9 ms·

If everybody is a couple of layoffs away from profitability or multi-year runways, where are the big falls? Who is the Pets.com this time around? P.S: Also mi

by pj_mukh 11y ago

If everybody is a couple of layoffs away from profitability or multi-year runways, where are the big falls? Who is the Pets.com this time around? P.S: Also mixed messaging (http://www.wsj.com/articles/fidelity-in-reversal-raises-value-of-many-tech-startups-1462041176?mod=e2tw http://www.wsj.com/articles/fidelity-in-reversal-raises-valu...). Maybe its not all sky-is-falling doom and gloom.

dudifordMann 11y ago
Hmmm, this might just be a candidate for a conspiracy where they are in reality shorting the market?
untog 11y ago
I know it'll be an unpopular opinion, but I really think Uber could be in for a big fall. Not because they haven't been successful, but because they've been too successful - they've opened the market up for themselves but also competitors. Most Uber drivers I ride with have at least one other ride share app open, none of them have a loyalty to the company. In fact, many actively dislike it. And riders I talk to aren't loyal either - they'll happily flip between Lyft, Uber, and whatever else is available, depending on who is offering a discount code that week. I don't doubt that Uber has a better investment in the future (self driving cars and the like) but it remains to be seen if they'll make it that far - that future is still a ways off. By itself that wouldn't be so drastic, but Uber has taken on a lot of funding and obstinately refused to go public. It could put pressure on other companies that are currently quite happily staying private, too.
- pj_mukh 11y ago
  Worst case scenario they pull out of China (where they are purposely hemorrhaging money). Their profitability in America, means they are in no threat of "dying".
  - untog 11y ago
    But will they continue to be profitable? Imagine a new startup launches today offering ridesharing in NYC. Drivers - who already have Lyft running - add the app to their roster. After some advertising spend, so do users. What is Uber's strategy to stop them? Spend more money, usually - more advertising! More drivers! Is that sustainable? What is Uber's moat?
    - mrdrozdov 11y ago
      Driverless cars and state of the art engineering infrastructure.
      - untog 11y ago
        Driverless cars at least half a decade if not a decade away from widespread adoption in cities. Who's to say they'll last that long? What does "state of the art engineering infrastructure" give users? I don't recall Lyft's app ever failing on me.
      - bobjordan 11y ago
        Finally, Uber get's pushed out of relevance by driverless cars, from BMW, Mercedes-Benz, Chevy, Ford, etc., who will ultimately never let them have this market.
      - CPLX 11y ago
        Driverless cars don't exist and there's literally zero evidence that Uber has a stronger claim on that market than any other aspiring company. Engineering for an app like this is non-trivial but hardly insurmountable. The one advantage they do have is network effect, the more drivers and users they have the quicker it is to get a ride and more lucrative for drivers. That does matter, the question is how much.
      - rhino369 11y ago
        If anything Driveless cars is a huge threat to uber. Buying the cars would be a massive capital investment. Right now they rely on their employees/contractors to bring a 20k+ asset to work with them. Someone like Hertz or a General Motors already have fleets and know how to manage them. All they have to do is engineer an app. What is easier? A nationwide vehicle fleet or an app that connects drivers to riders.
  - sbierwagen 11y ago
    Their profitability in America, means they are in no threat of "dying". Ha. http://www.businessinsider.com/uber-says-its-profitable-in-the-us-2016-4 http://www.businessinsider.com/uber-says-its-profitable-in-t... Citing previously undisclosed financial documents, Bloomberg pegs Uber’s February US profit per ride at $0.19 (not including “interest, taxes, and equity-based compensation for employees"). Nineteen cents per ride. Before tax!
    - goldbrick 11y ago
      They're doing more volume than the entire taxi industry though. It adds up.
      - sbierwagen 11y ago
        http://www.barrypopik.com/index.php/new_york_city/entry/we_lose_money_on_every_sale_but_make_it_up_on_volume http://www.barrypopik.com/index.php/new_york_city/entry/we_l...
    - delecti 11y ago
      The article isn't specific enough to know for sure whether that's average profit per ride, or whether that's the margin they skim off the top per ride Does that $0.19 come from (total margins from US rides - total US operating expenses) / (total number of US rides), or is it (total user payment - total driver costs) / (total number of US rides). The former means that they're actually bringing in about 10m in total net profit per month, which isn't terrible. The latter means they're probably not doing so well.
- potatolicious 11y ago
  Agree - Uber suffers from the same problem as Square. They created a new product expecting it to be stickier than it actually turned out to be. In Uber's case it turns out "better than a yellow cab" is a pretty low bar to clear, and neither drivers nor consumers have much loyalty and are highly price sensitive, creating a race to the bottom. In Square's case it turns out merchants will gladly use a slightly-worse iPad UI for payments if the fees are lower, and consumers don't really care regardless. Again, race to the bottom. Right now it looks like Uber is engaged in an epic price war in many markets where the prices are unsustainably low - and these prices are sustained by a combination of setting VC cash on fire and squeezing driver pay. Having no insider information into Uber, I'm a bit skeptical that they're that close to be sustainably profitable.
  - uptown 11y ago
    Uber's problem seems to be that they need to raise prices and cut driver rates once they've captured a market and driven out competition. Either that, or they need to switch to driverless cars to eliminate that component of their business - but that seems to be a ways off, and there's no reason to think other players won't be just as successful when you're able to remove drivers, one of the larger variables, from the overall equation. https://twitter.com/neilanalien/status/627873374505562112 https://twitter.com/neilanalien/status/627873374505562112
  - aaroninsf 11y ago
    Squeezing driver pay: indeed. My mother drives in SF for Uber and Lyft. She makes about one quarter (with the same time/schedule) she did less than two years ago. Some call this _market efficiency_ and point out this is functioning as designed. My mother, she's moving back to Washington State.
  - superuser2 11y ago
    > "better than a yellow cab" Better than a yellow cab (UberX) isn't the interesting part of Uber's business, Pool (and a swarm of dynamically routed cars buzzing around a city, picking up and dropping off people and cargo) is. Further, that swarm becomes more cost-effective the larger it is.
- FussyZeus 11y ago
  Brand loyalty is practically a myth at this point. I don't use any service or any product without some reservations about the company that made it, especially when it comes to apps and cloud stuff. People I talk to about this sort of thing USE online services, but we're also fully backed up and ready to move at a moment's notice. Probably a consequence of watching so many of these things go up in smoke.
- Touche 11y ago
  What matters more, driver loyalty or user loyalty? Uber feels like the Kleenex of its industry. Outside of the tech hubs I don't feel that most people are even aware that non-Uber ride services exist. I certainly here people asking their friends "should we get an Uber?" all the time.
  - untog 11y ago
    > Uber feels like the Kleenex of its industry. I agree but not, I think, in the way you intend. If someone asks for a Kleenex and they get passed a non-Kleenex brand tissue, they rarely object. "Uber" could just become the 21st Century "Hoover".
    - Touche 11y ago
      Tissue paper is bought at a grocery store with each brand sitting next to each other. If tissue paper brands each had their own store, like ride sharing apps do, then I think Kleenex wouldn't have the problem you describe. Uber still has to compete on price, for sure. But there's certainly friction to A) download non-Uber ride sharing apps and (even greater IMO) B) open multiple apps to compare prices. If Uber's price doesn't seem unreasonably high, what reason is there for people to compare?
      - dagwaging 11y ago
        >open multiple apps to compare prices that gives me an idea...
        waitwhatwhoa 11y ago
        http://www.whatsthefare.com http://www.whatsthefare.com
        Touche 11y ago
        There was a similar app during the check-in app craze (where a half-dozen competing apps existed) but that didn't stop Foursquare from eventually winning the space (even though it was arguably not the best of the options).
- deleted 11y ago
  [deleted]
- HillaryBriss 11y ago
  Yeah, I see the same thing. Multiple apps open. Zero driver loyalty. Ride-sharing companies commodified drivers, so drivers commodified ride-sharing companies. And so have customers. It's like grocery shopping. One store might be a little cleaner than another, have longer hours or feel safer, but, mostly, you go with the low-price leader.
- rwj 11y ago
  A big part of Uber's advantage is corporate nullification. I'm sure their app is nice, but avoiding regulation appears to be their big advantage. Government may be slow, but it will catch up eventually. There are already several cities moving to update regulations so that Uber and the local taxi companies are playing by the same rules.
- loudin 11y ago
  I don't think Uber is going to completely turf out, but I believe they will experience a correction in their valuation. It looks like they last raised money at a $62.5 billion valuation [1], which suggests that investors are expecting the company to operate at a global level. Unfortunately, Uber is facing extremely stiff competition in China [2] and India [3]. There's also the well-publicized tension between Uber and various European companies. And that's not even taking into account increased regulation in US cities like San Francisco [4]. So, while Uber is clearly a successful company - how successful will it be? $62.5 billion dollars successful? My guess would be no, which would drive a correction for the company. [1] http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation http://www.bloomberg.com/news/articles/2015-12-03/uber-raise... [2] http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding/ http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding... [3] http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-same-dirty-tricks-uber-was-accused-of-using-on-lyft-and-gett/ http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-s... [4] http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Uber-drivers-to-obtain-7250137.php http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Ube...
- marincounty 11y ago
  Lyft seems to have the right attitude. I hope they gain market share, and overtake Uber. Yea--Uber has always rubbed me the wrong way, on so many levels.
- crzwdjk 11y ago
  It's worse than that: not only are there plenty of competitors to Uber (especially on a local scale), but in a way, Uber sowed the seeds of its own destruction. Before Uber, all the regulations around the taxis business were a pretty high barrier to entry. But with billions of dollars of VC backing, Uber has done a pretty good job of clearing the regulatory hurdles out of its way... and out of the way of its competitors too. I suppose we should be thankful to the venture capitalists for so generously donating money to improve competition in the taxi industry.
- deegles 11y ago
  What I think could/should happen is someone releasing an open-source version of Uber/Lyft and selling support for city governments to run city-owned ride-sharing services. If the Uber app only worked in the city I live, I wouldn't mind at all. It would also be no trouble to download the local ride-sharing app when visiting a new city. This would be a win-win for many reasons, one of which would be that cities would keep the revenue from these services, or they could run it at cost and send more money to the drivers (thus stimulating the local economy and not VC valuations)
deleted 11y ago
[deleted]
daniel_levine 11y ago
No ill will towards these companies/founders, but: - Fab - Theranos - Homejoy - Zirtual - To some degree Foursquare and Zenefits (still have time to fix) - The flash sales category One challenge is that when things aren't going well companies are much quieter than when companies are going well.
- noer 11y ago
  I thought Foursquare had started to turn itself around and started selling data services?
  - __derek__ 11y ago
    They may be turning it around, but they just halved their valuation in January.[1] [1]: http://www.nytimes.com/2016/01/15/technology/foursquare-raises-45-million-cutting-its-valuation-nearly-in-half.html http://www.nytimes.com/2016/01/15/technology/foursquare-rais...
teen 11y ago
Dropbox. High burn rate + failure to pivot from a purely online storage service
- tim333 11y ago
  They're trying to move into organising teams as well as files.
- pj_mukh 11y ago
  Waay too many entrenched users. They can very easily shave staff, hunker down and make it through.
throwawayjane 11y ago
Nextdoor
NDizzle 11y ago
I have a great pets.com story, to add a little light heartedness to a serious topic like this. At their HQ the bottom floor had astroturf and a lot of windows. This is where the pet day care was for all of the employees. You'd walk past and see how great it was to work there - just look at the pet day care! When they shut down, they shut down so suddenly that nobody cleaned up that area. I forget how long that space was vacant, but I want to say it was roughly a year. You'd walk by the space and you'd see little doggie turds in various forms of decay on the nearly-neon astroturf. The dot com boom in a nutshell!
mrweasel 11y ago
Twitters is a company that honestly needs to fail. While people love Twitter, there's no business strategy to speak of. It's pretty unforgivably that a company as old a Twitter aren't making their own money at this point.

by pj_mukh 11y ago

dudifordMann 11y ago

Hmmm, this might just be a candidate for a conspiracy where they are in reality shorting the market?

untog 11y ago

I know it'll be an unpopular opinion, but I really think Uber could be in for a big fall. Not because they haven't been successful, but because they've been too successful - they've opened the market up for themselves but also competitors. Most Uber drivers I ride with have at least one other ride share app open, none of them have a loyalty to the company. In fact, many actively dislike it. And riders I talk to aren't loyal either - they'll happily flip between Lyft, Uber, and whatever else is available, depending on who is offering a discount code that week. I don't doubt that Uber has a better investment in the future (self driving cars and the like) but it remains to be seen if they'll make it that far - that future is still a ways off. By itself that wouldn't be so drastic, but Uber has taken on a lot of funding and obstinately refused to go public. It could put pressure on other companies that are currently quite happily staying private, too.

pj_mukh 11y ago
Worst case scenario they pull out of China (where they are purposely hemorrhaging money). Their profitability in America, means they are in no threat of "dying".
- untog 11y ago
  But will they continue to be profitable? Imagine a new startup launches today offering ridesharing in NYC. Drivers - who already have Lyft running - add the app to their roster. After some advertising spend, so do users. What is Uber's strategy to stop them? Spend more money, usually - more advertising! More drivers! Is that sustainable? What is Uber's moat?
  - mrdrozdov 11y ago
    Driverless cars and state of the art engineering infrastructure.
    - untog 11y ago
      Driverless cars at least half a decade if not a decade away from widespread adoption in cities. Who's to say they'll last that long? What does "state of the art engineering infrastructure" give users? I don't recall Lyft's app ever failing on me.
    - bobjordan 11y ago
      Finally, Uber get's pushed out of relevance by driverless cars, from BMW, Mercedes-Benz, Chevy, Ford, etc., who will ultimately never let them have this market.
    - CPLX 11y ago
      Driverless cars don't exist and there's literally zero evidence that Uber has a stronger claim on that market than any other aspiring company. Engineering for an app like this is non-trivial but hardly insurmountable. The one advantage they do have is network effect, the more drivers and users they have the quicker it is to get a ride and more lucrative for drivers. That does matter, the question is how much.
    - rhino369 11y ago
      If anything Driveless cars is a huge threat to uber. Buying the cars would be a massive capital investment. Right now they rely on their employees/contractors to bring a 20k+ asset to work with them. Someone like Hertz or a General Motors already have fleets and know how to manage them. All they have to do is engineer an app. What is easier? A nationwide vehicle fleet or an app that connects drivers to riders.
- sbierwagen 11y ago
  Their profitability in America, means they are in no threat of "dying". Ha. http://www.businessinsider.com/uber-says-its-profitable-in-the-us-2016-4 http://www.businessinsider.com/uber-says-its-profitable-in-t... Citing previously undisclosed financial documents, Bloomberg pegs Uber’s February US profit per ride at $0.19 (not including “interest, taxes, and equity-based compensation for employees"). Nineteen cents per ride. Before tax!
  - goldbrick 11y ago
    They're doing more volume than the entire taxi industry though. It adds up.
    - sbierwagen 11y ago
      http://www.barrypopik.com/index.php/new_york_city/entry/we_lose_money_on_every_sale_but_make_it_up_on_volume http://www.barrypopik.com/index.php/new_york_city/entry/we_l...
  - delecti 11y ago
    The article isn't specific enough to know for sure whether that's average profit per ride, or whether that's the margin they skim off the top per ride Does that $0.19 come from (total margins from US rides - total US operating expenses) / (total number of US rides), or is it (total user payment - total driver costs) / (total number of US rides). The former means that they're actually bringing in about 10m in total net profit per month, which isn't terrible. The latter means they're probably not doing so well.
potatolicious 11y ago
Agree - Uber suffers from the same problem as Square. They created a new product expecting it to be stickier than it actually turned out to be. In Uber's case it turns out "better than a yellow cab" is a pretty low bar to clear, and neither drivers nor consumers have much loyalty and are highly price sensitive, creating a race to the bottom. In Square's case it turns out merchants will gladly use a slightly-worse iPad UI for payments if the fees are lower, and consumers don't really care regardless. Again, race to the bottom. Right now it looks like Uber is engaged in an epic price war in many markets where the prices are unsustainably low - and these prices are sustained by a combination of setting VC cash on fire and squeezing driver pay. Having no insider information into Uber, I'm a bit skeptical that they're that close to be sustainably profitable.
- uptown 11y ago
  Uber's problem seems to be that they need to raise prices and cut driver rates once they've captured a market and driven out competition. Either that, or they need to switch to driverless cars to eliminate that component of their business - but that seems to be a ways off, and there's no reason to think other players won't be just as successful when you're able to remove drivers, one of the larger variables, from the overall equation. https://twitter.com/neilanalien/status/627873374505562112 https://twitter.com/neilanalien/status/627873374505562112
- aaroninsf 11y ago
  Squeezing driver pay: indeed. My mother drives in SF for Uber and Lyft. She makes about one quarter (with the same time/schedule) she did less than two years ago. Some call this _market efficiency_ and point out this is functioning as designed. My mother, she's moving back to Washington State.
- superuser2 11y ago
  > "better than a yellow cab" Better than a yellow cab (UberX) isn't the interesting part of Uber's business, Pool (and a swarm of dynamically routed cars buzzing around a city, picking up and dropping off people and cargo) is. Further, that swarm becomes more cost-effective the larger it is.
FussyZeus 11y ago
Brand loyalty is practically a myth at this point. I don't use any service or any product without some reservations about the company that made it, especially when it comes to apps and cloud stuff. People I talk to about this sort of thing USE online services, but we're also fully backed up and ready to move at a moment's notice. Probably a consequence of watching so many of these things go up in smoke.
Touche 11y ago
What matters more, driver loyalty or user loyalty? Uber feels like the Kleenex of its industry. Outside of the tech hubs I don't feel that most people are even aware that non-Uber ride services exist. I certainly here people asking their friends "should we get an Uber?" all the time.
- untog 11y ago
  > Uber feels like the Kleenex of its industry. I agree but not, I think, in the way you intend. If someone asks for a Kleenex and they get passed a non-Kleenex brand tissue, they rarely object. "Uber" could just become the 21st Century "Hoover".
  - Touche 11y ago
    Tissue paper is bought at a grocery store with each brand sitting next to each other. If tissue paper brands each had their own store, like ride sharing apps do, then I think Kleenex wouldn't have the problem you describe. Uber still has to compete on price, for sure. But there's certainly friction to A) download non-Uber ride sharing apps and (even greater IMO) B) open multiple apps to compare prices. If Uber's price doesn't seem unreasonably high, what reason is there for people to compare?
    - dagwaging 11y ago
      >open multiple apps to compare prices that gives me an idea...
      - waitwhatwhoa 11y ago
        http://www.whatsthefare.com http://www.whatsthefare.com
        Touche 11y ago
        There was a similar app during the check-in app craze (where a half-dozen competing apps existed) but that didn't stop Foursquare from eventually winning the space (even though it was arguably not the best of the options).
deleted 11y ago
[deleted]
HillaryBriss 11y ago
Yeah, I see the same thing. Multiple apps open. Zero driver loyalty. Ride-sharing companies commodified drivers, so drivers commodified ride-sharing companies. And so have customers. It's like grocery shopping. One store might be a little cleaner than another, have longer hours or feel safer, but, mostly, you go with the low-price leader.
rwj 11y ago
A big part of Uber's advantage is corporate nullification. I'm sure their app is nice, but avoiding regulation appears to be their big advantage. Government may be slow, but it will catch up eventually. There are already several cities moving to update regulations so that Uber and the local taxi companies are playing by the same rules.
loudin 11y ago
I don't think Uber is going to completely turf out, but I believe they will experience a correction in their valuation. It looks like they last raised money at a $62.5 billion valuation [1], which suggests that investors are expecting the company to operate at a global level. Unfortunately, Uber is facing extremely stiff competition in China [2] and India [3]. There's also the well-publicized tension between Uber and various European companies. And that's not even taking into account increased regulation in US cities like San Francisco [4]. So, while Uber is clearly a successful company - how successful will it be? $62.5 billion dollars successful? My guess would be no, which would drive a correction for the company. [1] http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation http://www.bloomberg.com/news/articles/2015-12-03/uber-raise... [2] http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding/ http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding... [3] http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-same-dirty-tricks-uber-was-accused-of-using-on-lyft-and-gett/ http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-s... [4] http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Uber-drivers-to-obtain-7250137.php http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Ube...
marincounty 11y ago
Lyft seems to have the right attitude. I hope they gain market share, and overtake Uber. Yea--Uber has always rubbed me the wrong way, on so many levels.
crzwdjk 11y ago
It's worse than that: not only are there plenty of competitors to Uber (especially on a local scale), but in a way, Uber sowed the seeds of its own destruction. Before Uber, all the regulations around the taxis business were a pretty high barrier to entry. But with billions of dollars of VC backing, Uber has done a pretty good job of clearing the regulatory hurdles out of its way... and out of the way of its competitors too. I suppose we should be thankful to the venture capitalists for so generously donating money to improve competition in the taxi industry.
deegles 11y ago
What I think could/should happen is someone releasing an open-source version of Uber/Lyft and selling support for city governments to run city-owned ride-sharing services. If the Uber app only worked in the city I live, I wouldn't mind at all. It would also be no trouble to download the local ride-sharing app when visiting a new city. This would be a win-win for many reasons, one of which would be that cities would keep the revenue from these services, or they could run it at cost and send more money to the drivers (thus stimulating the local economy and not VC valuations)

deleted 11y ago

[deleted]

daniel_levine 11y ago

No ill will towards these companies/founders, but: - Fab - Theranos - Homejoy - Zirtual - To some degree Foursquare and Zenefits (still have time to fix) - The flash sales category One challenge is that when things aren't going well companies are much quieter than when companies are going well.

noer 11y ago
I thought Foursquare had started to turn itself around and started selling data services?
- __derek__ 11y ago
  They may be turning it around, but they just halved their valuation in January.[1] [1]: http://www.nytimes.com/2016/01/15/technology/foursquare-raises-45-million-cutting-its-valuation-nearly-in-half.html http://www.nytimes.com/2016/01/15/technology/foursquare-rais...

teen 11y ago

Dropbox. High burn rate + failure to pivot from a purely online storage service

tim333 11y ago
They're trying to move into organising teams as well as files.
pj_mukh 11y ago
Waay too many entrenched users. They can very easily shave staff, hunker down and make it through.

throwawayjane 11y ago

Nextdoor

NDizzle 11y ago

I have a great pets.com story, to add a little light heartedness to a serious topic like this. At their HQ the bottom floor had astroturf and a lot of windows. This is where the pet day care was for all of the employees. You'd walk past and see how great it was to work there - just look at the pet day care! When they shut down, they shut down so suddenly that nobody cleaned up that area. I forget how long that space was vacant, but I want to say it was roughly a year. You'd walk by the space and you'd see little doggie turds in various forms of decay on the nearly-neon astroturf. The dot com boom in a nutshell!

mrweasel 11y ago

Twitters is a company that honestly needs to fail. While people love Twitter, there's no business strategy to speak of. It's pretty unforgivably that a company as old a Twitter aren't making their own money at this point.