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I'll tell you one thing: I really don't appreciate an article that just continually asserts investors are idiots. High end retail! They're stupider than Saudis!

I'll tell you one thing: I really don't appreciate an article that just continually asserts investors are idiots. High end retail! They're stupider than Saudis! I'm sympathetic to the idea that Uber has lots of headwind. As mentioned, the majority of costs scale with revenue in a way that isn't true of real tech companies and the autonomous driving thing is basically dead. But there's lots of reasons companies could fail - it's not enough to list them. One glaring hole I see in this analysis is the monopoly view. Uber is establishing itself as a monopoly in some markets and pulling out of the ones that it's failing to achieve that. A pretty straight forward step would be to start jacking up prices in areas they have a monopoly whilst simultaneously driving out the competition. That would be profitable and it addresses the problem the article proposes.

zimpenfish 8y ago
> A pretty straight forward step would be to start jacking up prices in areas they have a monopoly But what's to stop someone like Lyft or any other cab company coming into that market and undercutting them?
- Traster 8y ago
  Capital. Assuming the article is right and there's no fundamental efficiency saving of any particular taxi company then to challenge Uber's monopoly in a market you need to sink money into subsidizing fares until you drive Uber out of the market to establish your own monopoly. Why would someone do that? It's far more effective for Lyft to put it's capital into where it can establish itself rather than just having a cash burn contest. This is why Uber left South-East Asia to Grab in exchange for a stake.
  - Tyrek 8y ago
    You don't have to establish a monopoly though - your simple presence in the market (relatively low cost since it's not like drivers are loyal to a particular brand) will give you a cut of the profits that would otherwise go to Uber - why forfeit an entire market when you can participate at low cost?
    - mrobins 8y ago
      And require Uber to continue subsidizing fares in that market. If you assume Uber operates at a loss everywhere they subsidize then smart competition will compete everywhere.
  - Retric 8y ago
    > sink money into subsidizing fares This assumes there is no way to undercut Uber's costs. If Uber wants to be a 100 billion dollar company then someone could be happy with being a 100 million dollar company and aim for a much smaller market. They don't need to win every city, just take a slice of the most profitable city from Uber. Suddenly your 10 million per year profit is costing Uber 10 times that as they can't undercut you and still be highly profitable. After that either the small guy expands, or someone else aims for the 2nd most profitable city. Eventually, Uber is left with a monopoly on the least valuable markets and steady competition on all the profitable ones. And that's assuming they can kill off Lyft, and all other significant players which already have network effects and cash on hand.
    - Traster 8y ago
      >They don't need to win every city, just take a slice of the most profitable city from Uber. Suddenly your 10 million per year profit is costing Uber 10 times that as they can't undercut you and still be highly profitable. If Uber is operating in 100 cities and you turn up in their most profitable one, they can just drop the prices and make a loss in that city until you leave. I agree with you, maybe they don't kill off lyft and don't get to the point that they have the scale to implement their strategy, but that doesn't stop it being a decent strategy to aim for.
      - Retric 8y ago
        > If Uber is operating in 100 cities and you turn up in their most profitable one, they can just drop the prices and make a loss in that city until you leave. That gets insanely expensive in their most profitable city as you not only forgo profit you also need to drop the pice enough that people pick you. And it’s never going to be just one company in just one city that tries to compete. The might be able to pull it off, but not while being a 100 Billion dollar company. Remeber, long term their options are be profitable or fail. They can’t continue to attract money if they had a monopoly and still can’t be profitable.
hardestbutton 8y ago
Do you know what a retail investor is? According to investopedia `What is a 'Retail Investor: A retail investor, also known as an individual investor, is a non-professional investor who buys and sells securities, mutual funds or exchange traded funds (ETFs) through traditional or online brokerage firms or savings account' ............. OF COURSE RETAIL INVESTORS ARE DUMB. Do you think most retail investors even read the most basic balance sheets? Know anything about security analysis/fundamental analysis? Know the difference between a bond and an equity? can define the efficient market hypothesis? could explain what an index fund is? tell me why bogle is famous? I mean maybe not knowing these things maybe makes you a good investor because the conventional wisdom is wrong. I could believe that. But retail investors don't have some sophisticated view of markets. They 1. either go with their very biased gut 2. listen to cramer 3. listen to what their co-worker says. Being dumb is basically the definition of being a retail investor. sometimes being dumb works. lots of people have made money buying 1. ponzi schemes 2. tulips 3. ponzi-coin.....but....making random spasmodic guesses does not always work.

zimpenfish 8y ago

> A pretty straight forward step would be to start jacking up prices in areas they have a monopoly But what's to stop someone like Lyft or any other cab company coming into that market and undercutting them?

Traster 8y ago
Capital. Assuming the article is right and there's no fundamental efficiency saving of any particular taxi company then to challenge Uber's monopoly in a market you need to sink money into subsidizing fares until you drive Uber out of the market to establish your own monopoly. Why would someone do that? It's far more effective for Lyft to put it's capital into where it can establish itself rather than just having a cash burn contest. This is why Uber left South-East Asia to Grab in exchange for a stake.
- Tyrek 8y ago
  You don't have to establish a monopoly though - your simple presence in the market (relatively low cost since it's not like drivers are loyal to a particular brand) will give you a cut of the profits that would otherwise go to Uber - why forfeit an entire market when you can participate at low cost?
  - mrobins 8y ago
    And require Uber to continue subsidizing fares in that market. If you assume Uber operates at a loss everywhere they subsidize then smart competition will compete everywhere.
- Retric 8y ago
  > sink money into subsidizing fares This assumes there is no way to undercut Uber's costs. If Uber wants to be a 100 billion dollar company then someone could be happy with being a 100 million dollar company and aim for a much smaller market. They don't need to win every city, just take a slice of the most profitable city from Uber. Suddenly your 10 million per year profit is costing Uber 10 times that as they can't undercut you and still be highly profitable. After that either the small guy expands, or someone else aims for the 2nd most profitable city. Eventually, Uber is left with a monopoly on the least valuable markets and steady competition on all the profitable ones. And that's assuming they can kill off Lyft, and all other significant players which already have network effects and cash on hand.
  - Traster 8y ago
    >They don't need to win every city, just take a slice of the most profitable city from Uber. Suddenly your 10 million per year profit is costing Uber 10 times that as they can't undercut you and still be highly profitable. If Uber is operating in 100 cities and you turn up in their most profitable one, they can just drop the prices and make a loss in that city until you leave. I agree with you, maybe they don't kill off lyft and don't get to the point that they have the scale to implement their strategy, but that doesn't stop it being a decent strategy to aim for.
    - Retric 8y ago
      > If Uber is operating in 100 cities and you turn up in their most profitable one, they can just drop the prices and make a loss in that city until you leave. That gets insanely expensive in their most profitable city as you not only forgo profit you also need to drop the pice enough that people pick you. And it’s never going to be just one company in just one city that tries to compete. The might be able to pull it off, but not while being a 100 Billion dollar company. Remeber, long term their options are be profitable or fail. They can’t continue to attract money if they had a monopoly and still can’t be profitable.

hardestbutton 8y ago

Do you know what a retail investor is? According to investopedia `What is a 'Retail Investor: A retail investor, also known as an individual investor, is a non-professional investor who buys and sells securities, mutual funds or exchange traded funds (ETFs) through traditional or online brokerage firms or savings account' ............. OF COURSE RETAIL INVESTORS ARE DUMB. Do you think most retail investors even read the most basic balance sheets? Know anything about security analysis/fundamental analysis? Know the difference between a bond and an equity? can define the efficient market hypothesis? could explain what an index fund is? tell me why bogle is famous? I mean maybe not knowing these things maybe makes you a good investor because the conventional wisdom is wrong. I could believe that. But retail investors don't have some sophisticated view of markets. They 1. either go with their very biased gut 2. listen to cramer 3. listen to what their co-worker says. Being dumb is basically the definition of being a retail investor. sometimes being dumb works. lots of people have made money buying 1. ponzi schemes 2. tulips 3. ponzi-coin.....but....making random spasmodic guesses does not always work.