7 ms·

Exactly. They are burning cash to gain market share and will lose that share as soon as they stop. Not many barriers to these apps. Uber is going to implode.

ng12 10y ago
Here's the thing -- ride sharing is the least interesting thing about Uber. Uber's expertise is on-demand logistics which is a totally new field at this scale. Ride sharing just happened to be an easy first step. Once they're able to move things around in real-time at a global scale the opportunities are massive.
- CPLX 10y ago
  People say this a lot, so I am not picking on you, but I don't get this argument at all. Amazon does it, so does Lasership and Seamless and Fedex and WalMart and a million other variations. I don't see any real reason Uber is more adept at adjacent non-core market verticals than any other top tier entrant.
  - mikeash 10y ago
    Don't forget Domino's. They and others in their business had this whole thing with drivers using their own cars for short notice transportation jobs decades ago.
    - sjg007 10y ago
      It's like uber for pizza.
      - adgulacti 10y ago
        more like uber is domino's for people
        codecamper 10y ago
        Maybe domino's could carry passengers one way. Order a pizza. Get a pizza & a passenger too!
  - macspoofing 10y ago
    That's a great point. To add to it, as Uber grows, it'll take on weight and inertia and become as rigid, bloated and inflexible as other successful Fortune 500 companies. They'll have departments, and department heads who want good quarterly numbers and will not want to rock the boat too much. They'll have shareholders who'll want a good return and not expensive moonshots. And I mean that all in a good way. There's nothing wrong with that. WalMart didn't miss out by not building a search engine 10 years ago. It's not what they know.
- wsinks 10y ago
  This is a great point. UberEATS and UberCats and put our stuff anywhere with an API? I'm starting to see the platform in action.
- dharmon 10y ago
  This is the oft-repeated argument in favor of Uber ("they're a logistics company!"), and to be honest, it's quite hand-wavey. Why is the expertise they have built up in car-hailing directly applicable to other logistics problems, and what advantage will they have going in that creates a barrier to entry for newcomers? I think there is one answer to this for Uber, and its the same strategy Amazon stumbled into: have your "main" business be breakeven, but provide the scale needed for a pure profit business. In Amazon's case, the main business is retail and the profit center is AWS. In Uber's case, this would look like individual ride-taking customers providing the demand to keep a critical mass of drivers on the road. This business is breakeven at best, likely slightly money-losing (sorry folks, but an increases in ride costs will quickly stamp out demand to pre-Uber days). Then, with this "infrastructure" of drivers on the road, they can leverage it into nearly pure profit areas like last-mile delivery. There's a huge catch, though. Amazon just has to buy new machines every 3-5 years. Uber's driver turnover is much much higher, and is absolutely killing them. All the claims of profitability are deceptive, because they assume current demand with current set of drivers; those statements do not factor in driver recruitment costs next month, or tomorrow. Unfortunately this appears on the surface to be a structural problem. Current pay with driver-owned vehicles is probably not a long-term or full-time possibility for most candidate drivers. Edit: to save a step, the predictable response to my objection is always, "but... self-driving cars!"
  - cylinder 10y ago
    Yep. Uber Eats is a joke, horrible experiences with that, it just seems like a joke they're running almost.
  - bduerst 10y ago
    Yep. The reason that's the next predictable response is because Uber is holding off for self-driving cars, so it can become the logistics network for delivery. That doesn't mean that they will, of course. I have a feeling that these platform-locked services like Uber and Lyft will not be able to compete with the scalability of an open auction network.
    - toomuchtodo 10y ago
- jsemrau 10y ago
  Good point. However, it is a huge operational risk to rely on on-demand hires for logistics. In addition, ride-sharing works because humans are moved with a given market price given by the taxi network. In logistics you compete not only against UPS and FedEx but with Amazon as well. And *mostly free shipping is hard to get cheaper.
  - aetherson 10y ago
    Also, you know, Amazon are not idiots. They aren't like, "Hey, you know what would be fun? Being bent over a barrel on last-mile shipping so that our profits can go to justify Uber's insane stock price." Amazon is investigating Uber-like delivery options [1]. If they decide that there's anything there (and I'm not totally convinced that there is), they'll build the service themselves and not pay Uber for the privilege. And if the service works well for themselves, you can bet they'll open it up to other people to use for a price, as they have for all of their internal infrastructure projects. [1] Source for this claim: I worked at Flywheel, an Uber competitor. Amazon had a program to have our drivers deliver packages, and got fairly close to acquiring us, before deciding they would rather not. This was a few years ago at this point, information is not current, and I have no idea about the present state of Flywheel, as I do not work there any more.
- macspoofing 10y ago
  >ride sharing is the least interesting thing about Uber That's the only interesting thing about Uber. Sure they have delusions of grandeur and they certainly have no qualms about putting out glossy marketing material extolling how they will change humanity, but today they are a taxi company.
  - ng12 10y ago
    That's the whole point of investing -- you're betting money on the fact that they can make their "delusions" a reality.
- dreamdu5t 10y ago
  That's what they tell everyone when people start questioning the fundamentals. It's what they told me two years ago when I interviewed there. Linking drivers with riders is not a complex problem. It doesn't even require machine learning. It doesn't require ongoing research. The whole dispatch infrastructure is mostly node and redis running predetermined matching algorithms.
- roel_v 10y ago
  "on-demand logistics which is a totally new field at this scale" I've heard this argument before, but how can this be taken seriously? Take DHL, or UPS - they do orders of magnitude more (in transactions) than Uber does, and I know it's not exactly the same, but I'd even argue that any parcel service is a lot more complicated than Uber. Hell, even the tiny postal service of my country ships the same amount of packages each day as Uber has rides. The tech side of Uber is (dare I say it!) trivial (well the 'ride sharing' part, not the AV research side). It's the regulatory and plain business model angles that must be costing them.
- brohee 10y ago
  The scale at which Uber operate is laughably small compared to real logistic companies like Maersk...
hyperbovine 10y ago
> Not many barriers to these apps. Two words: network effect. More drivers means more users. More users attracts more drivers. This is precisely why we have eBay and Craigslist despite them both offering, by modern standards, objectively terrible user experiences. Suffice it to say I am extremely bullish on Uber, Airbnb, etc. sticking around for a whole.
- rasz_pl 10y ago
  Except taxis also experience network effect. There is no central 'hail a taxi' telephone number(at least in my part of the world, might be different in NY), every company has its own numbers, own dispatch, and own rates. They all compete with each other, and while some bigger companies might ride on the too lazy dont care just come and pick me up tail of the market, majority still chooses their ride based on the rate and previous experience (nice driver, clean car, speed). In Europe small scale transportation is as competitive as cellphone market. Hmm now I am beginning to see the problem, in US you might not understand what a competitive cellphone carrier market looks like in the first place? :) Here you can transfer numbers freely between carriers, there are usually 3-5 providers to pick from and they all compete fiercely on price, level and quality of service. Changing companies is not a mayor ordeal, merely an ~hour of work to optimize your phone bill.
  - hyperbovine 10y ago
    I didn't say I was from the US. The average EU state is the size of Illinois and has maybe three or four population centers. It's no wonder that there are many regional carriers competing within each country. God help you once you start crossing borders though--evidently there isn't fierce competition on price, or the EU wouldn't have stepped in and capped roaming rates!
  - jcranmer 10y ago
    The US has 4 major cellular carriers--AT&T, Sprint, T-Mobile, and Verizon. Most of the EU has just three carriers.

ng12 10y ago

Here's the thing -- ride sharing is the least interesting thing about Uber. Uber's expertise is on-demand logistics which is a totally new field at this scale. Ride sharing just happened to be an easy first step. Once they're able to move things around in real-time at a global scale the opportunities are massive.

CPLX 10y ago
People say this a lot, so I am not picking on you, but I don't get this argument at all. Amazon does it, so does Lasership and Seamless and Fedex and WalMart and a million other variations. I don't see any real reason Uber is more adept at adjacent non-core market verticals than any other top tier entrant.
- mikeash 10y ago
  Don't forget Domino's. They and others in their business had this whole thing with drivers using their own cars for short notice transportation jobs decades ago.
  - sjg007 10y ago
    It's like uber for pizza.
    - adgulacti 10y ago
      more like uber is domino's for people
      - codecamper 10y ago
        Maybe domino's could carry passengers one way. Order a pizza. Get a pizza & a passenger too!
- macspoofing 10y ago
  That's a great point. To add to it, as Uber grows, it'll take on weight and inertia and become as rigid, bloated and inflexible as other successful Fortune 500 companies. They'll have departments, and department heads who want good quarterly numbers and will not want to rock the boat too much. They'll have shareholders who'll want a good return and not expensive moonshots. And I mean that all in a good way. There's nothing wrong with that. WalMart didn't miss out by not building a search engine 10 years ago. It's not what they know.
wsinks 10y ago
This is a great point. UberEATS and UberCats and put our stuff anywhere with an API? I'm starting to see the platform in action.
dharmon 10y ago
This is the oft-repeated argument in favor of Uber ("they're a logistics company!"), and to be honest, it's quite hand-wavey. Why is the expertise they have built up in car-hailing directly applicable to other logistics problems, and what advantage will they have going in that creates a barrier to entry for newcomers? I think there is one answer to this for Uber, and its the same strategy Amazon stumbled into: have your "main" business be breakeven, but provide the scale needed for a pure profit business. In Amazon's case, the main business is retail and the profit center is AWS. In Uber's case, this would look like individual ride-taking customers providing the demand to keep a critical mass of drivers on the road. This business is breakeven at best, likely slightly money-losing (sorry folks, but an increases in ride costs will quickly stamp out demand to pre-Uber days). Then, with this "infrastructure" of drivers on the road, they can leverage it into nearly pure profit areas like last-mile delivery. There's a huge catch, though. Amazon just has to buy new machines every 3-5 years. Uber's driver turnover is much much higher, and is absolutely killing them. All the claims of profitability are deceptive, because they assume current demand with current set of drivers; those statements do not factor in driver recruitment costs next month, or tomorrow. Unfortunately this appears on the surface to be a structural problem. Current pay with driver-owned vehicles is probably not a long-term or full-time possibility for most candidate drivers. Edit: to save a step, the predictable response to my objection is always, "but... self-driving cars!"
- cylinder 10y ago
  Yep. Uber Eats is a joke, horrible experiences with that, it just seems like a joke they're running almost.
- bduerst 10y ago
  Yep. The reason that's the next predictable response is because Uber is holding off for self-driving cars, so it can become the logistics network for delivery. That doesn't mean that they will, of course. I have a feeling that these platform-locked services like Uber and Lyft will not be able to compete with the scalability of an open auction network.
  - toomuchtodo 10y ago
jsemrau 10y ago
Good point. However, it is a huge operational risk to rely on on-demand hires for logistics. In addition, ride-sharing works because humans are moved with a given market price given by the taxi network. In logistics you compete not only against UPS and FedEx but with Amazon as well. And *mostly free shipping is hard to get cheaper.
- aetherson 10y ago
  Also, you know, Amazon are not idiots. They aren't like, "Hey, you know what would be fun? Being bent over a barrel on last-mile shipping so that our profits can go to justify Uber's insane stock price." Amazon is investigating Uber-like delivery options [1]. If they decide that there's anything there (and I'm not totally convinced that there is), they'll build the service themselves and not pay Uber for the privilege. And if the service works well for themselves, you can bet they'll open it up to other people to use for a price, as they have for all of their internal infrastructure projects. [1] Source for this claim: I worked at Flywheel, an Uber competitor. Amazon had a program to have our drivers deliver packages, and got fairly close to acquiring us, before deciding they would rather not. This was a few years ago at this point, information is not current, and I have no idea about the present state of Flywheel, as I do not work there any more.
macspoofing 10y ago
>ride sharing is the least interesting thing about Uber That's the only interesting thing about Uber. Sure they have delusions of grandeur and they certainly have no qualms about putting out glossy marketing material extolling how they will change humanity, but today they are a taxi company.
- ng12 10y ago
  That's the whole point of investing -- you're betting money on the fact that they can make their "delusions" a reality.
dreamdu5t 10y ago
That's what they tell everyone when people start questioning the fundamentals. It's what they told me two years ago when I interviewed there. Linking drivers with riders is not a complex problem. It doesn't even require machine learning. It doesn't require ongoing research. The whole dispatch infrastructure is mostly node and redis running predetermined matching algorithms.
roel_v 10y ago
"on-demand logistics which is a totally new field at this scale" I've heard this argument before, but how can this be taken seriously? Take DHL, or UPS - they do orders of magnitude more (in transactions) than Uber does, and I know it's not exactly the same, but I'd even argue that any parcel service is a lot more complicated than Uber. Hell, even the tiny postal service of my country ships the same amount of packages each day as Uber has rides. The tech side of Uber is (dare I say it!) trivial (well the 'ride sharing' part, not the AV research side). It's the regulatory and plain business model angles that must be costing them.
brohee 10y ago
The scale at which Uber operate is laughably small compared to real logistic companies like Maersk...

hyperbovine 10y ago

> Not many barriers to these apps. Two words: network effect. More drivers means more users. More users attracts more drivers. This is precisely why we have eBay and Craigslist despite them both offering, by modern standards, objectively terrible user experiences. Suffice it to say I am extremely bullish on Uber, Airbnb, etc. sticking around for a whole.

rasz_pl 10y ago
Except taxis also experience network effect. There is no central 'hail a taxi' telephone number(at least in my part of the world, might be different in NY), every company has its own numbers, own dispatch, and own rates. They all compete with each other, and while some bigger companies might ride on the too lazy dont care just come and pick me up tail of the market, majority still chooses their ride based on the rate and previous experience (nice driver, clean car, speed). In Europe small scale transportation is as competitive as cellphone market. Hmm now I am beginning to see the problem, in US you might not understand what a competitive cellphone carrier market looks like in the first place? :) Here you can transfer numbers freely between carriers, there are usually 3-5 providers to pick from and they all compete fiercely on price, level and quality of service. Changing companies is not a mayor ordeal, merely an ~hour of work to optimize your phone bill.
- hyperbovine 10y ago
  I didn't say I was from the US. The average EU state is the size of Illinois and has maybe three or four population centers. It's no wonder that there are many regional carriers competing within each country. God help you once you start crossing borders though--evidently there isn't fierce competition on price, or the EU wouldn't have stepped in and capped roaming rates!
- jcranmer 10y ago
  The US has 4 major cellular carriers--AT&T, Sprint, T-Mobile, and Verizon. Most of the EU has just three carriers.