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Can Uber ever make money?

economist.com

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Re: Can Uber ever make money?

#31

Post by harryh »

ghaff wrote: post #20
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…

People are willing to pay to get driven around for relatively short distances on-demand so I'm not sure why that's an inherently unprofitable business. I assume many taxi companies and black car companies make money. What's probably true is that they probably have to raise prices and deal with decreased volumes in at least many markets to do so--and probably grow more organically. And it won't be the kind of profitab…

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

Re: Can Uber ever make money?

#32

Post by dcolkitt »

govg wrote: post #17

I can only see them making money in three ways : - They scale up massively and capture a huge fraction of the ride sharing market, thus allowing them to offer low cost / low margin rides, but making up for it by volumes : At least in India, they are in a good position, but they seem to have conceded the other markets with high potential for growth like SE Asia and China. - They have a premium offering that is actuall…

Option 4: Uber uses the expertise, infrastructure, and brand it built in ridesharing to expand into the becoming the de facto standard for timely last mile delivery. This is why UberEats is such a major strategic focus for the company. It's proof of concept that they can do more than be a taxi.

An efficient platform for quickly and cheaply ferrying around stuff around town is a way bigger market than ridesharing. We're not only talking about the obvious examples like residential packages, groceries, and laundry.

But entirely new business models that didn't previously exist, because there's no efficient last-mile delivery solution. Cloud kitchen are an example of a nascent industry that could only emerge in a post-Uber world.

Re: Can Uber ever make money?

#34

Post by tjpaudio »

I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are. Wall Street is not paying for a taxi company, they are betting that Uber and Lyft are the best poised to first rollout driverless ride sharing, i.e. one of them will own and monopolize patentable tech that the mass public wants to use. The existing experience is a commodity business where profits go to zero, that's well known and old news.

Re: Can Uber ever make money?

#35

Post by perfmode »

tjpaudio wrote: post #34

I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are. Wall Street is not paying for a taxi company, they are betting that Uber and Lyft are the best poised to first rollout driverless ride sharing, i.e. one of them will own and monopolize patentable tech that the mass public wants to use. The existing experience…

Driverless ride sharing isn’t coming, in a meaningful way*, in the next ten years, I’m willing to bet my house on that.

Meaningful such that it actually delivers monetarily

Re: Can Uber ever make money?

#36

Post by empath75 »

tjpaudio wrote: post #34

I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are. Wall Street is not paying for a taxi company, they are betting that Uber and Lyft are the best poised to first rollout driverless ride sharing, i.e. one of them will own and monopolize patentable tech that the mass public wants to use. The existing experience…

If it’s about driverless ride sharing why don’t you buy stock in a company like google that makes money and is developing driverless cars, instead of a taxi company that loses money.

Google could build everything Uber has in a weekend once Waymo gets driverless cars working.

Re: Can Uber ever make money?

#37

Post by bryanlarsen »

TuringNYC wrote: post #29
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…

>> 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. I dont understand this comment. Traditional taxis made money for generations, why cant Uber? If anything, Uber has more advantages. EVEN: Traditional taxis had the "rent" of medallions. Uber has t…

Taxis made money because the medallion situation limited competition, and because fare prices were fixed by the city at levels that ensured a profit.

Re: Can Uber ever make money?

#38

Post by bunderbunder »

TruthSHIFT wrote: post #7

Keep in mind that this may not change when driverless cars become widely available. Maintaining a fleet thousands of driverless cars may prove to be more expensive than crowdsourcing a vehicle fleet.

I can't fathom how.

If you maintain a fleet of thousands of driverless cars, there are at least some economies of scale you can leverage: More negotiating power with your suppliers, the ability to purchase consumables like fuel and tires at wholesale prices, the ability to have your own in-house team of mechanics who can specialize in just your fleet, etc.

If you crowdsource it, a lot of that stuff is going to have to be purchased at retail prices, which will raise the bottom line. You might be able to hide from that by capitalizing on some information asymmetry, by paying the people you crowdsource cars from less money than it's costing them to let you use their cars. But that's presumably only going to last for a short time, until private car owners wise up.

Re: Can Uber ever make money?

#39

Post by tjpaudio »

perfmode wrote: post #35
tjpaudio wrote: post #34

I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are. Wall Street is not paying for a taxi company, they are betting that Uber and Lyft are the best poised to first rollout driverless ride sharing, i.e. one of them will own and monopolize patentable tech that the mass public wants to use. The existing experience…

Driverless ride sharing isn’t coming, in a meaningful way*, in the next ten years, I’m willing to bet my house on that. Meaningful such that it actually delivers monetarily

While I would agree with you, driverless tech is in fact the reason behind the valuation and balance sheet deficit. No large investors at this point think they are going to get a dividend paying profitable commodity business.

*edit for grammar

Re: Can Uber ever make money?

#40

Post by jandrese »

harryh wrote: post #31
ghaff wrote: post #20

Earlier quoted context omitted.

People are willing to pay to get driven around for relatively short distances on-demand so I'm not sure why that's an inherently unprofitable business. I assume many taxi companies and black car companies make money. What's probably true is that they probably have to raise prices and deal with decreased volumes in at least many markets to do so--and probably grow more organically. And it won't be the kind of profitab…

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.
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