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So... Let me see if I have this straight: 1. Uber is unprofitable and the only way it can become profitable is to get SDC's 2. Uber is significantly (years) b

So... Let me see if I have this straight: 1. Uber is unprofitable and the only way it can become profitable is to get SDC's 2. Uber is significantly (years) behind Waymo in the SDC space. 3. Waymo will launch SDC taxi services first meaning: - When it puts in an order for SDC components no one else is going to be buying in bulk and thus it can have effectively 100% of capacity of these specialized equipment makers - It is going to be competing with other taxi/ride share services with all the cost advantages of SDC vehicles while its competitors are paying human drivers (and have basically no fat to cut from their current pricing) - It will be able to improve its services so when someone else does launch their service will be inferior. 4. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition. 5. Uber expects that it is going to be able to continue to use human drivers even while it competes against those same people with its SDC's (i.e. when your employer hires your replacement but expects you to train them). I simply can't imagine how Uber is worth anything at the moment.

foobarbazetc 8y ago
SDC’s are like... minimum 5 years away for something an early adopter would get into. So...
- ModernMech 8y ago
  Been hearing that for almost 5 years now: From 2015: https://www.carscoops.com/2015/01/ford-ceo-says-driverless-cars-will-hit/ https://www.carscoops.com/2015/01/ford-ceo-says-driverless-c...
- shereadsthenews 8y ago
  Waymo are driving early adopters around Phoenix right now.
- suh_dude 8y ago
  No way are we going to be in autonomous vehicles that soon. All of the companies besides Waymo are just doing fancy lane assist and calling it self-driving. And Waymo only works in the most ideal conditions
Not_a_pizza 8y ago
I concur.
deleted 8y ago
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panarky 8y ago
> can't imagine how Uber is worth anything If the operation doesn't make an economic profit, and if there isn't sufficient moat to defend the operation until it can become profitable, then I agree with you it's not worth anything. But in fact, Uber does have a massive moat -- its network of drivers and riders in thousands of cities around the world. No competitor is even close. It takes tremendous capital expenditure to build that network, and it will take tremendous capital expenditure to neutralize it. It remains to be seen if Uber can make an economic profit, but with an operating loss of just 10% of gross revenue, it's not at all inconceivable.
- BinaryIdiot 8y ago
  > It takes tremendous capital expenditure to build that network, and it will take tremendous capital expenditure to neutralize it. Does it, though? Every driver I've talked to basically drives for "all of them". Several told me they try to find whatever apps are local for driving and they setup those alone with Uber and Lyft and simply take whatever pays the most / is more frequent. Uber's software and network are solid but I don't think there is a whole lot of loyalty there. Anyone who can drive a wedge into a spot in their business could slowly erode it, IMO. Now, they're too big to die quickly or anything like that. But it doesn't seem impossible at all to me.
  - bradhe 8y ago
    > literally drives for "all of them". But how many have they _stopped_ driving for?
    - IMTDb 8y ago
      None, they just drive less of A and more of B until they barely have any customer for A anymore until A dies.
  - inverse_pi 8y ago
    it's economically unreasonable to drive for more than one apps simultaneously. Now, it could be economically reasonable to drive for more than one apps at many points in the past. If Lyft and Uber are so easily exchangeable, why is Lyft is still a minority in the US while spending more money? There's something more interesting here.
h3throw 8y ago
You're making a very large number of assumptions. In particular #1, #3 and #4. None of these are clear.
aphextron 8y ago
Autonomous cars won’t be proprietary to each manufacturer or company. Once someone has perfected their system, everyone else will drop what they are doing and simply buy it like an OS. It’s all in the software; hardware required (cameras, radar, GPUs) is already cheap and ubiquitous. My money is on Tesla or comma.ai for this.
- nostrademons 8y ago
  Most likely the business model for autonomous cars will be a rideshare - instead of selling the software, the company with the best software will buy cars and rent them out for rides via app. Waymo has already gone in this direction. Also, Tesla Autopilot is a joke compared to what Waymo or even Cruise has.
- jjeaff 8y ago
  Why Tesla? They seem to be near the bottom of the pack when it comes to self driving capability.
  - watwat1 8y ago
    You clearly don’t own or have ever ridden in a Tesla.
  - aphextron 8y ago
    >They seem to be near the bottom of the pack when it comes to self driving capability. And yet they are the only company in the world to have shipped a workable level 2 system in mass quantities. Orders of magnitude greater than Cruise or Waymo's fleet size. That puts them miles ahead in terms of data collection, which is the real challenge.
    - mrnobody_67 8y ago
      Supposedly adversarial AI networks are solving for the data problem... AI generates the data to train the AI.
- notyourwork 8y ago
burlesona 8y ago
One path is that their network can be leveraged to monetize other services, like Uber Eats or Jump, which could be profitable. FWIW from conversations with some of the scooter rental app devs, apparently the scooter / ebike on-demand rentals are extremely profitable.
smallgovt 8y ago
Can't Uber become profitable by raising prices and lowering costs? They have $40B in gross rideshare bookings and $3B in real losses for 2018. Let's assume 20% of their costs are fixed and 80% are variable. What might happen if they raise prices by 10%? Gross bookings drop by 20% / Revenue per booking increase by 10% => $35.2B in gross bookings Variable costs drop by 30% (due to lower driver acquisition costs since they're oversupplied) => $24B in variable costs Fixed costs stay the same => $8.6B That nets $2.6B profit. My numbers are estimations, but it wouldn't surprise me if they could reach profitability without SDC's.
- thedaveoflife 8y ago
  Your thesis is supported by their financial statements. Their costs are indicative of a company focused on growth. As revenues continue to grow the can scale back marketing and administrative costs as a percentage of revenue to make profits potential. This company has a lot of potential based on the numbers alone... the real problem is the uncertainty in the market for ride and the tech
- admax88q 8y ago
  If we're just making up numbers why not assume you'll only drop gross bookings by 0%, or increase bookings even! Anything can be made profitable if you just invent numbers.
  - smallgovt 8y ago
    They aren't pulled out of thin air. They're best estimates. If you disagree, what do you think their unit model would transform into if they acquired lyft for $20B in stock and raised prices by 10%? Why?
    - disiplus 8y ago
      you cannot really play with it like that, users have an expectation how much something will cost and if they dont feel that its right you can drop a lot. from my own experience price increase if just on its own of 10% can decease sales by more then 20%. and i assume uber had such ideas and has been simulating them, and I'm sure they are testing it out with smaller but not noticeable increases. let's see how that works for them.
jboy55 8y ago
I always felt SDC is the death of Uber. If you had 5 billion to invest in SDCs for a taxi service, why would you become a small investor in Uber, when you could probably build the app for $10 million and just roll your own? Also uber could become profitable if they charged more. I've actually started taking taxi's again, since they are marginally more expensive than Ubers/Lyfts. However, if you pick them up from an airport, you don't have to wait staring at your phone for 5 minutes watching your driver just sit around in their car until they start moving.
- fossuser 8y ago
  I take Taxis from airports and from hotels for that reason (often faster than waiting for the uber to get through traffic). The exception is SFO where Taxis cost 2x what an UberX costs. The Taxi experience is still bad though - just yesterday in DC I had to listen to my driver 'joke' about why the Taliban should be able to fight for their country while also repeatedly pointing out and talking about women on the street.
  - lapinot 8y ago
    So you prefer being serviced by a machine that records everything you say, do, think, than bearing an interaction with a living human being which may or may not be quite different and interest, question, amuse or revolt you? I must say i don't agree with that, anytime i would prefer a place where people authentically and actually speak their mind and act spontaneously (not considering whether or not i actually think their behavior is stupid, alienated or impolite), instead of being corporate zombies, their soul already exhausted by the system, silent and jaded, having lost faith in any kind of joy in the productive part of life we call "work". > Men are disturbed not by things, but by the view which they take of them. Epictetus
    - a_t48 8y ago
      Don't worry, many of the taxi\uber drivers record inside their car, too.
    - p1esk 8y ago
fullshark 8y ago
You can't imagine any scenario under which an 11 billion dollar money printing machine which is growing and costs 11 billion + 3 billion to run can turn cash flow positive?
- Marazan 8y ago
  When your business is selling $10 for $5 then no, I cannot see a way to turn cash flow positive.
  - temporalparts 8y ago
    Your example isn't proportionate. It's selling $14 for $11, which is much closer to selling $10 for $8, which is a lot more reasonable than $10 to $5.
    - Marazan 8y ago
      Cool, cool. Just gotta raise prices by 25% or cut costs by 20%. Trivial.
  - treis 8y ago
    They're not doing that. They got $11.27 in revenue for a cost of $9.65. The loss stems from spending an additional $4.67 on advertising and R&D.
    - Marazan 8y ago
      1.5 billion on R&D, 3 billion on marketing. Uber don't get the income from the rides without the marketing so I don't get why you get to ignore that when working out if they are profitable or not.
      - inverse_pi 8y ago
        Does marketing and R&D cost grow linearly with number of rides though?
austenallred 8y ago
> 1. Uber is unprofitable and the only way it can become profitable is to get SDC's That doesn't seem to be true... > 4. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition. What significantly cheaper competition?
- 666lumberjack 8y ago
  >What significantly cheaper competition? The hypothetical Waymo SDC-based 'taxi' service
raldi 8y ago
#4 is the most crucial. There's no stickiness. If a competitor builds a better mousetrap, the switching cost is near-zero.
localhostdotdev 8y ago
you forgot option B: raise prices, reduce costs
- Karunamon 8y ago
  The only issue there is that Uber hasn’t driven out the local livery companies, and Uber’s presence forced many of them to invest in infrastructure. If the rides get too expensive, people will just go back to taxis.
- gcb0 8y ago
  that is exactly what every company in the universe does in the quarter before being offered for sale or filling public offering. always assume the first company filling is the best as possible already.
flatline 8y ago
The assumption that SDCs are going to completely overtake the market is a huge one and is unwarranted. This puts all the cost of building and maintaining a fleet on Waymo, or whoever is first to market. While it cuts out the cost of a human driver, it's not at all clear to me that this is cheaper in net. Furthermore, a completely robust SDC able to handle all climates and weather in which a human driver is at least nominally competent to drive is still likely a pipe dream. So this model may work well - if it works at all - for the Southern regions of the US, without coverage anywhere else.
- apendleton 8y ago
  While this is true, it's the only proposed path to Uber being profitable. They lose money on every human-driven ride and have no approach to remedy that situation. So if SDCs aren't coming any time soon, or if they aren't any cheaper than human drivers, I'm not sure that's any better for Uber's prospects...
AznHisoka 8y ago
To keep the math simple: It's worth the amount a greater fool will pay for it.
gamblor956 8y ago
It is going to be competing with other taxi/ride share services with all the cost advantages of SDC vehicles while its competitors are paying human drivers (and have basically no fat to cut from their current pricing) It's going to be a very long time before self-driving cars are cheaper than cheap cars with human drivers. It's very possible that Uber might reach an acceptable level of self-driving capabilities before Waymo's paid off its investment in its first crop of self-driving cars.
- gmueckl 8y ago
  Huh? How much does a full time driver earn? Let's say $30000 for the sake of argument. A car that is run as a taxi or rideshare service full time will last maybe three years. So that eould mean $90000 for the driver plus around $40000 for a decent car. A mass produced self driving taxi car that costs more than $130000 seems very unlikely.
  - gbear605 8y ago
    Plus a self driving taxi could run 24/7 while a driver likely only works 40-50 hours a week (at least at the $30k/year price point)
  - gamblor956 8y ago
    If you want to make up unrealistic numbers, sure, then unrealistically a self-driving car is cheaper. But with a self-driving car, operational costs like registration, maintenance, fuel/charging, and insurance, would all have to come out of Waymo's pockets instead of the driver's $30,000k. If the car is being driven 24/7, then maintenance costs will be much higher because of the increased wear and tear, and insurance for self-driving cars will be magnitudes higher than it is for human (commercial) drivers. Plus, there's the maintenance costs for the self-driving tech (LIDARs, software systems, etc.) The insurance alone would likely wipe out savings from eliminating human drivers, and the combined maintenance+insurance costs definitely will for the foreseeable future. The average Uber drives a $30k-40k car (assuming it was purchased new). So you're looking at a $100k difference in costs in acquiring the car (using your $130k price). If the SDCs only last 3 years, that means you only have 3 years to make up the $100k difference, so each SDC would have to make $33k/year more than the comparable human-driven Uber car competitor to break even (since operational costs per car will cost the same or more as paying a human drive would have). $33k/year is roughly 3000+ additional rides/year assuming $10/ride average cost. Assuming 10 rides a day based on media reports, that would require Waymo to at least double the rides each vehicle does every day. And Waymo can't just increase the price on its SDC rides, since if it makes them much more than $10/ride, people will just drive cause it's much cheaper and faster, even including gas and parking. And remember: in all of the numbers above, Waymo is bringing the costs in-house, except for the vehicles themselves, so there's no markup. Retail costs for similarly specced SDCs cars would be much higher because each respective vendors will want their profits. So yeah, while I don't believe Uber will achieve self-driving, I think that it's going to be a long time before self-driving cars are cheaper than human-driven cars once all costs are taken into account.
antaviana 8y ago
With an accumulated deficit of $7.9 billion in their balance, isn't it worth at least $7.9 billion in tax credits?
dmode 8y ago
According to the S-1, Uber has a $1bn profit. Where did you see it is unprofitable ?
- a13n 8y ago
  Only because in Q1 2018 they sold a bunch of their operations to Yandex and Grab for $3B. They effectively lost $2B.
pacetherace 8y ago
It's worth it until there is an alternative on the road. Eventually, most if not every company get replaced by a better one. Stock market IPOs are never about predicting what will eventually happen to a company. It is not different than say, Tesla. Everybody keeps repeating that the traditional car manufacturers will catch up with Tesla, but even till then Tesla is gonna do business. And as expected once the novelty of their products (EV and self-driving features) got somewhat out of the way, now it is being judged but the revenue and profit numbers it is pulling.
ian_badfellow 8y ago
Do you work in SDC development? There's a difference between making it work for a small suburb area in Phoenix some of the times and making it work everywhere all the time. And the problem with ride-sharing applications is that unless it works everywhere nobody is going to use it. Making it work everywhere for all circumstances is hard. Like really hard. There's a difference between an intervention-free ride and an actual ride that's both safe and comfortable. You could rack up your miles per safety intervention by programming a paranoid robot that sits at a highway ramp for hours without merging. Is it possible? Maybe. It's nice that some deep models can magically (with no theoretical explanation) recognize a pedestrian, a vehicle, a bike. But would you trust it with your life? There's no theoretical safety guarantee unlike aviation where you can actually read and understand the proofs. I mean yes it could certainly work somewhere some of the time, but believing that it will eventually work everywhere all of the time is rather naive.
- shmageggy 8y ago
  I wouldn't call it naive to believe it will work eventually, if the time scale for eventually is unspecified; after all, we are an existence proof that it's at least possible. Pinning down that timescale is the tricky part though. Also, your username is hilariously apt.
dfischer 8y ago
Sorry, what’s a SDC?
- kingaillas 8y ago
  Self-driving car.
- albertut 8y ago
  SDC = Self Driving Car
rhegart 8y ago
Data. They will sell location data. Mine all transits. Physical location data and daily customer trends will net them billions.
- brohee 8y ago
  Telcos are already selling that, on more people. Why would Uber inferior dataset would be so valuable...
magicalhippo 8y ago
> 1. Uber is unprofitable and the only way it can become profitable is to get SDC's So I'm not following this closely, but why is Uber unprofitable? I mean the app worked last time I was in the US and surely can't be that expensive to develop and maintain.
- gbear605 8y ago
  Because most of the income from the rider goes directly to the driver.
  - drcross 8y ago
    Worse than that, Uber are taking money from investors and directly giving it to the drivers to subsidise the trip price for the consumer all in an effort to build market share. It's folly to think that customers are going to remain loyal to such a service once the money runs out.
NicoJuicy 8y ago
One company with a lot of capital clears the road in a blue ocean, the others pursuit. Just like in cycling, fast followers have it a lot easier in getting a % of the market share.
empath75 8y ago
If Uber is a self driving car company that why do I have to pay for a money losing taxi company, too?
shamino 8y ago
Doesn't matter if Uber is actually worth anything - it matters if a lot of people think Uber is worth anything :)
robotizeme 8y ago
In LA, Uber recently reduced the per minute rate from 80 cents to 60 cents. This was after increasing the rates in Sept 18. Their annoucment of the rate decline was preceded by hours until it was effective. Prior to this week, Uber had a consecutive ride bonus for 3-rides in a row that would add $7 to 11. But the app would malfunction often or not alert you, and break the streak. Almost everyday I complained but Uber never conceded and never gave me the small bonus. This week, the consecutive ride bonuses are gone. Replaced by a flat $185 bonus for 70 rides in 7-days to $305 for 120 rides. Previously the biggest ride bonuses would require you to drive 11 hours a day consecutively to hit. And if you did 25% or 50% you’d get 10-15% of the bonus. My current rate is $23/hour minus roughly $5-6 for gas, depreciation, car and insurance. My rent in LA is $3000/month. Perhaps $17-18 an hour is fair but Uber’s tactics seem incredibly malicious and ever-changing. I feel like they are exploiting drivers unnecessarily although it is nice to have income whenever I need it. There’s also tons of bad drivers, they encourage you to use the Uber map system which is seriously flawed, doesn’t calculate traffic and is semi-dangerous. They don’t advise drivers how to do basic tips to navigate traffic. It could be so much better but it’s weird corporate strategies mixed with bad execution. The negatively Uber generates is a serious problem for their brand and I can’t imagine they’ll exist in 10-years based on how they decide things.
yashap 8y ago
Let’s say Waymo get to legit, truly market ready SDC taxi tech 3 years before Uber, and they start expanding into Uber’s markets at lower prices. This is bad for Uber, but hardly the end of their business. People won’t immediately trust SDCs, so Uber will lose market share only gradually even if their prices are higher. Plus Waymo have to scale up massively to significantly compete with Uber - that’ll take time. If Waymo don’t make much of a dent in Uber’s market share in 3 years, Uber gets their SDC tech to market and problem solved. If they DO start making a big dent, Uber can likely raise enough money to simply drop prices to Waymo levels (with human drivers), and just bleed cash until they get the tech out to be profitable. Uber (and their investors) are well versed in this strategy.
- devit 8y ago
  But given that Uber is not profitable now competing with Lyft both with human drivers, why would it be profitable tomorrow competing with Waymo both with SDCs? Even if the profit is no longer negative, it should be near zero since there is not much moat, and it's not even clear whether Uber would be able to compete at all against Waymo (better tech) or even carmakers who own the cars. The only thing Uber has is brand recognition, but Google Maps actually has even more brand recognition and that's where Waymo is going to be unless antitrust prevents it somehow.
- panarky 8y ago
  The conventional wisdom is that self-driving cars will be much cheaper than rideshare, and the only question is when they'll reach level-5 autonomy. But what if they're not actually significantly cheaper? Let's say an Uber driver who works 60 hours gets paid $1,200 gross, or $20 per hour. Could the self-driving car drive the same trips with $1,200 lower cost? Not a chance. Because the $1,200 paid to the Uber driver isn't just for the driver's time, it's also for the reduced resale value of the car, and for fuel, and tires, and repairs. And those costs for the self-driving car will be much higher because the self-driving vehicle will be newer, and larger, and loaded with expensive computers and lidar. The self-driving car will also require 24/7 realtime monitoring, and customer support, and a depot staffed with technicians, and a field service team. The IRS rate for deducting business use of a vehicle is $0.58 per mile, not including the driver's time. I'd bet the cost of an autonomous car will be well north of that.
aiisjustanif 8y ago
I love how we just assume SDC is just fact. No mention of weather issues, privacy issues, governmental legislation slow down, infrastructure that they drive on. The human driver still has a minute. It's not like we are talking about Semi Trucks that will primarily have to navigate interstates.
sytelus 8y ago
> the only way it can become profitable is to get SDC's Can't they just get out of markets that are loss leaders and continue to operate in profitable markets? Note that they should but that's always an option if profitability becomes an immediate issue.
cobookman 8y ago
Uber needs SDC, alphabet doesn't. Alphabet will not risk a company ending lawsuit due to SDC...uber is more than happy to bet it all on SDC if that is the sole way to become profitable. Uber vs Waymo will be inetersting for sure.
zn44 8y ago
it's a very strong brand, as much as it gets a lot of hate here for the last two years of scandals, especially in developing markets noone cares about that. With right change of management and slow but steady rate raise it can be profitable.
deleted 8y ago
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JumpCrisscross 8y ago
> the only way it can become profitable is to get SDC's This isn’t self-evident. Their services are unit profitable in core markets. And additional revenue streams increase the geographies in which they’re organically profitable.
mtw 8y ago
This supposes that Self driving vehicles will be possible in the near future , without a human operator, in every city that Uber operates in. I highly doubt that. At least not in the next 5 years. What is see is Waymo being deployed in select 10 major cities in certain neighborhoods.
tompetry 8y ago
Uber facilitated 10 billion rides in 2018. I think you are severely underestimating the ease at which another service, benefitting from self-driving capabilities or not, will erode such a massive network. Value of company will be correlated with value of the network, so I can certainly see how it is indeed worth something... and actually quite a lot.

foobarbazetc 8y ago

SDC’s are like... minimum 5 years away for something an early adopter would get into. So...

ModernMech 8y ago
Been hearing that for almost 5 years now: From 2015: https://www.carscoops.com/2015/01/ford-ceo-says-driverless-cars-will-hit/ https://www.carscoops.com/2015/01/ford-ceo-says-driverless-c...
shereadsthenews 8y ago
Waymo are driving early adopters around Phoenix right now.
suh_dude 8y ago
No way are we going to be in autonomous vehicles that soon. All of the companies besides Waymo are just doing fancy lane assist and calling it self-driving. And Waymo only works in the most ideal conditions

Not_a_pizza 8y ago

I concur.

deleted 8y ago

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panarky 8y ago

> can't imagine how Uber is worth anything If the operation doesn't make an economic profit, and if there isn't sufficient moat to defend the operation until it can become profitable, then I agree with you it's not worth anything. But in fact, Uber does have a massive moat -- its network of drivers and riders in thousands of cities around the world. No competitor is even close. It takes tremendous capital expenditure to build that network, and it will take tremendous capital expenditure to neutralize it. It remains to be seen if Uber can make an economic profit, but with an operating loss of just 10% of gross revenue, it's not at all inconceivable.

BinaryIdiot 8y ago
> It takes tremendous capital expenditure to build that network, and it will take tremendous capital expenditure to neutralize it. Does it, though? Every driver I've talked to basically drives for "all of them". Several told me they try to find whatever apps are local for driving and they setup those alone with Uber and Lyft and simply take whatever pays the most / is more frequent. Uber's software and network are solid but I don't think there is a whole lot of loyalty there. Anyone who can drive a wedge into a spot in their business could slowly erode it, IMO. Now, they're too big to die quickly or anything like that. But it doesn't seem impossible at all to me.
- bradhe 8y ago
  > literally drives for "all of them". But how many have they _stopped_ driving for?
  - IMTDb 8y ago
    None, they just drive less of A and more of B until they barely have any customer for A anymore until A dies.
- inverse_pi 8y ago
  it's economically unreasonable to drive for more than one apps simultaneously. Now, it could be economically reasonable to drive for more than one apps at many points in the past. If Lyft and Uber are so easily exchangeable, why is Lyft is still a minority in the US while spending more money? There's something more interesting here.

h3throw 8y ago

You're making a very large number of assumptions. In particular #1, #3 and #4. None of these are clear.

aphextron 8y ago

Autonomous cars won’t be proprietary to each manufacturer or company. Once someone has perfected their system, everyone else will drop what they are doing and simply buy it like an OS. It’s all in the software; hardware required (cameras, radar, GPUs) is already cheap and ubiquitous. My money is on Tesla or comma.ai for this.

nostrademons 8y ago
Most likely the business model for autonomous cars will be a rideshare - instead of selling the software, the company with the best software will buy cars and rent them out for rides via app. Waymo has already gone in this direction. Also, Tesla Autopilot is a joke compared to what Waymo or even Cruise has.
jjeaff 8y ago
Why Tesla? They seem to be near the bottom of the pack when it comes to self driving capability.
- watwat1 8y ago
  You clearly don’t own or have ever ridden in a Tesla.
- aphextron 8y ago
  >They seem to be near the bottom of the pack when it comes to self driving capability. And yet they are the only company in the world to have shipped a workable level 2 system in mass quantities. Orders of magnitude greater than Cruise or Waymo's fleet size. That puts them miles ahead in terms of data collection, which is the real challenge.
  - mrnobody_67 8y ago
    Supposedly adversarial AI networks are solving for the data problem... AI generates the data to train the AI.
notyourwork 8y ago

burlesona 8y ago

One path is that their network can be leveraged to monetize other services, like Uber Eats or Jump, which could be profitable. FWIW from conversations with some of the scooter rental app devs, apparently the scooter / ebike on-demand rentals are extremely profitable.

smallgovt 8y ago

Can't Uber become profitable by raising prices and lowering costs? They have $40B in gross rideshare bookings and $3B in real losses for 2018. Let's assume 20% of their costs are fixed and 80% are variable. What might happen if they raise prices by 10%? Gross bookings drop by 20% / Revenue per booking increase by 10% => $35.2B in gross bookings Variable costs drop by 30% (due to lower driver acquisition costs since they're oversupplied) => $24B in variable costs Fixed costs stay the same => $8.6B That nets $2.6B profit. My numbers are estimations, but it wouldn't surprise me if they could reach profitability without SDC's.

thedaveoflife 8y ago
Your thesis is supported by their financial statements. Their costs are indicative of a company focused on growth. As revenues continue to grow the can scale back marketing and administrative costs as a percentage of revenue to make profits potential. This company has a lot of potential based on the numbers alone... the real problem is the uncertainty in the market for ride and the tech
admax88q 8y ago
If we're just making up numbers why not assume you'll only drop gross bookings by 0%, or increase bookings even! Anything can be made profitable if you just invent numbers.
- smallgovt 8y ago
  They aren't pulled out of thin air. They're best estimates. If you disagree, what do you think their unit model would transform into if they acquired lyft for $20B in stock and raised prices by 10%? Why?
  - disiplus 8y ago
    you cannot really play with it like that, users have an expectation how much something will cost and if they dont feel that its right you can drop a lot. from my own experience price increase if just on its own of 10% can decease sales by more then 20%. and i assume uber had such ideas and has been simulating them, and I'm sure they are testing it out with smaller but not noticeable increases. let's see how that works for them.

jboy55 8y ago

I always felt SDC is the death of Uber. If you had 5 billion to invest in SDCs for a taxi service, why would you become a small investor in Uber, when you could probably build the app for $10 million and just roll your own? Also uber could become profitable if they charged more. I've actually started taking taxi's again, since they are marginally more expensive than Ubers/Lyfts. However, if you pick them up from an airport, you don't have to wait staring at your phone for 5 minutes watching your driver just sit around in their car until they start moving.

fossuser 8y ago
I take Taxis from airports and from hotels for that reason (often faster than waiting for the uber to get through traffic). The exception is SFO where Taxis cost 2x what an UberX costs. The Taxi experience is still bad though - just yesterday in DC I had to listen to my driver 'joke' about why the Taliban should be able to fight for their country while also repeatedly pointing out and talking about women on the street.
- lapinot 8y ago
  So you prefer being serviced by a machine that records everything you say, do, think, than bearing an interaction with a living human being which may or may not be quite different and interest, question, amuse or revolt you? I must say i don't agree with that, anytime i would prefer a place where people authentically and actually speak their mind and act spontaneously (not considering whether or not i actually think their behavior is stupid, alienated or impolite), instead of being corporate zombies, their soul already exhausted by the system, silent and jaded, having lost faith in any kind of joy in the productive part of life we call "work". > Men are disturbed not by things, but by the view which they take of them. Epictetus
  - a_t48 8y ago
    Don't worry, many of the taxi\uber drivers record inside their car, too.
  - p1esk 8y ago

fullshark 8y ago

You can't imagine any scenario under which an 11 billion dollar money printing machine which is growing and costs 11 billion + 3 billion to run can turn cash flow positive?

Marazan 8y ago
When your business is selling $10 for $5 then no, I cannot see a way to turn cash flow positive.
- temporalparts 8y ago
  Your example isn't proportionate. It's selling $14 for $11, which is much closer to selling $10 for $8, which is a lot more reasonable than $10 to $5.
  - Marazan 8y ago
    Cool, cool. Just gotta raise prices by 25% or cut costs by 20%. Trivial.
- treis 8y ago
  They're not doing that. They got $11.27 in revenue for a cost of $9.65. The loss stems from spending an additional $4.67 on advertising and R&D.
  - Marazan 8y ago
    1.5 billion on R&D, 3 billion on marketing. Uber don't get the income from the rides without the marketing so I don't get why you get to ignore that when working out if they are profitable or not.
    - inverse_pi 8y ago
      Does marketing and R&D cost grow linearly with number of rides though?

austenallred 8y ago

> 1. Uber is unprofitable and the only way it can become profitable is to get SDC's That doesn't seem to be true... > 4. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition. What significantly cheaper competition?

666lumberjack 8y ago
>What significantly cheaper competition? The hypothetical Waymo SDC-based 'taxi' service

raldi 8y ago

#4 is the most crucial. There's no stickiness. If a competitor builds a better mousetrap, the switching cost is near-zero.

localhostdotdev 8y ago

you forgot option B: raise prices, reduce costs

Karunamon 8y ago
The only issue there is that Uber hasn’t driven out the local livery companies, and Uber’s presence forced many of them to invest in infrastructure. If the rides get too expensive, people will just go back to taxis.
gcb0 8y ago
that is exactly what every company in the universe does in the quarter before being offered for sale or filling public offering. always assume the first company filling is the best as possible already.

flatline 8y ago

The assumption that SDCs are going to completely overtake the market is a huge one and is unwarranted. This puts all the cost of building and maintaining a fleet on Waymo, or whoever is first to market. While it cuts out the cost of a human driver, it's not at all clear to me that this is cheaper in net. Furthermore, a completely robust SDC able to handle all climates and weather in which a human driver is at least nominally competent to drive is still likely a pipe dream. So this model may work well - if it works at all - for the Southern regions of the US, without coverage anywhere else.

apendleton 8y ago
While this is true, it's the only proposed path to Uber being profitable. They lose money on every human-driven ride and have no approach to remedy that situation. So if SDCs aren't coming any time soon, or if they aren't any cheaper than human drivers, I'm not sure that's any better for Uber's prospects...

AznHisoka 8y ago

To keep the math simple: It's worth the amount a greater fool will pay for it.

gamblor956 8y ago

It is going to be competing with other taxi/ride share services with all the cost advantages of SDC vehicles while its competitors are paying human drivers (and have basically no fat to cut from their current pricing) It's going to be a very long time before self-driving cars are cheaper than cheap cars with human drivers. It's very possible that Uber might reach an acceptable level of self-driving capabilities before Waymo's paid off its investment in its first crop of self-driving cars.

gmueckl 8y ago
Huh? How much does a full time driver earn? Let's say $30000 for the sake of argument. A car that is run as a taxi or rideshare service full time will last maybe three years. So that eould mean $90000 for the driver plus around $40000 for a decent car. A mass produced self driving taxi car that costs more than $130000 seems very unlikely.
- gbear605 8y ago
  Plus a self driving taxi could run 24/7 while a driver likely only works 40-50 hours a week (at least at the $30k/year price point)
- gamblor956 8y ago
  If you want to make up unrealistic numbers, sure, then unrealistically a self-driving car is cheaper. But with a self-driving car, operational costs like registration, maintenance, fuel/charging, and insurance, would all have to come out of Waymo's pockets instead of the driver's $30,000k. If the car is being driven 24/7, then maintenance costs will be much higher because of the increased wear and tear, and insurance for self-driving cars will be magnitudes higher than it is for human (commercial) drivers. Plus, there's the maintenance costs for the self-driving tech (LIDARs, software systems, etc.) The insurance alone would likely wipe out savings from eliminating human drivers, and the combined maintenance+insurance costs definitely will for the foreseeable future. The average Uber drives a $30k-40k car (assuming it was purchased new). So you're looking at a $100k difference in costs in acquiring the car (using your $130k price). If the SDCs only last 3 years, that means you only have 3 years to make up the $100k difference, so each SDC would have to make $33k/year more than the comparable human-driven Uber car competitor to break even (since operational costs per car will cost the same or more as paying a human drive would have). $33k/year is roughly 3000+ additional rides/year assuming $10/ride average cost. Assuming 10 rides a day based on media reports, that would require Waymo to at least double the rides each vehicle does every day. And Waymo can't just increase the price on its SDC rides, since if it makes them much more than $10/ride, people will just drive cause it's much cheaper and faster, even including gas and parking. And remember: in all of the numbers above, Waymo is bringing the costs in-house, except for the vehicles themselves, so there's no markup. Retail costs for similarly specced SDCs cars would be much higher because each respective vendors will want their profits. So yeah, while I don't believe Uber will achieve self-driving, I think that it's going to be a long time before self-driving cars are cheaper than human-driven cars once all costs are taken into account.

antaviana 8y ago

With an accumulated deficit of $7.9 billion in their balance, isn't it worth at least $7.9 billion in tax credits?

dmode 8y ago

According to the S-1, Uber has a $1bn profit. Where did you see it is unprofitable ?

a13n 8y ago
Only because in Q1 2018 they sold a bunch of their operations to Yandex and Grab for $3B. They effectively lost $2B.

pacetherace 8y ago

It's worth it until there is an alternative on the road. Eventually, most if not every company get replaced by a better one. Stock market IPOs are never about predicting what will eventually happen to a company. It is not different than say, Tesla. Everybody keeps repeating that the traditional car manufacturers will catch up with Tesla, but even till then Tesla is gonna do business. And as expected once the novelty of their products (EV and self-driving features) got somewhat out of the way, now it is being judged but the revenue and profit numbers it is pulling.

ian_badfellow 8y ago

Do you work in SDC development? There's a difference between making it work for a small suburb area in Phoenix some of the times and making it work everywhere all the time. And the problem with ride-sharing applications is that unless it works everywhere nobody is going to use it. Making it work everywhere for all circumstances is hard. Like really hard. There's a difference between an intervention-free ride and an actual ride that's both safe and comfortable. You could rack up your miles per safety intervention by programming a paranoid robot that sits at a highway ramp for hours without merging. Is it possible? Maybe. It's nice that some deep models can magically (with no theoretical explanation) recognize a pedestrian, a vehicle, a bike. But would you trust it with your life? There's no theoretical safety guarantee unlike aviation where you can actually read and understand the proofs. I mean yes it could certainly work somewhere some of the time, but believing that it will eventually work everywhere all of the time is rather naive.

shmageggy 8y ago
I wouldn't call it naive to believe it will work eventually, if the time scale for eventually is unspecified; after all, we are an existence proof that it's at least possible. Pinning down that timescale is the tricky part though. Also, your username is hilariously apt.

dfischer 8y ago

Sorry, what’s a SDC?

kingaillas 8y ago
Self-driving car.
albertut 8y ago
SDC = Self Driving Car

rhegart 8y ago

Data. They will sell location data. Mine all transits. Physical location data and daily customer trends will net them billions.

brohee 8y ago
Telcos are already selling that, on more people. Why would Uber inferior dataset would be so valuable...

magicalhippo 8y ago

> 1. Uber is unprofitable and the only way it can become profitable is to get SDC's So I'm not following this closely, but why is Uber unprofitable? I mean the app worked last time I was in the US and surely can't be that expensive to develop and maintain.

gbear605 8y ago
Because most of the income from the rider goes directly to the driver.
- drcross 8y ago
  Worse than that, Uber are taking money from investors and directly giving it to the drivers to subsidise the trip price for the consumer all in an effort to build market share. It's folly to think that customers are going to remain loyal to such a service once the money runs out.

NicoJuicy 8y ago

One company with a lot of capital clears the road in a blue ocean, the others pursuit. Just like in cycling, fast followers have it a lot easier in getting a % of the market share.

empath75 8y ago

If Uber is a self driving car company that why do I have to pay for a money losing taxi company, too?

shamino 8y ago

Doesn't matter if Uber is actually worth anything - it matters if a lot of people think Uber is worth anything :)

robotizeme 8y ago

In LA, Uber recently reduced the per minute rate from 80 cents to 60 cents. This was after increasing the rates in Sept 18. Their annoucment of the rate decline was preceded by hours until it was effective. Prior to this week, Uber had a consecutive ride bonus for 3-rides in a row that would add $7 to 11. But the app would malfunction often or not alert you, and break the streak. Almost everyday I complained but Uber never conceded and never gave me the small bonus. This week, the consecutive ride bonuses are gone. Replaced by a flat $185 bonus for 70 rides in 7-days to $305 for 120 rides. Previously the biggest ride bonuses would require you to drive 11 hours a day consecutively to hit. And if you did 25% or 50% you’d get 10-15% of the bonus. My current rate is $23/hour minus roughly $5-6 for gas, depreciation, car and insurance. My rent in LA is $3000/month. Perhaps $17-18 an hour is fair but Uber’s tactics seem incredibly malicious and ever-changing. I feel like they are exploiting drivers unnecessarily although it is nice to have income whenever I need it. There’s also tons of bad drivers, they encourage you to use the Uber map system which is seriously flawed, doesn’t calculate traffic and is semi-dangerous. They don’t advise drivers how to do basic tips to navigate traffic. It could be so much better but it’s weird corporate strategies mixed with bad execution. The negatively Uber generates is a serious problem for their brand and I can’t imagine they’ll exist in 10-years based on how they decide things.

yashap 8y ago

Let’s say Waymo get to legit, truly market ready SDC taxi tech 3 years before Uber, and they start expanding into Uber’s markets at lower prices. This is bad for Uber, but hardly the end of their business. People won’t immediately trust SDCs, so Uber will lose market share only gradually even if their prices are higher. Plus Waymo have to scale up massively to significantly compete with Uber - that’ll take time. If Waymo don’t make much of a dent in Uber’s market share in 3 years, Uber gets their SDC tech to market and problem solved. If they DO start making a big dent, Uber can likely raise enough money to simply drop prices to Waymo levels (with human drivers), and just bleed cash until they get the tech out to be profitable. Uber (and their investors) are well versed in this strategy.

devit 8y ago
But given that Uber is not profitable now competing with Lyft both with human drivers, why would it be profitable tomorrow competing with Waymo both with SDCs? Even if the profit is no longer negative, it should be near zero since there is not much moat, and it's not even clear whether Uber would be able to compete at all against Waymo (better tech) or even carmakers who own the cars. The only thing Uber has is brand recognition, but Google Maps actually has even more brand recognition and that's where Waymo is going to be unless antitrust prevents it somehow.
panarky 8y ago
The conventional wisdom is that self-driving cars will be much cheaper than rideshare, and the only question is when they'll reach level-5 autonomy. But what if they're not actually significantly cheaper? Let's say an Uber driver who works 60 hours gets paid $1,200 gross, or $20 per hour. Could the self-driving car drive the same trips with $1,200 lower cost? Not a chance. Because the $1,200 paid to the Uber driver isn't just for the driver's time, it's also for the reduced resale value of the car, and for fuel, and tires, and repairs. And those costs for the self-driving car will be much higher because the self-driving vehicle will be newer, and larger, and loaded with expensive computers and lidar. The self-driving car will also require 24/7 realtime monitoring, and customer support, and a depot staffed with technicians, and a field service team. The IRS rate for deducting business use of a vehicle is $0.58 per mile, not including the driver's time. I'd bet the cost of an autonomous car will be well north of that.

aiisjustanif 8y ago

I love how we just assume SDC is just fact. No mention of weather issues, privacy issues, governmental legislation slow down, infrastructure that they drive on. The human driver still has a minute. It's not like we are talking about Semi Trucks that will primarily have to navigate interstates.

sytelus 8y ago

> the only way it can become profitable is to get SDC's Can't they just get out of markets that are loss leaders and continue to operate in profitable markets? Note that they should but that's always an option if profitability becomes an immediate issue.

cobookman 8y ago

Uber needs SDC, alphabet doesn't. Alphabet will not risk a company ending lawsuit due to SDC...uber is more than happy to bet it all on SDC if that is the sole way to become profitable. Uber vs Waymo will be inetersting for sure.

zn44 8y ago

it's a very strong brand, as much as it gets a lot of hate here for the last two years of scandals, especially in developing markets noone cares about that. With right change of management and slow but steady rate raise it can be profitable.

deleted 8y ago

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JumpCrisscross 8y ago

> the only way it can become profitable is to get SDC's This isn’t self-evident. Their services are unit profitable in core markets. And additional revenue streams increase the geographies in which they’re organically profitable.

mtw 8y ago

This supposes that Self driving vehicles will be possible in the near future , without a human operator, in every city that Uber operates in. I highly doubt that. At least not in the next 5 years. What is see is Waymo being deployed in select 10 major cities in certain neighborhoods.

tompetry 8y ago

Uber facilitated 10 billion rides in 2018. I think you are severely underestimating the ease at which another service, benefitting from self-driving capabilities or not, will erode such a massive network. Value of company will be correlated with value of the network, so I can certainly see how it is indeed worth something... and actually quite a lot.