7 ms·

I don't understand his point. Maybe I'm dense (today, ha). If Uber has a (simplified) split cost per drive consisting of vehicle (+maintenance) and/or fuel & d

I don't understand his point. Maybe I'm dense (today, ha). If Uber has a (simplified) split cost per drive consisting of vehicle (+maintenance) and/or fuel & driver. If subsidised part is generally covering the driver part. When you replace driver with autonomous vehicle and you remove subsidies, you're left with a sustainable (presumably) model on a certain margin that is already rolling. Rolling in a sense that it is already an established business - people know it and use it. You've used subsidies (well, investors cash) to build a business. Of course, this relies on a presumption they will build a sustainable model on replacing drivers with autonomous vehicles. It also presumes they will not venture into other, (potentially) more profitable business like logistics. One thing is certain. They are positioning themselves for a great catch which relies on few key components working in the (near) future. I think real hazard for Uber is regulation (autonomous vehicles for example) and market regulations (see taxi debates in Europe).

ithinkinstereo 10y ago
The author's not making the point that there is no margin, but rather that with self-driving cars it'll be a quick race to the bottom against competitors, thus eroding whatever margins Uber is left with after replacing human drivers.
- Keyframe 10y ago
  Question is, who are competitors with same scope as them? I don't know any. They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right.
  - ithinkinstereo 10y ago
    > Question is, who are competitors with same scope as them? I don't know any. Presumably traditional car manufacturers (GM, Ford, Toyota, BMW, etc.), upstart car manufacturers (Tesla), and even other large tech conglomerates (Google, Baidu, etc.). > They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right. Uber won't have a monopoly in self-driving tech. Their running start will get eroded (some would argue quickly) by new challengers (probably regional upstarts rather than a global competitor) that have easy access to self-driving tech (think car manufacturers). Also, Uber's network is mostly on the software and human (drivers) side of things. If self-driving tech becomes a reality, they'll have to quickly pivot to purchasing and maintaining a large fleet of cars. That's not an easy task at scale and not something that Uber necessarily has an advantage over others.
    - Keyframe 10y ago
      Why aren't car manufacturers already in logistics business? Or are they? I'm trying to find sources. I see VW has its own logistics group, but only for their own use.
      - xemdetia 10y ago
        In the US at least (I haven't ever bothered to look at how branded car dealers exist outside the US), they already have a network of physical locations where they can ship anything and service anything they sell. There are also the rental agencies and the people that manage fleets of private vehicles that work directly with the local dealers on behest of the global organization- Uber doesn't have this and would have to build it. Right now they are pushing that part of the logistics of their organization on their drivers since it is their own personal vehicle. This is something you can see Tesla having to do the hard way in comparison with their coast to coast supercharger network. There was no physical infrastructure to support their product so they had to build it, and established car dealers already have it which is part of why Tesla overcoming that was such a challenge. If I have a US make car in the US and I am in a moderately populated area I can make a reasonable assumption I can get to a dealer in an hour or two wherever I may be, and Uber would have to overcome that.
      - secabeen 10y ago
        They have been. Between 1987 and 2005, Hertz was owned by Ford and Volvo. They spun it off to private equity in 2005, but it has happened in the past.
    - dragonwriter 10y ago
      Google may be a competitor, but it may be more of an enabler of competitors to Uber, by way of, e.g., it's ridesharing feature in Maps.
  - Qworg 10y ago
    What is scope for Uber-likes? What is network? They're simply leveraging a brand - it is almost no moat versus a competitor, especially if they have a structural advantage. An example advantage would be an autonomous car manufacturer entering the market - they can simply blow Uber out of the water on cost alone.
    - Keyframe 10y ago
      No moat? Do you think brand recognition is worthless or I'm missing something? They have a large user base (I presume) already. I'm not sure one could build one from scratch just like that. It would need a big player to enter the game.
      - amclennon 10y ago
        I imagine a company like Ford, Chrysler, or any other large car manufacturer would have equal if not greater brand recognition compared to Uber. These would be the biggest threat to Uber's market share since they could easily compete on cost and distribution alone.
  - majewsky 10y ago
    Any larger car company is a competitor at the same scale. And you don't even need a competitor of the same scale: It's enough if every city has a local competitor.
    - Ben-G 10y ago
      Yep, that's exactly one of the points I was trying to make.
  - vitaminbandit 10y ago
    As far as war chest goes, Uber basically has no competition. As far as their routing and vehicle management algorithms go, there already exist companies with more sophisticated routing systems than Uber. Uber's routing algorithm is basically nearest neighbor search at a massive scale - which is perfect for the on-demand nature of their business; the companies that I'm referring to can support on-demand routing as well as scheduling rides days and weeks in advance. More knowledge of future rides -> better optimization -> better margins. Once self-driving cars finally come around, it's going to come down to fleet size and routing optimization, and while Uber can win in the first category, there's no guarantee they can win in the second category.
    - jacques_chester 10y ago
      > As far as war chest goes, Uber basically has no competition. Google has more money coming in half year than Uber has ever raised, and it's from profits. The major car companies also have billions of dollars of revenue and collectively they hold hundreds of billions, possibly trillions, of dollars of fully depreciated assets.
      - vitaminbandit 10y ago
        You're right about the cash available, but how much is Google (and its investors) willing to lose to compete with Uber? Are Google's investors willing to put up with another [vastly more expensive] Google Plus? Because when I say war chest, I mean Uber is willing to lose it all. Rides are Uber's only revenue source, whereas Google has never made a cent in that industry.
        nojvek 10y ago
        Is Uber really willing to lose it all? Investors have put money in it expecting 10x return. Google can just right it off as their moonshot project while Uber as as a company goes poof and burns
        jacques_chester 10y ago
        Google's investors don't have a choice. Brin and Page have voting control. In any case, it's hypothetical. Uber's unit economics are made of losses and there is no structural moat around their business. They'll run out of money and that will be that.
  - dinkumthinkum 10y ago
    I think building a network is very much in the bailiwick of auto manufacturers or anyone with capital to purchase the cars and built a simple app with a marketing campaign.
sf_rob 10y ago
He argues that self-driving cars will likely be commoditized so that they will not have a competitive advantage there. Combine that will low switching cost for users and their debt will be more of a competitive disadvantage than their network effects. I don't necessarily agree with the above, but I think it's what he was trying to communicate in the piece. I think that network effects will provide a huge advantage for Uber. The larger your market share, the more predictable your demand and the more optimized your service can be. Uber is more like Adsense for Content than like cabs. They are doing a lot of intention matching/prediction in real time and that is very hard to compete against without scale.
beezischillin 10y ago
The Uber we know right now will probably transition into the self-driving car-based company for freight, passenger transport and ride sharing. It'll be a bit unsettling to see what'll happen to the drivers they're using right now. I personally think that Uber is not an ethical company (I do live in Europe). They are exploiting tax and legal loopholes to profit off of both drivers and countries, simply because regulation for a taxi company that would be set up like Uber is does not exist yet and most countries take their time to regulate. When Uber is put up to the same scrutiny as taxi companies are (to ensure their drivers are up to the same standard), they refuse to compete and instead of paying the same tax everyone else does and abiding by the same regulations everyone else does, they just leave the market. Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation.
- Keyframe 10y ago
  When Uber is put up to the same scrutiny as taxi companies are (to ensure their drivers are up to the same standard), they refuse to compete and instead of paying the same tax everyone else does and abiding by the same regulations everyone else does, they just leave the market. Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation. I have to agree with this. Uber is its own biggest enemy. Market regulation comes along with it. This is the real danger for them, for now. At least here in Europe.
- benchaney 10y ago
  >Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation. I don't really understand this mentality. You don't want to let them exploit the situation by profiting off of making things better for consumers?
  - 10y ago
mcguire 10y ago
Does Uber have a competitive advantage over its competitors?
- Keyframe 10y ago
  Existing user base?
  - mcguire 10y ago
    You mean brand recognition? (What prevents a user from using more than one service?)
    - Keyframe 10y ago
      What prevents a user from using more than one service? Customer inertia, among other things.
      - mcguire 10y ago
        The same inertia that prevented them from switching to Uber in the first place?
1_2__3 10y ago
I love this, self-driving cars are the new magic fairies. Whatever the problem, they're here to fix them - and it'll be any minute now. Aaaaaaaaany minute now.
- sctb 10y ago
  This qualifies as drive-by snark, which we've already asked you to please stop posting.

ithinkinstereo 10y ago

The author's not making the point that there is no margin, but rather that with self-driving cars it'll be a quick race to the bottom against competitors, thus eroding whatever margins Uber is left with after replacing human drivers.

Keyframe 10y ago
Question is, who are competitors with same scope as them? I don't know any. They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right.
- ithinkinstereo 10y ago
  > Question is, who are competitors with same scope as them? I don't know any. Presumably traditional car manufacturers (GM, Ford, Toyota, BMW, etc.), upstart car manufacturers (Tesla), and even other large tech conglomerates (Google, Baidu, etc.). > They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right. Uber won't have a monopoly in self-driving tech. Their running start will get eroded (some would argue quickly) by new challengers (probably regional upstarts rather than a global competitor) that have easy access to self-driving tech (think car manufacturers). Also, Uber's network is mostly on the software and human (drivers) side of things. If self-driving tech becomes a reality, they'll have to quickly pivot to purchasing and maintaining a large fleet of cars. That's not an easy task at scale and not something that Uber necessarily has an advantage over others.
  - Keyframe 10y ago
    Why aren't car manufacturers already in logistics business? Or are they? I'm trying to find sources. I see VW has its own logistics group, but only for their own use.
    - xemdetia 10y ago
      In the US at least (I haven't ever bothered to look at how branded car dealers exist outside the US), they already have a network of physical locations where they can ship anything and service anything they sell. There are also the rental agencies and the people that manage fleets of private vehicles that work directly with the local dealers on behest of the global organization- Uber doesn't have this and would have to build it. Right now they are pushing that part of the logistics of their organization on their drivers since it is their own personal vehicle. This is something you can see Tesla having to do the hard way in comparison with their coast to coast supercharger network. There was no physical infrastructure to support their product so they had to build it, and established car dealers already have it which is part of why Tesla overcoming that was such a challenge. If I have a US make car in the US and I am in a moderately populated area I can make a reasonable assumption I can get to a dealer in an hour or two wherever I may be, and Uber would have to overcome that.
    - secabeen 10y ago
      They have been. Between 1987 and 2005, Hertz was owned by Ford and Volvo. They spun it off to private equity in 2005, but it has happened in the past.
  - dragonwriter 10y ago
    Google may be a competitor, but it may be more of an enabler of competitors to Uber, by way of, e.g., it's ridesharing feature in Maps.
- Qworg 10y ago
  What is scope for Uber-likes? What is network? They're simply leveraging a brand - it is almost no moat versus a competitor, especially if they have a structural advantage. An example advantage would be an autonomous car manufacturer entering the market - they can simply blow Uber out of the water on cost alone.
  - Keyframe 10y ago
    No moat? Do you think brand recognition is worthless or I'm missing something? They have a large user base (I presume) already. I'm not sure one could build one from scratch just like that. It would need a big player to enter the game.
    - amclennon 10y ago
      I imagine a company like Ford, Chrysler, or any other large car manufacturer would have equal if not greater brand recognition compared to Uber. These would be the biggest threat to Uber's market share since they could easily compete on cost and distribution alone.
- majewsky 10y ago
  Any larger car company is a competitor at the same scale. And you don't even need a competitor of the same scale: It's enough if every city has a local competitor.
  - Ben-G 10y ago
    Yep, that's exactly one of the points I was trying to make.
- vitaminbandit 10y ago
  As far as war chest goes, Uber basically has no competition. As far as their routing and vehicle management algorithms go, there already exist companies with more sophisticated routing systems than Uber. Uber's routing algorithm is basically nearest neighbor search at a massive scale - which is perfect for the on-demand nature of their business; the companies that I'm referring to can support on-demand routing as well as scheduling rides days and weeks in advance. More knowledge of future rides -> better optimization -> better margins. Once self-driving cars finally come around, it's going to come down to fleet size and routing optimization, and while Uber can win in the first category, there's no guarantee they can win in the second category.
  - jacques_chester 10y ago
    > As far as war chest goes, Uber basically has no competition. Google has more money coming in half year than Uber has ever raised, and it's from profits. The major car companies also have billions of dollars of revenue and collectively they hold hundreds of billions, possibly trillions, of dollars of fully depreciated assets.
    - vitaminbandit 10y ago
      You're right about the cash available, but how much is Google (and its investors) willing to lose to compete with Uber? Are Google's investors willing to put up with another [vastly more expensive] Google Plus? Because when I say war chest, I mean Uber is willing to lose it all. Rides are Uber's only revenue source, whereas Google has never made a cent in that industry.
      - nojvek 10y ago
        Is Uber really willing to lose it all? Investors have put money in it expecting 10x return. Google can just right it off as their moonshot project while Uber as as a company goes poof and burns
      - jacques_chester 10y ago
        Google's investors don't have a choice. Brin and Page have voting control. In any case, it's hypothetical. Uber's unit economics are made of losses and there is no structural moat around their business. They'll run out of money and that will be that.
- dinkumthinkum 10y ago
  I think building a network is very much in the bailiwick of auto manufacturers or anyone with capital to purchase the cars and built a simple app with a marketing campaign.

sf_rob 10y ago

He argues that self-driving cars will likely be commoditized so that they will not have a competitive advantage there. Combine that will low switching cost for users and their debt will be more of a competitive disadvantage than their network effects. I don't necessarily agree with the above, but I think it's what he was trying to communicate in the piece. I think that network effects will provide a huge advantage for Uber. The larger your market share, the more predictable your demand and the more optimized your service can be. Uber is more like Adsense for Content than like cabs. They are doing a lot of intention matching/prediction in real time and that is very hard to compete against without scale.

beezischillin 10y ago

The Uber we know right now will probably transition into the self-driving car-based company for freight, passenger transport and ride sharing. It'll be a bit unsettling to see what'll happen to the drivers they're using right now. I personally think that Uber is not an ethical company (I do live in Europe). They are exploiting tax and legal loopholes to profit off of both drivers and countries, simply because regulation for a taxi company that would be set up like Uber is does not exist yet and most countries take their time to regulate. When Uber is put up to the same scrutiny as taxi companies are (to ensure their drivers are up to the same standard), they refuse to compete and instead of paying the same tax everyone else does and abiding by the same regulations everyone else does, they just leave the market. Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation.

Keyframe 10y ago
When Uber is put up to the same scrutiny as taxi companies are (to ensure their drivers are up to the same standard), they refuse to compete and instead of paying the same tax everyone else does and abiding by the same regulations everyone else does, they just leave the market. Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation. I have to agree with this. Uber is its own biggest enemy. Market regulation comes along with it. This is the real danger for them, for now. At least here in Europe.
benchaney 10y ago
>Don't misunderstand me, taxi service in my country is horrible, they're useless and rude and service is generally bad, but just because that's the situation, we should try and improve that, instead of allowing companies like Uber to exploit the situation. I don't really understand this mentality. You don't want to let them exploit the situation by profiting off of making things better for consumers?
- 10y ago

mcguire 10y ago

Does Uber have a competitive advantage over its competitors?

Keyframe 10y ago
Existing user base?
- mcguire 10y ago
  You mean brand recognition? (What prevents a user from using more than one service?)
  - Keyframe 10y ago
    What prevents a user from using more than one service? Customer inertia, among other things.
    - mcguire 10y ago
      The same inertia that prevented them from switching to Uber in the first place?

1_2__3 10y ago

I love this, self-driving cars are the new magic fairies. Whatever the problem, they're here to fix them - and it'll be any minute now. Aaaaaaaaany minute now.

sctb 10y ago
This qualifies as drive-by snark, which we've already asked you to please stop posting.