4 ms·

The narrative is that automation will make all of these services cheap, so the "gig economy" jobs get lost regardless to autonomous vehicles and robotic hamburg

The narrative is that automation will make all of these services cheap, so the "gig economy" jobs get lost regardless to autonomous vehicles and robotic hamburger makers, for example. Only then, do these companies come out on top -- and quite big if they can float until automated solutions exist. At least, that's the story these types of business tell to acquire funding. That's essentially the bet with these companies. You're betting that paying the price to (1) establish and (2) maintain market dominance (by accepting the billions in hemorrhaging today), is worth it once these businesses make a very remarkable turnaround when their operating expenses drop off a cliff, thus yielding massive profits. Like anything, it's a bet. It could pan out, and early investors will be rewarded very well. Or it won't. I don't think it's a done deal either way, or you wouldn't have two camps of thought. Tons of people decreeing ride hailing companies, many others cheering them on. There's valid reasons to both sides.

dragonwriter 8y ago
> Only then, do these companies come out on top Only the ones that also own the automated vehicle/robotic hamburger flipper technologies—and if it's not one of the on-demand firms that does that key job automation piece, all the existing on-demand firms are worthless in the face of the firm that owns the technology that erases the big cost in their business, and therefore can partner with the whichever is willing to accept the smallest share (or just start it's own) and own the whole market.
- JMTQp8lwXL 8y ago
  It is completely valid to question the value of being first to market. Will anybody care about Uber or Lyft if a new player, Company X, has a fleet of hundreds of thousands of autonomous vehicles in all major U.S. cities? Consumers have shown us just how easy it is to switch to a new app. I concur that the branding wouldn't matter-- if the existing rideshare companies couldn't strike a deal with makers of autonomous vehicles, they won't be getting a share of the autonomous profits. Of course, these companies are actually developing their own technology. But that is far from their singular focus today. Quietly, I assume there are folks operating on the thought that market dominance doesn't matter. We don't hear about them today very much, because they don't get much media attention.
- digitaltrees 8y ago
  Everyone is assuming customers are price sensitive, it could be that the losses are designed to achieve monopolies and drive out competition while establishing a large two sided network and once achieved they use monopoly pricing power to extract value from price insensitive customers. It’s a reasonable thesis based on history. I just personally thing this class of company will never achieve positive unit economics because people are price sensitive, and the service is a commodity with no meaningful network effect
  - b_tterc_p 8y ago
    I’m pretty sure price sensitivity is already well studied and proven in this case given all of the surge pricing they already experiment with
    - digitaltrees 8y ago
      I agree, that's why, despite understanding the investment thesis, as I point out in my last sentence, I am skeptical.
motivated_gear 8y ago
"Theres a lot of people that spend years telling themselves that they're going to work on rockets. These same people build ad tech platforms and never leave. If you want to build rockets, just go build rockets." -- a very paraphrased Peter Thiel. If these companies are waiting for the next wave of automation they need to build it. Uber and lyft are trying with self driving but they haven't bet the farm on it. If Uber had spent $800 million on autonomous tech and staked the company's entire future on it, maybe they'd be further. If Tesla gets to level 4 automation, I doubt they'd have trouble whipping up a ride share platform that connects directly with their vehicles.
- digitaltrees 8y ago
  Google+ begs to differ. Network effects are real. A product needs to be 10x better than a network effect alternative to have a shot at replacing it. If Tesla is first to market by a year or two, maybe. But if Lyft hits the market within a few months; as a lift user, you’ll just stick to that app, why switch.
  - AlexandrB 8y ago
    > A product needs to be 10x better than a network effect alternative to have a shot at replacing it. This isn't true, sometimes it's just fashion. At its inception Facebook wasn't 10x better than MySpace. Moreover, ride sharing doesn't benefit from the kind of network effects that social network do. I'm stuck on Facebook because that's where many of my friends are. I have no reason at all to care at all which ride-sharing app my friends use. Even old-school email is more sticky in this regard, my Gmail account has a bunch of historical email I want to keep - so it's unlikely I'll ever delete it entirely. What's in my Uber account? Ride history? Why do I care about keeping that? A think a better parallel is airlines. I have almost no loyalty to any airline, I just choose the flights that go where I want with the least cost/pain. Why would ride-sharing be that different?
    - b_tterc_p 8y ago
      Uber’s answer to that is pretty clear and close to what you’re saying: airline style rewards program. But I think you’re right. The breadth of offerings is too small and the margins are too tight to gain any real loyalty
AlexandrB 8y ago
> The narrative is that automation will make all of these services cheap, so the "gig economy" jobs get lost regardless to autonomous vehicles and robotic hamburger makers, for example. Only then, do these companies come out on top -- and quite big if they can float until automated solutions exist. At least, that's the story these types of business tell to acquire funding. This narrative never made sense to me. Buying all those autonomous vehicles and burger flippers is an enormous expense and comes with additional logistics complications such as maintenance. Even if autonomous vehicles were perfected tomorrow, transforming a company with little to no capex like Uber into a capex behemoth would take many years, tons of real-estate negotiations, construction, etc. I'm not convinced Uber could make this transition faster than Amazon could build and app and start parking a fleet of cars at its already-built distribution centres.

dragonwriter 8y ago

> Only then, do these companies come out on top Only the ones that also own the automated vehicle/robotic hamburger flipper technologies—and if it's not one of the on-demand firms that does that key job automation piece, all the existing on-demand firms are worthless in the face of the firm that owns the technology that erases the big cost in their business, and therefore can partner with the whichever is willing to accept the smallest share (or just start it's own) and own the whole market.

JMTQp8lwXL 8y ago
It is completely valid to question the value of being first to market. Will anybody care about Uber or Lyft if a new player, Company X, has a fleet of hundreds of thousands of autonomous vehicles in all major U.S. cities? Consumers have shown us just how easy it is to switch to a new app. I concur that the branding wouldn't matter-- if the existing rideshare companies couldn't strike a deal with makers of autonomous vehicles, they won't be getting a share of the autonomous profits. Of course, these companies are actually developing their own technology. But that is far from their singular focus today. Quietly, I assume there are folks operating on the thought that market dominance doesn't matter. We don't hear about them today very much, because they don't get much media attention.
digitaltrees 8y ago
Everyone is assuming customers are price sensitive, it could be that the losses are designed to achieve monopolies and drive out competition while establishing a large two sided network and once achieved they use monopoly pricing power to extract value from price insensitive customers. It’s a reasonable thesis based on history. I just personally thing this class of company will never achieve positive unit economics because people are price sensitive, and the service is a commodity with no meaningful network effect
- b_tterc_p 8y ago
  I’m pretty sure price sensitivity is already well studied and proven in this case given all of the surge pricing they already experiment with
  - digitaltrees 8y ago
    I agree, that's why, despite understanding the investment thesis, as I point out in my last sentence, I am skeptical.

motivated_gear 8y ago

"Theres a lot of people that spend years telling themselves that they're going to work on rockets. These same people build ad tech platforms and never leave. If you want to build rockets, just go build rockets." -- a very paraphrased Peter Thiel. If these companies are waiting for the next wave of automation they need to build it. Uber and lyft are trying with self driving but they haven't bet the farm on it. If Uber had spent $800 million on autonomous tech and staked the company's entire future on it, maybe they'd be further. If Tesla gets to level 4 automation, I doubt they'd have trouble whipping up a ride share platform that connects directly with their vehicles.

digitaltrees 8y ago
Google+ begs to differ. Network effects are real. A product needs to be 10x better than a network effect alternative to have a shot at replacing it. If Tesla is first to market by a year or two, maybe. But if Lyft hits the market within a few months; as a lift user, you’ll just stick to that app, why switch.
- AlexandrB 8y ago
  > A product needs to be 10x better than a network effect alternative to have a shot at replacing it. This isn't true, sometimes it's just fashion. At its inception Facebook wasn't 10x better than MySpace. Moreover, ride sharing doesn't benefit from the kind of network effects that social network do. I'm stuck on Facebook because that's where many of my friends are. I have no reason at all to care at all which ride-sharing app my friends use. Even old-school email is more sticky in this regard, my Gmail account has a bunch of historical email I want to keep - so it's unlikely I'll ever delete it entirely. What's in my Uber account? Ride history? Why do I care about keeping that? A think a better parallel is airlines. I have almost no loyalty to any airline, I just choose the flights that go where I want with the least cost/pain. Why would ride-sharing be that different?
  - b_tterc_p 8y ago
    Uber’s answer to that is pretty clear and close to what you’re saying: airline style rewards program. But I think you’re right. The breadth of offerings is too small and the margins are too tight to gain any real loyalty

AlexandrB 8y ago

> The narrative is that automation will make all of these services cheap, so the "gig economy" jobs get lost regardless to autonomous vehicles and robotic hamburger makers, for example. Only then, do these companies come out on top -- and quite big if they can float until automated solutions exist. At least, that's the story these types of business tell to acquire funding. This narrative never made sense to me. Buying all those autonomous vehicles and burger flippers is an enormous expense and comes with additional logistics complications such as maintenance. Even if autonomous vehicles were perfected tomorrow, transforming a company with little to no capex like Uber into a capex behemoth would take many years, tons of real-estate negotiations, construction, etc. I'm not convinced Uber could make this transition faster than Amazon could build and app and start parking a fleet of cars at its already-built distribution centres.