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Uber is demonstrating that they can sell $2 bills for a buck and that there's demand for that. They've not demonstrated they can establish a real business here

Uber is demonstrating that they can sell $2 bills for a buck and that there's demand for that. They've not demonstrated they can establish a real business here in what has turned into a pure commodity market. In competitive markets a lot of "me too" competitors pop up all the time. When you see consumers just picking the one that's the cheapest (i.e. with the most VC cash subsidizing the ride) and drivers rocking up with multiple phones on the dashboard as they too game these companies it's clearly all a fools game. This industry is a race to the bottom, but at least people get to enjoy cheap VC-subsidized rides while the party's still on!

georgespencer 9y ago
> Uber is demonstrating that they can sell $2 bills for a buck and that there's demand for that. I think the consensus is that rides are subsidised by around twenty cents on the dollar. Ubers bet is autonomous cars. They pay a 75% fee to the driver. When autonomous fleets launch in the next few years they'll normalise prices at around 50%, meaning your $10 ride costs you $5, and each ride has wafer thin profitability (the additional 5% margin will be chewed up a little by maintenance costs). And let's be real: Lyft did $600m of sales in 2016. Uber did $5.5bn. This isn't just a race to the bottom on price, it's about building a brand.
- true_religion 9y ago
  Autonomous cars are not going arrive for 10 to 15 years. If Uber can't reduce costs by 20% or increase prices by 20% or some combination of the two, then they are making the wrong kind of bet's. Personally, I believe their bet is on not needing a large advertising budget once enough people know about their service.
  - georgespencer 9y ago
    > Autonomous cars are not going arrive for 10 to 15 years. Tesla believes its cars are already equipped with the necessary hardware and that the software, including Tesla Network (their announced autonomous Uber competitor), will be going live at the end of 2017. At this point five years seems like a long time horizon for autonomous cars being on the road.
    - rgbrenner 9y ago
      Saying they're going to release details at the end of this year is not the same as launching at the end of the year.
      - georgespencer 9y ago
        This might be the perfect Hacker News comment. It's a shifting of the premise to something which is axiomatically indisputable, but clearly has no relevance to the argument. OP said that self driving cars are 10-15 years away. I observe that the hardware has already been developed and that Tesla anticipates its software being ready within the next 12 months, suggesting that a ten year horizon feels conservative. HN pedant wades in to make an irrelevant point.
        deleted 9y ago
        [deleted]
- dragonwriter 9y ago
  > Ubers bet is autonomous cars. Autonomous cars being generally available lowers the barrier to entry for competitors to Uber, and makes their position worse, not better. Uber's bet is Uber controlling the autonomous car market, which is a different and much harder thing.
  - georgespencer 9y ago
    > Autonomous cars being generally available lowers the barrier to entry for competitors to Uber, and makes their position worse, not better. Why do you think that's true? Uber is investing heavily in autonomous cars because they want to be very early to the market (hence "Uber's bet is autonomous cars"), and because when you have autonomous cars high utilisation is important, they are in food delivery, and interested in shipping and courier services. I think you're also overestimating the complexity of recruiting a load of former private hire drivers and underestimating the complexity of developing scaled fleet management solutions for entirely autonomous vehicles. > Uber's bet is Uber controlling the autonomous car market I think most reasonable people would be able to impute some sort of first mover or early mover advantage into what I was saying.
    - Nacraile 9y ago
      >> Uber's bet is Uber controlling the autonomous car market > I think most reasonable people would be able to impute some sort of first mover or early mover advantage into what I was saying. I think most reasonable people are deeply sceptical that Uber is going to win first-mover advantage against the likes of Google (who's been working on the autonomy tech for what, a decade, now?), traditional automakers (who have deep experience actually building vehicles), and Tesla (who've been working on the autonomy for at least as long, while also developing manufacturing experience, and have many more vehicles on the road gathering data). Let's not even bother quibbling about that nasty lawsuit.
      - georgespencer 9y ago
        > I think most reasonable people are deeply sceptical that Uber is going to win first-mover advantage against the likes of Google Sure. Not anything to do with my point, though.
- prostoalex 9y ago
  > Ubers bet is autonomous cars. Out of the following contenders: 1) GM (+Cruise Automation), Mercedes or VW with their enormous supply networks, vendor lock-ins, economies of scale and ability to massively ramp up a car production when needed. 2) Tesla with their (allegedly unique) battery storage tech, working manufacturing facility and massive amounts of data harvested from thousands of Tesla vehicles on the roads today. 3) Google/Waymo with their unlimited budget, ability to partner up or buy whoever they choose, and nearly limitless amount of software engineering talent they can suddenly relocate to this project when desired. 4) Avis/Budget, Hertz or other fleet management company that already has a relationship with car manufacturer and can own/maintain/wash/clean/park/dispatch a large number of vehicles on the cheap. 5) Uber. Why is #5 the strongest candidate? Does the dispatch app that displays available cars on the map create such a strong moat that #1, #2, #3 or #4 will never be able to replicate? Does Uber have a bunch of aces up their sleeve that will allow them to build/buy automobile manufacturing facilities on the cheap? Do they have a know-how of maintaining a large fleet and take care of simple things like changing a tire or cleaning the car after the previous passenger puked in it? And do that at scale?
  - code4tee 9y ago
    Quite simply at the rate Uber is going it will crash and burn long before self-driving cars are a thing at scale
  - georgespencer 9y ago
    I'm not arguing that it's a sensible bet. I'm arguing that people shitting themselves laughing because Uber has a model whereby it loses 15% of the cost of each trip do not appreciate what Uber is trying to do.
toomuchtodo 9y ago
Quibble: having multiple phones is not gaming companies; they're independent contractors, remember? You work for whoever provides the best compensation at that moment. Live by the sword, die by the sword.
- hawkice 9y ago
  It's possible he meant game in a deeper, street-philosophy sense, in that the drivers are playing the game and Uber is playing the fool.
  - toomuchtodo 9y ago
    My understanding was that Uber had/has a system called "Hell" that could uniquely identify Lyft drivers based on fiticious rider requests Uber would send, and then use that data to target those Lyft drivers to drive exclusively for Uber. Uber most definitely wasn't playing the fool.
    - hawkice 9y ago
      I'm not saying that's what's happening, I'm just saying there's an idiomatic use of "playing these companies" that doesn't involve betraying a trust.
      - toomuchtodo 9y ago
        Fair analysis. Definitely hard to obtain meaning from text alone at times.

georgespencer 9y ago

> Uber is demonstrating that they can sell $2 bills for a buck and that there's demand for that. I think the consensus is that rides are subsidised by around twenty cents on the dollar. Ubers bet is autonomous cars. They pay a 75% fee to the driver. When autonomous fleets launch in the next few years they'll normalise prices at around 50%, meaning your $10 ride costs you $5, and each ride has wafer thin profitability (the additional 5% margin will be chewed up a little by maintenance costs). And let's be real: Lyft did $600m of sales in 2016. Uber did $5.5bn. This isn't just a race to the bottom on price, it's about building a brand.

true_religion 9y ago
Autonomous cars are not going arrive for 10 to 15 years. If Uber can't reduce costs by 20% or increase prices by 20% or some combination of the two, then they are making the wrong kind of bet's. Personally, I believe their bet is on not needing a large advertising budget once enough people know about their service.
- georgespencer 9y ago
  > Autonomous cars are not going arrive for 10 to 15 years. Tesla believes its cars are already equipped with the necessary hardware and that the software, including Tesla Network (their announced autonomous Uber competitor), will be going live at the end of 2017. At this point five years seems like a long time horizon for autonomous cars being on the road.
  - rgbrenner 9y ago
    Saying they're going to release details at the end of this year is not the same as launching at the end of the year.
    - georgespencer 9y ago
      This might be the perfect Hacker News comment. It's a shifting of the premise to something which is axiomatically indisputable, but clearly has no relevance to the argument. OP said that self driving cars are 10-15 years away. I observe that the hardware has already been developed and that Tesla anticipates its software being ready within the next 12 months, suggesting that a ten year horizon feels conservative. HN pedant wades in to make an irrelevant point.
      - deleted 9y ago
        [deleted]
dragonwriter 9y ago
> Ubers bet is autonomous cars. Autonomous cars being generally available lowers the barrier to entry for competitors to Uber, and makes their position worse, not better. Uber's bet is Uber controlling the autonomous car market, which is a different and much harder thing.
- georgespencer 9y ago
  > Autonomous cars being generally available lowers the barrier to entry for competitors to Uber, and makes their position worse, not better. Why do you think that's true? Uber is investing heavily in autonomous cars because they want to be very early to the market (hence "Uber's bet is autonomous cars"), and because when you have autonomous cars high utilisation is important, they are in food delivery, and interested in shipping and courier services. I think you're also overestimating the complexity of recruiting a load of former private hire drivers and underestimating the complexity of developing scaled fleet management solutions for entirely autonomous vehicles. > Uber's bet is Uber controlling the autonomous car market I think most reasonable people would be able to impute some sort of first mover or early mover advantage into what I was saying.
  - Nacraile 9y ago
    >> Uber's bet is Uber controlling the autonomous car market > I think most reasonable people would be able to impute some sort of first mover or early mover advantage into what I was saying. I think most reasonable people are deeply sceptical that Uber is going to win first-mover advantage against the likes of Google (who's been working on the autonomy tech for what, a decade, now?), traditional automakers (who have deep experience actually building vehicles), and Tesla (who've been working on the autonomy for at least as long, while also developing manufacturing experience, and have many more vehicles on the road gathering data). Let's not even bother quibbling about that nasty lawsuit.
    - georgespencer 9y ago
      > I think most reasonable people are deeply sceptical that Uber is going to win first-mover advantage against the likes of Google Sure. Not anything to do with my point, though.
prostoalex 9y ago
> Ubers bet is autonomous cars. Out of the following contenders: 1) GM (+Cruise Automation), Mercedes or VW with their enormous supply networks, vendor lock-ins, economies of scale and ability to massively ramp up a car production when needed. 2) Tesla with their (allegedly unique) battery storage tech, working manufacturing facility and massive amounts of data harvested from thousands of Tesla vehicles on the roads today. 3) Google/Waymo with their unlimited budget, ability to partner up or buy whoever they choose, and nearly limitless amount of software engineering talent they can suddenly relocate to this project when desired. 4) Avis/Budget, Hertz or other fleet management company that already has a relationship with car manufacturer and can own/maintain/wash/clean/park/dispatch a large number of vehicles on the cheap. 5) Uber. Why is #5 the strongest candidate? Does the dispatch app that displays available cars on the map create such a strong moat that #1, #2, #3 or #4 will never be able to replicate? Does Uber have a bunch of aces up their sleeve that will allow them to build/buy automobile manufacturing facilities on the cheap? Do they have a know-how of maintaining a large fleet and take care of simple things like changing a tire or cleaning the car after the previous passenger puked in it? And do that at scale?
- code4tee 9y ago
  Quite simply at the rate Uber is going it will crash and burn long before self-driving cars are a thing at scale
- georgespencer 9y ago
  I'm not arguing that it's a sensible bet. I'm arguing that people shitting themselves laughing because Uber has a model whereby it loses 15% of the cost of each trip do not appreciate what Uber is trying to do.

toomuchtodo 9y ago

Quibble: having multiple phones is not gaming companies; they're independent contractors, remember? You work for whoever provides the best compensation at that moment. Live by the sword, die by the sword.

hawkice 9y ago
It's possible he meant game in a deeper, street-philosophy sense, in that the drivers are playing the game and Uber is playing the fool.
- toomuchtodo 9y ago
  My understanding was that Uber had/has a system called "Hell" that could uniquely identify Lyft drivers based on fiticious rider requests Uber would send, and then use that data to target those Lyft drivers to drive exclusively for Uber. Uber most definitely wasn't playing the fool.
  - hawkice 9y ago
    I'm not saying that's what's happening, I'm just saying there's an idiomatic use of "playing these companies" that doesn't involve betraying a trust.
    - toomuchtodo 9y ago
      Fair analysis. Definitely hard to obtain meaning from text alone at times.