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Amzn and tsla started reporting profits just recently. Would you call them failure?

zitterbewegung 10y ago
Amzn is profitable without burning through investment capital. Tesla is in a much better position but it also could still fail .
- sharemywin 10y ago
  Amzn prints money with web services. practically 0 marginal costs.
krambs 10y ago
I don't think he's saying that it will take a long time for them to turn a profit, but that they never will (or only ever will see the tiny profit margins that, say, the airline industry does).
bryanlarsen 10y ago
As far as an investor in Uber is concerned success means valuation going up; failure means valuation going down.
epistasis 10y ago
He addresses that notion: >In this regard Uber is pretty different from other fast growing startups. >Economies of scale won’t help, since Uber has a high fixed cost per unit associated with their service - the drivers - that won’t become significantly cheaper as the service grows. >Network effects are mostly irrelevant for Uber’s business. Yes, they need a large supply of drivers to make the service viable, but this isn’t an advantage of Uber compared to regular cabs which have sufficient availability in most cities. I also don’t see a potential network effect in Uber’s global availability. Most users take rides in their home city and they would happily switch to a local competitor with lower prices, even if that means they would need to use a different service when they are traveling. Also, Tesla will continue to generate losses until they hit full scale and stop growing, at which point they will have the economies of scale that they need to deliver profits. Amazon's "profits" or "losses" are miniscule in comparison to revenue, because they are reinvesting so much. Uber has huge losses because they are taking a loss on each ride; which would be fine if they would get something out of that growth. Amazon gets better distribution, better deals with manufacturers, and other economies of scale. What efficiency gains does Uber get as it grows? Uber pool? Is that going to be a big profit source in the future?
tdb7893 10y ago
Amazon and Tesla both required large capital expenditures to get running and get more efficient. It's not like Amazon was actually losing money each sale like Uber is.

Amzn is profitable without burning through investment capital. Tesla is in a much better position but it also could still fail .

sharemywin 10y ago
Amzn prints money with web services. practically 0 marginal costs.

krambs 10y ago

I don't think he's saying that it will take a long time for them to turn a profit, but that they never will (or only ever will see the tiny profit margins that, say, the airline industry does).

bryanlarsen 10y ago

As far as an investor in Uber is concerned success means valuation going up; failure means valuation going down.

epistasis 10y ago

He addresses that notion: >In this regard Uber is pretty different from other fast growing startups. >Economies of scale won’t help, since Uber has a high fixed cost per unit associated with their service - the drivers - that won’t become significantly cheaper as the service grows. >Network effects are mostly irrelevant for Uber’s business. Yes, they need a large supply of drivers to make the service viable, but this isn’t an advantage of Uber compared to regular cabs which have sufficient availability in most cities. I also don’t see a potential network effect in Uber’s global availability. Most users take rides in their home city and they would happily switch to a local competitor with lower prices, even if that means they would need to use a different service when they are traveling. Also, Tesla will continue to generate losses until they hit full scale and stop growing, at which point they will have the economies of scale that they need to deliver profits. Amazon's "profits" or "losses" are miniscule in comparison to revenue, because they are reinvesting so much. Uber has huge losses because they are taking a loss on each ride; which would be fine if they would get something out of that growth. Amazon gets better distribution, better deals with manufacturers, and other economies of scale. What efficiency gains does Uber get as it grows? Uber pool? Is that going to be a big profit source in the future?

tdb7893 10y ago

Amazon and Tesla both required large capital expenditures to get running and get more efficient. It's not like Amazon was actually losing money each sale like Uber is.