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I don't know the last time I read an article so snarky and without substance as this. Just a few points below: > After nine years, Uber isn’t within hailing d

by bko 8y ago

I don't know the last time I read an article so snarky and without substance as this. Just a few points below: > After nine years, Uber isn’t within hailing distance of making money and continues to bleed more red ink than any start-up in history. By contrast, Facebook and Amazon were solidly cash-flow positive by their fifth year. Amazon was founded in 1994 and reported a quarterly profit in the fourth quarter of 2001 and, at $5 million. It then went back into the red for several years. [0] > The app is not technically daunting and and does not create a competitive barrier, as witnessed by the fact that many other players have copied it. Apps have been introduced for airlines, pizza delivery, and hundreds of other consumer services but have never generated market-share gains, much less tens of billions in corporate value. So its easy to copy, is regularly copied, but none of them made any market-share gains? Maybe it's not so easy to copy? > Nor, after a certain point, does adding more drivers. Uber does regularly claim that its app creates economies of scale for drivers — but for that to be the case, adding more drivers would have to benefit drivers. It doesn’t. For drivers the economy of scale is that they are in a market. They can be in their own market, a market of 1, and alas, they'll have no competition. But saying that a market adds no value to producers as it grows large is backward economics. The benefits of economies of scale for the passengers is more obvious and completely ignored by the article. > Unlike digital businesses, the cab industry does not have significant scale economies; that’s why there have never been city-level cab monopolies, consolidation plays, or even significant regional operators. There are no benefits to scale economies in taxi markets, that's why one never existed. Oh, except Uber, which does exist and is worth a lot but is stupid. > Uber has never presented a case as to why it will ever be profitable, let alone earn an adequate return on capital. Investors are pinning their hopes on a successful IPO, which means finding greater fools in sufficient numbers. This is just a cynical view of anything financial. I believe something is stupid. If others agree, good. If others own it, it's just because they know other people are stupid and they'll pass it on to someone stupider. [0] https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017/ https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-...

dominicr 8y ago
> So its easy to copy, is regularly copied, but none of them made any market-share gains? Maybe it's not so easy to copy? In Uber's case there are a lot of successful copies of the app based taxi service, some of which have pushed them out of markets completely. e.g. Lyft, DidiChuxing, Grab, Ola, etc... Plus many local cab companies now have apps that mirror Uber's functionality. In cities that I know well I find those companies are better, quicker and cheaper than Uber, which I now mainly use as a backup or in places that I don't know.
deleted 8y ago
[deleted]
addicted 8y ago
1) Profit != cash flow. Amazon was cash flow positive significantly before they became profitable. They made a conscious choice to not be profitable (the cynic’s take on this is that they didn’t want to pay taxes). 2) Lyft has made market share gains in the US. Other companies have made market share gains in other countries, to the point that Uber has had to withdraw from several countries. 3) A larger market does not necessarily provide economies of scale for the individual driver. The larger market does not help an individual driver reduce their costs. A larger market adds some value to the drivers, but the actual fact is that the value added so far has been consistently outweighed by the downsides. This is clearly evident in the significantly less money they are making. 4) Your argument that Uber is worth a lot is exactly what is being contested. You can’t use that assertion (whether right or wrong) to prove the assertion. And Iber is hardly a monopoly anywhere. Yellow cab services still exist. Left and other competitors still exist and are growing. 5) Has Uber presented a case showing how they will be profitable? How is it cynical to point out this obvious fact? Also, with the IPO market they don’t need to sell to someone stupider. They just need to sell to an entity whose decision makers’ interests are not aligned with the owners of the funds they are investing. In other words, pension funds, mutual funds, investment banks, etc. But yeah, there are enough stupider people as well who could lose money on this.
- bko 8y ago
  1. Uber could be profitable by not expanding. They stated that there are a number of markets in which they're profitable. It seems to be a decision as well to aggressively expand. These arguments seem to be backing into an argument why Uber is not like other things. 2. I'm commenting on what the article wrote. Of course there are competitors. I was pointing out the logical fallacy in the article. Easy to copy but no one successfully copied it. 3. So the market doesn't benefit drivers but the market is growing in drivers? Apparently the downsides of joining the market is less than the upsides evidenced by the fact that it's growing 4. The article claims there are little or no benefits to markets in Cabs. The fact that Uber has grown to this size questions that assertion. And your statement that there are other competitors also questions the articles assertion. So we're in agreement here 5. No idea but I assume the skin in the game that has invested billions has reason to believe so. Or maybe everyone else is stupid.

by bko 8y ago

dominicr 8y ago

> So its easy to copy, is regularly copied, but none of them made any market-share gains? Maybe it's not so easy to copy? In Uber's case there are a lot of successful copies of the app based taxi service, some of which have pushed them out of markets completely. e.g. Lyft, DidiChuxing, Grab, Ola, etc... Plus many local cab companies now have apps that mirror Uber's functionality. In cities that I know well I find those companies are better, quicker and cheaper than Uber, which I now mainly use as a backup or in places that I don't know.

deleted 8y ago

[deleted]

addicted 8y ago

1) Profit != cash flow. Amazon was cash flow positive significantly before they became profitable. They made a conscious choice to not be profitable (the cynic’s take on this is that they didn’t want to pay taxes). 2) Lyft has made market share gains in the US. Other companies have made market share gains in other countries, to the point that Uber has had to withdraw from several countries. 3) A larger market does not necessarily provide economies of scale for the individual driver. The larger market does not help an individual driver reduce their costs. A larger market adds some value to the drivers, but the actual fact is that the value added so far has been consistently outweighed by the downsides. This is clearly evident in the significantly less money they are making. 4) Your argument that Uber is worth a lot is exactly what is being contested. You can’t use that assertion (whether right or wrong) to prove the assertion. And Iber is hardly a monopoly anywhere. Yellow cab services still exist. Left and other competitors still exist and are growing. 5) Has Uber presented a case showing how they will be profitable? How is it cynical to point out this obvious fact? Also, with the IPO market they don’t need to sell to someone stupider. They just need to sell to an entity whose decision makers’ interests are not aligned with the owners of the funds they are investing. In other words, pension funds, mutual funds, investment banks, etc. But yeah, there are enough stupider people as well who could lose money on this.

bko 8y ago
1. Uber could be profitable by not expanding. They stated that there are a number of markets in which they're profitable. It seems to be a decision as well to aggressively expand. These arguments seem to be backing into an argument why Uber is not like other things. 2. I'm commenting on what the article wrote. Of course there are competitors. I was pointing out the logical fallacy in the article. Easy to copy but no one successfully copied it. 3. So the market doesn't benefit drivers but the market is growing in drivers? Apparently the downsides of joining the market is less than the upsides evidenced by the fact that it's growing 4. The article claims there are little or no benefits to markets in Cabs. The fact that Uber has grown to this size questions that assertion. And your statement that there are other competitors also questions the articles assertion. So we're in agreement here 5. No idea but I assume the skin in the game that has invested billions has reason to believe so. Or maybe everyone else is stupid.