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The 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

by phodo 10y ago

The 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 ago
While 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 ago
Once 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 ago
It'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
Self-driving cars provide no economic moat whatsoever. 1. There will be several wellsprings of that technology, all them with deeper capital pools than Uber. Google is now running $5 billion of profit per quarter, nearly $7 billion in pre-tax profit. In any given year they overtake Uber's entire investment capital to this point. Meanwhile the major car companies have hundreds of billions of dollars of collective revenue and possibly more than a trillion dollars of existing, largely fully-depreciated capital and equipment. A century of brand recognition and loyalty, with entire families swearing they'll only buy a particular maker's vehicles. 2. There is no lockin whatsoever. Expect "AirBnB for self-driving cars" that disintermediates Uber entirely. When anyone can buy a car, expect them to rent it out at uneconomically low rates because they don't realise it's uneconomical. Meanwhile every livery company replaces their drivers too. Or expect "Google Ride" / "Amazon Woosh" / "Facebook Gimme A Lift" to enter the market, leveraging their particular strengths. Or subscription services, a la GE's engine-hours concept[0] or NetJets fractional ownership. All you want is a Fiat Funmobile 2-3 hours in peak and a Toyota Tyke-Transporter on weekends. Most of the time you have to buy both. No longer. [0] In fact, Cadillac are already trialling this.

by phodo 10y ago

Gargoyle 10y ago

While 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 ago

Once 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 ago

It'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

Self-driving cars provide no economic moat whatsoever. 1. There will be several wellsprings of that technology, all them with deeper capital pools than Uber. Google is now running $5 billion of profit per quarter, nearly $7 billion in pre-tax profit. In any given year they overtake Uber's entire investment capital to this point. Meanwhile the major car companies have hundreds of billions of dollars of collective revenue and possibly more than a trillion dollars of existing, largely fully-depreciated capital and equipment. A century of brand recognition and loyalty, with entire families swearing they'll only buy a particular maker's vehicles. 2. There is no lockin whatsoever. Expect "AirBnB for self-driving cars" that disintermediates Uber entirely. When anyone can buy a car, expect them to rent it out at uneconomically low rates because they don't realise it's uneconomical. Meanwhile every livery company replaces their drivers too. Or expect "Google Ride" / "Amazon Woosh" / "Facebook Gimme A Lift" to enter the market, leveraging their particular strengths. Or subscription services, a la GE's engine-hours concept[0] or NetJets fractional ownership. All you want is a Fiat Funmobile 2-3 hours in peak and a Toyota Tyke-Transporter on weekends. Most of the time you have to buy both. No longer. [0] In fact, Cadillac are already trialling this.