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Let's be clear that "they're buying market share and betting that they can pull self-driving cars into their fleets" thing is revisionist history. Nobody who i

Let's be clear that "they're buying market share and betting that they can pull self-driving cars into their fleets" thing is revisionist history. Nobody who invested billions in Uber years ago was told, "Our plan is to burn your money and win driverless cars." They didn't even have a driverless car program until about two years ago. Uber thought that they had a viable business model based on human drivers, and that their markets would settle down into profitability once they established market share. They were wrong. They thought that they could successfully expand into a logistics business -- that was a big element of their redesign, which only landed 6 months ago, for god's sake. Now you never hear about logistics (because the only people who might conceivably want Uber-for-packages, Amazon, just went ahead and built the service in-house). So now they're saying that they're a big bet on driverless cars.

Balgair 9y ago
I can't find the post, but there was a 'UBER finance guy' (self-claimed) on HN a few weeks back that 'spilled the beans' and quit on what Uber is actually: a sub-prime auto loan company. Again, this is my recollection, take it with salt. It goes like: Driver (D): I want to drive for Uber! Uber (U): Sure! Do you have a car that is safe and less than 5 years old? (I have no idea what the car reqs. are) D: No U: Ok, well, we can loan you one! Just sign this! D: Great! I signed! What are the loan repayments like? U: Well, you owe us, per the 3 year contract, $100/week (I have no idea what the actual loan terms are like, but 100 is a nice round number so lets use that) D: Ok! That's not bad! U: It gets better! We'll just auto-deduct the money you owe us from your driver's account, after that, all the money is yours! You don't have to worry about any of it, just drive for us, we'll take care of it. D: Cool! What happens when I get sick or something and can't drive? U: Well, then you still owe us the money, plus a 10% fee on that week's loan payment (again, I have no idea what the loan agreement is like, YMMV) that we'll automatically tack on to the next week's loan payment. -A week goes by- D: Oh man, the weather was great this week, not a lot of people needed me to drive them around! I only made $90! U: Ok, well, per the loan agreement, you owe us $10 more then (100-90=10), plus the 10% late fee, making your next week's payment $100 + $10 + (0.1 x $100) = $120. D: Oh man! I better hope that the weather is bad so people want to take an Uber that I am driving! -Another week goes by- D: The weather was really rainy, but even still, I only got notifications to pick up $90 worth of people! Not again! U: Well, now you owe us $120 - $90 = $30 plus the 10% late fee on the $120, making your next week's payment $100 + $30 + (0.1 x $120) = $142. D: Well, darn, I thought a lot of people wanted to take Ubers! All my friends take them! But I don't get enough notifications to pick people up from Uber! U: We know. We are the people that are giving you a loan and simultaneously are the ones that control how much of that loan you can pay back because we are the ones that tell you how many people you pick up and we also set the 'surge' rates and regular rates that we tell you. Also, we have something of a history of acting in morally reprehensible way without shame. D: Wait, what did you say?! U: Nothing! Nothing at all! Get back to driving! That car we bought isn't going to pay itself off, you are!
- aetherson 9y ago
  I'm as negative as the next guy on Uber, and that's a great narrative, but they are losing vast quantities of money. Any dastardly deed that they do has to square itself with the fact that they are losing vast quantities of money. A predatory auto-loan company is not a $70B business.
  - HarryHirsch 9y ago
    No, but the loan sideline allows to classify the drivers as contractors. And there's externalities. No properly run bank would issue a car loan to an Uber driver, they'd run the math for the applicant and find it isn't going to work out. But Uber with its infinite pockets does not have to consider profitability, and eventually the driver has to declare bankruptcy and becomes a burden on the public pocket. It's a disgrace.
  - Balgair 9y ago
    True, but you can make a ton of money when you design a system where you have no labor costs (drivers make no net income). It's not $70 billion, but it is on the order of billions carried out for a decade. Perhaps that is why Uber is so ... nasty. Even with their scummy tactics and greyball and whatnot, they still can't make ends meet. Also, what is stopping them, or anyone else, from running the same scam with other large capital expenditures? AirBnB could do this with houses, DoorDash could do this with heavy industrial kitchen equipment, etc. It's evil as hell, but Wall Street backed VCs have no issues finding people to do it.
  - yeukhon 9y ago
    I said this before, Uber should seriously consider closing down its operation in other countries. It is expanding virtually exponentially (they have a huge engineering team) for the type of company they are running. They need to focus on the U.S. market. They are losing way too much money everywhere combiend.
    - jorvi 9y ago
      Microsoft did this with the Xbox One (almost all the extra features they advertised were US only) and it completely destroyed their market share, making the PS4 sell 2-to-1. WhatsApp went the other way (the US doesn't matter, you want the global market) and it got them a $19 billion sticker price. The US is a market, not the market.
samstave 9y ago
Honestly though, years ago when I heard on the radio that google gave Uber 1 billion in funding I loudly exclaimed to everyone in my tiny office "ah... they want to invest in self driving cars through Uber!" So yeah, there were plenty of people who were looking at that. I think they just didn't know how expensive that long con would wind up being
- aetherson 9y ago
  So, to be clear, you think that when Google gave Uber 250M in funding (not 1B), in 2013, when Google had without-a-doubt the most advanced driverless car program in the world, and Uber was roughly two years away from beginning any driverless car program, Google made its investment in order to get into driverless cars? Huh.
  - xadhominemx 9y ago
    People in the investment community were for sure talking about Uber and driverless cars in 2013. It was clear at the time Uber was going to have to make a buy vs. build decision. But it wasn't out of the question that Uber would become an early adopter and major customer of Google self-driving vehicles. https://techcrunch.com/2013/08/25/uberauto/ https://techcrunch.com/2013/08/25/uberauto/ https://www.quora.com/Uber-in-2013-How-can-Uber-survive-driverless-cars https://www.quora.com/Uber-in-2013-How-can-Uber-survive-driv... https://www.forbes.com/sites/roberthof/2013/08/23/as-google-ventures-invests-250-million-in-uber-whats-next-driverless-cars-on-demand/#2065a91b3a9b https://www.forbes.com/sites/roberthof/2013/08/23/as-google-...
    - aetherson 9y ago
      I agree that one possible synergy at the time between Google and Uber was that Uber might use Google's driverless car technology. That's very different from the revisionist rationale that Uber was always themselves making a long term play for driverless vehicles, or that Google got into Uber because Google wanted to invest in driverless vehicles. The narrative at the time was that Uber was going to become a dominant rides-for-hire business (a real business, not a gaping wound hoping that technology would catch up to them) and at least a player in logistics, and then when driverless cars came along, everything would be even better for Uber. You'll note that as that narrative was increasingly pounded into the dust, Google never invested further in Uber and relations between them have at this point obviously completely soured.
Animats 9y ago
* They didn't even have a driverless car program until about two years ago.* Now everybody has one. 33 companies have registered with the California DMV to test. Five more accidents are listed for March and April. Cruise has three; they were rear-ended twice while stopped, and were clipped once by a pickup trying to drive around a double-parked mobile crane. Waymo was rear-ended once, and was forced off the road into a curb once by a vehicle drifting out of lane. This is progress. Cruise is getting hit when it's not their fault, which is way ahead of their earlier driving record. We're seeing more unusual situations, where the other driver did something weird. Nobody was hurt in any of these. The auto industry is indicating that the 2020 model year is when self-driving starts to ship. They have to be public about that, because the parts suppliers need to get their production lines ready to make the components in quantity. It's not going to be just Uber. It's going to be all the big automakers.

Balgair 9y ago

I can't find the post, but there was a 'UBER finance guy' (self-claimed) on HN a few weeks back that 'spilled the beans' and quit on what Uber is actually: a sub-prime auto loan company. Again, this is my recollection, take it with salt. It goes like: Driver (D): I want to drive for Uber! Uber (U): Sure! Do you have a car that is safe and less than 5 years old? (I have no idea what the car reqs. are) D: No U: Ok, well, we can loan you one! Just sign this! D: Great! I signed! What are the loan repayments like? U: Well, you owe us, per the 3 year contract, $100/week (I have no idea what the actual loan terms are like, but 100 is a nice round number so lets use that) D: Ok! That's not bad! U: It gets better! We'll just auto-deduct the money you owe us from your driver's account, after that, all the money is yours! You don't have to worry about any of it, just drive for us, we'll take care of it. D: Cool! What happens when I get sick or something and can't drive? U: Well, then you still owe us the money, plus a 10% fee on that week's loan payment (again, I have no idea what the loan agreement is like, YMMV) that we'll automatically tack on to the next week's loan payment. -A week goes by- D: Oh man, the weather was great this week, not a lot of people needed me to drive them around! I only made $90! U: Ok, well, per the loan agreement, you owe us $10 more then (100-90=10), plus the 10% late fee, making your next week's payment $100 + $10 + (0.1 x $100) = $120. D: Oh man! I better hope that the weather is bad so people want to take an Uber that I am driving! -Another week goes by- D: The weather was really rainy, but even still, I only got notifications to pick up $90 worth of people! Not again! U: Well, now you owe us $120 - $90 = $30 plus the 10% late fee on the $120, making your next week's payment $100 + $30 + (0.1 x $120) = $142. D: Well, darn, I thought a lot of people wanted to take Ubers! All my friends take them! But I don't get enough notifications to pick people up from Uber! U: We know. We are the people that are giving you a loan and simultaneously are the ones that control how much of that loan you can pay back because we are the ones that tell you how many people you pick up and we also set the 'surge' rates and regular rates that we tell you. Also, we have something of a history of acting in morally reprehensible way without shame. D: Wait, what did you say?! U: Nothing! Nothing at all! Get back to driving! That car we bought isn't going to pay itself off, you are!

aetherson 9y ago
I'm as negative as the next guy on Uber, and that's a great narrative, but they are losing vast quantities of money. Any dastardly deed that they do has to square itself with the fact that they are losing vast quantities of money. A predatory auto-loan company is not a $70B business.
- HarryHirsch 9y ago
  No, but the loan sideline allows to classify the drivers as contractors. And there's externalities. No properly run bank would issue a car loan to an Uber driver, they'd run the math for the applicant and find it isn't going to work out. But Uber with its infinite pockets does not have to consider profitability, and eventually the driver has to declare bankruptcy and becomes a burden on the public pocket. It's a disgrace.
- Balgair 9y ago
  True, but you can make a ton of money when you design a system where you have no labor costs (drivers make no net income). It's not $70 billion, but it is on the order of billions carried out for a decade. Perhaps that is why Uber is so ... nasty. Even with their scummy tactics and greyball and whatnot, they still can't make ends meet. Also, what is stopping them, or anyone else, from running the same scam with other large capital expenditures? AirBnB could do this with houses, DoorDash could do this with heavy industrial kitchen equipment, etc. It's evil as hell, but Wall Street backed VCs have no issues finding people to do it.
- yeukhon 9y ago
  I said this before, Uber should seriously consider closing down its operation in other countries. It is expanding virtually exponentially (they have a huge engineering team) for the type of company they are running. They need to focus on the U.S. market. They are losing way too much money everywhere combiend.
  - jorvi 9y ago
    Microsoft did this with the Xbox One (almost all the extra features they advertised were US only) and it completely destroyed their market share, making the PS4 sell 2-to-1. WhatsApp went the other way (the US doesn't matter, you want the global market) and it got them a $19 billion sticker price. The US is a market, not the market.

samstave 9y ago

Honestly though, years ago when I heard on the radio that google gave Uber 1 billion in funding I loudly exclaimed to everyone in my tiny office "ah... they want to invest in self driving cars through Uber!" So yeah, there were plenty of people who were looking at that. I think they just didn't know how expensive that long con would wind up being

aetherson 9y ago
So, to be clear, you think that when Google gave Uber 250M in funding (not 1B), in 2013, when Google had without-a-doubt the most advanced driverless car program in the world, and Uber was roughly two years away from beginning any driverless car program, Google made its investment in order to get into driverless cars? Huh.
- xadhominemx 9y ago
  People in the investment community were for sure talking about Uber and driverless cars in 2013. It was clear at the time Uber was going to have to make a buy vs. build decision. But it wasn't out of the question that Uber would become an early adopter and major customer of Google self-driving vehicles. https://techcrunch.com/2013/08/25/uberauto/ https://techcrunch.com/2013/08/25/uberauto/ https://www.quora.com/Uber-in-2013-How-can-Uber-survive-driverless-cars https://www.quora.com/Uber-in-2013-How-can-Uber-survive-driv... https://www.forbes.com/sites/roberthof/2013/08/23/as-google-ventures-invests-250-million-in-uber-whats-next-driverless-cars-on-demand/#2065a91b3a9b https://www.forbes.com/sites/roberthof/2013/08/23/as-google-...
  - aetherson 9y ago
    I agree that one possible synergy at the time between Google and Uber was that Uber might use Google's driverless car technology. That's very different from the revisionist rationale that Uber was always themselves making a long term play for driverless vehicles, or that Google got into Uber because Google wanted to invest in driverless vehicles. The narrative at the time was that Uber was going to become a dominant rides-for-hire business (a real business, not a gaping wound hoping that technology would catch up to them) and at least a player in logistics, and then when driverless cars came along, everything would be even better for Uber. You'll note that as that narrative was increasingly pounded into the dust, Google never invested further in Uber and relations between them have at this point obviously completely soured.

Animats 9y ago

* They didn't even have a driverless car program until about two years ago.* Now everybody has one. 33 companies have registered with the California DMV to test. Five more accidents are listed for March and April. Cruise has three; they were rear-ended twice while stopped, and were clipped once by a pickup trying to drive around a double-parked mobile crane. Waymo was rear-ended once, and was forced off the road into a curb once by a vehicle drifting out of lane. This is progress. Cruise is getting hit when it's not their fault, which is way ahead of their earlier driving record. We're seeing more unusual situations, where the other driver did something weird. Nobody was hurt in any of these. The auto industry is indicating that the 2020 model year is when self-driving starts to ship. They have to be public about that, because the parts suppliers need to get their production lines ready to make the components in quantity. It's not going to be just Uber. It's going to be all the big automakers.