3 ms·

To be fair, Amazon was investing all of their money on creating moats to fend off current/future competitors, like warehouses and packing/shipping infrastructur

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.

cocktailpeanuts 9y ago
I know that, and I'm sure guys at Uber knows that too, and probably know much more than all of us combined. They are not idiots and they think about these things every single day. If people like us who only think about it once in a while when a related article shows up on HN knows it, they do too. Just to be clear, I also think what you say is a very possible scenario, but the problem is this thesis is based on the current state of the world. Things change all the time (For example who knows where Uber would have been if this whole autonomous vehicle thing never became the reality, and there can be all kinds of variables in the future that may work for or against them) You really never know what will happen. It's easy to say the moat is not as obvious as amazon's, but Amazon's moat was not as obvious as we think nowadays back then. Not just Amazon, every single disruptive tech company went through this, nowadays it's so obvious that you can make money with search ads but when Google first came out people never understood how they were going to make money by sending people away from their site as soon as they arrive. Obvious things are only obvious in hindsight.
- ithinkinstereo 9y ago
  It's not a matter of obviousness, though. The real question is: are they spending their money on creating a real moat that will remain once the money spigot is turned off or not? Amazon purchased real things. Uber is spending their cash on subsidizing the price. I guess you can make the argument that their moat is also their brand, but I think its very apples to oranges to compare Uber's subsidies with Amazon's infrastructure spend. I also don't by the "they are not idiots" argument. Remember, there were plenty of "geniuses" at Enron, at Bear Stearns, At Lehman, etc.
  - cocktailpeanuts 9y ago
    > I think its very apples to oranges to compare Uber's subsidies with Amazon's infrastructure spend. Yet you are comparing them. My point was exactly that comparing these are apples and oranges. And it is a matter of obviousness because you seem to think it's obvious that Amazon's "moat" was an obvious moat whereas Uber doesn't have a moat at all. I'm not even saying Uber has found their absolute moat either. I'm saying a lot of analysis we take for granted was never obvious when the companies were in their early days. Youtube's model was never obvious either (and still not obvious in terms of profitability) yet they managed to near monopolize the online video sector. You could say the same thing about Youtube. They didn't know how to make money, and they just kept bleeding money. So bad that they had to sell themselves. Yet they have built something valuable, and someone wanted to buy them to use as a very important strategic asset. Who knows what will happen to uber but I don't think it's so bad that they will obviously fail. It's more like 50/50. They do provide great value to people, and I am sure they are doing whatever they can to create what you call a moat, just not visible to you. I still stand by the fact that Amazon's "moat" was never obvious until recently. If you really think it was as easy as "Amazon was spending money purchasing real things so they were actually accumulating value, compared to Uber", you should read this book https://www.amazon.com/Everything-Store-Jeff-Bezos-Amazon-ebook/dp/B00BWQW73E/ref=pd_sim_351_1?_encoding=UTF8&psc=1&refRID=N701XJT8QX5WZAT0MGEX https://www.amazon.com/Everything-Store-Jeff-Bezos-Amazon-eb... There were so many points in Amazon's history where everybody mocked them and criticized them just like you're doing right now for Uber. For example at one point everyone thought a decentralized marketplace (eBay) was the future and Amazon will die off because eBay never kept inventory, which came with a lot of benefits such as high margin and low operating cost, not to mention people used to say "eBay is the true internet marketplace, Amazon is just a web1.0 company and won't survive in the world where every sale happens online peer to peer". So basically what you're referring to as a moat now was actually considered the biggest weakness for Amazon at one point in history.

cocktailpeanuts 9y ago

I know that, and I'm sure guys at Uber knows that too, and probably know much more than all of us combined. They are not idiots and they think about these things every single day. If people like us who only think about it once in a while when a related article shows up on HN knows it, they do too. Just to be clear, I also think what you say is a very possible scenario, but the problem is this thesis is based on the current state of the world. Things change all the time (For example who knows where Uber would have been if this whole autonomous vehicle thing never became the reality, and there can be all kinds of variables in the future that may work for or against them) You really never know what will happen. It's easy to say the moat is not as obvious as amazon's, but Amazon's moat was not as obvious as we think nowadays back then. Not just Amazon, every single disruptive tech company went through this, nowadays it's so obvious that you can make money with search ads but when Google first came out people never understood how they were going to make money by sending people away from their site as soon as they arrive. Obvious things are only obvious in hindsight.

ithinkinstereo 9y ago
It's not a matter of obviousness, though. The real question is: are they spending their money on creating a real moat that will remain once the money spigot is turned off or not? Amazon purchased real things. Uber is spending their cash on subsidizing the price. I guess you can make the argument that their moat is also their brand, but I think its very apples to oranges to compare Uber's subsidies with Amazon's infrastructure spend. I also don't by the "they are not idiots" argument. Remember, there were plenty of "geniuses" at Enron, at Bear Stearns, At Lehman, etc.
- cocktailpeanuts 9y ago
  > I think its very apples to oranges to compare Uber's subsidies with Amazon's infrastructure spend. Yet you are comparing them. My point was exactly that comparing these are apples and oranges. And it is a matter of obviousness because you seem to think it's obvious that Amazon's "moat" was an obvious moat whereas Uber doesn't have a moat at all. I'm not even saying Uber has found their absolute moat either. I'm saying a lot of analysis we take for granted was never obvious when the companies were in their early days. Youtube's model was never obvious either (and still not obvious in terms of profitability) yet they managed to near monopolize the online video sector. You could say the same thing about Youtube. They didn't know how to make money, and they just kept bleeding money. So bad that they had to sell themselves. Yet they have built something valuable, and someone wanted to buy them to use as a very important strategic asset. Who knows what will happen to uber but I don't think it's so bad that they will obviously fail. It's more like 50/50. They do provide great value to people, and I am sure they are doing whatever they can to create what you call a moat, just not visible to you. I still stand by the fact that Amazon's "moat" was never obvious until recently. If you really think it was as easy as "Amazon was spending money purchasing real things so they were actually accumulating value, compared to Uber", you should read this book https://www.amazon.com/Everything-Store-Jeff-Bezos-Amazon-ebook/dp/B00BWQW73E/ref=pd_sim_351_1?_encoding=UTF8&psc=1&refRID=N701XJT8QX5WZAT0MGEX https://www.amazon.com/Everything-Store-Jeff-Bezos-Amazon-eb... There were so many points in Amazon's history where everybody mocked them and criticized them just like you're doing right now for Uber. For example at one point everyone thought a decentralized marketplace (eBay) was the future and Amazon will die off because eBay never kept inventory, which came with a lot of benefits such as high margin and low operating cost, not to mention people used to say "eBay is the true internet marketplace, Amazon is just a web1.0 company and won't survive in the world where every sale happens online peer to peer". So basically what you're referring to as a moat now was actually considered the biggest weakness for Amazon at one point in history.