Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017 • Hacker News Board

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#21

Post by EpicEng » Fri, Feb 16, 2018, 6:43 PM UTC

emodendroket wrote: post #5

Havoc wrote: post #2

Giving things away at <cost is good for growth and not much else.

Well, the idea is that they kill off every competing service and then can raise prices. Also that they can beat everyone else to self-driving cars and eliminate the cost of labor. Other articles on NC have called the feasibility of both of those into question.

Sounds like a terrible idea given that this would just open the door for another company to do the same to them. They don't produce anything novel which can't easily be replicated.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#22

Post by moduspol » Fri, Feb 16, 2018, 6:45 PM UTC

UncleEntity wrote: post #15

moduspol wrote: post #9

Earlier quoted context omitted.

Then apparently it is impossible to run a SaaS app connecting drivers and passengers for a ~25% cut of current prices. That seems pretty unlikely. We need to move on from this unsupportable "ride sharing pricing is unsustainable" narrative.

Unsupportable for the drivers or the company? A driver tears up their car there's a ton of people to replace them but that isn't very supportable on the individual level.

If the individual driver doesn't think they're getting paid enough, that's fine. They don't have to drive for a ride-sharing company.

But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. That means the only way VCs could be "subsidizing" the price is if the remainder of the price (the cut Uber takes) is too low, which is difficult to imagine.

We already know what's actually happening--they're spending a ton of money expanding into new geographic areas and new markets (like Uber Eats). Yet that doesn't stop every Uber discussion on HN from becoming about the bubble popping on "subsidized" ride prices.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#23

Post by sgwealti » Fri, Feb 16, 2018, 6:49 PM UTC

In the claim in the article that they're inflating top line revenue growth, is the argument that they're selling a $100 ride but giving a $20 discount and calling it $100 in top line revenue?

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#24

Post by moduspol » Fri, Feb 16, 2018, 6:49 PM UTC

emodendroket wrote: post #19

moduspol wrote: post #9

Earlier quoted context omitted.

Then apparently it is impossible to run a SaaS app connecting drivers and passengers for a ~25% cut of current prices. That seems pretty unlikely. We need to move on from this unsupportable "ride sharing pricing is unsustainable" narrative.

I don't think I follow. There's nothing impossible about running a livery service with a cell phone application for hailing, but I don't think current prices are sustainable. It is not a business with substantial economies of sale.

Well, drivers are voluntarily choosing to drive for what they're getting paid. Riders are voluntarily choosing to pay the quoted price. Uber takes a cut from the price to run the part of the business that isn't actually driving cars.

The only way the price is subsidized is if the business couldn't be run without Uber's cut covering the non-driving parts of the business, which is unlikely. They're taking ~25% (or more) on each fare. That's a huge margin for a SaaS app and administrative work.

If Uber disappeared tomorrow, it would not be that difficult for someone to build something similarly and price it the same way. In many areas, it's already happened. That suggests the price is not unsustainable.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#25

Post by hkmurakami » Fri, Feb 16, 2018, 6:51 PM UTC

Animats wrote: post #10

"Uber released new financial data this week, showing full year 2017 GAAP operating losses of $4.5 billion, and an operating margin of negative 61%." Finally, Generally Accepted Accounting Principles numbers from Uber. And they're awful. Lots of startups whine about having to produce GAAP numbers (all US public companies have to) because they can't exclude "extraordinary expenses". But GAAP numbers are real, not "earn…

How much of that $10B was secondary sales that didn't put anything into the company's coffers?

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#26

Post by albertgoeswoof » Fri, Feb 16, 2018, 6:51 PM UTC

clairity wrote: post #11

hari_seldon_ wrote: post #7

Earlier quoted context omitted.

Agreed. The dominant strategy seems to be to undercut competitors until they are driven out of business, and then you can raise prices. However, raising prices then gives opportunity for a new ride-sharing service to come in and say that they can compete by offering lower prices for a period of time...

yes, that's how capitalism is designed to work. the window in which you can make outsized profits is meant to be temporary so companies can't just rest on their laurels. it's beautiful when it works.

So if you invest when a company is at the end of that temporary window, you’re going to lose money? Remind me of the difference between that an MLM scheme again?

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#27

Post by IntronExon » Fri, Feb 16, 2018, 6:52 PM UTC

emodendroket wrote: post #5

Havoc wrote: post #2

Giving things away at <cost is good for growth and not much else.

Well, the idea is that they kill off every competing service and then can raise prices. Also that they can beat everyone else to self-driving cars and eliminate the cost of labor. Other articles on NC have called the feasibility of both of those into question.

I think the idea was that they’d soon have automation, but that’s clearly not coming soon enough to save their bacon.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#28

Post by Jasper_ » Fri, Feb 16, 2018, 6:52 PM UTC

moduspol wrote: post #9

emodendroket wrote: post #4

Earlier quoted context omitted.

Probably not great, but what if the model of both businesses just isn't actually viable without massive injections of funds?

Then apparently it is impossible to run a SaaS app connecting drivers and passengers for a ~25% cut of current prices. That seems pretty unlikely. We need to move on from this unsupportable "ride sharing pricing is unsustainable" narrative.

The expensive part of Uber isn't the SaaS app or even the engineers. It's the overhead of running a law-avoiding lobbying business that explicitly seeks out to just do everything as evil as possible.

Hell, Uber tried being a predatory car loan business for quite some time, which you would think would be one of the easiest ways to make surefire money, but they lost on that one too: http://www.businessinsider.com/uber-subprime-auto-loans-runn...

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#29

Post by emodendroket » Fri, Feb 16, 2018, 6:54 PM UTC

EpicEng wrote: post #21

emodendroket wrote: post #5

Earlier quoted context omitted.

Well, the idea is that they kill off every competing service and then can raise prices. Also that they can beat everyone else to self-driving cars and eliminate the cost of labor. Other articles on NC have called the feasibility of both of those into question.

Sounds like a terrible idea given that this would just open the door for another company to do the same to them. They don't produce anything novel which can't easily be replicated.

I didn't say it was a good plan.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#30

Post by Jasper_ » Fri, Feb 16, 2018, 6:55 PM UTC

moduspol wrote: post #22

UncleEntity wrote: post #15

Earlier quoted context omitted.

Unsupportable for the drivers or the company? A driver tears up their car there's a ton of people to replace them but that isn't very supportable on the individual level.

If the individual driver doesn't think they're getting paid enough, that's fine. They don't have to drive for a ride-sharing company. But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. That means the only way VCs could be "subsidizing" the price is if the remainder of the price (the cut Uber takes) is too low, which is difficult to imagine. We already know wha…

> But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate.

Why do you say that? It's well-known that they've toyed in every possible way with driver rates, including showing different rates to the consumer and the driver in an attempt to hide lower-than-market-rate wages.