actually too high.

What are your thoughts on Uber Select / Uber Black / Lyft Lux / Lyft Lux Black?

Re: Can Uber ever make money?

#137

Post by basementcat »

habosa wrote: post #127

I want to talk to someone who has invested in Lyft (or plans to do so for Uber) through the public markets and is in it for a long-term buy and hold. Like someone who really thinks the share price represents the net present value of all future cash streams for Lyft/Uber. I think I'd have a hard time finding someone like this. You don't have to believe the company will make money, you just have to believe you can sell…

> You don't have to believe the company will make money, you just have to believe you can sell your piece of the company to the next guy for more.

This is why people invest in gold and dogecoins.

Re: Can Uber ever make money?

#138

Post by kickopotomus »

prolepunk wrote: post #18
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…

If self-driving technology is mature enough to be used and there are several implementations to choose from, what stops care manufacturers to go after that market directly and undercutting everyone else? * They have industrial facilities to build cars * They have dealership networks to repair cars * They have capital or can borrow easily to do it I can even argue that all that stops car manufacturers from operating t…

As a sibling comment noted, that is Telsa's plan. I believe GM is wanting to do something similar with Cruise.

However, I feel that both of those companies are still way behind Waymo in terms of R&D. Personally, I think that Waymo is the one to watch. If they get their first, they already have the ride hailing infrastructure/user network in place (Google Maps) and may even license the tech out to auto manufacturers.

Re: Can Uber ever make money?

#139

Post by EpicEng »

anthonypasq wrote: post #100
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 reality is that a VC-backed company can simply outprice any competitor this assumes bad ideas get enough vc funding to do what uber is doing. they dont.

Elizabeth Holmes would like to have a word

Re: Can Uber ever make money?

#140

Post by [deleted] »

matchagaucho wrote: post #132
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…

This is really just about the dynamics of mobile hailing and logistics. Of course it's cheaper than actually calling a Taxi dispatcher, verbally providing a pickup location, and paying cash. But how much cheaper? Uber, Lyft, Grab and others are in the business of figuring out those margins... and riders will pay rate increases as supply and demand equalizes.

[deleted]
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