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1 - Uber has a weak network effect (drivers drive Lyft and Uber) same for consumers. 2 - Uber is not very scalable (this is why they have to burn so much money

1 - Uber has a weak network effect (drivers drive Lyft and Uber) same for consumers. 2 - Uber is not very scalable (this is why they have to burn so much money to grow) 3 - Self-driving cars will actually destroy Uber's business. Uber = Driver -> Uber -> Passenger. Self-driving cars will remove the Driver from the equation. Uber becomes a consumer facing app. Very vulnerable to Apple and Google should they ever want to get into that business. I think Google maps and Siri will become the interface to care sharing eventually as Apple/Google will have far more access to mobile experience that Uber will ever get. I had made the above points before and predicted Uber will probably go the ways of AOL. It seems like more and more people are beginning see that too.

1_2__3 10y ago
Could we maybe have a sober conversation about Uber that doesn't involve self driving cars? Because I hate to tell you, but whatever reckoning is coming for Uber will come long before self driving cars are viable. I do not understand why so many HN commenters ignore the reality of self driving car tech and regulation and think it's right around the corner. It's so far away that the only relevance it has to this conversation is already in the article (and completely disagrees with your claim): if Uber is planing to rely on self driving cars they're already dead. The tech will not be ready in time for them.
- ckastner 10y ago
  I agree that this focus on self-driving cars is very premature, but then you are left with its current business, which so far seems to be hemorrhaging money and with no change of that in sight.
  - paulddraper 10y ago
    Practical self-driving cars are already not "in sight", assuming your sight is the next ten years.
- lz400 10y ago
  This is the truth. Counting on self driving cars at this point contributes to the conversation as much as counting on spaceships.
- spullara 10y ago
  Probably because my car drives 95% of my commute. Honestly though, that is bias, since complete self-driving is still much harder. However, I don't think it is more than 5 years out which is in the Uber horizon.
  - charlesism 10y ago
    > my car drives 95% of my commute. In the context of the taxi market, "self driving" means 100%. If I call for a self-driving cab, it needs to reach me on its own. Getting to 100% looks like it's going to be pretty hard, despite the endless stream of articles insinuating otherwise. A car that drives into oncoming traffic 1% of the time isn't good enough.
    - AstralStorm 10y ago
      Well, if it safely gets wedged or parked 1 in 1000 of the time it might be good enough. Too late for Uber though.
- Trundle 10y ago
  >Could we maybe have a sober conversation about Uber that doesn't involve self driving cars? No. Why? >if Uber is planing to rely on self driving cars they're already dead. There's no discussion to be had there.
  - an_account 10y ago
    Why is there no discussion to be had there? There's tons of discussion to be had about whether Uber can tweak their current business model (i.e. drivers) to be profitable.
    - jsemrau 10y ago
      Well, the current strategy seems to be Uber as the service for everyone and everything. Let's take Singapore as an example Core business you need to compete against the home-grown champion Grab, costing money. Basic strategy question: Diversify or Focus since loss leader does not work. Solution: Diversify. The problem is the moment you start UberEats you are competing with Foodpanda, Deliveroo, etc. Competition costs money. Groceries delivery? You are competing with RedMart et al Document delivery? GogoVan, Zap. The problem with that strategy is that it takes the focus off the core business -> You lose China to Didi, you lose India to Ola. Voila, just like this Uber is not dominating the main global growth markets. If they now slow their growth by focusing their investors bail out since the "storyline" is not working anymore. Seems to me like a lose/lose situation for Uber
- r00fus 10y ago
  I'd agree with the two facts: 1) that Uber is beleagered and 2) self-driving cars are a long way away. The third point tying them together is Uber's faith that (2) is false. That is yet another indicator that Uber won't make it - their optimism is not well founded.
- dnautics 10y ago
  I think self-driving cars are going to be viable, very very fast - but uber will implode much faster. When it implodes, it will happen much faster than anyone expects. There will be lots of collateral damage, as the rest of the current incarnation of the SV insanity will be exposed to the deflation of the unicorn narrative. I think a huge part of it will be when it becomes really really obvious that Uber will never be able to IPO, the employees there will have to leave. The gravitational pull of the sunk cost fallacy (with respect to any exercised options the employees have) will be overwhelmed by the need to 'find other options' faster than their colleagues and it becomes a race to not be the last one off the sinking ship. 1_2__3 - while I agree with your overall thesis, I think it's reasonable to bring up self driving cars since they are in the original article, after all.
  - VonGuard 10y ago
    Employees are already leaving. I'd wager a few people in here have seen candidates coming through interviews in the past week. It's been kinda scary how many ubers are leaving the ship.
- foobiekr 10y ago
  I agree with this. Why does anyone at this point suspect the self-driving cars thing is not a retcon to try and cover up the obvious fact that while a great user experience for summoning rides is a something people like, the model uber landed on to make a business doesn't really work? It would be really interesting to see the early pitch decks for Uber - especially the series A and B slides. I would be inclined to bet that autonomous vehicles do not make an appearance until much later.
shrewduser 10y ago
to add to the self driving car platform, there's just not enough of a competitive advantage to getting your app in front of customers, the real competitive advantage will be had by companies that can run / service and maintain fleets of cars. something uber isn't adept at, they would need to invest unimaginable amounts into physical capital to get to parity with some existing companies when automated cars actually become a thing.
- taxicabjesus 10y ago
  > the real competitive advantage will be had by companies that can run / service and maintain fleets of cars. They used to call these "taxi companies", before the dark times... This is a photo of one of the company's yards: https://www.facebook.com/TaxiCabJesus/photos/a.523710047820449.1073741827.497301130461341/523709944487126/?type=3&theater https://www.facebook.com/TaxiCabJesus/photos/a.5237100478204... They had to consolidate to the other yard (after I retired). I've read that the old taxi company now leases unbranded cars for use with any service. "no mileage restrictions and maintenance is included." Arizona's laws don't allow regular rental cars to be used for 'ridesharing'. (I recently figured out how to finish my site about the 'taxi wars', http://www.taxiwars.org/ http://www.taxiwars.org/ - I was learning about the human condition the whole time. New posts are in progress...)
Larrikin 10y ago
What I've found interesting in Chicago atleast is that pretty much all the drivers I've had from Uber also drove for Lyft or were very new to the platform. However a significant number of my Lyft drivers said they drove Lyft exclusively after initially coming in from Uber and then driving both. Its anecdotal but most of the people I've asked about it said the pay on Lyft is better and they get far fewer bad passengers. Is Lyft losing as much cash as Uber? That would be a pretty bad trend if they're losing drivers and making less off of the drivers they have.
vcool07 10y ago
Self-driving cars have a long way to go. Even if they are technologically advanced sufficiently, many countries (especially in the third world, which are the high growth markets currently) would take a very long time to even draft legislation around it. I can already imagine bus/taxi guys going on strike to disallow licenses for self-driving cars in the interest of protecting jobs ! Also, its not so difficult for uber to start it's own fleet of self driving cabs , they already have a brand name, so consumers who cannot afford to buy the car , might still go the uber way !
- pas 10y ago
  Why would Uber care about legislation especially in "the third world"? It's not their "style". Also, if the car drives itself technically but not legally, you can put anyone with a license and a negative breathalyzer test behind the wheel, and pay them even closer to nothing than now - especially in the 3rd world.
- sundaeofshock 10y ago
  > they already have a brand name A brand which has been horribly damaged. I started using Uber back in 2011 before UberX was rolled out. It was a great service with professional drivers. It was more expensive then cabs, but worth it for the incredible service. I was encouraging friends to use the app and got our company on business service about a year ago. A month ago, I deleted the app. Their brand is crap and they hve become the public face of the worst excesses of Tech Bro Douche culture. Their current brand ain't going to save them.
logicallee 10y ago
A small quibble: An example of a network effect is a chat app: if 1 person uses a chat app worldwide, that person can get literally 0 utility out of it. If 2 people use it, they have a tiny amount of utility: there is a single other person who can use it. If three billion people use it, they all have massive utility: they can talk with anyone. So, without changing the product, the more people who use it,the more utility each person has. By that standard, Uber has no network effect at all (0, not "weak"): I simply don't get more utility whatsoever from the number of other people using Uber in my city. If there are 5 available Uber cars which can take me to my destination, it really, really doesn't matter whether another 1,500 Uber cars in that city are already in use or whether that is the total 5 Uber cars which are available. This shows that there is 0 (not "weak") network effect.
- lxmorj 10y ago
  That's not really true. There are two segmented populations that only "communicate" with those in the other group, but the value is dramatically tied to the number of people in the opposing segment. Riders and drivers need there to be a large population in each other to derive value from the app.
  - logicallee 10y ago
    That's not the definition of network effect, end of story. Look it up. You can't use precisely defined economic concepts willy-nilly. By that standard Amazon has network effects because the more products I can buy there the happier I am to shop there (Amazon side) and also the same goes for the other side, because the more customers it has the happier it is. Only problem is that's not the definition of the word we're arguing about.
- dnautics 10y ago
  Tell that to Sidecar.
  - AstralStorm 10y ago
    Unfortunately carrying multiple people also has anti utility or we'd all be driving in minibuses or public transport.
michaeldunworth 10y ago
Extremely far off. 1) Lyft is in the USA only. Uber is in 400+ cities. Lyft is not remotely close to Uber in terms of hurting them. 2) No. It is scalable. They burn to drown their competition. They've got more money, so once the oxygen runs out for their competitors, Uber will just put margins back to where they are, stop comping so many rides, etc... 3) Not sure how you get to this approach. Self-driving = Lower/zero driver costs. Consumer facing app mobile experience is not going to be the deciding factor of Uber's success. I'm not sure if your statement is trolling, or if you were actually being serious... If it's a troll, very well done... If it's not, then I strongly disagree with you.
- ckastner 10y ago
  > 1) Lyft is in the USA only. Uber is in 400+ cities. A cynic might say: Lyft is losing money in the USA only. Uber is losing money in 400+ cities.
- oblio 10y ago
  2) Is literally dumping, which is anti-competitive and either illegal in many jurisdictions or at least immoral everywhere else.
- SilasX 10y ago
  3) Self driving = lower costs and prices, unless Uber is the only one to offer a self driving car. So it won't help profitability unless they have an effective monopoly on SDCs; if they don't, others will lower their prices for self-driven rides.

1_2__3 10y ago

Could we maybe have a sober conversation about Uber that doesn't involve self driving cars? Because I hate to tell you, but whatever reckoning is coming for Uber will come long before self driving cars are viable. I do not understand why so many HN commenters ignore the reality of self driving car tech and regulation and think it's right around the corner. It's so far away that the only relevance it has to this conversation is already in the article (and completely disagrees with your claim): if Uber is planing to rely on self driving cars they're already dead. The tech will not be ready in time for them.

ckastner 10y ago
I agree that this focus on self-driving cars is very premature, but then you are left with its current business, which so far seems to be hemorrhaging money and with no change of that in sight.
- paulddraper 10y ago
  Practical self-driving cars are already not "in sight", assuming your sight is the next ten years.
lz400 10y ago
This is the truth. Counting on self driving cars at this point contributes to the conversation as much as counting on spaceships.
spullara 10y ago
Probably because my car drives 95% of my commute. Honestly though, that is bias, since complete self-driving is still much harder. However, I don't think it is more than 5 years out which is in the Uber horizon.
- charlesism 10y ago
  > my car drives 95% of my commute. In the context of the taxi market, "self driving" means 100%. If I call for a self-driving cab, it needs to reach me on its own. Getting to 100% looks like it's going to be pretty hard, despite the endless stream of articles insinuating otherwise. A car that drives into oncoming traffic 1% of the time isn't good enough.
  - AstralStorm 10y ago
    Well, if it safely gets wedged or parked 1 in 1000 of the time it might be good enough. Too late for Uber though.
Trundle 10y ago
>Could we maybe have a sober conversation about Uber that doesn't involve self driving cars? No. Why? >if Uber is planing to rely on self driving cars they're already dead. There's no discussion to be had there.
- an_account 10y ago
  Why is there no discussion to be had there? There's tons of discussion to be had about whether Uber can tweak their current business model (i.e. drivers) to be profitable.
  - jsemrau 10y ago
    Well, the current strategy seems to be Uber as the service for everyone and everything. Let's take Singapore as an example Core business you need to compete against the home-grown champion Grab, costing money. Basic strategy question: Diversify or Focus since loss leader does not work. Solution: Diversify. The problem is the moment you start UberEats you are competing with Foodpanda, Deliveroo, etc. Competition costs money. Groceries delivery? You are competing with RedMart et al Document delivery? GogoVan, Zap. The problem with that strategy is that it takes the focus off the core business -> You lose China to Didi, you lose India to Ola. Voila, just like this Uber is not dominating the main global growth markets. If they now slow their growth by focusing their investors bail out since the "storyline" is not working anymore. Seems to me like a lose/lose situation for Uber
r00fus 10y ago
I'd agree with the two facts: 1) that Uber is beleagered and 2) self-driving cars are a long way away. The third point tying them together is Uber's faith that (2) is false. That is yet another indicator that Uber won't make it - their optimism is not well founded.
dnautics 10y ago
I think self-driving cars are going to be viable, very very fast - but uber will implode much faster. When it implodes, it will happen much faster than anyone expects. There will be lots of collateral damage, as the rest of the current incarnation of the SV insanity will be exposed to the deflation of the unicorn narrative. I think a huge part of it will be when it becomes really really obvious that Uber will never be able to IPO, the employees there will have to leave. The gravitational pull of the sunk cost fallacy (with respect to any exercised options the employees have) will be overwhelmed by the need to 'find other options' faster than their colleagues and it becomes a race to not be the last one off the sinking ship. 1_2__3 - while I agree with your overall thesis, I think it's reasonable to bring up self driving cars since they are in the original article, after all.
- VonGuard 10y ago
  Employees are already leaving. I'd wager a few people in here have seen candidates coming through interviews in the past week. It's been kinda scary how many ubers are leaving the ship.
foobiekr 10y ago
I agree with this. Why does anyone at this point suspect the self-driving cars thing is not a retcon to try and cover up the obvious fact that while a great user experience for summoning rides is a something people like, the model uber landed on to make a business doesn't really work? It would be really interesting to see the early pitch decks for Uber - especially the series A and B slides. I would be inclined to bet that autonomous vehicles do not make an appearance until much later.

shrewduser 10y ago

to add to the self driving car platform, there's just not enough of a competitive advantage to getting your app in front of customers, the real competitive advantage will be had by companies that can run / service and maintain fleets of cars. something uber isn't adept at, they would need to invest unimaginable amounts into physical capital to get to parity with some existing companies when automated cars actually become a thing.

taxicabjesus 10y ago
> the real competitive advantage will be had by companies that can run / service and maintain fleets of cars. They used to call these "taxi companies", before the dark times... This is a photo of one of the company's yards: https://www.facebook.com/TaxiCabJesus/photos/a.523710047820449.1073741827.497301130461341/523709944487126/?type=3&theater https://www.facebook.com/TaxiCabJesus/photos/a.5237100478204... They had to consolidate to the other yard (after I retired). I've read that the old taxi company now leases unbranded cars for use with any service. "no mileage restrictions and maintenance is included." Arizona's laws don't allow regular rental cars to be used for 'ridesharing'. (I recently figured out how to finish my site about the 'taxi wars', http://www.taxiwars.org/ http://www.taxiwars.org/ - I was learning about the human condition the whole time. New posts are in progress...)

Larrikin 10y ago

What I've found interesting in Chicago atleast is that pretty much all the drivers I've had from Uber also drove for Lyft or were very new to the platform. However a significant number of my Lyft drivers said they drove Lyft exclusively after initially coming in from Uber and then driving both. Its anecdotal but most of the people I've asked about it said the pay on Lyft is better and they get far fewer bad passengers. Is Lyft losing as much cash as Uber? That would be a pretty bad trend if they're losing drivers and making less off of the drivers they have.

vcool07 10y ago

Self-driving cars have a long way to go. Even if they are technologically advanced sufficiently, many countries (especially in the third world, which are the high growth markets currently) would take a very long time to even draft legislation around it. I can already imagine bus/taxi guys going on strike to disallow licenses for self-driving cars in the interest of protecting jobs ! Also, its not so difficult for uber to start it's own fleet of self driving cabs , they already have a brand name, so consumers who cannot afford to buy the car , might still go the uber way !

pas 10y ago
Why would Uber care about legislation especially in "the third world"? It's not their "style". Also, if the car drives itself technically but not legally, you can put anyone with a license and a negative breathalyzer test behind the wheel, and pay them even closer to nothing than now - especially in the 3rd world.
sundaeofshock 10y ago
> they already have a brand name A brand which has been horribly damaged. I started using Uber back in 2011 before UberX was rolled out. It was a great service with professional drivers. It was more expensive then cabs, but worth it for the incredible service. I was encouraging friends to use the app and got our company on business service about a year ago. A month ago, I deleted the app. Their brand is crap and they hve become the public face of the worst excesses of Tech Bro Douche culture. Their current brand ain't going to save them.

logicallee 10y ago

A small quibble: An example of a network effect is a chat app: if 1 person uses a chat app worldwide, that person can get literally 0 utility out of it. If 2 people use it, they have a tiny amount of utility: there is a single other person who can use it. If three billion people use it, they all have massive utility: they can talk with anyone. So, without changing the product, the more people who use it,the more utility each person has. By that standard, Uber has no network effect at all (0, not "weak"): I simply don't get more utility whatsoever from the number of other people using Uber in my city. If there are 5 available Uber cars which can take me to my destination, it really, really doesn't matter whether another 1,500 Uber cars in that city are already in use or whether that is the total 5 Uber cars which are available. This shows that there is 0 (not "weak") network effect.

lxmorj 10y ago
That's not really true. There are two segmented populations that only "communicate" with those in the other group, but the value is dramatically tied to the number of people in the opposing segment. Riders and drivers need there to be a large population in each other to derive value from the app.
- logicallee 10y ago
  That's not the definition of network effect, end of story. Look it up. You can't use precisely defined economic concepts willy-nilly. By that standard Amazon has network effects because the more products I can buy there the happier I am to shop there (Amazon side) and also the same goes for the other side, because the more customers it has the happier it is. Only problem is that's not the definition of the word we're arguing about.
dnautics 10y ago
Tell that to Sidecar.
- AstralStorm 10y ago
  Unfortunately carrying multiple people also has anti utility or we'd all be driving in minibuses or public transport.

michaeldunworth 10y ago

Extremely far off. 1) Lyft is in the USA only. Uber is in 400+ cities. Lyft is not remotely close to Uber in terms of hurting them. 2) No. It is scalable. They burn to drown their competition. They've got more money, so once the oxygen runs out for their competitors, Uber will just put margins back to where they are, stop comping so many rides, etc... 3) Not sure how you get to this approach. Self-driving = Lower/zero driver costs. Consumer facing app mobile experience is not going to be the deciding factor of Uber's success. I'm not sure if your statement is trolling, or if you were actually being serious... If it's a troll, very well done... If it's not, then I strongly disagree with you.

ckastner 10y ago
> 1) Lyft is in the USA only. Uber is in 400+ cities. A cynic might say: Lyft is losing money in the USA only. Uber is losing money in 400+ cities.
oblio 10y ago
2) Is literally dumping, which is anti-competitive and either illegal in many jurisdictions or at least immoral everywhere else.
SilasX 10y ago
3) Self driving = lower costs and prices, unless Uber is the only one to offer a self driving car. So it won't help profitability unless they have an effective monopoly on SDCs; if they don't, others will lower their prices for self-driven rides.