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Title is slightly misleading. Everyone knows that they are bleeding money, but it is by design to get as much marketshare as possible/get as many people using/

Title is slightly misleading. Everyone knows that they are bleeding money, but it is by design to get as much marketshare as possible/get as many people using/ addicted to their services. EDIT* They are a software based business ,of course they can and are highly likely to turn a profit if they raise prices * The better question that many journalists seem to shy away from asking is: What are the effects of subsidizing goods/services on the end user? Will end users be more likely to pay for the goods/services if they increase/charge market rate for them? Is it okay to make end users addicted to your services? It will be a very interesting next 10 years for business models of businesses like Uber.

workthrowaway27 9y ago
I don't understand why this is legal? I thought there were laws about operating at a loss to drive competitors out of business.
- ggg9990 9y ago
  Read "Chickenshit" and "The Divide." Starting with the Obama administration and definitely continuing there is effectively no law for the sufficiently rich. It makes no sense for Uber to worry about laws.
  - workthrowaway27 9y ago
    I haven't read those, but just skimming their amazon pages they look to be about why wealthy individuals are less likely to be prosecuted, which doesn't really apply to large corporations. Plus Uber is in the middle of a court case right now, so I'm sure both Uber and its lawyers have very good reasons to worry about laws.
  - IncRnd 9y ago
    > there is effectively no law for the sufficiently rich. It makes no sense for Uber to worry about laws. That's clearly false. Uber is currently in a court case and was just reprimanded by the judge for appearing to intentionally destroy business records.
- kjksf 9y ago
  It would be hard to come up with definition of "operating at a loss to drive competition out" that applies to Uber but doesn't kill YCombinator and all other VC businesses. Dropbox has competitors and for years operated at a loss thanks to investment from YC and other VC firms. So did Twitter, Airbnb and countless other. If that was illegal, there would be no-one for VCs to invest and you wouldn't be here reading Hacker News, because this website would not exist.
  - workthrowaway27 9y ago
    It appears to be covered under antitrust laws and so is only applicable when the creation of a monopoly is likely, but there are situations in which it is illegal. See [1]. I disagree with your claim that there would be no one for VCs to invest in if the law were enforced more broadly/frequently. The important part is that the law isn't applicable to all unprofitable businesses. Only those that are unprofitable because they are pricing below cost. [1]: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
  - IncRnd 9y ago
    You're comparing apples and oranges. "Operating at a loss to drive competition out" is different from "operating at a loss".
ztratar 9y ago
"They are a software based business of course they can and will turn a profit." The aren't as software-based as many people make them out to be. They need driverless cars to become what their current valuation and growth expectations require. Don't get me wrong, I'm long Uber and think they'll survive either way, but if others dominate them in driverless and drive prices down before Uber is ready with their own fleet, they will be forced to conduct a massive down-sizing.
- bob_theslob646 9y ago
  >The aren't as software-based as many people make them out to be. What does that even mean? Has Uber made a single physical product? To the best of my knowledge they do not. Yes they may have to balance wages of drivers which is arguably not easy, nor is it easy to balance human labor(capital) costs in any industry. They are a marketplace for retail transportation. I agree that driverless cars could sink their ship if they're beaten to the market first. Self-driving cars are about many years away contingent on the legal system being the way it is today. That could change.The biggest problem to self-driving cars is insurance/liability ,the areas that they are going to be used, people's ability to change/adapt to them. What people don't understand is that the most population dense places, where uber and other ride handling services are predomimatly used, happens to have many pedestrians and the shittiest infrastructure. I think even talking about self driving cars is a gigantic waste of time , borderline buzzwordiness of 'machine learning' and 'artificial intelligence'. At least those buzz words are being used today. We are nowhere near a level 5 standards.
  - rco8786 9y ago
    I think the “not that much of a software company” has to do with the fact that their product is delivered in person by humans. They’re no more of a software company than UPS or Delta.
    - bob_theslob646 9y ago
      Correct.
femto113 9y ago
It's certainly not all by design, e.g. Uber began winding down [their direct to driver leasing business] this summer after learning that losses were $9,000 per car on average, steeply above the previous estimates of around $500 per car That's an 18x miscalculation.
emiliobumachar 9y ago
"Is it okay to make end users addicted to your services?" I don't think the definition of "addictive" you seem to be using is the standard one, or it would apply to making any product or service better in any way.
nitwit005 9y ago
> They are a software based business of course they can and will turn a profit. They're vetting people, and having them do labor on their behalf. Regardless of how the law defines an employee, they're effectively hiring a huge amount of labor. They're completely unlike most software firms who can sell licenses or ads with no human involvement.
- bob_theslob646 9y ago
  >They're vetting people, and having them do labor on their behalf. Regardless of how the law defines an employee, they're effectively hiring a huge amount of labor. They are doing this, primarily, with software. I agree they are not like traditional software companies, but technically they are giving you the right but not the obligation to obtain business, and in that sense it is like a software as a service company. Again, I agree that it is not traditional, but as another commenter stated they are more like a Logistic Company like Delta or UPS with a focus on the end consumer versus a business.
  - nitwit005 9y ago
    > They are doing this, primarily, with software. Not really, no, or at least no more than ordinary companies like Target, where they also have you apply on a website. They're paying people to do background checks, vehicle confirmation, and so on.
Splines 9y ago
> Is it okay to make end users addicted to your services? How much of a moat does uber really have? It seems to be only made of money - there is nothing inherent in their product that makes it sticky, only "is this the cheapest ride right now?".
- bob_theslob646 9y ago
  You raise a really fair question, but as of August of this year they had a 76% market share in the U.S. I agree with you that price is king(cheapest) and on stickiness. Unfortunately, at the moment, they are the dominate service.

workthrowaway27 9y ago

I don't understand why this is legal? I thought there were laws about operating at a loss to drive competitors out of business.

ggg9990 9y ago
Read "Chickenshit" and "The Divide." Starting with the Obama administration and definitely continuing there is effectively no law for the sufficiently rich. It makes no sense for Uber to worry about laws.
- workthrowaway27 9y ago
  I haven't read those, but just skimming their amazon pages they look to be about why wealthy individuals are less likely to be prosecuted, which doesn't really apply to large corporations. Plus Uber is in the middle of a court case right now, so I'm sure both Uber and its lawyers have very good reasons to worry about laws.
- IncRnd 9y ago
  > there is effectively no law for the sufficiently rich. It makes no sense for Uber to worry about laws. That's clearly false. Uber is currently in a court case and was just reprimanded by the judge for appearing to intentionally destroy business records.
kjksf 9y ago
It would be hard to come up with definition of "operating at a loss to drive competition out" that applies to Uber but doesn't kill YCombinator and all other VC businesses. Dropbox has competitors and for years operated at a loss thanks to investment from YC and other VC firms. So did Twitter, Airbnb and countless other. If that was illegal, there would be no-one for VCs to invest and you wouldn't be here reading Hacker News, because this website would not exist.
- workthrowaway27 9y ago
  It appears to be covered under antitrust laws and so is only applicable when the creation of a monopoly is likely, but there are situations in which it is illegal. See [1]. I disagree with your claim that there would be no one for VCs to invest in if the law were enforced more broadly/frequently. The important part is that the law isn't applicable to all unprofitable businesses. Only those that are unprofitable because they are pricing below cost. [1]: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
- IncRnd 9y ago
  You're comparing apples and oranges. "Operating at a loss to drive competition out" is different from "operating at a loss".

ztratar 9y ago

"They are a software based business of course they can and will turn a profit." The aren't as software-based as many people make them out to be. They need driverless cars to become what their current valuation and growth expectations require. Don't get me wrong, I'm long Uber and think they'll survive either way, but if others dominate them in driverless and drive prices down before Uber is ready with their own fleet, they will be forced to conduct a massive down-sizing.

bob_theslob646 9y ago
>The aren't as software-based as many people make them out to be. What does that even mean? Has Uber made a single physical product? To the best of my knowledge they do not. Yes they may have to balance wages of drivers which is arguably not easy, nor is it easy to balance human labor(capital) costs in any industry. They are a marketplace for retail transportation. I agree that driverless cars could sink their ship if they're beaten to the market first. Self-driving cars are about many years away contingent on the legal system being the way it is today. That could change.The biggest problem to self-driving cars is insurance/liability ,the areas that they are going to be used, people's ability to change/adapt to them. What people don't understand is that the most population dense places, where uber and other ride handling services are predomimatly used, happens to have many pedestrians and the shittiest infrastructure. I think even talking about self driving cars is a gigantic waste of time , borderline buzzwordiness of 'machine learning' and 'artificial intelligence'. At least those buzz words are being used today. We are nowhere near a level 5 standards.
- rco8786 9y ago
  I think the “not that much of a software company” has to do with the fact that their product is delivered in person by humans. They’re no more of a software company than UPS or Delta.
  - bob_theslob646 9y ago
    Correct.

femto113 9y ago

It's certainly not all by design, e.g. Uber began winding down [their direct to driver leasing business] this summer after learning that losses were $9,000 per car on average, steeply above the previous estimates of around $500 per car That's an 18x miscalculation.

emiliobumachar 9y ago

"Is it okay to make end users addicted to your services?" I don't think the definition of "addictive" you seem to be using is the standard one, or it would apply to making any product or service better in any way.

nitwit005 9y ago

> They are a software based business of course they can and will turn a profit. They're vetting people, and having them do labor on their behalf. Regardless of how the law defines an employee, they're effectively hiring a huge amount of labor. They're completely unlike most software firms who can sell licenses or ads with no human involvement.

bob_theslob646 9y ago
>They're vetting people, and having them do labor on their behalf. Regardless of how the law defines an employee, they're effectively hiring a huge amount of labor. They are doing this, primarily, with software. I agree they are not like traditional software companies, but technically they are giving you the right but not the obligation to obtain business, and in that sense it is like a software as a service company. Again, I agree that it is not traditional, but as another commenter stated they are more like a Logistic Company like Delta or UPS with a focus on the end consumer versus a business.
- nitwit005 9y ago
  > They are doing this, primarily, with software. Not really, no, or at least no more than ordinary companies like Target, where they also have you apply on a website. They're paying people to do background checks, vehicle confirmation, and so on.

Splines 9y ago

> Is it okay to make end users addicted to your services? How much of a moat does uber really have? It seems to be only made of money - there is nothing inherent in their product that makes it sticky, only "is this the cheapest ride right now?".

bob_theslob646 9y ago
You raise a really fair question, but as of August of this year they had a 76% market share in the U.S. I agree with you that price is king(cheapest) and on stickiness. Unfortunately, at the moment, they are the dominate service.