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How Uber could end up as Silicon Valley's most spectacular crash
- jonthepirate 10y agoI've also been calling for this... "Ridesharing" as we know is it going to crash https://news.ycombinator.com/item?id=13762242 https://news.ycombinator.com/item?id=13762242 Their valuation got so far ahead of itself that priced into it is global domination. Now that it clearly is not a global monopoly, there's nowhere to go but down. Everyday one of their employees goes to work is a day wasted where they could have been vesting at a company which is not horribly over valued. Disclaimer: Former Lyft engineer / stockholder here (2014-2016)
- elmar 10y agothe main problem is the unit economics that don't work for Uber or Lyft, if the subsidies stop they will be the same price or more than Taxis.
- seppin 10y agothen they are a premium car service again, one that people would gladly pay for. just no 50b valuations
- deleted 10y ago[deleted]
- hueving 10y agoI wouldn't pay for it. I (and most of the US) don't have the money to blow $50 each way to the airport for a vacation. Assuming Uber/Lyft on both ends, that's $200 in airport transportation which is nearly the cost of the airfare to fly a thousand miles round trip.
- Viper007Bond 10y agoWell it's not like a taxi is free in comparison.
- easytiger 10y agoYou don't know much about London. $100 fares from Heathrow to z1 are pretty normal.
- vertex-four 10y agoWhy would you take a taxi that far? Heathrow has plenty of public transport services.
- hueving 10y agoMost people aren't rich enough to live in or visit London that frequently.
- spullara 10y agoi will basically never get into a taxi again unless it is passing by and stops for me just as i need it. the price difference, if there is one, will not be a compelling reason to switch back.
- wtvanhest 10y agoThe unit economics work at a much, much smaller market size.
- arjie 10y agoYeah, but they beat taxis on service. Ubers are computer dispatched, on-time, and give me pre-ride fare calculation. When pooling they give me guaranteed arrival times. I'm not going to use some half-assed taxi service for the same price, because I don't need the agita. Whatever their company culture problems, I have found the service superb.
- marklyon 10y agoI hope not. I prefer my car service provider to be ruthless, impersonal, and corporate, not lovey-dovey like the "fist bump and ride in the front seat" people at Lyft. …and there's no way I want to go back to using DC Taxis.
- DHowett 10y agoAre DC Taxis not "ruthless, impersonal and corporate" enough?
- aarpmcgee 10y agogross
- chinathrow 10y agoDo you want your car service also to be disrespectful about laws? Disrespectful about women in tech? Disrespectful to privacy?
- icebraining 10y agoIs it really a choice between the respectful and the non-respectful of the law? http://observer.com/2016/05/derailed-by-uber-deposed-new-york-taxi-king-gets-sued-in-chicago/ http://observer.com/2016/05/derailed-by-uber-deposed-new-yor...
- cx1000 10y agoWhich may also work against them... > If Uber stalls, it isn’t going to be saved by a loyal consumer fan base. There is no stickiness to Uber. It has no frequent-rider program. It has no social component. It prevents users from forming bonds with drivers. No one gets a heightened sense of self by identifying as an Uber rider versus some competitor. We’ll stick with Uber as long as it continues to get us where we want to go at a price we like. Someone else comes along with a better service or lower price, we’ll use it.
- colordrops 10y agoI don't know about DC, but in LA there's nothing lovey-dovey about Lyft. The ride is identical to Uber.
- Animats 10y agoI've been saying that for a while. Uber is losing $800 million per quarter. They run out of cash in 2018 unless they can find a bigger sucker than Saudi Arabia's sovereign wealth fund. Uber is cheap only because investor capital subsidizes every ride. (And because they keep squeezing the drivers harder.) IPO? They'd have to publish audited financial statements with GAAP numbers, which are almost certain to be worse than the leaked numbers. They'd take a big haircut on valuation, which the existing investors would not like. (Who has voting rights in Uber, anyway?) Uber will probably run out of money and be picked up cheaply by some buyer of distressed companies, which will raise rates and cut it back to a profitable operation.
- jbhatab 10y agoSuch a reactionary comment. I don't think things will be quite as drastic as you claim. Much more interested in how self driving cars play out because that's the real goal they are all chasing. Finding markets and places to apply self driving cars or transportation to reinvent how transportation works globally.
- chaser7016 10y agoAnd they don't care if a few dozen or more people die at the hands of their self driving car because all they care about is winning the self car driving war at all and any cost! Some hacker or a hacker group plz teach uber a lesson in humility and make sure they pay for their sins! This is not how you win and or change the world via deaths of dozens of innocent drivers killed by your self driving unproven cars which you stole from Google. Their lack of humility.. morals .. ethics is Unbelievable!!!
- edblarney 10y agoI believe they are profitable in many city venues, their cash outlays have to do with targeting new markets, and moon-shot style projects. If they want to be profitable, they can pull back on aggressive expansion, and dump the more expensive, less fruitful projects.
- 10y ago
- apapli 10y agoUber = Groupon v2?
- rock57 10y agoI totally agree, I've mentioned in earlier threads that it seems to me that Uber is Groupon v2 having its Zenefits moment https://news.ycombinator.com/item?id=13788642 https://news.ycombinator.com/item?id=13788642 https://news.ycombinator.com/item?id=13585025 https://news.ycombinator.com/item?id=13585025
- curun1r 10y agoWebvan seems like a more apt comparison. Some of Uber's antics remind me of the way Webvan used to act. I remember seeing one of their delivery people pull up and park in a red zone right in front of a cop. The cop told him he couldn't park there. His response, "Are you going to tow me?" was answered with "no, but..." and before the cop could finish, the driver had walked away. The cop dutifully wrote out the ticket. Uber's scale is a lot larger, but the two feel much more similar than either does to Groupon. Groupon was much more a gimmick product that used high-pressure sales tactics to get small businesses into situations they weren't prepared for with dubious benefit. Once word got around and people realized that its benefit to businesses was much more limited than they promised, they got a lot smaller. But Groupon wasn't really burning VC cash to subsidize a legitimately-useful service the way that Uber and Webvan are/did.
- rocqua 10y ago> I remember seeing one of their delivery people pull up and park in a red zone right in front of a cop. The cop told him he couldn't park there. His response, "Are you going to tow me?" was answered with "no, but..." and before the cop could finish, the driver had walked away. The cop dutifully wrote out the ticket. I like the concept of an 'economic' crime for these kinds of situations. The idea is that when a misdemeanor has the normal penalty aimed at deterring private usage but was committed for commercial reasons, the penalty is massively increased. This way, you prevent situations where it makes financial sense to park in front of a fire hydrant and just eat the fines.
- vmarquet 10y agoIsn't Uber like a Ponzi scheme in some way? They use investors money to subsidize drivers so that prices are low and they get more users, and with more users they are valued better and get more investors money. When investors money or/and user growth stops, prices go up, people stop using it, and the system collapses (or at least the user base shrinks).
- tarunm 10y agoProbably the most effective economic trickle down.
- mcgannon2007 10y agoTo be fair, you could make a similar argument with a lot of these high-growth VC backed companies.
- jfoster 10y agoLike Amazon & Tesla? Some companies just have a much bigger ramp up than others. Amazon has so many markets to build warehousing & logistics in. Uber has so many markets to establish drivers in. The subsidising of rides makes complete sense; subsidised rides are loss-leaders aimed towards building habits. I haven't seen their data, but it seems like a good plan.
- MegaButts 10y agoBoth Amazon and Tesla build physical infrastructure to lower their costs in the future. Uber is banking on self-driving cars to save them. The ironic thing though is Uber is racing to spend as much as money as possible before that happens, effectively gaining them nothing more than mindshare. As soon as another company pops up with self-driving vehicles, they can compete with Uber and they haven't wasted $10 billion making everybody hate them.
- jfoster 10y agoThis seems to be the biggest risk with Uber. I think they will probably end up working with the first company to have autonomous cars "ready". The big question is what happens next. Will Uber be at the mercy of that supplier every few years as the contact comes up for renewal, or will autonomous cars become so commodity that there will be multiple players competing to be Uber's supplier? Another possibility is an M&A event.
- sharkweek 10y agoI think about this a lot. We live in a time where some of the most ridiculous services are being subsidized big time by VC cash, and I should be enjoying it while it lasts. From cheap rides to the airport, food delivery, laundry service, etc... soak it up now.
- chinathrow 10y agoNo. If you know and realize that it is only convenient because of VC subsidies, you know enough not to use those services since it won't be sustainable. I try to understand each business model I support with revenue. If it's only setup to enable growth, I pass.
- mason55 10y agoIf a billionaire wants to subsidize food and taxis for me then I'm more than happy to take it
- chinathrow 10y agoEven if you know that using said VC money bankrupts whole families the world over?
- robotresearcher 10y agoI don't think it's morally wrong to take a cheap taxi ride subsidized by speculators. I don't care if the model is sustainable since I get all my value immediately in return for the fare. The way Uber treats its people is a separate issue.
- vwcx 10y agoExactly. Other than the moral-environmental issue of the subsidy encouraging me to take more short trips, thus increasing my footprint...
- rrdharan 10y agoI think there can still be a moral component, if you know that they are enacting and perpetrating a vicious cycle that will lead to the depletion of public transit: http://www.slate.com/articles/business/metropolis/2016/12/cities_are_cutting_transportation_service_because_they_think_uber_will_fill.html http://www.slate.com/articles/business/metropolis/2016/12/ci...
- sschueller 10y agoI guess Unicorns are actually a myth and don't really exist.
- deleted 10y ago[deleted]
- phodo 10y agoThe saving grace for Uber will be self-driving cars. Uber is a race against time to keep up the VC-subsidies until self driving is feasible. They don't need to make all routes self-driving, only some routes in some cities, to make the unit economics favorable and profitable. This logic holds true even if self-driving requires a large upfront fixed cost investment, as that cost can be amortized over time.
- Gargoyle 10y agoWhile I'm in the camp that thinks self-driving cars will be viable for many routes soon, I'm not in the camp that thinks they will be viable enough soon enough for Uber.
- cpeterso 10y agoOnce fleets of self-driving taxis are available, what advantage does Uber hold over some new company that just buys their taxis without having to sink any R&D costs?
- rrdharan 10y agoIt's kind of funny to consider how long this debate has been going on and the self-driving cars excuse as merely the latest iteration of it: http://www.bradford-delong.com/2016/12/must-read-there-is-a-serious-debate-about-uber-floor-wax-or-desert-topping-excuse-me-uber-grift-or-technological.html http://www.bradford-delong.com/2016/12/must-read-there-is-a-... To quote Tom Slee from the comment above: - Uber has a nice business as a status product (Uber Black Car ~ 2010) - Uber Black may not be profitable, but Uber will displace taxis and be hugely profitable because of technology-driven efficiencies (UberX: 2014-2015) - UberX may not be profitable, but UberPool will lead to new efficiencies in mass transit (2015-2016) - UberX may not be profitable, but Uber is a logistics company and will rewrite the rules of delivery (UberEats, various speculative stories, 2013-2015) - UberPool may not be profitable, but when Uber displaces car ownership the scale of the market will make it profitable (2016) - Uber with drivers may not be profitable, but driverless cars will make Uber profitable (2014-) - Driverless cars may not be profitable, but Uber is looking into flying vehicles (2016)
- jacques_chester 10y ago
- johan_larson 10y agoI'm having trouble believing a high-flying company could really come crashing down over accusations that they are sexist assholes. "They're a really high-pressure place, there's a lot of vicious corporate politics, and they sometimes treat women badly," could describe a whole lot of companies and institutions.
- ktta 10y agoWell, not to forget the legal case with Waymo, which might put a stop to all of Uber's self-driving efforts.
- jacques_chester 10y ago> I'm having trouble believing a high-flying company could really come crashing down over accusations that they are sexist assholes. There's a nostrum in politics that mud often doesn't stick; until it all sticks at once. Bad publicity sets a narrative that other journalists follow. Whether because it fits their own thinking, or simply to follow the herd to a higher readership, a run of bad news has a way of reinforcing itself. Especially if there's a rich vein of old bad news to dig up and recycle.
- auganov 10y agoUber's lock-in is so soft that they ought to be paranoid about any attack on their image.
- jfoster 10y agoIf that were true, they would be swamped with competitors. In most markets, they only have one significant competitor; Lyft, Grab, previously Didi. (let's not count taxis)
- BinaryIdiot 10y ago> If that were true, they would be swamped with competitors Are they not? I hear of tons of ride sharing companies every week almost always in very local areas. Seems like they have a ton of competition everywhere. At least anecdotally that's how it looks to me.
- deleted 10y ago[deleted]
- lucajona 10y agoI don't understand why the media and Silicon Valley seem to be gleefully awaiting the downfall of Uber. If Uber's business model is not financially viable then the free market will take care of that. But promoting the view that their "culture" is "rotten" based on a report from a disgruntled employee, or saying that their employees are being "exploited" based on one video from one driver is sanctimonious and vicious. Why is this necessary? The only answer I can come up with is that there is a political motivation, driven by neo-Marxism and the narrative that capitalism and big business are inherently evil. I'm an Uber user, and I still love the service and the fiercely competitive way that Uber has transformed what was previously a protected and stagnant industry delivering poor service.
- rocqua 10y agoBlaming this all on ideology is too easy an explanation. There have been multiple reports by various uber employees (as well as 2 investors according to the OP) of a rotten culture. Add to that the leaks of taking huge losses, and people are seeing a company that isn't profitable and has some disastrous PR. It doesn't help that the way they approach regulation, and the way they allegedly treat workers match up pretty well. They take an aggressive stance with both. The narrative here is that a company that was once thought to be great is now showing some significant cracks.
- jowiar 10y agoThey have also been around long enough that everyone in the industry knows someone who said "great product, shitty place to work", or something to that effect. We all knew there was _something_ a bit off, but didn't have a public, large-scale narrative to get behind.
- Swizec 10y agoBecause it drives traffic. Traffic is money. Most "news" these days, especially tech news, is just tabloids for people who think reading about celebrities is beneath them. Do you learn anything useful from following these stories? No, but it makes you feel better about your own life and the company you work for. Sure we might be profit-driven megallomaniacs, but at least we're not Uber, right?
- jacques_chester 10y agoMy main concern, as a potential founder, is that once Uber goes "pop" or Snap goes "fsssss", there will be the inevitable catastrophic lurch in the financial hivemind. The purses will snap shut all at once, for good and ill. Contractions are no respecter of potential. I'd really like to get in before last call.
- mzzter 10y agoI'm pretty sure they will continue to invest, hopefully more wisely though. They want to grow their money, so they need to invest to do that. The "lurch" should control the ballooning valuations of these startups.
- jacques_chester 10y agoI'd like that, but in my experience, markets tend to be big-bang control systems.
- jtmcmc 10y agoas a tech worker this is my concern as well. A contraction of the tech market due to funding drying up is bad for all tech employees...
- chaser7016 10y agoUber needs to be hacked and destroyed to finally teach its founders humility, morality and ethics. He isn't going to change until he meets rock bottom!!!
- deleted 10y ago[deleted]
- edshiro 10y agoI think this sentence really captures the customer's mindset with regards to Uber: "We’ll stick with Uber as long as it continues to get us where we want to go at a price we like." As long as this argument above is true, I don't see Uber dying.
- rocqua 10y agoIf they are really posting huge losses, they might need to hike prices. Besides, #deleteuber shows that bad PR has at least a marginal effect.
- jfoster 10y agoThey could hike prices and as long as they were equal to, less than, or even slightly above their competition, that would probably not cause much customer churn. The more interesting way for them to hike prices would be by rolling out upfront pricing everywhere. Consumers may not notice the slight price upticks if they happen gradually enough. In any case, they may not need to hike prices on customers. They could just increase their share from drivers. This may cause driver churn which would affect supply, but they have their ride liquidity algorithm (surge pricing) to take care of that. The bad PR will definitely be a pain for them, but doesn't seem likely to affect their longer term success.
- grandalf 10y agoHere's why Uber will succeed: - Nobody who lives in a market that Uber serves will ever be willing to go back to the old way of calling a taxi dispatch line by phone, waiting on hold, and being told the cab will arrive in "five to thirty minutes". Seriously. Think about this. - Nobody used to Uber will want to waste time taking out a credit card and swiping it through a dirty slot or handing it to a driver only to wait several minutes for it to finally go through. - Compared to the average Uber vehicle, most taxis are filthy and full of all sorts of odors. - The taxi/livery industry is simply too used to enjoying a monopoly business to be able to fix itself. Uber has already won, and all these stories about Uber's culture, Uber's approach to dealing with regulators, etc., are one last attempt by those who dislike Uber to gang up on it and do it harm. Taxi and livery services, medallions, and all the corruption that goes with them are on the way out. The stories we should be reading would be about immigrants scammed by Taxi companies working in violation of medallion laws, or about the cost of an NYC medallion that keeps non-rich people from making money driving. I don't think Uber's prices are subsidized enough that if the subsidy went away demand would be significantly altered. Simply having an intelligent app tell drivers where to expect fares and allowing easy booking and payment ads significant value to every ride that far outweighs the small dollar subsidy Uber invests to try to win market share. I personally use Uber far more often than I would ever take a Taxi, largely because of the incredible convenience that the app offers and the high quality of the service. While Uber's culture could probably use some improvement, it's irritating to see everyone piling on and trying to harm one of the firms that has done the most to democratize labor and empower individuals.
- ramy_d 10y agoTaxis are already making their own apps now in an effort to compete against uber. Medallions licences and other restrictions are gone out the window when cities allowed uber to keep doing business. Whatever monopoly they had is gone. For all the terrible things uber is, they sure disrupted the ride industry.
- jellicle 10y agoIf you're selling $5 bills for $2, funded by venture capital, are you really disrupting the dollar bill industry? I mean, you are, in the dictionary sense of disrupting - you're messing it up. But in the Silicon Valley sense, this disruption is going to last right until the money runs out and then disappear without a trace. Uber will be a cautionary tale along the lines of Kozmo or Pets.com.
- billions 10y agoThose of us who have been around a while remember the black sheep of past technology eras. I always like to sum (+/-)happiness/person * num people affected by the technology]. It usually outweighs the dramatized negative points covered in the press.
- moritzplassnig 10y agoI found this article (https://www.theinformation.com/how-uber-can-drive-profits https://www.theinformation.com/how-uber-can-drive-profits) from The Information interesting since the "Uber will get to self-driving cars which makes them profitable" is brought as an argument all the time. TL;DR is that self-driving cars according to an internal Uber study (according to The Information) would only modestly increase their margins: "Doing without drivers will only increase Uber’s projected long-term net profit margin by as much as 5 percentage points, according to an Uber worker who’s seen internal data projected by that team. That’s in part because of expected municipal regulations on pricing related to autonomous vehicle services, this person said. Another factor is that Uber may have to purchase and maintain its own cars en masse, rather than relying on cars owned by drivers as it does now."
- rrdharan 10y agoSeveral folks have analyzed this in depth. The economics of self-driving cars are definitely far from clear: https://ftalphaville.ft.com/2015/10/20/2142450/do-the-economics-of-self-driving-taxis-actually-make-sense/ https://ftalphaville.ft.com/2015/10/20/2142450/do-the-econom... http://www.nakedcapitalism.com/2017/01/can-uber-ever-deliver-part-seven-ubers-narrative-vox-stratechery-critiques-naked-capitalisms-uber-series-defending-uber-requires-ignoring.html http://www.nakedcapitalism.com/2017/01/can-uber-ever-deliver...
- pmiller2 10y ago5% is more than the entire average net margin of some industries.
- dkarapetyan 10y agoI asked this question a while back and I'll ask it again. Why is Kalanick still in charge?
- rmason 10y agoTravis Kalanick is a poster boy for bad behavior but this article is self exploiting trash. First Uber is close to break even in the US and Latin America. They've also stemmed their losses in China with the merger with Didi. http://fortune.com/2016/02/18/uber-profitable-us/ http://fortune.com/2016/02/18/uber-profitable-us/ https://www.bloomberg.com/news/articles/2016-05-31/uber-s-fastest-growing-region-set-to-break-even-fund-expansion https://www.bloomberg.com/news/articles/2016-05-31/uber-s-fa... The story they should have written is how Uber is going to hire with all this bad publicity? Any 'A' players are going to demand outrageous compensation to work for them now. As for Travis himself he needs to send a plane for Jerry Colonna, startup coach to the stars ASAP.
- laurencei 10y agoI don't get the constant hype around self driving cars. Sure - they will be revolutionary when they get here - but the reality is they are years and years away at best. We have autopilots for planes, that can effectively take off, fly, and land a plane. We've had that technology for quite a while. So why is not common place for planes, at least cargo planes with no passengers? Surely companies like UPS, FedEx etc that have a large fleet of cargo planes that fly around the US and the world would have significant cost savings? Why do we feel a car is easier to autopilot than a plane? And when the car autopilot technology does get here - why does Uber feel it will benefit them more than Lyft? As soon as it is available - you'll just have Uber style copy cats with "on demand" vehicles? What benefit does Uber have at that point?
- stagbeetle 10y ago> I don't get the constant hype around self driving cars. Sure - they will be revolutionary when they get here - but the reality is they are years and years away at best. There's a mad dash going on to be first to market on driverless cars. The basic driverless car is already being tested. The only things that need to be done are major debugging and lobbying. ETA: within half a decade if lobbying goes through. > We have autopilots for planes, that can effectively take off, fly, and land a plane. We've had that technology for quite a while. This is erroneous and irrelevant. > So why is not common place for planes, at least cargo planes with no passengers? Surely companies like UPS, FedEx etc that have a large fleet of cargo planes that fly around the US and the world would have significant cost savings? Planes are significantly harder to pilot than cars. If nothing else, look at the differences between a pilot's license and a driver's. Perhaps driverless cars will pave the way for pilotless planes, but not until safety can be guaranteed. No one wants another 9/11. > Why do we feel a car is easier to autopilot than a plane? There are more necessary controls and procedures in a plane than a car. > As soon as it is available - you'll just have Uber style copy cats with "on demand" vehicles? If you're talking about one-offs, then probably not. The reason Uber copycats are failing right now is because of app-population and broadness of coverage. Small biz can't populate their own apps with large competitors still in the picture. Include that with any licensing fees, barrier to entries, etc. it's highly unlikely. Perhaps if a ride-sharing-app sourcer is made that uses Uber and Lyft APIs, while giving one-offs a chance to be mixed in, we might have a nice free market. > What benefit does Uber have at that point? A practically free way to get even more cash.
- asasidh 10y agoI thought we already had theranos
- coldcode 10y agoUber was an interesting idea brilliantly executed with billions and billions of other people's money that in the end has no chance of ever being profitable. Like Twitter, it's an indispensable product that nonetheless doesn't make money and in the end making money is what real businesses do.
- employee8000 10y agoAs an Uber employee, yes we are going through a rough patch and we are doing a lot of bloodletting right now internally, but as a company I think we will emerge much better and much more impassioned. If you saw the numbers we see, you wouldn't be so quick to predict our death. And no, I'm not going to leak anything, go ask NYT who seems to have their own personal leak, whom I hope gets caught and fired. In terms of self-driving cars I'm not holding my breath. I think that's a decade away at least, the only reason why Uber cares is because if we don't have a foothold in that race, it's an existential problem for us. But all it will take is one terrible self-driving car tragedy to push back all research by 20 years due. I really hope something like that never happens but with all these players doing self-driving cars who can tell what will happen in the future.
- wott 10y ago> As an Uber employee, Yes, we know, since you almost always use this account to do PR for Uber.
- Neliquat 10y agoWow, thought you were exaggerating but all his comments are "as an uber employee" spins, or comments downvoted to oblivion that have been redacted. Is there any guidance from HN on corporate spin (aka shill) accounts, or could this just be considered an overly enthusiastic employees legit opinion?
- employee8000 10y agoThis is a ridiculous statement. Would you prefer I don't announce myself as an Uber employee when talking about Uber?
- tlow 10y agoEvidence suggests that this market is changing rapidly. I have seen graphs on paid ride figures being pretty even over time, whereas standard taxi figures appear to almost universally be dropping in quantity. Might not a longer term perspective change a lot of this speculation? Putting aside the driverless car thing for a moment, can't we at least agree for the next 3-5 years people are going to continue to require taxi-like transportation services?
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- frik 10y agoUber might be the new Webvan https://en.wikipedia.org/wiki/Webvan https://en.wikipedia.org/wiki/Webvan
- thedogeye 10y agoGreyball looks like a cut and dry case of obstruction of justice. I predict there will be jail time.