Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Uber Valued at More Than $50B

wsj.com

Post reply on HN
Print view View original

81–90 of 95 posts

Re: Uber Valued at More Than $50B

#81

Post by prostoalex »

pitnips wrote: post #48
paulgb wrote: post #14

Earlier quoted context omitted.

I remember following Groupon closely and feeling like Groupon was spending a bunch of money teaching people around the world how to use daily deals, only to have competitors come in make it a race to the bottom because the barriers to entry were so low. I feel like Uber is doing the same: spending a bunch of money teaching people how to hail a cab from their phone. When competitors like Lyft, Hailo, and Via enter the…

Groupon doesn't have a network effect. Uber has a VERY strong network effect. In fact, it has the type of network effect that can keep its advantage over competitors (see Facebook versus Google+).

But it's localized network effect. Taxi drivers and consumers in Moscow or Barcelona are not going to switch right over just because #1 taxi app in San Francisco just arrived in their market.

If a yellow cab owner from NYC decided to expand to Tucson or Kansas City, you'd expect him to do okay with his background in the ins and outs of the business, but expecting total domination based on his knowledge of NYC market is bit of a stretch.

Re: Uber Valued at More Than $50B

#82

Post by prostoalex »

pitnips wrote: post #67
flexie wrote: post #56

Earlier quoted context omitted.

What network effect? How does my friends using Uber force me to use Uber as well? I see it more like a toilet paper or shampoo thing: My friends might recommend Uber, but other friends would recommend Lyft, and others a local competitor. There is nothing that locks me in. We can disagree and I can live with them using Uber and me using some other service for years. Unlike Facebook, Uber is easily replaced. I can't co…

More users (i.e., your friends) drive higher service levels (more Uber drivers and quicker service times, which spirals). There is no "forcing," just as no one "forces" you to have a Facebook account. If you want bad service (long wait times, high prices) then your argument makes sense. However, the more people that use Uber will lead to better service levels and lower prices. Drivers benefit by minimizing wait times…

> More users (i.e., your friends) drive higher service levels (more Uber drivers and quicker service times, which spirals).

Considering how many drivers are signed into multiple apps (and that will be the law of the land if Uber wants to keep them as independent contractors), there's also a bit of network subsidy - top network adding liquidity to its competitors.

Re: Uber Valued at More Than $50B

#83

Post by prostoalex »

bbali wrote: post #37
msoad wrote: post #7

Didn't somebody do the math and came up with $40B for entire taxi business globally?

Uber is best positioned to usher in self-driving cars. If they are successful at it, their market opportunity is much larger than the Taxi-cab industry.

> Uber is best positioned to usher in self-driving cars.

Fleet management is all about buying, parking, filling up, maintaining, cleaning and eventually selling the vehicles once they ran their course. Why would Uber be better at all those things?

Re: Uber Valued at More Than $50B

#84

Post by bbali »

prostoalex wrote: post #83
bbali wrote: post #37

Earlier quoted context omitted.

Uber is best positioned to usher in self-driving cars. If they are successful at it, their market opportunity is much larger than the Taxi-cab industry.

> Uber is best positioned to usher in self-driving cars. Fleet management is all about buying, parking, filling up, maintaining, cleaning and eventually selling the vehicles once they ran their course. Why would Uber be better at all those things?

Economies of scale that it can drive from its platform given that it will have the largest base of customers as well as suppliers. It is very close to what Amazon did to bookstores and eventually to ecommerce business.

Re: Uber Valued at More Than $50B

#85

Post by gmarx »

pitnips wrote: post #76
curiousjorge wrote: post #73

Earlier quoted context omitted.

No it doesn't have any speakable economic moat built around it. Like the parent comment mentions, it's just one of the many possible ways to get around the city, there's no cost of change. >However, the more people that use Uber will lead to better service levels and lower prices. That would be very bad for Uber. Lower prices would mean that they are constantly operating at a loss against traditional taxis and other…

There's as much difference between Uber and the airline industry as there is in a $10 ride home versus a $250+/person flight. Uber doesn't own any cars. How would better service and lower prices be bad for Uber? It wouldn't. The more activity they generate, the better off they are. They simply get a cut off everything. It would be wiser to compare to VISA/MasterCard. Those are software companies with huge network eff…

Airlines don't own planes (generally). They lease them

Re: Uber Valued at More Than $50B

#86

Post by prostoalex »

bbali wrote: post #84
prostoalex wrote: post #83

Earlier quoted context omitted.

> Uber is best positioned to usher in self-driving cars. Fleet management is all about buying, parking, filling up, maintaining, cleaning and eventually selling the vehicles once they ran their course. Why would Uber be better at all those things?

Economies of scale that it can drive from its platform given that it will have the largest base of customers as well as suppliers. It is very close to what Amazon did to bookstores and eventually to ecommerce business.

Some of that doesn't scale rapidly. If they need to buy a thousand car washes nationwide, an owner in Omaha is not going to sell at a discount just because they already own 10 car washes in Los Angeles. Similarly with pricing for gas/electricity.

Their economies of scale are akin to those of Avis or Enterprise Rent-a-Car, and those companies are not valued at high multiples, due to high upfront capital requirements, insurance burden, fast depreciation, low barrier to entry, etc.

Current multiples for Uber are there precisely because of the lack of all liabilities associated with car ownership and maintenance.

Re: Uber Valued at More Than $50B

#87

Post by bbali »

prostoalex wrote: post #86
bbali wrote: post #84

Earlier quoted context omitted.

Economies of scale that it can drive from its platform given that it will have the largest base of customers as well as suppliers. It is very close to what Amazon did to bookstores and eventually to ecommerce business.

Some of that doesn't scale rapidly. If they need to buy a thousand car washes nationwide, an owner in Omaha is not going to sell at a discount just because they already own 10 car washes in Los Angeles. Similarly with pricing for gas/electricity. Their economies of scale are akin to those of Avis or Enterprise Rent-a-Car, and those companies are not valued at high multiples, due to high upfront capital requirements,…

I would be surprised if the prevalent economic models will continue to apply. Think Walmart, Costco, Amazon and how they leveraged their scale to drive efficiency through the ecosystem.

The prevailing models during those times were revisited which included prices, contracts, payments.

In your specific example about car washes, I envision a huge warehouse with multiple floors to do automated car washes which is super efficient. This will happen as there will be a metric that will show how a minute saved on the car wash floor can save the company millions of dollars because of their scale. There will be no "car wash" dealership to negotiate with.

Re: Uber Valued at More Than $50B

#88

Post by Cthulhu_ »

Animats wrote: post #34

Uber's revenue numbers are awful. "According to Bloomberg, Uber had revenue of $415 million (we assume net revenue after payments to drivers, not gross revenue) and an operating loss of $470 million." That's for 2014, and it's leaked data. But it's not good. Why are they losing money? They're an app and a server farm, some "driver centers", and an admin staff. It's not like Amazon, with giant warehouses full of expen…

I'm actually pretty sure their main expense - at least when it comes to expanding internationally - is lawyers and lawsuits. I mean Uber drivers get threatened and their cars wrecked in France, where the existing taxi companies - that have to pay a lot of money and / or have certain connections to be able to drive a legal taxi - have protested against Uber vigorously.

Re: Uber Valued at More Than $50B

#89

Post by bbali »

taytus wrote: post #17

I feel so unintelligent. I try my hardest to understand these valuations and I'm failing miserably.

We don't have access to their pitch deck - market size, roadmap and traction. If we were privy to that info, am sure some of this would make more sense.

Re: Uber Valued at More Than $50B

#90

Post by henrikschroder »

moistgorilla wrote: post #71
henrikschroder wrote: post #60

Earlier quoted context omitted.

You also have existing taxi companies to compete against. Way before Uber was a thing, my preferred company in Stockholm had a simple hailing app, it was basically one button for "I want a cab, here, now". No tracking, no payments, nothing fancy, but still. These days, Taxi Stockholm has a hailing app that is on par with Uber's app, and I just can't see how Uber can compete with that. I can use Taxi Stockholm and get…

> nice luxury car Are the cabs in Stockholm actually nice?

Compared to SF, oh yes, much better! The most common taxi in Stockholm is probably a Mercedes, and the average car of the kind of people who would want to drive for Uber is definitely not. I don't see how Uber could mobilize a comparable fleet to compete with that. I can see UberPool working where people expect a "regular" car, and I could see them becoming the dispatch of choice for non-affiliated taxi drivers, but that's the bottom of the barrel of that market.

If people think that taxi markets everywhere look like the one in SF, then I understand why people value Uber so highly and think they'll conquer every market easily. But the truth is that Uber doesn't have anything that isn't easily replicatable by entrenched taxi companies that are willing.

Post reply on HN