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Uber has a big competitive moat, which is willingness to burn money. They've got a lot of it, and any competitor which can't raise as much money for that purpos

by est31 8y ago

Uber has a big competitive moat, which is willingness to burn money. They've got a lot of it, and any competitor which can't raise as much money for that purpose as Uber has will lose out. It's simple, in any area that a small competitor of Uber operates they just artificially lower prices and do it until the competitor runs out of money. The company with more money wins. Slack... sure you can just spin up a rocket.chat or matrix instance, but operating those costs money and attention by employees that YOU need to hire and pay. And suddenly the Slack bill you have doesn't seem that high. Quite many companies are in such a situation. There are institutions in different situations, like the French state for example which employs millions (sic) and really wants to keep the data out of foreign hands so they use matrix instead and have staff to maintain the instances. With the costs being irrelevant for most institutions, they select for other criteria instead, which is quality of the product. And Slack for some reason is market leader here. I definitely prefer to use IRC but I'm not delusional, most people aren't like me.

maxxxxx 8y ago
"Uber has a big competitive moat, which is willingness to burn money. " that's a very bad long term strategy :-)
- est31 8y ago
  Most of the time, there won't be anyone trying so most of the time they will make money instead of burning it. As long as they are burning less on average than they are doing in profits they turn a profit in total. The business model already exists e.g. in the form of American cable companies. They offer crappy services for super expensive prices, but the moment a competitor gets into town and invests heavily, they invest as well and outbid them. This way they ensure that no competitor can make profits and grow beside them in that specific town. So they are safe. Add in government mandated monopolies and "you get counties abc, I get counties def" type deals between cable companies and regulators looking the other way. Same will likely happen for Uber vs Lyft.
techntoke 8y ago
Usually those staff are able to setup and manage chat while doing 100 other things for the company, and if they're not then fire them.
toasterlovin 8y ago
The problem with Uber is not that they are lacking a moat, it’s that they have not demonstrated what the market size for ride-sharing is when consumers have to eventually pay the true cost. Given how incredibly expensive ride-sharing is when heavily subsidized, you’re have to be insane to think that the market won’t shrink when prices are 30-50% higher. And if your answer to that problem is self driving cars, well then I’ll happily point you to the auto-rental market as roughly what kind of a business you’re investing in.

by est31 8y ago

maxxxxx 8y ago

"Uber has a big competitive moat, which is willingness to burn money. " that's a very bad long term strategy :-)

est31 8y ago
Most of the time, there won't be anyone trying so most of the time they will make money instead of burning it. As long as they are burning less on average than they are doing in profits they turn a profit in total. The business model already exists e.g. in the form of American cable companies. They offer crappy services for super expensive prices, but the moment a competitor gets into town and invests heavily, they invest as well and outbid them. This way they ensure that no competitor can make profits and grow beside them in that specific town. So they are safe. Add in government mandated monopolies and "you get counties abc, I get counties def" type deals between cable companies and regulators looking the other way. Same will likely happen for Uber vs Lyft.

techntoke 8y ago

Usually those staff are able to setup and manage chat while doing 100 other things for the company, and if they're not then fire them.

toasterlovin 8y ago

The problem with Uber is not that they are lacking a moat, it’s that they have not demonstrated what the market size for ride-sharing is when consumers have to eventually pay the true cost. Given how incredibly expensive ride-sharing is when heavily subsidized, you’re have to be insane to think that the market won’t shrink when prices are 30-50% higher. And if your answer to that problem is self driving cars, well then I’ll happily point you to the auto-rental market as roughly what kind of a business you’re investing in.