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

#41

Post by Someone » Fri, Feb 16, 2018, 7:12 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.

Such a business can be sustainable, but the questions are whether it warrants Uber’s valuation and whether getting customers is worth the amount of money Uber pays for it.

Apparently some investors think the answer to both is yes. Otherwise, Uber wouldn’t get the money they get.

Other people disagree, though. I’m one of them. I think it is worthwhile to invest in getting some users to your platform, but I fear they attract way too many customers who are cost conscious, and will move to a different provider without blinking an eye.

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

#42

Post by ashelmire » Fri, Feb 16, 2018, 7:12 PM UTC

adventured wrote: post #38

EpicEng wrote: post #21

Earlier quoted context omitted.

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.

Once they acquire a dominant position, the cost to assail it will be astronomical. It already is in fact, which is why Lyft is burning so much cash just in the US market alone ($3 to $4 billion in red ink just in the US). You're going to have to convince venture capitalists to put in $10 or $15 billion and be willing to watch it all burn, on the nearly impossible task of unseating the market winner. That will never h…

You are making the incorrect assumption that a company has to try to compete with Uber everywhere all at once. They don't. Once Uber raises prices to the point where they make a profit, cabs will just come back and undercut them - because they will have less expenses (they don't have to support a massive organization and shareholders). This will happen independently in every city.

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

#43

Post by zitterbewegung » Fri, Feb 16, 2018, 7:14 PM UTC

hkmurakami wrote: post #25

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?

I think the 10b isn’t sales but it’s to fund whatever insurance policy that they have on their cars . They probably add that to the price of their rides or something .

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

#44

Post by misterbowfinger » Fri, Feb 16, 2018, 7:14 PM UTC

RandallBrown wrote: post #3

How are Lyft's financials? Are they losing money just as fast or what? If they aren't, seems like the answer is that yes, Uber can deliver.

This year [2017], Lyft is on pace for $1.5 billion in net revenue -- the amount of money it generates after paying drivers -- on losses of $400 million, according to the document, which was prepared at the end of the second quarter. Since then, Lyft has spent heavily on a nationwide marketing campaign, including TV spots with actor Jeff Bridges. Investors are now anticipating losses of close to $600 million in 2017, two people said.

https://www.bloomberg.com/news/articles/2017-11-11/lyft-set-...

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

#45

Post by dnautics » Fri, Feb 16, 2018, 7:15 PM UTC

Jasper_ wrote: post #30

moduspol wrote: post #22

Earlier quoted context omitted.

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.

In the end the driver has to eat, so whatever deception Uber does on the driver pay side is not really sustainable if it doesn't in the end meet the driver market (I was a driver for 1.5 yrs)

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

#46

Post by philwelch » Fri, Feb 16, 2018, 7:18 PM UTC

albertgoeswoof wrote: post #32

The main value prop for Uber hasn’t changed for quite some time, probably not much since UberX, the innovation there is pretty much done. This puts Governments in the perfect position to disrupt Uber, if they build their own version, feature for feature (let’s face it, it’s a complex app but not that hard to copy) and mandate it on their already regulated taxis / ban uber, their user acquisition costs and marketing c…

For everyone? The only reason Uber and Lyft have been successful have been because the regulated taxis suffer from artificially constrained supply and zero quality control in terms of passenger experience. And we have governments to thank for that.

Even on the technology side--sure, Uber isn't groundbreaking, but having used Uber and Lyft and also having used my state portal for buying health insurance through Obamacare, it doesn't seem like governments are capable of producing the same user experience.

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

#47

Post by moduspol » Fri, Feb 16, 2018, 7:18 PM UTC

emodendroket wrote: post #31

moduspol wrote: post #24

Earlier quoted context omitted.

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 the other hand, they're losing billions of dollars.

Yep. It does cost money to expand into new geographic areas or markets (like Uber eats). That doesn't indicate that ride prices are subsidized, though.

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

#48

Post by jfrankamp » Fri, Feb 16, 2018, 7:18 PM UTC

sol_remmy wrote: post #35

emodendroket wrote: post #16

Earlier quoted context omitted.

That's not really how it's "supposed to" work. It's called predatory pricing and the most ardent free-market defenders claim it doesn't exist because it's economically irrational (check out the contentious discussion and Frankenstein-like text of the Wikipedia entry on the topic).

"predatory pricing" So they're offering prices below cost and that is considered "predatory"? Last time I checked low prices are good for consumers

In the long run, higher prices for consumers. After the predatory prices have driven out competition.

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

#49

Post by moduspol » Fri, Feb 16, 2018, 7:20 PM UTC

Jasper_ wrote: post #30

moduspol wrote: post #22

Earlier quoted context omitted.

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.

They still have the drivers. I'm not even endorsing it--but even at worst, that means drivers are subsidizing the ride prices, not investors.

I don't think they are, though. If they were, they'd be having trouble keeping drivers working and we'd see complaints about long waits and unavailability.

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

#50

Post by zanny » Fri, Feb 16, 2018, 7:20 PM UTC

albertgoeswoof wrote: post #32

The main value prop for Uber hasn’t changed for quite some time, probably not much since UberX, the innovation there is pretty much done. This puts Governments in the perfect position to disrupt Uber, if they build their own version, feature for feature (let’s face it, it’s a complex app but not that hard to copy) and mandate it on their already regulated taxis / ban uber, their user acquisition costs and marketing c…

LibreTaxi (and several other open source clones) already exist. Governments can easily take those, bake in credit cards (which open source / decentralized apps really can't support) and put in some legalize insurance coverage and they are good to go.

The thing is the value in Uber and Lyft come from their mindshare that gives you access to drivers and customers, their ratings systems to filter out good drivers and riders, and their insurance to help mitigate the risk involved in riding in some random strangers car.

I don't think it takes state actors running the show to disrupt ridesharing though. Just an endorsement of the concept, some kind of insurance drivers must legally buy to do it, and the only really hard part for anyone involved is a rating system. Which isn't something to underestimate, its not technically hard to do but logistically a nightmare to be able to rate riders and drivers without a central business authority. I'm not sure governments are going to be willing to manage a review board.