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Uber confirms SoftBank has agreed to invest

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Re: Uber confirms SoftBank has agreed to invest

#41

Post by mandeepj »

rileymat2 wrote: post #36
timewarrior wrote: post #34

Earlier quoted context omitted.

Uber is valuable only because it has solved a two party network problem at a city level. You need drivers and you need riders. If you don't have any drivers riders won't come and vice versa. Two party networks are much more difficult to solve than one party network problems. Because with two party networks you have a chicken and egg problem. Anyone who has solved self driving, has near unlimited scale on the driver s…

Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? Additionally you need people maintaining them.

> Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? > Additionally you need people maintaining them.

This is why I think Tesla is a bigger threat to Uber in long term. If you are not sure then refer to Tesla's plan 2 but Uber also have a counter plan - UberAir

https://www.tesla.com/blog/master-plan-part-deux

Re: Uber confirms SoftBank has agreed to invest

#42

Post by timewarrior »

mandeepj wrote: post #41
rileymat2 wrote: post #36

Earlier quoted context omitted.

Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? Additionally you need people maintaining them.

> Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? > Additionally you need people maintaining them. This is why I think Tesla is a bigger threat to Uber in long term. If you are not sure then refer to Tesla's plan 2 but Uber also have a counter plan - UberAir https://www.tesla.com/blog/master-plan-part-deux

I somehow feel that Autonomous drones would be easier to build than Autonomous cars.

Benefits of Autonomous drones:

1. Do not need to deal other non autonomous devices while in flight. Cars needs to deal with human, other cars driven by humans.

2. Do not need to follow existing road traffic rules.

3. Lot of paths available. Cars are limited to existing roads. Drones can have a lot of flight paths.

I understand that there are other challenges - more energy required, less safe in case of an accident, flight regulations.

But still. It seems like if the technology is there, it would be an easier transition with Drones vs Cars.

Re: Uber confirms SoftBank has agreed to invest

#43

Post by pfarnsworth »

rileymat2 wrote: post #36
timewarrior wrote: post #34

Earlier quoted context omitted.

Uber is valuable only because it has solved a two party network problem at a city level. You need drivers and you need riders. If you don't have any drivers riders won't come and vice versa. Two party networks are much more difficult to solve than one party network problems. Because with two party networks you have a chicken and egg problem. Anyone who has solved self driving, has near unlimited scale on the driver s…

Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? Additionally you need people maintaining them.

Whoever solved self-driving cars could buy 10,000 cars per city. Let's say each car costs $100,000. That's $1B if paid upfront which is never the case, but let's assume.

Now, each of those 10,000 cars could work 24x7. Assuming each ride is $10, and you can do 50 rides in a day (2 trips per hour on average over the entire day), that's $500 per day less electricity and maintenance. That's $5M/day with no employee costs except for maintenance workers. You could scale up by simply buying more cars, and whichever cars aren't needed could roost at homebase, without people picketing or sending nasty tweets saying they don't have enough work.

I doubt you have to pay for marketing costs at this point, word of mouth would be strong enough, and you just develop an app.

Re: Uber confirms SoftBank has agreed to invest

#44

Post by timewarrior »

pfarnsworth wrote: post #43
rileymat2 wrote: post #36

Earlier quoted context omitted.

Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? Additionally you need people maintaining them.

Whoever solved self-driving cars could buy 10,000 cars per city. Let's say each car costs $100,000. That's $1B if paid upfront which is never the case, but let's assume. Now, each of those 10,000 cars could work 24x7. Assuming each ride is $10, and you can do 50 rides in a day (2 trips per hour on average over the entire day), that's $500 per day less electricity and maintenance. That's $5M/day with no employee costs…

I agree. The user behavior has already been developed. And Uber doesn't have any special user loyalty. There is no reason for users to not try another app.

If the tech is indeed safer vs human, it would also have an added benefit of not having safety risks similar to Uber where some Uber drivers have assaulted their riders.

Re: Uber confirms SoftBank has agreed to invest

#45

Post by ttul »

yeukhon wrote: post #24
clusmore wrote: post #19

So how is Uber's runway looking now? This article [1] from August suggests they had just over three years of runway at the end of June ($6.6b burning at about $2b/yr). So this extends the runway by only six months? Are they going to survive long enough to see autonomous drivers? How will this deal affect future funding? [1] https://venturebeat.com/2017/08/23/uber-is-still-burning-cas...

They might spin off the autonomous program into another company to raise fund, prior to IPO, perhaps, just a thought. I think that's a better option financially.

There is no future for Uber without automated cars. Think of it this way: as soon as someone else has an automated fleet, Uber is finished unless it has its own. This is an existential requirement.

Re: Uber confirms SoftBank has agreed to invest

#46

Post by mattdeboard »

timewarrior wrote: post #38
rileymat2 wrote: post #36

Earlier quoted context omitted.

Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber? Additionally you need people maintaining them.

My understanding is that in a reasonably stable state, an autonomous car would run on battery, charge itself and cost 40k. If a car has a life time of 5 years and electricity costs 4k/yr + 2k maintenance (lower for electric cars), we are looking at operational cost of 14k/yr per vehicle. Right now an Uber driver who is probably online 60 hours a week, needs to support a car priced around 25k (amortized over 5 years),…

Couple of great comments in the thread. Thanks.

Re: Uber confirms SoftBank has agreed to invest

#47

Post by abvdasker »

dreamdu5t wrote: post #28

Investors have lost the plot. Uber is nothing more than a taxi company using VC capital to undercut competitors. There are no self driving cars. That’s just a story to get money and make the brand bigger than its product. Come back to reality. There is no futuristic mars colony with Uber robots driving everyone around. It’s just a bunch of taxi drivers with dispatch replaced by an app.

Please take your uninformed cynicism somewhere else. Uber's self-driving division is one of the 3-5 groups leading the pack right now (with Waymo obviously in front). It is anything but a scam, and even a basic attempt to Google Uber's self-driving program will show you videos of their very real results.

Your premise that self-driving cars are just a publicity stunt for Uber doesn't even make sense given that the company has spent close to a billion dollars on the project. If Uber's self-driving program was really "just a story to get money and make the brand bigger than its product" they could have faked it for far less than that.

Re: Uber confirms SoftBank has agreed to invest

#48

Post by Lordarminius »

dreamdu5t wrote: post #28

Investors have lost the plot. Uber is nothing more than a taxi company using VC capital to undercut competitors. There are no self driving cars. That’s just a story to get money and make the brand bigger than its product. Come back to reality. There is no futuristic mars colony with Uber robots driving everyone around. It’s just a bunch of taxi drivers with dispatch replaced by an app.

There are no self driving cars - yet. The time scale to realization is measured in decades - longer than is currently promised but the tech companies involved wont tell you that....

I agree with all you on all the other points.

Re: Uber confirms SoftBank has agreed to invest

#49

Post by JumpCrisscross »

raiyu wrote: post #8
RileyJames wrote: post #6

Can anyone explain why $1B is being invested at a $70B valuation, while existing share holdings are being purchased at a lower/to be determined valuation?

The $1B that is being invested at the $70B valuation is direct from the company and Softbank will be purchasing preferred shares like any other VC. These preferred shares have extra rights, things like liquidation preference, board seats, voting rights, etc. What specifically they will receive is unknown, but at the very least they will have a 1x liquidation preference on that $1B invested, which means if the company…

Preference terms explain some, but a minority, of the pricing gap. It’s mostly so existing investors can keep marking their holdings at $70bn [1]. (It also maximises Uber’s cash extraction from Softbank so the latter doesn’t go and hand that money to Uber’s competitors.)

[1] https://www.bloomberg.com/view/articles/2017-09-15/icos-vcs-...

Re: Uber confirms SoftBank has agreed to invest

#50

Post by JumpCrisscross »

hatred wrote: post #27
raiyu wrote: post #8

Earlier quoted context omitted.

The $1B that is being invested at the $70B valuation is direct from the company and Softbank will be purchasing preferred shares like any other VC. These preferred shares have extra rights, things like liquidation preference, board seats, voting rights, etc. What specifically they will receive is unknown, but at the very least they will have a 1x liquidation preference on that $1B invested, which means if the company…

Thanks for the detailed explanation. I am wondering if its ever possible to board to later approve that those newly bought "common" stocks get converted to "preferred" i.e., have the same liquidation preference?

No sane board would ever convert common to preferred because a venture-backed Board represents the preferred shareholders. Before an IPO the preferred converts to common, but not the other way.
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