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My impression is that Uber simply can't afford to not be the absolute first in driverless taxis. They're burning money to stay in the taxi business. Their entir

My impression is that Uber simply can't afford to not be the absolute first in driverless taxis. They're burning money to stay in the taxi business. Their entire business model relies on keeping the price somewhere in the range of what it is now and not paying a driver. It might be that the marginal advantage of not having a driver on the highway section of truck delivery is not large enough to justify building out a trucking network. They'd have to establish relationships, buy trucks, service the trucks etc. all of that would be time and money that isn't going into their big bet.

ghaff 9y ago
I've said this before, but this just seems crazy to me. Nothing I see suggests that 100% autonomous door-to-door driving as a commercially offered service is just around the corner. Even if it reliably worked technically you're still years away from being able to offer it to the public. Not even Uber could flaunt the law that flagrantly. And the thing is that we're not there. Even if you say it's a decade out (which seems pie in the sky optimistic to me), can Uber really afford to burn through cash for another 10 years? [ADDED: I didn't make my point well. I do think legal/regulatory will take some time independent of technical readiness, but IMO it's technical readiness especially in all the corner cases that's the long pole.]
- placeybordeaux 9y ago
  I'd short Uber if it was publicly traded. I'm not sure how far away door to door taxis are, but I also would bet against Uber having a long enough market lock in to recoup losses.
  - aetherson 9y ago
    Uber's driverless car strategy is incredibly implausible. You have to believe all of the following: 1. Uber will be first to market with driverless car technology. That is, it will beat Waymo, all the actual car companies, Apple, Tesla, and 100 other startups. 2. Given 1, Uber's driverless car technology is a durable technological advantage (ie, even if it's first to market, that doesn't matter much if Waymo follows it to market 3 months later). Note that we are at this point stipulating that this technological challenge is doable with a team that you spun up out of nothing a couple of years ago, as not-the-best-resourced team on the block. 3. Given 2, the legal issues with driverless cars are resolved well enough that Uber has a viable business. 4. Given 3, Uber can successfully raise money for an incredible capital expenditure (how many cars are we talking here? 1,000,000, very conservatively? At $20,000 ea, very conservatively? So $20B investment), and then handle that kind of capital investment. 5. Given 4, build up all the supporting infrastructure for this business (parking, local cleaning, etc.) 6. Given 5, this all happens within Uber's operational runway (like, starts within 3-5 years, finishes within 10 or so)? Personally, I'd put the odds of this at: 10% for 1 * 10% for 2 * 90% for 3 * 80% for 4 * 70% for 5 * 20% for 6 = roughly 0.1%. But even if you're way more bullish on Uber than I am, can anyone really argue for more than 50% for 1 * 50% for 2 * 90% for 3 * 95% for 4 * 95% for 5 * 80% for 6? That's still only 16%.
    - placeybordeaux 9y ago
      I think that steps 2 and 4 are the biggest questions for me, but the details about keeping the cars running & clean are also good ones. Right now Uber can externalize the costs of a running clean car. Running their own fleet will mean that stuff like gas, maintenance, cleanliness, misc stuff that 5 star uber drivers do (free candy, water etc) will no longer be externalized and bore by their drivers. P.S. did you mean bearish instead of bullish?
      - aetherson 9y ago
        Nope. People who are more bullish about Uber than I rate their chance of being first-to-market with driverless car technology at higher than 10%, for example.
    - ghaff 9y ago
      So Uber just needs to win, in a sustainable differentiated way, self-driving technology, get it incorporated into actual cars in production volumes, and roll it out as a new major national car rental company based mostly on very short-term rentals. Within, as you say, their operational runway.
    - wdb 9y ago
      And then you have the question, if people want to be in a taxi without a driver?
- rtkwe 9y ago
  There's a few easier steps they could take first. Long haul point to point from a few major distribution points to others is probably doable soon especially if they're designed to accommodate the autonomous trucks. Local drivers who are paid less drop off a trailer at a UberFreight depot in Southern California, an automated truck picks it up and drives freeways over to the UberFreight depot for Eastern North Carolina, there another local short haul driver gets booked to take it to it's final destination. Uber might be burning too much money to make it to this but the technology for long haul freeway driving is largely here already it avoids a lot of the difficulties of small roads.
  - ghaff 9y ago
    While true, a lot of truly "long haul" trucking has switched to freight railroads anyway with inter-modal shipping. There may be some savings associated with effectively adding another mode (autonomous medium-haul) but there's at least some cost to adding the additional level of depots associated with that. I can believe it would work but I've never seen a real analysis.
- kjksf 9y ago
  Elon Musk stated that their technology is 2 years away from full autonomous driving. Tesla is planning LA -> NY fully autonomic drive by end of this year. Waymo has already started a real pilot of fully autonomic driving for regular people in Phoenix area. I predict that means they are less than 1 year away from ditching training wheels and launching it fully. Some think that changing laws to make legal will be the hard part but I see the opposite: states will be competing for who's first to make it possible. Many states, including CA, already made testing possible. You just sign up and ask "can I test my self-driving cars, on real roads, possibly destroying other cars on those roads and killing people. Pretty please?". Laws are hard when they're controversial and self-driving cars are political goldmine: * dramatically less deaths and other kinds of destruction due to less accidents * cheaper transportation * the sheer coolness of self-driving It'll take only few states in US to allow it and other states will have to follow or the politicians will look very stupid if a taxi drive in SF costs $1 and the same is $10 in Chicago. No-one will have to flaunt the law, it'll get changed very quickly.
  - ghaff 9y ago
    I actually agree that if the tech works extremely reliably, the legal/regulatory hurdles may take some time but aren't going to be a major roadblock. We are quite far apart however on how close we are to "just works."
  - aetherson 9y ago
    Waymo's Phoenix test will include an employee in the driver's seat ready to take over. (See: https://www.nytimes.com/2017/04/25/technology/waymo-to-offer-phoenix-area-access-to-self-driving-cars.html?_r=0 https://www.nytimes.com/2017/04/25/technology/waymo-to-offer..., and note the sentence "All the Waymo cars will have a technician who can take control in an emergency.") Elon Musk said that Tesla's driverless technology was "probably better than a person" more than a year ago. (https://www.washingtonpost.com/news/the-switch/wp/2016/01/11/elon-musk-says-teslas-autopilot-is-already-probably-better-than-human-drivers/ https://www.washingtonpost.com/news/the-switch/wp/2016/01/11...). What I'm saying is, Musk is a big promoter of Tesla and taking his ideas of when the technology will be ready at 100% face value is foolish.
- TheCoelacanth 9y ago
  Easy, they just have to find an investor with 10 times as much money to irresponsibly blow through as the Saudi sovereign wealth fund. That exists, right?
Marazan 9y ago
I don't get what the Uber game plan with driverless taxis is. What is their competitive advantage?
- mattnewton 9y ago
  Network effects (they already have many app installs and habitual users), and possibly an early mover advantage at the rate their program had been progressing.
- radiorental 9y ago
  I did some back of the napkin calculations and a two car suburban family would save approximately $7000 using Uber to commute compared to owning a 15-20K second card over a 10 year period. That's the market, if uber wants to scale they have to do that driverless.
  - querulous 9y ago
    $7k a year, or $7k total? no one in america is giving up their car for $700/year
    - radiorental 9y ago
      Who is giving up a car? Who will want to own, maintain, deal with parking, insure, etc etc a car for 10 years when you can have this year's model appear anywhere, anytime by just taking out your phone? The 7k savings assume you bought a cheap car and kept it, I also did not factor tax & insurance. Savings increase dramatically if you were to finance a 35k+ 2nd car that many Americans in the burbs seem to do.
  - Marazan 9y ago
    Uber loses money at that price. Uber doesn't "scale", there is no economies of scale that kick in anywhere in their business model.
    - placeybordeaux 9y ago

ghaff 9y ago

I've said this before, but this just seems crazy to me. Nothing I see suggests that 100% autonomous door-to-door driving as a commercially offered service is just around the corner. Even if it reliably worked technically you're still years away from being able to offer it to the public. Not even Uber could flaunt the law that flagrantly. And the thing is that we're not there. Even if you say it's a decade out (which seems pie in the sky optimistic to me), can Uber really afford to burn through cash for another 10 years? [ADDED: I didn't make my point well. I do think legal/regulatory will take some time independent of technical readiness, but IMO it's technical readiness especially in all the corner cases that's the long pole.]

placeybordeaux 9y ago
I'd short Uber if it was publicly traded. I'm not sure how far away door to door taxis are, but I also would bet against Uber having a long enough market lock in to recoup losses.
- aetherson 9y ago
  Uber's driverless car strategy is incredibly implausible. You have to believe all of the following: 1. Uber will be first to market with driverless car technology. That is, it will beat Waymo, all the actual car companies, Apple, Tesla, and 100 other startups. 2. Given 1, Uber's driverless car technology is a durable technological advantage (ie, even if it's first to market, that doesn't matter much if Waymo follows it to market 3 months later). Note that we are at this point stipulating that this technological challenge is doable with a team that you spun up out of nothing a couple of years ago, as not-the-best-resourced team on the block. 3. Given 2, the legal issues with driverless cars are resolved well enough that Uber has a viable business. 4. Given 3, Uber can successfully raise money for an incredible capital expenditure (how many cars are we talking here? 1,000,000, very conservatively? At $20,000 ea, very conservatively? So $20B investment), and then handle that kind of capital investment. 5. Given 4, build up all the supporting infrastructure for this business (parking, local cleaning, etc.) 6. Given 5, this all happens within Uber's operational runway (like, starts within 3-5 years, finishes within 10 or so)? Personally, I'd put the odds of this at: 10% for 1 * 10% for 2 * 90% for 3 * 80% for 4 * 70% for 5 * 20% for 6 = roughly 0.1%. But even if you're way more bullish on Uber than I am, can anyone really argue for more than 50% for 1 * 50% for 2 * 90% for 3 * 95% for 4 * 95% for 5 * 80% for 6? That's still only 16%.
  - placeybordeaux 9y ago
    I think that steps 2 and 4 are the biggest questions for me, but the details about keeping the cars running & clean are also good ones. Right now Uber can externalize the costs of a running clean car. Running their own fleet will mean that stuff like gas, maintenance, cleanliness, misc stuff that 5 star uber drivers do (free candy, water etc) will no longer be externalized and bore by their drivers. P.S. did you mean bearish instead of bullish?
    - aetherson 9y ago
      Nope. People who are more bullish about Uber than I rate their chance of being first-to-market with driverless car technology at higher than 10%, for example.
  - ghaff 9y ago
    So Uber just needs to win, in a sustainable differentiated way, self-driving technology, get it incorporated into actual cars in production volumes, and roll it out as a new major national car rental company based mostly on very short-term rentals. Within, as you say, their operational runway.
  - wdb 9y ago
    And then you have the question, if people want to be in a taxi without a driver?
rtkwe 9y ago
There's a few easier steps they could take first. Long haul point to point from a few major distribution points to others is probably doable soon especially if they're designed to accommodate the autonomous trucks. Local drivers who are paid less drop off a trailer at a UberFreight depot in Southern California, an automated truck picks it up and drives freeways over to the UberFreight depot for Eastern North Carolina, there another local short haul driver gets booked to take it to it's final destination. Uber might be burning too much money to make it to this but the technology for long haul freeway driving is largely here already it avoids a lot of the difficulties of small roads.
- ghaff 9y ago
  While true, a lot of truly "long haul" trucking has switched to freight railroads anyway with inter-modal shipping. There may be some savings associated with effectively adding another mode (autonomous medium-haul) but there's at least some cost to adding the additional level of depots associated with that. I can believe it would work but I've never seen a real analysis.
kjksf 9y ago
Elon Musk stated that their technology is 2 years away from full autonomous driving. Tesla is planning LA -> NY fully autonomic drive by end of this year. Waymo has already started a real pilot of fully autonomic driving for regular people in Phoenix area. I predict that means they are less than 1 year away from ditching training wheels and launching it fully. Some think that changing laws to make legal will be the hard part but I see the opposite: states will be competing for who's first to make it possible. Many states, including CA, already made testing possible. You just sign up and ask "can I test my self-driving cars, on real roads, possibly destroying other cars on those roads and killing people. Pretty please?". Laws are hard when they're controversial and self-driving cars are political goldmine: * dramatically less deaths and other kinds of destruction due to less accidents * cheaper transportation * the sheer coolness of self-driving It'll take only few states in US to allow it and other states will have to follow or the politicians will look very stupid if a taxi drive in SF costs $1 and the same is $10 in Chicago. No-one will have to flaunt the law, it'll get changed very quickly.
- ghaff 9y ago
  I actually agree that if the tech works extremely reliably, the legal/regulatory hurdles may take some time but aren't going to be a major roadblock. We are quite far apart however on how close we are to "just works."
- aetherson 9y ago
  Waymo's Phoenix test will include an employee in the driver's seat ready to take over. (See: https://www.nytimes.com/2017/04/25/technology/waymo-to-offer-phoenix-area-access-to-self-driving-cars.html?_r=0 https://www.nytimes.com/2017/04/25/technology/waymo-to-offer..., and note the sentence "All the Waymo cars will have a technician who can take control in an emergency.") Elon Musk said that Tesla's driverless technology was "probably better than a person" more than a year ago. (https://www.washingtonpost.com/news/the-switch/wp/2016/01/11/elon-musk-says-teslas-autopilot-is-already-probably-better-than-human-drivers/ https://www.washingtonpost.com/news/the-switch/wp/2016/01/11...). What I'm saying is, Musk is a big promoter of Tesla and taking his ideas of when the technology will be ready at 100% face value is foolish.
TheCoelacanth 9y ago
Easy, they just have to find an investor with 10 times as much money to irresponsibly blow through as the Saudi sovereign wealth fund. That exists, right?

Marazan 9y ago

I don't get what the Uber game plan with driverless taxis is. What is their competitive advantage?

mattnewton 9y ago
Network effects (they already have many app installs and habitual users), and possibly an early mover advantage at the rate their program had been progressing.
radiorental 9y ago
I did some back of the napkin calculations and a two car suburban family would save approximately $7000 using Uber to commute compared to owning a 15-20K second card over a 10 year period. That's the market, if uber wants to scale they have to do that driverless.
- querulous 9y ago
  $7k a year, or $7k total? no one in america is giving up their car for $700/year
  - radiorental 9y ago
    Who is giving up a car? Who will want to own, maintain, deal with parking, insure, etc etc a car for 10 years when you can have this year's model appear anywhere, anytime by just taking out your phone? The 7k savings assume you bought a cheap car and kept it, I also did not factor tax & insurance. Savings increase dramatically if you were to finance a 35k+ 2nd car that many Americans in the burbs seem to do.
- Marazan 9y ago
  Uber loses money at that price. Uber doesn't "scale", there is no economies of scale that kick in anywhere in their business model.
  - placeybordeaux 9y ago