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That seems a little pessimistic. I think most people can realize Uber is an outlier in many aspects, most of which, its inability to produce a profit. It isn'

That seems a little pessimistic. I think most people can realize Uber is an outlier in many aspects, most of which, its inability to produce a profit. It isn't even burning cash to continue growing, like Amazon, it is just burning cash to exist. Amazon at least has proven it has a valuable model but chooses to continue burning.

placeybordeaux 10y ago
I thought amazon was dumping $ into infrastructure where as uber was dumping $ into customer and driver's pockets.
jacquesm 10y ago
Amazon is continuously expanding its offering in every market it can get into. Think of it not as one company but as 30 or so very well run start-ups that all charge for the product. Long run I'd be bullish on Amazon and less bullish on Google simply because Google is as fragile as the advertising market and there is no knowing where that is going. But for Amazons products there will likely always be a good sized market and they could become profitable very fast as soon as they decide that's where they want to go and stop the expansionist phase. To Jeff Bezos it's just one huge land-grab.
cocktailpeanuts 10y ago
Do a bit more history study and you'll realize people used to say the same thing about Amazon. It's only recently that people decided to acknowledge the fact that Amazon's "burning money" is a feature not a bug. You said "Amazon at least has proven it has a valuable model...". What you don't realize is it took almost a decade. This is actually why I have infinite respect for Jeff Bezos, he stuck around through all the criticism (almost a decade of constantly hearing "it won't work! they're not making any money" even though they have been clearly the market leader for a long time and I'm sure he had clear vision all along) and finally managed to get to a point where even the naysayers gave up.
- colbyh 10y ago
  Amazon's free cash flow (at least by their own definition, which I'm not attempting to debate) is tied to operating efficiency above all else. for Uber to pull the same trick it appears the only place Uber could start making more money at scale would be via autonomous cars, which Travis himself has said is critical to the success of the company: http://www.businessinsider.com/travis-kalanick-interview-on-self-driving-cars-future-driver-jobs-2016-8 http://www.businessinsider.com/travis-kalanick-interview-on-... If that's the case then Uber is a very different company with a very different business model and risks, so it's very tricky to assess it as the same company (at this point). until then it does seem like the "scale at all costs" mentality is currently coming back to bite them.
  - cocktailpeanuts 10y ago
    The "operational cost" is because of competition. It's not like Uber buys up all the cars so they need tons of capital. The reason they need to spend a lot of money is they need to stay afloat until all others die off. Whether this strategy will succeed or not is absolutely not as obvious as you think, because there's of tons of history where companies that took the same road either ended up dominating the market (Youtube) or died off (Most others). I'm not saying "scale at all costs" is good, but I also sympathize with them because there's not much else they can do at this point. As soon as they start charging more and go less aggressive on marketing they will lose to their competition. But they also know there are only a few serious competitors at the moment and they all have the same struggles. So if they manage to stay afloat until the competitors die off (read: get acquired), they will have much better leverage. I'm sure that's what they're shooting for.
- ithinkinstereo 10y ago
  To be fair, Amazon was investing all of their money on creating moats to fend off current/future competitors, like warehouses and packing/shipping infrastructure. Most of Uber's spend is on subsidizing the cost of the product. This is a competitor moat in the sense that it outprices less-resourced competition, but it's a moat that can only be maintained by continued subsidies. The moment those subsidies end, so does the moat.

placeybordeaux 10y ago

I thought amazon was dumping $ into infrastructure where as uber was dumping $ into customer and driver's pockets.

jacquesm 10y ago

Amazon is continuously expanding its offering in every market it can get into. Think of it not as one company but as 30 or so very well run start-ups that all charge for the product. Long run I'd be bullish on Amazon and less bullish on Google simply because Google is as fragile as the advertising market and there is no knowing where that is going. But for Amazons products there will likely always be a good sized market and they could become profitable very fast as soon as they decide that's where they want to go and stop the expansionist phase. To Jeff Bezos it's just one huge land-grab.

cocktailpeanuts 10y ago

Do a bit more history study and you'll realize people used to say the same thing about Amazon. It's only recently that people decided to acknowledge the fact that Amazon's "burning money" is a feature not a bug. You said "Amazon at least has proven it has a valuable model...". What you don't realize is it took almost a decade. This is actually why I have infinite respect for Jeff Bezos, he stuck around through all the criticism (almost a decade of constantly hearing "it won't work! they're not making any money" even though they have been clearly the market leader for a long time and I'm sure he had clear vision all along) and finally managed to get to a point where even the naysayers gave up.

colbyh 10y ago
Amazon's free cash flow (at least by their own definition, which I'm not attempting to debate) is tied to operating efficiency above all else. for Uber to pull the same trick it appears the only place Uber could start making more money at scale would be via autonomous cars, which Travis himself has said is critical to the success of the company: http://www.businessinsider.com/travis-kalanick-interview-on-self-driving-cars-future-driver-jobs-2016-8 http://www.businessinsider.com/travis-kalanick-interview-on-... If that's the case then Uber is a very different company with a very different business model and risks, so it's very tricky to assess it as the same company (at this point). until then it does seem like the "scale at all costs" mentality is currently coming back to bite them.
- cocktailpeanuts 10y ago
  The "operational cost" is because of competition. It's not like Uber buys up all the cars so they need tons of capital. The reason they need to spend a lot of money is they need to stay afloat until all others die off. Whether this strategy will succeed or not is absolutely not as obvious as you think, because there's of tons of history where companies that took the same road either ended up dominating the market (Youtube) or died off (Most others). I'm not saying "scale at all costs" is good, but I also sympathize with them because there's not much else they can do at this point. As soon as they start charging more and go less aggressive on marketing they will lose to their competition. But they also know there are only a few serious competitors at the moment and they all have the same struggles. So if they manage to stay afloat until the competitors die off (read: get acquired), they will have much better leverage. I'm sure that's what they're shooting for.
ithinkinstereo 10y ago
To be fair, Amazon was investing all of their money on creating moats to fend off current/future competitors, like warehouses and packing/shipping infrastructure. Most of Uber's spend is on subsidizing the cost of the product. This is a competitor moat in the sense that it outprices less-resourced competition, but it's a moat that can only be maintained by continued subsidies. The moment those subsidies end, so does the moat.