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I believe that your assumption of insane driver subsidies is indeed the reason they are sucking down so much money. That is a problem, because the moment that

I believe that your assumption of insane driver subsidies is indeed the reason they are sucking down so much money. That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. The only strategy I can see with the absurd amounts they are raising is that they are trying to get enough money to sustain the subsidies until they kill all existing competition, at which point they can raise their prices and people will have no choice but to pay them - much like Standard Oil did. In today's world though, I'm not sure that such a strategy can work. It will be interesting to see what happens. Perhaps there is a chance of success. But if Uber were a public company, personally I'd be shorting every share that I could.

taxicabjesus 10y ago
> The only strategy I can see with the absurd amounts of fundraising is that they are trying to get enough money to sustain the subsidies until they kill all existing competition, at which point they can raise their prices and people will have no choice but to pay them The taxi company I drove for has contracts with many government agencies to transport poor & unfortunate people around. People have to get to their doctor (Arizona Medicaid) appointments, to the hospital, home from the hospital, foster kids transported to meetings with their parents, etc. These fares pay better than Uber's non-surge fares. /methinks "ride share" companies are run by founders suffering from delusions of grandeur. When they run out of venture capital, the realities of transporting people from place to place will reassert themselves.
- Thriptic 10y ago
  I've heard that Uber is going after those contracts as well.
martinald 10y ago
But Standard Oil literally bought the refineries, railroad, long term contracts on crude. That would be like Uber buying every road and every manufacturer. I also don't think Uber's biggest competition is cars or taxis, I imagine it is public transport. The markets with the best scale (esp outside of US) have good public transit. People aren't going to go from paying a £10 uber to a £30 black taxi in London, they'll go back to getting the tube or the bus home after a night out.
- macspoofing 10y ago
  I don't know about London, but in my area an UberX ride is 4-5x the price of a bus ticket (~10km). This only gets worse as the distance grows. Public transit is not Uber's competition and it'll never replace mass transit.
  - loeg 10y ago
    You can split an Uber 4 ways but you can't split a bus fare. So if you go out with a few friends it becomes much more reasonable for short trips. If Uber gets more expensive, some people will go back to public transit.
    - macspoofing 10y ago
      >You can split an Uber 4 ways but you can't split a bus fare. Like a taxi? Uber will never come close to moving the sheer numbers that public transit does. You can't do it, not enough road to fit all those cars. Especially in downtown cores. So Uber competes with public transit as much as taxis compete with public transit.
      - cmurf 10y ago
        Taxis are a kind of public transit. So call me skeptical if Uber manages to sink taxis and this is part of their long term strategy, because unless they have enough money to become the sovereign in their dominant markets, they're going to end up being regulated by the local government should they supplant taxis.
        CydeWeys 10y ago
        I know what point you're trying to make, but taxis are explicitly not public transit. Busses, trains, planes, ferries, etc., are all public transit, regardless of whether they are publicly or privately owned. For-hire taxis, coaches, limousines, private jets, etc., are all private transport.
        10y ago
tlrobinson 10y ago
> The only strategy I can see A more cynical version: they're trying to pump up their valuation, IPO, and dump their stock before anyone notices.
- prostoalex 10y ago
  That would make sense if founder/employee liquidity was in the works, but from the information we have it's going straight to the company.
- madebylaw 10y ago
  This investment didn't change their valuation.
  - iofj 10y ago
    Maybe it's the old "have some shares, then pay yourself $1M/year" racket then ?
baddox 10y ago
> That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. It depends what you mean by "actual costs," but I would suspect that Uber's will still be lower than cabs' under any reasonable definition.
- tedmiston 10y ago
  > I would suspect that Uber's will still be lower than cabs' What people pay for an Uber still varies a lot by city. At home in Ohio, Uber is more expensive than taxis in several cases, for example, to/from the airport, and short trips from the city center to the bars (2-3 miles). Taxis are also generally cheaper here for longer trips (maybe 30+ miles). Similarly taxis can still be cheaper (and are still ubiquitous) in NYC.
  - deleted 10y ago
    [deleted]
- coliveira 10y ago
  What you forget is that cabs also have incentives not available to Uber, such as lower fleet costs and tax advantages in certain cities. If you compare transportation costs without Uber subsidies, cabs are very competitive in some markets.
morgante 10y ago
> That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. There doesn't seem to be evidence of that. Uber is apparently profitable in its mature markets (mainly the US).[0] The money is mostly used to prop up new markets, where you have to give lots of incentives to get both sides of the market in place fast (keeping supply and demand matched is the constant challenge of nascent two-sided marketplaces). That being said, the fact that they're having to turn to Saudi money (nobody's preferred source) isn't encouraging. [0] http://fortune.com/2016/02/18/uber-profitable-us/ http://fortune.com/2016/02/18/uber-profitable-us/
- alttab 10y ago
  I got some blood testing machines I'd love to sell you.
  - nyc8821227 10y ago
    I laughed out loud when I read this
  - toomuchtodo 10y ago
    While driving home this evening listening to NPR's Marketplace, Kai Ryssdal specifically mentioned that Forbes removed Elizabeth Holems from their list of richest self-made women. Her stake in Theranos is now valued at $0 [1]. Capitalism giveth, and capitalism taketh away. [1] https://news.fastcompany.com/elizabeth-holmess-net-worth-is-now-nothing-according-to-forbes-4008949 https://news.fastcompany.com/elizabeth-holmess-net-worth-is-...
    - cft 10y ago
      According to this article her net worth is $400m. That's still a lot of money.
      - toomuchtodo 10y ago
        http://money.cnn.com/2016/06/01/technology/elizabeth-holmes-theranos-forbes/ http://money.cnn.com/2016/06/01/technology/elizabeth-holmes-... > Forbes said it has reexamined and revised Theranos' $9 billion valuation in light of recent investigations and allegations against the company. > Citing conversations with venture capitalists and analysts, Forbes estimates that the company is actually worth a great deal less: $800 million. That takes into account its intellectual property and financing, according to Forbes' Matthew Herper. > Holmes' 50% stake in the company would effectively be worth nothing at that valuation, Forbes concludes, because her investors would be paid back first (they hold preferred stock, not common stock like Holmes).
bastawhiz 10y ago
> That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. While price increases do happen, they generally have nothing to do with driver incentives. Incentives for drivers are (usually) meant to build supply, not cut the cost of rides.

taxicabjesus 10y ago

> The only strategy I can see with the absurd amounts of fundraising is that they are trying to get enough money to sustain the subsidies until they kill all existing competition, at which point they can raise their prices and people will have no choice but to pay them The taxi company I drove for has contracts with many government agencies to transport poor & unfortunate people around. People have to get to their doctor (Arizona Medicaid) appointments, to the hospital, home from the hospital, foster kids transported to meetings with their parents, etc. These fares pay better than Uber's non-surge fares. /methinks "ride share" companies are run by founders suffering from delusions of grandeur. When they run out of venture capital, the realities of transporting people from place to place will reassert themselves.

Thriptic 10y ago
I've heard that Uber is going after those contracts as well.

martinald 10y ago

But Standard Oil literally bought the refineries, railroad, long term contracts on crude. That would be like Uber buying every road and every manufacturer. I also don't think Uber's biggest competition is cars or taxis, I imagine it is public transport. The markets with the best scale (esp outside of US) have good public transit. People aren't going to go from paying a £10 uber to a £30 black taxi in London, they'll go back to getting the tube or the bus home after a night out.

macspoofing 10y ago
I don't know about London, but in my area an UberX ride is 4-5x the price of a bus ticket (~10km). This only gets worse as the distance grows. Public transit is not Uber's competition and it'll never replace mass transit.
- loeg 10y ago
  You can split an Uber 4 ways but you can't split a bus fare. So if you go out with a few friends it becomes much more reasonable for short trips. If Uber gets more expensive, some people will go back to public transit.
  - macspoofing 10y ago
    >You can split an Uber 4 ways but you can't split a bus fare. Like a taxi? Uber will never come close to moving the sheer numbers that public transit does. You can't do it, not enough road to fit all those cars. Especially in downtown cores. So Uber competes with public transit as much as taxis compete with public transit.
    - cmurf 10y ago
      Taxis are a kind of public transit. So call me skeptical if Uber manages to sink taxis and this is part of their long term strategy, because unless they have enough money to become the sovereign in their dominant markets, they're going to end up being regulated by the local government should they supplant taxis.
      - CydeWeys 10y ago
        I know what point you're trying to make, but taxis are explicitly not public transit. Busses, trains, planes, ferries, etc., are all public transit, regardless of whether they are publicly or privately owned. For-hire taxis, coaches, limousines, private jets, etc., are all private transport.
      - 10y ago

tlrobinson 10y ago

> The only strategy I can see A more cynical version: they're trying to pump up their valuation, IPO, and dump their stock before anyone notices.

prostoalex 10y ago
That would make sense if founder/employee liquidity was in the works, but from the information we have it's going straight to the company.
madebylaw 10y ago
This investment didn't change their valuation.
- iofj 10y ago
  Maybe it's the old "have some shares, then pay yourself $1M/year" racket then ?

baddox 10y ago

> That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. It depends what you mean by "actual costs," but I would suspect that Uber's will still be lower than cabs' under any reasonable definition.

tedmiston 10y ago
> I would suspect that Uber's will still be lower than cabs' What people pay for an Uber still varies a lot by city. At home in Ohio, Uber is more expensive than taxis in several cases, for example, to/from the airport, and short trips from the city center to the bars (2-3 miles). Taxis are also generally cheaper here for longer trips (maybe 30+ miles). Similarly taxis can still be cheaper (and are still ubiquitous) in NYC.
- deleted 10y ago
  [deleted]
coliveira 10y ago
What you forget is that cabs also have incentives not available to Uber, such as lower fleet costs and tax advantages in certain cities. If you compare transportation costs without Uber subsidies, cabs are very competitive in some markets.

morgante 10y ago

> That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. There doesn't seem to be evidence of that. Uber is apparently profitable in its mature markets (mainly the US).[0] The money is mostly used to prop up new markets, where you have to give lots of incentives to get both sides of the market in place fast (keeping supply and demand matched is the constant challenge of nascent two-sided marketplaces). That being said, the fact that they're having to turn to Saudi money (nobody's preferred source) isn't encouraging. [0] http://fortune.com/2016/02/18/uber-profitable-us/ http://fortune.com/2016/02/18/uber-profitable-us/

alttab 10y ago
I got some blood testing machines I'd love to sell you.
- nyc8821227 10y ago
  I laughed out loud when I read this
- toomuchtodo 10y ago
  While driving home this evening listening to NPR's Marketplace, Kai Ryssdal specifically mentioned that Forbes removed Elizabeth Holems from their list of richest self-made women. Her stake in Theranos is now valued at $0 [1]. Capitalism giveth, and capitalism taketh away. [1] https://news.fastcompany.com/elizabeth-holmess-net-worth-is-now-nothing-according-to-forbes-4008949 https://news.fastcompany.com/elizabeth-holmess-net-worth-is-...
  - cft 10y ago
    According to this article her net worth is $400m. That's still a lot of money.
    - toomuchtodo 10y ago
      http://money.cnn.com/2016/06/01/technology/elizabeth-holmes-theranos-forbes/ http://money.cnn.com/2016/06/01/technology/elizabeth-holmes-... > Forbes said it has reexamined and revised Theranos' $9 billion valuation in light of recent investigations and allegations against the company. > Citing conversations with venture capitalists and analysts, Forbes estimates that the company is actually worth a great deal less: $800 million. That takes into account its intellectual property and financing, according to Forbes' Matthew Herper. > Holmes' 50% stake in the company would effectively be worth nothing at that valuation, Forbes concludes, because her investors would be paid back first (they hold preferred stock, not common stock like Holmes).

bastawhiz 10y ago

> That is a problem, because the moment that people have to pay the actual costs of an Uber ride, they may go back to taxis or driving their own cars. While price increases do happen, they generally have nothing to do with driver incentives. Incentives for drivers are (usually) meant to build supply, not cut the cost of rides.