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So if they're relying on driver subsidies to be competitive but can't make money that route is there a plan for them to make money without relying on autonomous

So if they're relying on driver subsidies to be competitive but can't make money that route is there a plan for them to make money without relying on autonomous vehicles? Or is that the bet?

thesimon 10y ago
>So if they're relying on driver subsidies to be competitive but can't make money that route is there a plan for them to make money without relying on autonomous vehicles? Wait until others (taxis, Lyft) are out of the market and raise prices?
Cacti 10y ago
That would be a ridiculous bet. Autonomous driving in any wide-spread form is still years if not a decade away. Losing money for a decade while awaiting the glorious future to redeem you is a sure way to go bankrupt, and quickly. Uber did not start with plans to use autonomous vehicles and so far their plans amount to little more than "well, yeah, we'll shift to autonomous cars when they come." Well, yeah, so will everyone else on the planet. I don't think it's a coincidence that all of this came up around the time Uber started to lose money... when they were in the black all the talk was about the "rise of the freelancer economy."
- harpastum 10y ago
  As crazy as it sounds, they might not actually go bankrupt even if they continue to lose hundreds of millions per year. They've received $11.5B in total funding. They've averaged $1.6B in funding per year of operation and $4.65B in the last 3 months. It's likely that they're actually building up a war chest at this point, getting ready for extra spending on self-driving cars.
  - sdenton4 10y ago
    According to the article, their world wide loss for the first HALF of 2016 is $1.2 billion. So $1.6B per year ain't gonna cut it at the current burn rate.
    - dragonwriter 10y ago
      OTOH, $4.65B per 3 months more than suffices... But at some point there's got to be a limit to the tolerance of investors.
  - kamaal 10y ago
    >>It's likely that they're actually building up a war chest at this point, getting ready for extra spending on self-driving cars. They are waiting for self driving cars to arrive. Not building it themselves. Once someone does all the hardwork, they just want to buy and use them. Not going to happen any time soon.
- misiti3780 10y ago
  serious question for someone that knows the answer to it - isnt google much further ahead than UBER/CMU in the whole autonomous driving technologies ?
  - probe 10y ago
    Yes, but it doesn't mean that Uber cannot catch up. As Musk said, it's very easy (relatively) to get to 99% driverless cars, but it's the 1% that is truly difficult (with all edge cases). Furthermore, say driverless car technologies for all companies come around the same time (plus/minus a year) - don't you think Uber would have the distinct network effect advantage that Google would have to build from scratch? Said another way, would you rather bet that Uber can make up the 1 year technology lead (ex. aggressively hiring and more R&D) in driverless car FASTER than Google can make a uber-like driver/rider worldwide car share network? That being said I don't think Google (who is also an investor in Uber) would - they're mainly looking to license out the software. This is also leading to problems because car companies are realizing how pivotal this is going to be and want to control the entire process rather than be downgraded to a mere OEM.
- deleted 10y ago
  [deleted]
brentm 10y ago
Truly autonomous vehicles are probably the best and worst thing that will happen to Uber. One of Uber's greatest strength is having all of those drivers, it would be very hard to create a competing service and recruit that kind of fleet. If tomorrow it was legal to put truly autonomous vehicles on the road what is stopping anyone with a few billion dollars (e.g. Apple, Google, etc) to enter the market and compete on price per ride? I don't think many people are loyal to Uber, they are loyal to whatever is easiest, cheapest and quickest.
- sharemywin 10y ago
  There's no differentiation. a car ride is a car ride.
  - madeofpalk 10y ago
    If that were true then taxis would be fine and Uber wouldn't exist.
    - toomuchtodo 10y ago
      Uber isn't competing with taxis. They're competing with anyone who can launch a ride sharing app.
    - taxicabjesus 10y ago
      Taxis were fine in Arizona, but we only had 'Electronic Dispatch v1.0' [1]. The upstarts upgraded the dispatching system to v1.1. The main advantage of their upgraded system (over v1.0) was providing instantaneous feedback of the to the passenger's mobile computer. v1.1 also gave the passenger the ability to 'rate' their driver, which was also not a feature of v1.0. [1] http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/ http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/
    - sharemywin 10y ago
      uber beats them on price. that's not product differentiation.
- 10y ago
pyrale 10y ago
Dumping usually ends once you've killed competition. Looking at Lyft's results this strategy appears to be succesful.
- justinv 10y ago
  But is Lyft really the competition for Uber in the long run? This almost feels like the Blu Ray and HD DVD war - yeah, Blu Ray beat HD DVD, but digital beat out both. At what point do self driving cars mean that Uber no longer has a competitive advantage in transportation? Aka if you remove the need to sign up drivers, then you're just competing on cost of a vehicle + overhead as the cost to a customer to switch from Uber to say 'FordNow!' is so low - I just download another app. Uber is competing with all forms of transportation and to beat everyone there is a long time to try to wait and stay solvent for.
  - peatmoss 10y ago
    > the cost to a customer to switch... I think this is the key here. Network effects are powerful, but are highly contingent on switching costs. It costs drivers and passengers next to nothing to switch between providers. A relationship between driver and passenger only exists for a single ride. By contrast, look at Facebook's network effect. The switching cost to obtain a comparable service is talking all your friends and elderly relatives into Something New. Hence G+ making roughly zero gain against the Book.
    - rhino369 10y ago
      Ubers treatment of their drivers as "contractors" has hurt their network effect. Because they can't make them exclusive to uber. All the uber drivers in DC also use lyft. And they'd use another service if that popped up. I bounce around between the two based on whoever gave me a discount.
  - rnernento 10y ago
    It's not that easy to get in though, you need a huge investment in a sufficient number of autonomous vehicles for any area you want to enter.
privateersman 10y ago
I don't understand it personally. They sort-of remind me of how the US brought cable TV to the UK. There was huge investment on infrastructure and an amazing service. The funding ended, service declined but that infrastructure, which was decades ahead of anything else still existed. Uber is similar, but anyone can set up a taxi service. Their own taxi drivers can even do it. Existing competitors can take over when the discounts disappear. It just doesn't make sense, it's like a pyramid with no foundation.

So if they're relying on driver subsidies to be competitive but can't make money that route is there a plan for them to make money without relying on autonomous vehicles? Or is that the bet?

thesimon 10y ago

>So if they're relying on driver subsidies to be competitive but can't make money that route is there a plan for them to make money without relying on autonomous vehicles? Wait until others (taxis, Lyft) are out of the market and raise prices?

Cacti 10y ago

That would be a ridiculous bet. Autonomous driving in any wide-spread form is still years if not a decade away. Losing money for a decade while awaiting the glorious future to redeem you is a sure way to go bankrupt, and quickly. Uber did not start with plans to use autonomous vehicles and so far their plans amount to little more than "well, yeah, we'll shift to autonomous cars when they come." Well, yeah, so will everyone else on the planet. I don't think it's a coincidence that all of this came up around the time Uber started to lose money... when they were in the black all the talk was about the "rise of the freelancer economy."

harpastum 10y ago
As crazy as it sounds, they might not actually go bankrupt even if they continue to lose hundreds of millions per year. They've received $11.5B in total funding. They've averaged $1.6B in funding per year of operation and $4.65B in the last 3 months. It's likely that they're actually building up a war chest at this point, getting ready for extra spending on self-driving cars.
- sdenton4 10y ago
  According to the article, their world wide loss for the first HALF of 2016 is $1.2 billion. So $1.6B per year ain't gonna cut it at the current burn rate.
  - dragonwriter 10y ago
    OTOH, $4.65B per 3 months more than suffices... But at some point there's got to be a limit to the tolerance of investors.
- kamaal 10y ago
  >>It's likely that they're actually building up a war chest at this point, getting ready for extra spending on self-driving cars. They are waiting for self driving cars to arrive. Not building it themselves. Once someone does all the hardwork, they just want to buy and use them. Not going to happen any time soon.
misiti3780 10y ago
serious question for someone that knows the answer to it - isnt google much further ahead than UBER/CMU in the whole autonomous driving technologies ?
- probe 10y ago
  Yes, but it doesn't mean that Uber cannot catch up. As Musk said, it's very easy (relatively) to get to 99% driverless cars, but it's the 1% that is truly difficult (with all edge cases). Furthermore, say driverless car technologies for all companies come around the same time (plus/minus a year) - don't you think Uber would have the distinct network effect advantage that Google would have to build from scratch? Said another way, would you rather bet that Uber can make up the 1 year technology lead (ex. aggressively hiring and more R&D) in driverless car FASTER than Google can make a uber-like driver/rider worldwide car share network? That being said I don't think Google (who is also an investor in Uber) would - they're mainly looking to license out the software. This is also leading to problems because car companies are realizing how pivotal this is going to be and want to control the entire process rather than be downgraded to a mere OEM.
deleted 10y ago
[deleted]

brentm 10y ago

Truly autonomous vehicles are probably the best and worst thing that will happen to Uber. One of Uber's greatest strength is having all of those drivers, it would be very hard to create a competing service and recruit that kind of fleet. If tomorrow it was legal to put truly autonomous vehicles on the road what is stopping anyone with a few billion dollars (e.g. Apple, Google, etc) to enter the market and compete on price per ride? I don't think many people are loyal to Uber, they are loyal to whatever is easiest, cheapest and quickest.

sharemywin 10y ago
There's no differentiation. a car ride is a car ride.
- madeofpalk 10y ago
  If that were true then taxis would be fine and Uber wouldn't exist.
  - toomuchtodo 10y ago
    Uber isn't competing with taxis. They're competing with anyone who can launch a ride sharing app.
  - taxicabjesus 10y ago
    Taxis were fine in Arizona, but we only had 'Electronic Dispatch v1.0' [1]. The upstarts upgraded the dispatching system to v1.1. The main advantage of their upgraded system (over v1.0) was providing instantaneous feedback of the to the passenger's mobile computer. v1.1 also gave the passenger the ability to 'rate' their driver, which was also not a feature of v1.0. [1] http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/ http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/
  - sharemywin 10y ago
    uber beats them on price. that's not product differentiation.
10y ago

pyrale 10y ago

Dumping usually ends once you've killed competition. Looking at Lyft's results this strategy appears to be succesful.

justinv 10y ago
But is Lyft really the competition for Uber in the long run? This almost feels like the Blu Ray and HD DVD war - yeah, Blu Ray beat HD DVD, but digital beat out both. At what point do self driving cars mean that Uber no longer has a competitive advantage in transportation? Aka if you remove the need to sign up drivers, then you're just competing on cost of a vehicle + overhead as the cost to a customer to switch from Uber to say 'FordNow!' is so low - I just download another app. Uber is competing with all forms of transportation and to beat everyone there is a long time to try to wait and stay solvent for.
- peatmoss 10y ago
  > the cost to a customer to switch... I think this is the key here. Network effects are powerful, but are highly contingent on switching costs. It costs drivers and passengers next to nothing to switch between providers. A relationship between driver and passenger only exists for a single ride. By contrast, look at Facebook's network effect. The switching cost to obtain a comparable service is talking all your friends and elderly relatives into Something New. Hence G+ making roughly zero gain against the Book.
  - rhino369 10y ago
    Ubers treatment of their drivers as "contractors" has hurt their network effect. Because they can't make them exclusive to uber. All the uber drivers in DC also use lyft. And they'd use another service if that popped up. I bounce around between the two based on whoever gave me a discount.
- rnernento 10y ago
  It's not that easy to get in though, you need a huge investment in a sufficient number of autonomous vehicles for any area you want to enter.

privateersman 10y ago

I don't understand it personally. They sort-of remind me of how the US brought cable TV to the UK. There was huge investment on infrastructure and an amazing service. The funding ended, service declined but that infrastructure, which was decades ahead of anything else still existed. Uber is similar, but anyone can set up a taxi service. Their own taxi drivers can even do it. Existing competitors can take over when the discounts disappear. It just doesn't make sense, it's like a pyramid with no foundation.