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I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are.
by tjpaudio 7y ago
I'm not quite sure everyone discussing this, including the economist article author, is in the loop with why Lyft and Uber are getting valued the way they are. Wall Street is not paying for a taxi company, they are betting that Uber and Lyft are the best poised to first rollout driverless ride sharing, i.e. one of them will own and monopolize patentable tech that the mass public wants to use. The existing experience is a commodity business where profits go to zero, that's well known and old news.
- perfmode 7y agoDriverless ride sharing isn’t coming, in a meaningful way*, in the next ten years, I’m willing to bet my house on that. Meaningful such that it actually delivers monetarily
- tjpaudio 7y agoWhile I would agree with you, driverless tech is in fact the reason behind the valuation and balance sheet deficit. No large investors at this point think they are going to get a dividend paying profitable commodity business. *edit for grammar
- rand0mthought 7y agoDo you plan to short UBER on amount of your house cost?
- idlewords 7y agoThat would be a bet on both rational markets and lack of driverless technology. That's a very different bet.
- deleted 7y ago[deleted]
- leesec 7y agoWe absolutely can make some bets if you are serious.
- macspoofing 7y ago>Driverless ride sharing isn’t coming, in a meaningful way*, in the next ten years, I’m willing to bet my house on that. You'll have to expand on 'meaningful'. I can see driverless tech being used in specific use-cases between specific locations along controlled or established routes (example, moving cargo between a seaport and the train depot). I don't see driverless being available as a general purpose consumer vehicle that you can summon to pick up your buddy and drive back to your work.
- googlemike 7y agoHappy to take that bet. How should we do it?
- hoschicz 7y agoDefine "delivers monetarily" and I might be willing to take the other side of the bet. What about Waymo in the Phoenix area? Yes, that's a limited and perfect area, but still, it works very well there.
- natch 7y agoCan you restate this with fewer weasel words?
- empath75 7y agoIf it’s about driverless ride sharing why don’t you buy stock in a company like google that makes money and is developing driverless cars, instead of a taxi company that loses money. Google could build everything Uber has in a weekend once Waymo gets driverless cars working.
- tjpaudio 7y agoBecause Uber and Lyft are pure plays.
- amelius 7y agoPatents are not valid indefinitely. Given the ridiculous amounts of money thrown at this, patents will probably expire long before the break-even point is met. Besides patents, Uber has no way to bind customers. Yes, it's a commodity business, and I see no way around it. Users can simply use a different and cheaper car, which will inevitably exist and become popular.
- tjpaudio 7y agoBoth rideshares subsidize about half of what they pay drivers, but their deficit is not nearly half of their total revenue. Take out the drivers, profit tomorrow. Patent good for 20 years. That's about as juicy as it ever gets.
- amelius 7y agoThe patent may last for 20 years, but that might also be the time required to develop driverless cars and get them approved.
- AnimalMuppet 7y agoWell... the last patent that makes driverless actually feasible in the real world will last for 20 years, and for most of that time the development will already be done. Approval? That's another matter.
- bluGill 7y agoMore than one company is working on driverless cars. Either most of the patents will be easy to work around by some other approach, or several companies will each hold some of the needed patents and all will license from each other - it might stop someone new from getting in but it won't stop everyone already in. I would expect some combination of both.
- toasterlovin 7y agoTake out the drivers and you have a company that makes short term rentals of automobiles to consumers. There are already companies that do this. You may have rented a car from one of them last time you traveled. Take a look at Hertz or Budget and see if those are companies you actually want to be invested in. And regarding patents: what will probably end up happening with self-driving patents is that there will be a bunch of different entities (everyone currently working on self-driving tech) that will cross license their IP to each other. A patent in this space is going to be good for licensing fees, but not for giving yourself a monopoly on self-driving tech.
- gwbas1c 7y agoThat's like investing in Yahoo in the .com bubble. Uber and Lyft's only asset is the interface between the customer and the driver, not self-driving cars. It's very easy for someone to come up with an app to order a robotic taxi. This is probably the easiest part of the robotic taxi business. It's so much so, that unless Uber or Lyft's service is essentially "free," a robotic taxi business will probably consider the cost of working with Uber or Lyft not really worth it and bypass them. They might also prefer the experience of users sticking with their own app in their own walled garden. The robotic taxis will probably have large stickers in them that say something like, "order your next car through us and $AVE!!!" (Just like how JetBlue encourages customers to use jetblue.com) Or, to be quite honest: If I can actually hail a robotic Tesla taxi next year, I'd rather use Tesla's app instead of Lyft or Uber's app.
- tjpaudio 7y agoThis isn't my idea man... It's literally the reason why large investors are in Uber and Lyft. No VC's are dropping money on commodity businesses.
- umeshunni 7y agoWell, the VCs have cashing out in the next 6 months when the lock ups expire. The question is what the valuation will be then.
- bluGill 7y agoI agree, but will it work? If customers stubbornly pull out their lyft app despite the discounts...
- gwbas1c 7y agoIt's just old-fashioned brand loyalty. If you like a particular kind of car, why deal with a middleman?
- Marazan 7y agoWhy would either be best placed to take advantage of driverless ride sharing? Why do any of their curre t activities make you think that?