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It doesn't actually work that way in reality. If it did, there would already be another massive Uber undercutting Uber in eg the US market and raising $10+ bill
by adventured 8y ago
It doesn't actually work that way in reality. If it did, there would already be another massive Uber undercutting Uber in eg the US market and raising $10+ billion in VC money to do it. Because hey, a $75 billion valuation is sitting right there, so it's really easy: just put $10 or $20 billion into the company, undercut Uber, IPO, easy return. Everbody can do it, just add $20 billion.
What's actually the case, is the next clone will need $20 or $30 billion to fight and undercut Uber's entrenched brand, functioning system and scaled up position. And even in that case, the odds of winning against the large incumbents is low. It will cost even more to beat Uber via the undercut game than what Uber has already spent, because you have to take the market away from them - always a dramatically more expensive and difficult proposition.
VCs are not going to continue to burn massive amounts of capital trying to fund the next loss-making ride hailing company. The next $10 or $20 billion to put into an Uber clone in its major markets, does not exist and it will never exist.
Few things would scare a VC more than having the pitch that your plan is to destroy twice as much capital as what Uber did, to unseat Uber's entreched position, with nothing to differentiate you other than the speed at which you destroy capital.
That's why nobody is doing it right now. There isn't another Lyft, much less another Uber. Softbank isn't looking to drop $20 billion to fund the next Uber, to fight with Uber, in the US and similar markets that Uber dominates now.
- philipodonnell 8y ago> As soon as one of them increase prices to generate profit Once prices get back to a sustainable level it will be more appealing for other entrants and they won't need to burn that much money.
- return1 8y agoThere are a bunch of taxi apps in markets where uber is not allowed to enter and they are doing quite well too. This means thay if drivers are not happy with uber s pay, they can group together to creat their own gig. Users seem to go with whatever is cheapest. Uber doesn’t have entrenched anything
- asdff 8y agoEveryone I know compares prices between the two and goes with the cheapest, there isn't any loyalty. In most cases its the exact same driver working for both companies anyway; the service is identical. Even Lyfts subscription plan seems tailored to people who take one to work every day, and how many jobs really compensate you well enough to hail a private vehicle 10+ times a week? Maybe if you make north of 200k a year it seems great, but if I took one to work I'd be blowing $70-100+ a week on commuting alone, about the going rate of a bicycle on craigslist, and over twice as much as an unlimited NYC metro pass.
- JMTQp8lwXL 8y agoThe company that delivers fully autonomous vehicles would have no trouble securing funding to not have to operate within Uber's walled garden and give Uber a 22% cut of profits, and make their own app. Remember, when the independent contractors go away, you don't need offices in every city to onboard drivers, you don't need a big legal team to fight the ongoing "are they contractors or employees" debate, etc. In other words, the company that delivers autonomous won't need $10B to make a cloned Uber app. Since the driver is the biggest cost for Uber, riders will gleefully switch to the clone at even cheaper prices.
- rbranson 8y agoSomeone is going to have to put up the money to buy the fleet of autonomous vehicles.