8 ms·

Uber revolution will not last

70 points by dannylandau 10y ago

nawtacawp 10y ago
GM invested $500 million in Lyft earlier this year. I guess, they have a different view on where the market is headed. http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160105 http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN...
- mmackh 10y ago
  Direct quote from the article "Hill believes ride-sharing may be here to stay, but Uber is not"
  - nawtacawp 10y ago
    I wish he would have expanded on that. Why would one fail and another not, when the companies have the exact same model?
    - jimminy 10y ago
      I explained above, but Uber is way over-valued to the point that they cannot have a reasonable IPO and acquisitions are off the table to all but a few companies that don't need that business and can acquire a direct competitor at a more reasonable expense.
      - prostoalex 10y ago
        Box and Facebook both had IPOs that priced them below the last private round, and yet are limping along. Seems like positive cashflow is the key.
        jimminy 10y ago
        For Facebook, that is absolutely false. Their last known valuation prior to IPO based on a raise was $65B (March 2011), they IPO'd at $104B. And Box had a small downward valuation shift (-36%, -$0.9B), between last raised valuation and IPO. Uber's numbers even giving them liberal growth potential of 500% places them at around $33.75B (-50% current value, -$34B).
        prostoalex 10y ago
        Well, you're right, FB initial IPO price on day 1 was above the pricing in the last private round. However, shortly after, and by "shortly" I mean within 3-4 months after the IPO when most of the insiders were still under lock-up, a single share of FB could've been bought for high teens, which was at a significant discount to the last round.
        jimminy 10y ago
        That discussion isn't that relevant, when you're trying to figure out this kind of valuation though. The reason for that dip was largely 90 and 180 day lock-ups increasing supply of shares traded as employees sold stock. Also there were economic fears helping pressure the stock down. FB's valuation at IPO was still smaller than it's primary domestic market's (ad spending) size ($165B in 2012). Uber's primary domestic market (taxis) is only valued at ($20B), so if they captured all of the US taxi, their current valuation requires them to capture over 300% of the market.^ Now obviously that's not a perfect barometer. There are other variables and adjustments to make, but it makes it very clear that there is limited upside potential. Without claiming another market (ownership), it's actually damn near impossible. They've also ceded competition in the Chinese market to DiDi, so they can't make it up via global expansion either. ^edit (Obviously, this is a 1x multiple, as you increase to more reasonable values it drops the share required, but you have to push it pretty hard to reduce market share to a decent level.)
- jimminy 10y ago
  The valuations and conditions between Lyft and Uber are drastically different. Lyft with the funding from GM has only raised $2B over it's lifespan which is comparable to that of Uber. Uber has raised nearly $13B and blown through most of it. At their last round, Lyft is valued at about $6B and Uber is valued at $68B. One of these is reasonable based on the taxi market size (domestic $20B), the other is about 2x over the assumed value with decent market share and margins it could attain. The only way for Uber to express the value on the books is to replace car ownership, which is unlikely with the turnover rate of individuals replacing their cars, they'll need about a decade or more runway to justify the current valuation. Lyft and GM have an advantage in the race to replace ownership, with their partnership. Lyft gets a partner that can reduce cost of vehicle supply costs and maintenance, while GM gets a hedge against a possible headwind to their current business model.
  - nawtacawp 10y ago
    Thanks for the answer, makes perfect sense.
  - brandelune 10y ago
    The problem with Uber is not the business model, it's the hype that leads to overvaluation as you properly show. Too bad the article does not make that crystal clear.
    - jimminy 10y ago
      Part of it is business model, they've outsized their market potential which is a failure of their model. It's a bit of a chicken and the egg, because it's absolutely related to their valuation. That valuation is based on a flaw somewhere in their model potential, which feeds back into the model of potential (via expressing oversized outside interest).
xmlninja 10y ago
And Internet is just a fad
- bcook 10y ago
  > And Internet is just a fad I think a statement like "...and AltaVista is just a fad" is more appropriate, considering that ride-sharing is likely to continue being relevant but the companies that provide it will come and go.
- bdcravens 10y ago
  That's a typical canned response, but there's many things about the early Internet (and Internet I assume you mean the Web) that didn't make it because they were unsustainable.
prostoalex 10y ago
The "labor-exploiting" argument seems a bit disingenious to me. It's not like someone sees an ad for Uber and tells their boss to shove it, as they're quitting their full-time job, forfeiting all the benefits and 401(k) matching to start a brand new career as an Uber driver. The alternative for many drivers is simply unemployment. While there's zero possibility of labor exploitation, it reminds me of Flight of the Conchords quote "There is no more unethical treatment of the elephants. - Well, there's no more elephants, so..."
- jrockway 10y ago
  One wonders if driving for Uber could compete with basic income. The Internet keeps telling me that all Uber drivers are unhappy. I use Uber from time to time, and about 90% of the time, the driver seems super happy to be driving for Uber. They seem happy with their compensation. Maybe all the drivers are new, this is their first week, and it all sounds good on paper. But maybe they actually like the job. I don't know.
  - hkmurakami 10y ago
    I'd be afraid of a bad review if I told a passenger I'm not happy driving for Uber. What do I have to gain from sharing this info? At best I'm where I was before and at worst maybe an Uber employee is testing me for fidelity and I could be punished. The truth is somewhere in between, and a non zero number of passengers would rate me a non-5 star if I complained about my condition. So take the info with a grain of salt.
    - JoshTriplett 10y ago
      I don't mind a driver mentioning they're not happy driving for Uber and Lyft, or that the rates have gone down in the area, or that they've had a lot of short trips today. That alone wouldn't cause me to rate a driver poorly, though I can imagine that it might for some people. I do mind when I get a 20-minute rant for the duration of the trip, though. I've had that happen once or twice, once accompanied with a less than subtle "it's possible to tip in cash".
okonomiyaki3000 10y ago
The points the article makes about Uber's drivers are kind of meaningless anyway since Uber won't even have drivers in a few years.
- deleted 10y ago
  [deleted]
- EpicEng 10y ago
  >in a few years I think you're vastly overestimating the sophistication of driverless systems.
  - intrasight 10y ago
    But it may very well be a few years before a majority of riders would ride in a driverless car
    - EpicEng 10y ago
      It's going to be far longer before driverless cars are even on the road
      - a13n 10y ago
        I'm thinking 12-16 months
      - intrasight 10y ago
        Sorry, but they're already here in Pittsburgh
        EpicEng 10y ago
        No they're not, those have people in the driver's seat. Completely different ball game.
        10y ago
summarite 10y ago
Headline grabber, but not much more. That the 'sharing economy' will not continue as today should be obvious though. Governments have to react to avoid a breakdown of regular services like taxis, assuming that they want to save them. More importantly, governments won't tolerate the tax evasion and externalisation of costs - like unemployment benefits, health care, etc. That's the main reason uber is cheaper, and it's simply not sustainable - all taxis replaced with 'volunteer' drivers makes the streets not just a bit less safer, but also will cause huge costs on welfare budgets that are not paid through the regular cut taken from salaries.
- linkregister 10y ago
  Lyft and Uber primarily market driving as a part-time way to get extra cash, not as a full-time job. Lyft has targeted typical, otherwise-employed drivers since its inception. Uber pivoted from a black car service to catch up with Lyft and its pooling service, Lyft Line. Though both services offer generous incentives to full-time drivers (extra cash per 1000 rides in a month), I would expect this to recede after enough part-time drivers can take over. When it's a side job, the lack of benefits don't matter. Many governments offer centralized health care that companies don't contribute to. I think you should limit your scope to the United States.
Fricken 10y ago
Certainly, sooner or later the liliputians will come in and tie Uber down, but it's a giant now. It's a little too late to be proselytizing about the company's imminent demise. And in spite of supposedly losing in China, Uber managed to negotiate some pretty favorable terms. Uber now has a board seat and a 20% stake in Didi, a 30 billion dollar company growing about as fast as Uber was when it was that size.
- norikki 10y ago
  Unlike the USA, China doesn't allow foreign companies to compete there. The only exception is Apple, and that's after they almost had a revolution from the unmet demand, and Apple is still given a hard time.
  - linkregister 10y ago
    Was there a regulatory obstacle to UberChina that was in the news? I was under the impression that Didi simply outperformed UberChina, from having a superior local perspective. The difference between Didi and dead or dying car-sharing services was that Didi had enough financing to withstand the race-to-the-bottom on pricing and driver incentives.
rajeck 10y ago
Bizarre answer to this question. How is he shorting Uber? In his own mind? Q: Do you really think Uber is going to collapse or be bought up by another company? A: Look , I don’t have the internal numbers to – I’m not like . . . the hedge fund guy, Jim Chanos, who shorted Enron. He had lots of research and researched this stuff. . . . Let’s put it this way: I’m shorting Uber.
- norikki 10y ago
  yea this globalist hack is saying that uber is doomed because they will get laws passed to put them out of business. It has nothing to do with research or investing
- a13n 10y ago
  Yeah I think he means he's bearish rather than he's actually got money invested in Uber losing value
memco 10y ago
As a legally blind person living in the urban sprawl of LA, I rely on Uber and Lyft heavily to be able to commute and run errands. There is a lot about these companies that remains ethically and economically questionable, but until the public transportation options in the area are as quick and accessible as these services I will continue to use them. The pricing is the most unnerving thing for me. In some cases, I am now able to get an Uber for less than the bus. I am not sure how profitable that pricing is, but it is amazingly helpful that I can now go almost anywhere a sighted and licensed person can go and not have to carve out huge chunks of my day, plan for walking with potentially heavy loads or paying too much for this service. Recently, I took a trip to Africa. It was interesting to me that even though they do not have a fancy app, you can walk out the door and find someone to take you almost anywhere you want to go. Part of our current situation is due to societal and cultural factors that don't necessarily exist everywhere. But, if we don't have Uber, I think there's still a market for affordable, on-demand rides.
- norikki 10y ago
  Yea, in Africa they have what is called a free market. Here we have local political corruption in the name of 'safety regulation'. I suppose it is cultural in the sense that we have come to expect terrible service and products.
xyzzy4 10y ago
The transportation industry is just a fad, everyone.
- maverick_iceman 10y ago
  I'm sure in the early 1900s someone said that automobiles are just a fad.
quanticle 10y ago
I don't understand the point he's making about traffic congestion. He's claiming that "Uber is putting more cars on the street". More compared to what? Compared to everyone driving themselves? If Uber wasn't around, the alternative would not be people taking public transport. The alternative wouldn't be people waiting 35 minutes for taxis. The alternative would be people driving in themselves, causing greater congestion, because they'd rather sit in traffic for an hour rather than stand out in the rain.
- ezzaf 10y ago
  That's an interesting question. I know I've tried to get a cab during a busy time and just given up and caught public transit home. Generally this is Friday and Saturday nights, when most people are in no condition to be driving themselves. I also find Uber fares are about price comparable to public transit when travelling with multiple people, and so for that reason I could see it displacing trips previously taken with public transit. Are you aware on any data on what transit modes the increased ridership of uber is displacing?
  - tluyben2 10y ago
    Besides that I would rather walk than ever take public transit, I agree; Uber is comparable in price and definitely (much, sometimes 5-8x, but mostly 3x) cheaper than regular taxis. Public transit, in my mind, should be gov owned and be free, but I know a know that won't happen any time soon. So then I would always prefer Uber. Yesterday I had some snafu with my Uber registered phone number and had to take a normal cab in Hongkong; crap old car, pissed off driver, tried to take another route and more expensive than an Uber Black. Sorry, but how does that work? I sit in a dangerous vehicle that in my country probably would not pass ITV vs a monster of a new Toyota Vellfire or Audi A8 for more money??? In the UK when I travel with my colleagues an Uber is frequently not much more expensive and sometimes cheaper than public transit; I really don't get why people pay for that stuff if you can get door to door while being able to work in quiet and comfort. It's basically like a private driver for the price of a few train tickets... The most heard complaint is that public transit is more reliable and no traffic jams... But a warm/or AC car, quiet and comfortable is a work place you can trust; I don't mind jams in those. I do mind standing in a station for a cancelled train with 2000 of my best friends in the rain and then not even getting to the door of my destination for (almost) the same price... So I do think Uber does entice more cars on the streets; I am not sure if that's the case right now, but I definitely see that it is possible. Edit: on the other hand, if I would live close to / in a city with Uber, I would not buy a car... I use it way too little to warrent the hassle. I have no idea if there are more people who have that though; seems people still have this thing about owning a car even if it makes no sense. That's not some judgement; it makes sense in very many cases but it doesn't for me and it doesn't for many others but still they have one or two :)
DigitalJack 10y ago
I'm sure uber just needs a blockchain.
mc32 10y ago
This is gold... "So, yeah, it’s great: you hit the app, and the car shows up now in 10 minutes instead of a 35-minute wait. But now the traffic congestion is so bad that you’re sitting in that car for 20 minutes longer to get anywhere... cities now are starting to discuss and deal with: traffic congestion. The traffic congestion is so much worse. Now, is it all because of Uber? Not it’s not...you suddenly have a new service that’s committed to just flooding the streets with cars, putting thousands of more cars on the street. Is it any surprise that now the streets are more congested?" This is total stream of consciousness. Is Uber multiplying the taxi fleet? How can one put so many competing statements together like that and think it's coherent? Should we revert to poor taxi experience? Will that bring down traffic congestion? What's the point?
- stepanhruda 10y ago
  Exactly the part where I stopped reading
  - mkagenius 10y ago
    I still went ahead and stopped at the following: > having a few self-driving cars on the public streets of Pittsburgh looks to me like an act of desperation — come on, what a joke: a few cars driving around Pittsburgh, and the human “non-drivers” still have to be sitting in the drivers seat? This is supposed to be a sign of progress?
- dismantlethesun 10y ago
  Medallions (whether or not they were a good solution), were intended to restrict the number of cars on the road during peak hours, and enforce some uniform regulations on all taxis (pick up people of all races, etc.) Uber's' innovation leads to a fleet that's easier to regulate due to constant monitoring, and pre-booking data. However, when it comes to traffic congestion, their solution is pure demand-side economics: increase prices as high as the market can bear. This means with no cap on supply, more and more cars will get put on the road to serve as part of the private fleet and it's the cities that have to bear the increased costs of road construction & maintenance. My only hope is that rather than make cities crack down on Uber to maintain the status quo, they'll instead invest heavily in public transportation so all cities can have something on par to NYC today, and NYC tomorrow can have something on par to Tokyo.
barney54 10y ago
From the title I hoped it the article would make an interesting argument, but most of it was the same complaints about Uber that we have heard for years including that Uber evades livery laws. Well, livery laws are terrible and unjust, as are taxi medallions. Complaining about Iner drivers not being professional also misses the mark because they are much better than regular taxi drivers in my experience. Has this guy actually tried Uber?
- necessity 10y ago
  The whole article sounds like a PR piece, I'm surprised it was so well received here.
  - tonylemesmer 10y ago
    I agree. Found myself liking Uber more after the first couple of questions.
deleted 10y ago
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kfe 10y ago
As others have already noted, uber is not about replacing human drivers with human drivers, but about going driverless. To me a more interesting question is the whole sharing economy and it's relation to traditional regulation. Restaurants, hotels, taxies, etc have long been heavily regulated to ensure that so you don't get salmonellosis, don't have to deal with cockroaches or die in a car crash because of an incompetent driver. As the whole "sharing economy thing" is about information - the question is - can better movement of information replace the need for traditional government regulation in those fields (in the form of ratings, web of trust, etc)?
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PakG1 10y ago
The quality of the article isn't that great. But it made me think about this anyway. If Uber can achieve Kalanick's stated end game goal of driverless cars, it will absolutely last. A lot of Uber's pressures come with having to deal with drivers. I don't know what percentage, but it's significant. Variable costs, legal issues, ride quality, and so on. If all of that disappears, Uber is playing an entirely different game that it is much better poised to stick around for long-term. That the OP criticizes Uber's Pittsburgh efforts is disingenuous because it's only a beta-phase pilot. Of course, it's that simple right now. You'd want them to go through this careful pilot phase because the concept released on the streets without full testing is so dangerous. It's an extremely tough nut to crack. But IF they crack it, they're in for the long haul. "Big Taxi" as he calls it doesn't have the desire, technical expertise, freedom, or guts to achieve the self-driving car vision. For one thing, the business is structured too much around drivers paying franchise fees. In the meantime, Uber has already multiple times shown a willingness to throw a big FU at its own drivers, so it's not actually that hard to see them one day discarding their drivers for self-driving cars and keeping all of the profit rent.
- pfarnsworth 10y ago
  It's the opposite. Once fully self-driving cars are completely actualized, then ridesharing companies like Uber will collapse, because the entire thing becomes a commodity. Right now, there's a lot more to Uber and ride-sharing than just matching cars and riders. There are layers of complexities that are created because you need to deal with real humans on both ends. Once you get rid of human drivers, anyone can build a ride-sharing system. It just takes enough money to buy enough cars, and the ride sharing app, and that's it. Uber would then be competing against anyone and everyone, and then it's a race to $0, maybe even it turns into a free ride if you watch ads all drive long.
  - PakG1 10y ago
    Yeah, but the self-driving tech is a proprietary trade secret. Tesla's not sharing their self-driving tech. GM is not sharing their self-driving tech. Uber is not sharing their self-driving tech. If that moat is not easily surmountable, Uber has a long-term fighting chance. Uber does not have a long-term fighting chance if they stick with traditional drivers. It's like ISPs, no? Back in the day, anyone could become an ISP, just lease various telephone lines for running 33.6kbps to customers, and if you wanted to go fancy, T1. At the end of the day, telecom providers found it much nicer to keep their lines and become the ISPs themselves. It wasn't profitable for 3rd parties to lease those lines and try to be an ISP. Ridesharing companies similarly don't have their own cars and tech, they need to use someone else's cars and tech. Car manufacturers are making a similar switch as what ISPs did; they see a logical road that leads to becoming ridesharing companies. Uber is trying to flip the game and develop their own technology to become an ISP that owns its own lines. They're not trying to manufacture the cars though. They're just trying to manufacture the tech that goes on top of the cars, since they don't have manufacturing expertise. It'll be enough to just buy the cars from someone else and put their tech on top.
pfarnsworth 10y ago
One of my Uber drivers in the SF Bay Area told me that she went from making about $30/hr working in IT at a Fortune 500 company to making $40/hr driving for Uber. She has been driving for over a year, and quit her job about 9 months ago and had been driving full time, during the day. She knew how to work the incentives and the surge so that she maximized her earnings, and instead of working 8+ hrs a day, she opted to work 5-6 hrs a day and maintain the same life style. I asked her about the costs, and she has that all accounted for, including gas and depreciation. She wishes she had known about the Uber lease plan because she said that was superior because it gave free maintenance and the ability to change cars once a year. I don't know enough about it to comment, but she seemed to be pretty happy about it and 90% of the drivers I've talked to are more than happy.
- a13n 10y ago
  Just wait till they all get laid off at once in favor of self driving cars and then ask how happy they are. This job isn't here to stay.
  - tjbiddle 10y ago
    It's the same with any industry that's automated - it's not going to all happen at once. Self-driving cars will start to be introduced, and slowly human drivers will begin to pull out. The rug isn't going to be swept out from under them and they'll have time to adapt. In the meantime - a driver is free to capitalize on it how they see fit.
- foepys 10y ago
  Can't Uber dictate the price? Like if Uber doesn't feel like being expensive at rush hours to promote their service, drivers are paid less, aren't they? Also, what happens if more people learn about this and start driving for Uber? Wouldn't this lower the price for everyone? I feel like your Uber driver is gambling with their income by quitting a stable paying job. Then again maybe the job wasn't that good.
  - mvid 10y ago
Animats 10y ago
As criticism of Uber goes, this is kind of weak. Uber's big problem is simply that they lose money. They still have to use investor capital to buy market share. That shouldn't be necessary at their present size. Also, Uber has run out of investor financing and is now using leveraged loans.[1] Those have to be paid back. Their 2015 financing was a six year convertible bond. The bondholders get the right to participate in any future IPO at 20%-30% below the IPO price. Their 2016 financing is similar. Uber may be Webvan 2.0. Anyone remember when Webvan had their little trucks running around everywhere in major cities? [1] http://www.wsj.com/articles/uber-raises-1-15-billion-from-first-leveraged-loan-1467934151 http://www.wsj.com/articles/uber-raises-1-15-billion-from-fi...
- linkregister 10y ago
  Ironically, Amazon has resurrected Webvan with several of its former higher-ups [1]. Maybe Amazon will wait for the Uber/Lyft flameout and hire the nascent companies' experts to make its own profitable service. [1] http://www.reuters.com/article/net-us-amazon-webvan-idUSBRE95H1CC20130618 http://www.reuters.com/article/net-us-amazon-webvan-idUSBRE9...
  - Animats 10y ago
    Not quite the top "higher-ups". Amazon had no use for George Shaheen, Webvan's CEO. The people Amazon got were the operations people and the Kiva robotics guys.
kayoone 10y ago
Uber's biggest problem is the rate at which they burn cash and their $70B valuation which imo will be very hard to justify in the next 5 years. If that hype train stops getting funded, it might crash badly.
jpkeisala 10y ago
I have welcomed Uber to Europe with open hands but I really don't understand why they consider they should not apply to same laws as it has been put to Taxi drivers?
- shambala 10y ago
  Because the laws are outmoded and terrible.
tjbiddle 10y ago
People can say all they want: That self-driving cars will take over, that Uber is over-valued, that Uber shouldn't have bet on China, that the industry won't last, that people don't want xyz. Things aren't so black and white - and the market is different in different parts of the world, for better or worse. I've been living in Indonesia (I'm an American citizen) for the past year and GO-Jek is the big runner here. It's huge, all of my friends use it, and it's damn well the most convenient thing I've used in a while - and it offers even more than Uber: Motorbike rides, car rides, cleaning services, massages, food delivery, item shipment, etc. It definitely has some kinks - but it's growing, and fast. Now Uber came in last year and I've watched it's growth - they're subsidizing drivers by 50%; what would cost me normally $20 from a taxi driver on the street costs me $8-10 with Uber, and the drivers get paid the same. But there are also issues they have to deal with - such as restricted zones for pickups. The idea as a whole is here to stay; it will be improved on continuously, features will be added and removed, run-ins with governments and failed investments will be a part of the process - but peer-to-peer transportation and delivery will increase 10-fold.
- jventura 10y ago
  It's called race to the bottom..

70 points by dannylandau 10y ago

GM invested $500 million in Lyft earlier this year. I guess, they have a different view on where the market is headed. http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160105 http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN...

mmackh 10y ago
Direct quote from the article "Hill believes ride-sharing may be here to stay, but Uber is not"
- nawtacawp 10y ago
  I wish he would have expanded on that. Why would one fail and another not, when the companies have the exact same model?
  - jimminy 10y ago
    I explained above, but Uber is way over-valued to the point that they cannot have a reasonable IPO and acquisitions are off the table to all but a few companies that don't need that business and can acquire a direct competitor at a more reasonable expense.
    - prostoalex 10y ago
      Box and Facebook both had IPOs that priced them below the last private round, and yet are limping along. Seems like positive cashflow is the key.
      - jimminy 10y ago
        For Facebook, that is absolutely false. Their last known valuation prior to IPO based on a raise was $65B (March 2011), they IPO'd at $104B. And Box had a small downward valuation shift (-36%, -$0.9B), between last raised valuation and IPO. Uber's numbers even giving them liberal growth potential of 500% places them at around $33.75B (-50% current value, -$34B).
        prostoalex 10y ago
        Well, you're right, FB initial IPO price on day 1 was above the pricing in the last private round. However, shortly after, and by "shortly" I mean within 3-4 months after the IPO when most of the insiders were still under lock-up, a single share of FB could've been bought for high teens, which was at a significant discount to the last round.
        jimminy 10y ago
        That discussion isn't that relevant, when you're trying to figure out this kind of valuation though. The reason for that dip was largely 90 and 180 day lock-ups increasing supply of shares traded as employees sold stock. Also there were economic fears helping pressure the stock down. FB's valuation at IPO was still smaller than it's primary domestic market's (ad spending) size ($165B in 2012). Uber's primary domestic market (taxis) is only valued at ($20B), so if they captured all of the US taxi, their current valuation requires them to capture over 300% of the market.^ Now obviously that's not a perfect barometer. There are other variables and adjustments to make, but it makes it very clear that there is limited upside potential. Without claiming another market (ownership), it's actually damn near impossible. They've also ceded competition in the Chinese market to DiDi, so they can't make it up via global expansion either. ^edit (Obviously, this is a 1x multiple, as you increase to more reasonable values it drops the share required, but you have to push it pretty hard to reduce market share to a decent level.)
jimminy 10y ago
The valuations and conditions between Lyft and Uber are drastically different. Lyft with the funding from GM has only raised $2B over it's lifespan which is comparable to that of Uber. Uber has raised nearly $13B and blown through most of it. At their last round, Lyft is valued at about $6B and Uber is valued at $68B. One of these is reasonable based on the taxi market size (domestic $20B), the other is about 2x over the assumed value with decent market share and margins it could attain. The only way for Uber to express the value on the books is to replace car ownership, which is unlikely with the turnover rate of individuals replacing their cars, they'll need about a decade or more runway to justify the current valuation. Lyft and GM have an advantage in the race to replace ownership, with their partnership. Lyft gets a partner that can reduce cost of vehicle supply costs and maintenance, while GM gets a hedge against a possible headwind to their current business model.
- nawtacawp 10y ago
  Thanks for the answer, makes perfect sense.
- brandelune 10y ago
  The problem with Uber is not the business model, it's the hype that leads to overvaluation as you properly show. Too bad the article does not make that crystal clear.
  - jimminy 10y ago
    Part of it is business model, they've outsized their market potential which is a failure of their model. It's a bit of a chicken and the egg, because it's absolutely related to their valuation. That valuation is based on a flaw somewhere in their model potential, which feeds back into the model of potential (via expressing oversized outside interest).

xmlninja 10y ago

And Internet is just a fad

bcook 10y ago
> And Internet is just a fad I think a statement like "...and AltaVista is just a fad" is more appropriate, considering that ride-sharing is likely to continue being relevant but the companies that provide it will come and go.
bdcravens 10y ago
That's a typical canned response, but there's many things about the early Internet (and Internet I assume you mean the Web) that didn't make it because they were unsustainable.

prostoalex 10y ago

The "labor-exploiting" argument seems a bit disingenious to me. It's not like someone sees an ad for Uber and tells their boss to shove it, as they're quitting their full-time job, forfeiting all the benefits and 401(k) matching to start a brand new career as an Uber driver. The alternative for many drivers is simply unemployment. While there's zero possibility of labor exploitation, it reminds me of Flight of the Conchords quote "There is no more unethical treatment of the elephants. - Well, there's no more elephants, so..."

jrockway 10y ago
One wonders if driving for Uber could compete with basic income. The Internet keeps telling me that all Uber drivers are unhappy. I use Uber from time to time, and about 90% of the time, the driver seems super happy to be driving for Uber. They seem happy with their compensation. Maybe all the drivers are new, this is their first week, and it all sounds good on paper. But maybe they actually like the job. I don't know.
- hkmurakami 10y ago
  I'd be afraid of a bad review if I told a passenger I'm not happy driving for Uber. What do I have to gain from sharing this info? At best I'm where I was before and at worst maybe an Uber employee is testing me for fidelity and I could be punished. The truth is somewhere in between, and a non zero number of passengers would rate me a non-5 star if I complained about my condition. So take the info with a grain of salt.
  - JoshTriplett 10y ago
    I don't mind a driver mentioning they're not happy driving for Uber and Lyft, or that the rates have gone down in the area, or that they've had a lot of short trips today. That alone wouldn't cause me to rate a driver poorly, though I can imagine that it might for some people. I do mind when I get a 20-minute rant for the duration of the trip, though. I've had that happen once or twice, once accompanied with a less than subtle "it's possible to tip in cash".

okonomiyaki3000 10y ago

The points the article makes about Uber's drivers are kind of meaningless anyway since Uber won't even have drivers in a few years.

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EpicEng 10y ago
>in a few years I think you're vastly overestimating the sophistication of driverless systems.
- intrasight 10y ago
  But it may very well be a few years before a majority of riders would ride in a driverless car
  - EpicEng 10y ago
    It's going to be far longer before driverless cars are even on the road
    - a13n 10y ago
      I'm thinking 12-16 months
    - intrasight 10y ago
      Sorry, but they're already here in Pittsburgh
      - EpicEng 10y ago
        No they're not, those have people in the driver's seat. Completely different ball game.
        10y ago

summarite 10y ago

Headline grabber, but not much more. That the 'sharing economy' will not continue as today should be obvious though. Governments have to react to avoid a breakdown of regular services like taxis, assuming that they want to save them. More importantly, governments won't tolerate the tax evasion and externalisation of costs - like unemployment benefits, health care, etc. That's the main reason uber is cheaper, and it's simply not sustainable - all taxis replaced with 'volunteer' drivers makes the streets not just a bit less safer, but also will cause huge costs on welfare budgets that are not paid through the regular cut taken from salaries.

linkregister 10y ago
Lyft and Uber primarily market driving as a part-time way to get extra cash, not as a full-time job. Lyft has targeted typical, otherwise-employed drivers since its inception. Uber pivoted from a black car service to catch up with Lyft and its pooling service, Lyft Line. Though both services offer generous incentives to full-time drivers (extra cash per 1000 rides in a month), I would expect this to recede after enough part-time drivers can take over. When it's a side job, the lack of benefits don't matter. Many governments offer centralized health care that companies don't contribute to. I think you should limit your scope to the United States.

Fricken 10y ago

Certainly, sooner or later the liliputians will come in and tie Uber down, but it's a giant now. It's a little too late to be proselytizing about the company's imminent demise. And in spite of supposedly losing in China, Uber managed to negotiate some pretty favorable terms. Uber now has a board seat and a 20% stake in Didi, a 30 billion dollar company growing about as fast as Uber was when it was that size.

norikki 10y ago
Unlike the USA, China doesn't allow foreign companies to compete there. The only exception is Apple, and that's after they almost had a revolution from the unmet demand, and Apple is still given a hard time.
- linkregister 10y ago
  Was there a regulatory obstacle to UberChina that was in the news? I was under the impression that Didi simply outperformed UberChina, from having a superior local perspective. The difference between Didi and dead or dying car-sharing services was that Didi had enough financing to withstand the race-to-the-bottom on pricing and driver incentives.

rajeck 10y ago

Bizarre answer to this question. How is he shorting Uber? In his own mind? Q: Do you really think Uber is going to collapse or be bought up by another company? A: Look , I don’t have the internal numbers to – I’m not like . . . the hedge fund guy, Jim Chanos, who shorted Enron. He had lots of research and researched this stuff. . . . Let’s put it this way: I’m shorting Uber.

norikki 10y ago
yea this globalist hack is saying that uber is doomed because they will get laws passed to put them out of business. It has nothing to do with research or investing
a13n 10y ago
Yeah I think he means he's bearish rather than he's actually got money invested in Uber losing value

memco 10y ago

As a legally blind person living in the urban sprawl of LA, I rely on Uber and Lyft heavily to be able to commute and run errands. There is a lot about these companies that remains ethically and economically questionable, but until the public transportation options in the area are as quick and accessible as these services I will continue to use them. The pricing is the most unnerving thing for me. In some cases, I am now able to get an Uber for less than the bus. I am not sure how profitable that pricing is, but it is amazingly helpful that I can now go almost anywhere a sighted and licensed person can go and not have to carve out huge chunks of my day, plan for walking with potentially heavy loads or paying too much for this service. Recently, I took a trip to Africa. It was interesting to me that even though they do not have a fancy app, you can walk out the door and find someone to take you almost anywhere you want to go. Part of our current situation is due to societal and cultural factors that don't necessarily exist everywhere. But, if we don't have Uber, I think there's still a market for affordable, on-demand rides.

norikki 10y ago
Yea, in Africa they have what is called a free market. Here we have local political corruption in the name of 'safety regulation'. I suppose it is cultural in the sense that we have come to expect terrible service and products.

xyzzy4 10y ago

The transportation industry is just a fad, everyone.

maverick_iceman 10y ago
I'm sure in the early 1900s someone said that automobiles are just a fad.

quanticle 10y ago

I don't understand the point he's making about traffic congestion. He's claiming that "Uber is putting more cars on the street". More compared to what? Compared to everyone driving themselves? If Uber wasn't around, the alternative would not be people taking public transport. The alternative wouldn't be people waiting 35 minutes for taxis. The alternative would be people driving in themselves, causing greater congestion, because they'd rather sit in traffic for an hour rather than stand out in the rain.

ezzaf 10y ago
That's an interesting question. I know I've tried to get a cab during a busy time and just given up and caught public transit home. Generally this is Friday and Saturday nights, when most people are in no condition to be driving themselves. I also find Uber fares are about price comparable to public transit when travelling with multiple people, and so for that reason I could see it displacing trips previously taken with public transit. Are you aware on any data on what transit modes the increased ridership of uber is displacing?
- tluyben2 10y ago
  Besides that I would rather walk than ever take public transit, I agree; Uber is comparable in price and definitely (much, sometimes 5-8x, but mostly 3x) cheaper than regular taxis. Public transit, in my mind, should be gov owned and be free, but I know a know that won't happen any time soon. So then I would always prefer Uber. Yesterday I had some snafu with my Uber registered phone number and had to take a normal cab in Hongkong; crap old car, pissed off driver, tried to take another route and more expensive than an Uber Black. Sorry, but how does that work? I sit in a dangerous vehicle that in my country probably would not pass ITV vs a monster of a new Toyota Vellfire or Audi A8 for more money??? In the UK when I travel with my colleagues an Uber is frequently not much more expensive and sometimes cheaper than public transit; I really don't get why people pay for that stuff if you can get door to door while being able to work in quiet and comfort. It's basically like a private driver for the price of a few train tickets... The most heard complaint is that public transit is more reliable and no traffic jams... But a warm/or AC car, quiet and comfortable is a work place you can trust; I don't mind jams in those. I do mind standing in a station for a cancelled train with 2000 of my best friends in the rain and then not even getting to the door of my destination for (almost) the same price... So I do think Uber does entice more cars on the streets; I am not sure if that's the case right now, but I definitely see that it is possible. Edit: on the other hand, if I would live close to / in a city with Uber, I would not buy a car... I use it way too little to warrent the hassle. I have no idea if there are more people who have that though; seems people still have this thing about owning a car even if it makes no sense. That's not some judgement; it makes sense in very many cases but it doesn't for me and it doesn't for many others but still they have one or two :)

DigitalJack 10y ago

I'm sure uber just needs a blockchain.

mc32 10y ago

This is gold... "So, yeah, it’s great: you hit the app, and the car shows up now in 10 minutes instead of a 35-minute wait. But now the traffic congestion is so bad that you’re sitting in that car for 20 minutes longer to get anywhere... cities now are starting to discuss and deal with: traffic congestion. The traffic congestion is so much worse. Now, is it all because of Uber? Not it’s not...you suddenly have a new service that’s committed to just flooding the streets with cars, putting thousands of more cars on the street. Is it any surprise that now the streets are more congested?" This is total stream of consciousness. Is Uber multiplying the taxi fleet? How can one put so many competing statements together like that and think it's coherent? Should we revert to poor taxi experience? Will that bring down traffic congestion? What's the point?

stepanhruda 10y ago
Exactly the part where I stopped reading
- mkagenius 10y ago
  I still went ahead and stopped at the following: > having a few self-driving cars on the public streets of Pittsburgh looks to me like an act of desperation — come on, what a joke: a few cars driving around Pittsburgh, and the human “non-drivers” still have to be sitting in the drivers seat? This is supposed to be a sign of progress?
dismantlethesun 10y ago
Medallions (whether or not they were a good solution), were intended to restrict the number of cars on the road during peak hours, and enforce some uniform regulations on all taxis (pick up people of all races, etc.) Uber's' innovation leads to a fleet that's easier to regulate due to constant monitoring, and pre-booking data. However, when it comes to traffic congestion, their solution is pure demand-side economics: increase prices as high as the market can bear. This means with no cap on supply, more and more cars will get put on the road to serve as part of the private fleet and it's the cities that have to bear the increased costs of road construction & maintenance. My only hope is that rather than make cities crack down on Uber to maintain the status quo, they'll instead invest heavily in public transportation so all cities can have something on par to NYC today, and NYC tomorrow can have something on par to Tokyo.

barney54 10y ago

From the title I hoped it the article would make an interesting argument, but most of it was the same complaints about Uber that we have heard for years including that Uber evades livery laws. Well, livery laws are terrible and unjust, as are taxi medallions. Complaining about Iner drivers not being professional also misses the mark because they are much better than regular taxi drivers in my experience. Has this guy actually tried Uber?

necessity 10y ago
The whole article sounds like a PR piece, I'm surprised it was so well received here.
- tonylemesmer 10y ago
  I agree. Found myself liking Uber more after the first couple of questions.

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kfe 10y ago

As others have already noted, uber is not about replacing human drivers with human drivers, but about going driverless. To me a more interesting question is the whole sharing economy and it's relation to traditional regulation. Restaurants, hotels, taxies, etc have long been heavily regulated to ensure that so you don't get salmonellosis, don't have to deal with cockroaches or die in a car crash because of an incompetent driver. As the whole "sharing economy thing" is about information - the question is - can better movement of information replace the need for traditional government regulation in those fields (in the form of ratings, web of trust, etc)?

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PakG1 10y ago

The quality of the article isn't that great. But it made me think about this anyway. If Uber can achieve Kalanick's stated end game goal of driverless cars, it will absolutely last. A lot of Uber's pressures come with having to deal with drivers. I don't know what percentage, but it's significant. Variable costs, legal issues, ride quality, and so on. If all of that disappears, Uber is playing an entirely different game that it is much better poised to stick around for long-term. That the OP criticizes Uber's Pittsburgh efforts is disingenuous because it's only a beta-phase pilot. Of course, it's that simple right now. You'd want them to go through this careful pilot phase because the concept released on the streets without full testing is so dangerous. It's an extremely tough nut to crack. But IF they crack it, they're in for the long haul. "Big Taxi" as he calls it doesn't have the desire, technical expertise, freedom, or guts to achieve the self-driving car vision. For one thing, the business is structured too much around drivers paying franchise fees. In the meantime, Uber has already multiple times shown a willingness to throw a big FU at its own drivers, so it's not actually that hard to see them one day discarding their drivers for self-driving cars and keeping all of the profit rent.

pfarnsworth 10y ago
It's the opposite. Once fully self-driving cars are completely actualized, then ridesharing companies like Uber will collapse, because the entire thing becomes a commodity. Right now, there's a lot more to Uber and ride-sharing than just matching cars and riders. There are layers of complexities that are created because you need to deal with real humans on both ends. Once you get rid of human drivers, anyone can build a ride-sharing system. It just takes enough money to buy enough cars, and the ride sharing app, and that's it. Uber would then be competing against anyone and everyone, and then it's a race to $0, maybe even it turns into a free ride if you watch ads all drive long.
- PakG1 10y ago
  Yeah, but the self-driving tech is a proprietary trade secret. Tesla's not sharing their self-driving tech. GM is not sharing their self-driving tech. Uber is not sharing their self-driving tech. If that moat is not easily surmountable, Uber has a long-term fighting chance. Uber does not have a long-term fighting chance if they stick with traditional drivers. It's like ISPs, no? Back in the day, anyone could become an ISP, just lease various telephone lines for running 33.6kbps to customers, and if you wanted to go fancy, T1. At the end of the day, telecom providers found it much nicer to keep their lines and become the ISPs themselves. It wasn't profitable for 3rd parties to lease those lines and try to be an ISP. Ridesharing companies similarly don't have their own cars and tech, they need to use someone else's cars and tech. Car manufacturers are making a similar switch as what ISPs did; they see a logical road that leads to becoming ridesharing companies. Uber is trying to flip the game and develop their own technology to become an ISP that owns its own lines. They're not trying to manufacture the cars though. They're just trying to manufacture the tech that goes on top of the cars, since they don't have manufacturing expertise. It'll be enough to just buy the cars from someone else and put their tech on top.

pfarnsworth 10y ago

One of my Uber drivers in the SF Bay Area told me that she went from making about $30/hr working in IT at a Fortune 500 company to making $40/hr driving for Uber. She has been driving for over a year, and quit her job about 9 months ago and had been driving full time, during the day. She knew how to work the incentives and the surge so that she maximized her earnings, and instead of working 8+ hrs a day, she opted to work 5-6 hrs a day and maintain the same life style. I asked her about the costs, and she has that all accounted for, including gas and depreciation. She wishes she had known about the Uber lease plan because she said that was superior because it gave free maintenance and the ability to change cars once a year. I don't know enough about it to comment, but she seemed to be pretty happy about it and 90% of the drivers I've talked to are more than happy.

a13n 10y ago
Just wait till they all get laid off at once in favor of self driving cars and then ask how happy they are. This job isn't here to stay.
- tjbiddle 10y ago
  It's the same with any industry that's automated - it's not going to all happen at once. Self-driving cars will start to be introduced, and slowly human drivers will begin to pull out. The rug isn't going to be swept out from under them and they'll have time to adapt. In the meantime - a driver is free to capitalize on it how they see fit.
foepys 10y ago
Can't Uber dictate the price? Like if Uber doesn't feel like being expensive at rush hours to promote their service, drivers are paid less, aren't they? Also, what happens if more people learn about this and start driving for Uber? Wouldn't this lower the price for everyone? I feel like your Uber driver is gambling with their income by quitting a stable paying job. Then again maybe the job wasn't that good.
- mvid 10y ago

Animats 10y ago

As criticism of Uber goes, this is kind of weak. Uber's big problem is simply that they lose money. They still have to use investor capital to buy market share. That shouldn't be necessary at their present size. Also, Uber has run out of investor financing and is now using leveraged loans.[1] Those have to be paid back. Their 2015 financing was a six year convertible bond. The bondholders get the right to participate in any future IPO at 20%-30% below the IPO price. Their 2016 financing is similar. Uber may be Webvan 2.0. Anyone remember when Webvan had their little trucks running around everywhere in major cities? [1] http://www.wsj.com/articles/uber-raises-1-15-billion-from-first-leveraged-loan-1467934151 http://www.wsj.com/articles/uber-raises-1-15-billion-from-fi...

linkregister 10y ago
Ironically, Amazon has resurrected Webvan with several of its former higher-ups [1]. Maybe Amazon will wait for the Uber/Lyft flameout and hire the nascent companies' experts to make its own profitable service. [1] http://www.reuters.com/article/net-us-amazon-webvan-idUSBRE95H1CC20130618 http://www.reuters.com/article/net-us-amazon-webvan-idUSBRE9...
- Animats 10y ago
  Not quite the top "higher-ups". Amazon had no use for George Shaheen, Webvan's CEO. The people Amazon got were the operations people and the Kiva robotics guys.

kayoone 10y ago

Uber's biggest problem is the rate at which they burn cash and their $70B valuation which imo will be very hard to justify in the next 5 years. If that hype train stops getting funded, it might crash badly.

jpkeisala 10y ago

I have welcomed Uber to Europe with open hands but I really don't understand why they consider they should not apply to same laws as it has been put to Taxi drivers?

shambala 10y ago
Because the laws are outmoded and terrible.

tjbiddle 10y ago

People can say all they want: That self-driving cars will take over, that Uber is over-valued, that Uber shouldn't have bet on China, that the industry won't last, that people don't want xyz. Things aren't so black and white - and the market is different in different parts of the world, for better or worse. I've been living in Indonesia (I'm an American citizen) for the past year and GO-Jek is the big runner here. It's huge, all of my friends use it, and it's damn well the most convenient thing I've used in a while - and it offers even more than Uber: Motorbike rides, car rides, cleaning services, massages, food delivery, item shipment, etc. It definitely has some kinks - but it's growing, and fast. Now Uber came in last year and I've watched it's growth - they're subsidizing drivers by 50%; what would cost me normally $20 from a taxi driver on the street costs me $8-10 with Uber, and the drivers get paid the same. But there are also issues they have to deal with - such as restricted zones for pickups. The idea as a whole is here to stay; it will be improved on continuously, features will be added and removed, run-ins with governments and failed investments will be a part of the process - but peer-to-peer transportation and delivery will increase 10-fold.

jventura 10y ago
It's called race to the bottom..