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I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artific

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? There's already Lyft today... and once Uber starts to charge their true costs, then we'll likely see numerous other competitors emerge to compete on price. Ultimately, they're just a phone app! Most Uber drivers today are running the Uber app and Lyft app side by side anyway. The usual playbook calls for the early leader to pay off politicians, and have them write new laws or regulations that raise the barrier to entry for future competitors. But Uber's playbook has been to take an antagonistic stance toward politicians, rather than buying them off. So what's to stop some newer competitor from beating them on price... or some huge company to swoop in after Uber establishes the market, and beat them by cross-promoting and leveraging their other lines of business?

pishpash 9y ago
Uber's endgame has been making an Uber of everything (e.g. Uber eats), i.e. a platform for the so-called 'sharing economy.' They obtain this by network effects. That and self-driving cars, I don't know. They're basically an R&D operation funded by investors. It may or may not pan out.
- LeifCarrotson 9y ago
  > They're basically an R&D operation funded by investors No, they're basically a taxi service funded by investors. They served almost $10 billion in rides, and lost $1.5 billion in this single quarter. Other projects, like UberEats and self-driving car R&D are, in comparison, little more than distractions at present. You can buy self-driving companies or restaurants and employ an army of self-driving engineers for a billion dollars a year, and have that be a tiny fraction of those financials.
- rhino369 9y ago
  But the network effects aren't very strong. My wife and I used different taxi hailing apps, it doesn't matter.
sjm-lbm 9y ago
I honestly think the original vision was something similar to Amazon: bleed money when they are an online bookstore, make it all back when they swing for the fences and go for replacing all of retail. Likewise, Uber might lose money as a taxi service, but the idea would be to make it back in self-driving tech that replaces all transportation with 5 lanes of self-driving Ubers zipping about in all directions. The problem is that 2017 seems like a major hiccup in this vision. The original visionary is gone. There's been some issues with self-driving technology. Lyft wasn't a huge problem when they were small and had no self-driving tech, now they are much bigger and have a viable self-driving tech partner in Ford... and so on. It'll be interesting to see if this is actually the case, and, if they are off track enough, how they might change the way they operate.
- aetherson 9y ago
  That was absolutely not the original vision. The original vision was that they would somehow be a profitable concern as a taxi company despite the total lack of barrier to entry because, um, reasons. That they could create an app that was hard to compete with. In all fairness, it wasn't super clear seven or so years ago that there would be so relatively little innovation in the app after the core business of hailing happened. Then, they would expand into being a logistics company. They used to talk about this all the time. Taxi -> logistics, Uber for things. Uber Eats was supposed to be part of this, and they did a bike courier service in NYC that was supposed to be part of it and several other experiments. Then, when self-driving tech came along, and they were probably thinking like mid-2020's (hardly anyone in 2010-2011 believed that self-driving would go as fast as it did), their vast profitable concern would be well-positioned to get even bigger. That was the original narrative. It wasn't hidden, they talked about it a lot. As little as about two years ago, their redesign was heavily concerned with positioning themselves as a logistics company. But what happened is: 1. They've never been more than razor-thin profitable in certain very favorable markets as a taxi company, and obviously overall are grossly unprofitable as a taxi company. 2. Nobody in the entire world wants their logistics business. The only company who would be even remotely interested in it is Amazon, and Amazon laughed and said, "Nothing about your taxi business makes you well-suited to do logistics, we'll just build our own version kthx." 3. So now they spun up a self-driving car program out of nothing a couple of years ago and have desperately pumped cash into it. Hoping that they can somehow catch up with companies that are both substantially better-resourced than they are and who have multi-year head-starts on them, or, more cynically, that they can play some kind of pixie dust story into an IPO and dump their losses on dumb money.
AndyMcConachie 9y ago
Exactly. The only thing that keeps me coming back to Uber is their lower cost. And sometimes when $COMPANY is paying I don't even care about that. If I'm at a taxi stand why not take the taxi in front of me. In economic terms the switching cost for the consumer is low. Really low. I'm not locked in and Uber is not Amazon that is spending their runway on capital investment. They're spending their capital on paying drivers who will leave once they start getting paid more somewhere else. The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business.
- djsumdog 9y ago
  > The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business. That's kinda funny. I'm sure you know it will never happen. We're talking about billions in countries all over the world. Get out of an Airport in London, Melbourne, Auckland, Atlanta, Vegas .. you can get an Uber. That combined with their questionable ethical track record (which I don't think has really turned around since they symbolically hired Eric Holder's company to do damage control). If Uber does fail, it will do it gloriously and colossally.
albertgoeswoof 9y ago
I would LOVE to develop an Uber clone and pitch it to Governments around the world. We could even link them up so you have one unified account for people who cross borders. The government and taxpayer could then take any profit (or operate at a loss / break even if they want to subsidise costs for their citizens). The customer acquisition / marketing costs would be almost zero if the government mandates it as the only or preferred ride-hailing app. I don't really think Uber is going to innovate much from here (e.g .how much has the uber experience changed since UberX was rolled out?) outside of self-driving cars etc. there's no reason why we need a private company to innovate further, and there's almost no risk in doing this. It would be seen as a natural extension to mass transit, and every government around the world should be providing it for their citizens.
- fpisfun 9y ago
  Have you seen software developed by the government? Outside of things like NSA spying, military things, etc, it's generally terrible, I doubt there are many governments that could pull this off
  - throwawayjava 9y ago
    > Outside of things like... military things, etc "Aside from the most impressive engineered systems known to man kind, the government can't do anything right"
    - fpisfun 9y ago
      Right, things that enable those currently in power to remain in power they do well. Things that help the average citizen, most definitely not.
      - throwawayjava 9y ago
        Both components of your claim are dubious. > things that enable those currently in power to remain in power they do well 1. It's unclear to me how most of our military hardware is in any way even closely related to "enabling those currently in power to remain in power", perhaps aside from functioning as PC jobs programs. Super impressive engineering, but it's not really clear to me why most of it is particularly necessary. 2. Then I guess maybe we should vote for people who run effective services. > Things that help the average citizen, most definitely not. My local government has a system that allows you to reserve park space. I can also look up hours for rec centers on the city website. Those things are helpful to me, the average citizen, and definitely work well.
krrrh 9y ago
> we'll likely see numerous other competitors emerge to compete on price I've been beating this drum for years. One interesting point is that competitors aren't only competing on price, and there are a lot of ways to cut into Uber's market. Juno [1] offers an example that focused on a tight geography (Manhattan), and became popular by paying drivers more, scooping the highest rated drivers from Uber, and offering consumers a perceived better experience. Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators. In places like Germany where the laws make it hard for Uber to operate, smaller companies like MyTaxi offer ride-hailing services to the traditional taxi network. Their valuation likely offers a very different idea of how much of the surplus offered by ride-hailing apps can ultimately be captured by apps. [1] Acquired earlier this year by the VW-funded Gett - https://techcrunch.com/2017/04/26/on-demand-ride-service-gett-confirms-acquisition-of-juno-for-200m/ https://techcrunch.com/2017/04/26/on-demand-ride-service-get... [2] https://de.mytaxi.com/index.html https://de.mytaxi.com/index.html
- Eridrus 9y ago
  > Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators. I feel like the prices I get from within Google Maps are both vague and higher than the prices I get from opening the actual apps, so I never actually use the Google Maps integration and just end up checking both apps, which is pretty annoying. I think the Maps integration is basically a customer acquisition tactic, not something they expect most people to actually use.
rtx 9y ago
They can simply used the tech solutions they have developed and try to do something like AWS. I recently went on a holiday to place where Uber is not there. It made me realise how much actual value they provide me. As someone who was born near mid eghties, Amazon and Uber are the only two apps who have my credit card.
DannyBee 9y ago
"I seriously don't understand the endgame here." The end game is owning logistics (IE all forms of delivery, etc). It's a dumb end game, but that's what it is!
scott00 9y ago
The barrier to entry is that they're building a marketplace. Building a marketplace from scratch is hard: no driver wants to drive for a network with no riders, and no riders want to ride a network with no drivers. To make it work you basically have to pay drivers to drive empty cars until your customer acquisition gets enough riders that the market is self-sustaining. That requires a lot of capital. If you follow that game plan in one market against a national monopolist, they'll cut their pricing in your market to drive you out of business. So really, you need enough capital to mount a credible attack in enough markets that the monopolist is better off accepting duopoly profits than burning what it would take to put you out of business. That's a lot of capital to raise and a lot of hassle, and you don't even get monopoly profits if you win. As a result, you'd probably have trouble raising the money. That's the theory anyway.
djsumdog 9y ago
So the big question: Is Uber too big to fail? It looks like it will IPO at this point, it will keep finding more drivers and then cutting their wages .. it has a huge market. I refuse to use it, preferring the bus or Lyft when I absolutely have to ... If Uber does go under within the next ten years, will we see a reemergence of people taking cabs and drivers getting paid better?
QAPereo 9y ago
I think they believe in total automation within a few years, rather than the realistic decades.

pishpash 9y ago

Uber's endgame has been making an Uber of everything (e.g. Uber eats), i.e. a platform for the so-called 'sharing economy.' They obtain this by network effects. That and self-driving cars, I don't know. They're basically an R&D operation funded by investors. It may or may not pan out.

LeifCarrotson 9y ago
> They're basically an R&D operation funded by investors No, they're basically a taxi service funded by investors. They served almost $10 billion in rides, and lost $1.5 billion in this single quarter. Other projects, like UberEats and self-driving car R&D are, in comparison, little more than distractions at present. You can buy self-driving companies or restaurants and employ an army of self-driving engineers for a billion dollars a year, and have that be a tiny fraction of those financials.
rhino369 9y ago
But the network effects aren't very strong. My wife and I used different taxi hailing apps, it doesn't matter.

sjm-lbm 9y ago

I honestly think the original vision was something similar to Amazon: bleed money when they are an online bookstore, make it all back when they swing for the fences and go for replacing all of retail. Likewise, Uber might lose money as a taxi service, but the idea would be to make it back in self-driving tech that replaces all transportation with 5 lanes of self-driving Ubers zipping about in all directions. The problem is that 2017 seems like a major hiccup in this vision. The original visionary is gone. There's been some issues with self-driving technology. Lyft wasn't a huge problem when they were small and had no self-driving tech, now they are much bigger and have a viable self-driving tech partner in Ford... and so on. It'll be interesting to see if this is actually the case, and, if they are off track enough, how they might change the way they operate.

aetherson 9y ago
That was absolutely not the original vision. The original vision was that they would somehow be a profitable concern as a taxi company despite the total lack of barrier to entry because, um, reasons. That they could create an app that was hard to compete with. In all fairness, it wasn't super clear seven or so years ago that there would be so relatively little innovation in the app after the core business of hailing happened. Then, they would expand into being a logistics company. They used to talk about this all the time. Taxi -> logistics, Uber for things. Uber Eats was supposed to be part of this, and they did a bike courier service in NYC that was supposed to be part of it and several other experiments. Then, when self-driving tech came along, and they were probably thinking like mid-2020's (hardly anyone in 2010-2011 believed that self-driving would go as fast as it did), their vast profitable concern would be well-positioned to get even bigger. That was the original narrative. It wasn't hidden, they talked about it a lot. As little as about two years ago, their redesign was heavily concerned with positioning themselves as a logistics company. But what happened is: 1. They've never been more than razor-thin profitable in certain very favorable markets as a taxi company, and obviously overall are grossly unprofitable as a taxi company. 2. Nobody in the entire world wants their logistics business. The only company who would be even remotely interested in it is Amazon, and Amazon laughed and said, "Nothing about your taxi business makes you well-suited to do logistics, we'll just build our own version kthx." 3. So now they spun up a self-driving car program out of nothing a couple of years ago and have desperately pumped cash into it. Hoping that they can somehow catch up with companies that are both substantially better-resourced than they are and who have multi-year head-starts on them, or, more cynically, that they can play some kind of pixie dust story into an IPO and dump their losses on dumb money.

AndyMcConachie 9y ago

Exactly. The only thing that keeps me coming back to Uber is their lower cost. And sometimes when $COMPANY is paying I don't even care about that. If I'm at a taxi stand why not take the taxi in front of me. In economic terms the switching cost for the consumer is low. Really low. I'm not locked in and Uber is not Amazon that is spending their runway on capital investment. They're spending their capital on paying drivers who will leave once they start getting paid more somewhere else. The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business.

djsumdog 9y ago
> The best bet for Uber right now would be to close up shop, return the money to their investors, and cease business. That's kinda funny. I'm sure you know it will never happen. We're talking about billions in countries all over the world. Get out of an Airport in London, Melbourne, Auckland, Atlanta, Vegas .. you can get an Uber. That combined with their questionable ethical track record (which I don't think has really turned around since they symbolically hired Eric Holder's company to do damage control). If Uber does fail, it will do it gloriously and colossally.

albertgoeswoof 9y ago

I would LOVE to develop an Uber clone and pitch it to Governments around the world. We could even link them up so you have one unified account for people who cross borders. The government and taxpayer could then take any profit (or operate at a loss / break even if they want to subsidise costs for their citizens). The customer acquisition / marketing costs would be almost zero if the government mandates it as the only or preferred ride-hailing app. I don't really think Uber is going to innovate much from here (e.g .how much has the uber experience changed since UberX was rolled out?) outside of self-driving cars etc. there's no reason why we need a private company to innovate further, and there's almost no risk in doing this. It would be seen as a natural extension to mass transit, and every government around the world should be providing it for their citizens.

fpisfun 9y ago
Have you seen software developed by the government? Outside of things like NSA spying, military things, etc, it's generally terrible, I doubt there are many governments that could pull this off
- throwawayjava 9y ago
  > Outside of things like... military things, etc "Aside from the most impressive engineered systems known to man kind, the government can't do anything right"
  - fpisfun 9y ago
    Right, things that enable those currently in power to remain in power they do well. Things that help the average citizen, most definitely not.
    - throwawayjava 9y ago
      Both components of your claim are dubious. > things that enable those currently in power to remain in power they do well 1. It's unclear to me how most of our military hardware is in any way even closely related to "enabling those currently in power to remain in power", perhaps aside from functioning as PC jobs programs. Super impressive engineering, but it's not really clear to me why most of it is particularly necessary. 2. Then I guess maybe we should vote for people who run effective services. > Things that help the average citizen, most definitely not. My local government has a system that allows you to reserve park space. I can also look up hours for rec centers on the city website. Those things are helpful to me, the average citizen, and definitely work well.

krrrh 9y ago

> we'll likely see numerous other competitors emerge to compete on price I've been beating this drum for years. One interesting point is that competitors aren't only competing on price, and there are a lot of ways to cut into Uber's market. Juno [1] offers an example that focused on a tight geography (Manhattan), and became popular by paying drivers more, scooping the highest rated drivers from Uber, and offering consumers a perceived better experience. Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators. In places like Germany where the laws make it hard for Uber to operate, smaller companies like MyTaxi offer ride-hailing services to the traditional taxi network. Their valuation likely offers a very different idea of how much of the surplus offered by ride-hailing apps can ultimately be captured by apps. [1] Acquired earlier this year by the VW-funded Gett - https://techcrunch.com/2017/04/26/on-demand-ride-service-gett-confirms-acquisition-of-juno-for-200m/ https://techcrunch.com/2017/04/26/on-demand-ride-service-get... [2] https://de.mytaxi.com/index.html https://de.mytaxi.com/index.html

Eridrus 9y ago
> Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators. I feel like the prices I get from within Google Maps are both vague and higher than the prices I get from opening the actual apps, so I never actually use the Google Maps integration and just end up checking both apps, which is pretty annoying. I think the Maps integration is basically a customer acquisition tactic, not something they expect most people to actually use.

rtx 9y ago

They can simply used the tech solutions they have developed and try to do something like AWS. I recently went on a holiday to place where Uber is not there. It made me realise how much actual value they provide me. As someone who was born near mid eghties, Amazon and Uber are the only two apps who have my credit card.

DannyBee 9y ago

"I seriously don't understand the endgame here." The end game is owning logistics (IE all forms of delivery, etc). It's a dumb end game, but that's what it is!

scott00 9y ago

The barrier to entry is that they're building a marketplace. Building a marketplace from scratch is hard: no driver wants to drive for a network with no riders, and no riders want to ride a network with no drivers. To make it work you basically have to pay drivers to drive empty cars until your customer acquisition gets enough riders that the market is self-sustaining. That requires a lot of capital. If you follow that game plan in one market against a national monopolist, they'll cut their pricing in your market to drive you out of business. So really, you need enough capital to mount a credible attack in enough markets that the monopolist is better off accepting duopoly profits than burning what it would take to put you out of business. That's a lot of capital to raise and a lot of hassle, and you don't even get monopoly profits if you win. As a result, you'd probably have trouble raising the money. That's the theory anyway.

djsumdog 9y ago

So the big question: Is Uber too big to fail? It looks like it will IPO at this point, it will keep finding more drivers and then cutting their wages .. it has a huge market. I refuse to use it, preferring the bus or Lyft when I absolutely have to ... If Uber does go under within the next ten years, will we see a reemergence of people taking cabs and drivers getting paid better?

QAPereo 9y ago

I think they believe in total automation within a few years, rather than the realistic decades.