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I'd love to hear some smart people opinions on this idea: "Uber doesn't need to be profitable, they just need to survive until their autonomous cars are deploy

I'd love to hear some smart people opinions on this idea: "Uber doesn't need to be profitable, they just need to survive until their autonomous cars are deployed"

treis 7y ago
IMHO, autonomous cars actually breaks Uber's model. It changes it from taking a % off the top of a market to a capital and maintenance intensive business. Only seems to work if they end up with some sort of franchise model. Sort of like how Coke has a bunch of distributors.
- Animats 7y ago
  That's about right. Running a fleet of autonomous vehicles is an expensive proposition, and probably will be for years after they start working. Waymo outsources some of that to Avis Rent-A-Car, which already has garages, maintenance facilities, parking lots, car washes, etc. It's quite possible that when automomous vehicle operations start working, the big players will be car rental companies. It's a natural extension to their business.
  - malandrew 7y ago
    I have a hard time believing that anyone on HN legitimately things that companies like Hertz and Avis will be able to become efficient in the ridesharing market before one of the two TNCs become efficient in the fleet management market (which is a subset of the rental car market that overlaps with TNCs once they choose to have their own fleet. One set of businesses here has modern engineering practices and the other set are dinosaurs. Furthermore, rental companies have more employees dedicated to sales than to fleet management and their entire current customer base is rental car consumers. They literally need to redirect money to R&D long term where that R&D serves no benefit to their current customer base. Wall Street will punish the stock of rental car companies short term for spending R&D on becoming ridesharing businesses that serve a customer they don't yet even have mindshare with. With the TNCs however, wall street won't see any problem with them building out their own fleet. The only condition where wall street looks down on the idea of own fleet management is if they believe a franchise model with third party fleet managers make sense. Either way the TNCs own the relationship with the customer and therefore has all the power.
    - vladimir_prus 7y ago
      I would not be so sure. Avis, in particular, is actively pushing for a flow where you book online, use "secret" promo code to get full insurance for basically zero, pick up car directly on parking lot with keys inside, and drive away. It takes literally 5 minutes and a single employee to check your driving license and contract. Hertz is trying to do same, though less effectively. Their websites and apps are still horrible, and it's perplexing why, but the cost of building decent apps will be immaterial compared to the cost of the vehicles, and from that, building actual on-demand short-term rental network does not seem so unlikely.
- onlyrealcuzzo 7y ago
  I suspect this is what Waymo plans to do with Chrysler. Waymo will be the brand of AI driving the car, and probably own the app/marketplace, but the car companies will take care of building/capitalizing the fleet (and probably maintaining it, too).
- PretzelFisch 7y ago
  Do they need to own the car. They could just run not in use consumer cars.
  - LandR 7y ago
    Are people prepared to do this? I get my car to drive to me to work and then it goes out and operates like a taxi while I'm working. I'd be worried it comes back damaged or vomit all over the place. No thanks.
- mytailorisrich 7y ago
  The upside is that they keep 100% of fares, benefit from the economies of scale of having a large fleet, and can run the cars 24/7. Cars can be leased, reducing capex, and maintenance can be handled by specialised companies. Overall it seems that this upside far outweighs the downside.
sremani 7y ago
I am not smart , but before the phoenix accident that statement may have some basis but after that the uber autonomous car is tainted to an extent couple that with theft of intellectual property from Alphabet autonomous trucking and the subsequent deal made, it is hard to argue Uber is going to lead the autonomous revolution when it happens. Their current moat is their driver network (one of the moats), once that is gone Waymo and Tesla can pretty much pull what Uber does.
- toomuchtodo 7y ago
  Waymo/Alphabet/Tesla are one push notification to their apps away from building a driver network.
  - kn0where 7y ago
    I've seen Waymo's cars driving around plenty of times in Arizona. The ones without a human safety driver are so rare I haven't seen one in person yet. If they were actually confident they were close to FSD they would have more cars without human safety drivers.
ganitarashid 7y ago
Uber doesn't need to be profitable, they just need to survive until their investors can cash out
deleted 7y ago
[deleted]
julianozen 7y ago
While I can understand why autonomous cars can improve the efficiency of the market, unless Uber is able to gain semi-exclusive access self driving cars alone I don’t understand how this will fix their economics. Let’s pretend Waymo has 100% safe, easy producible, street legal self driving cars available today and everyone else was clearly several years behind. I see this would play out in a few ways: 1) Would Waymo actually want to spend billions to buy enough cars to maintain their own fleet in most cities in the world/US so that you could quickly and reliably hail a self driving car (and spend on marketing / referrals to grow marketshare). Would Waymos/Google investors actually allow them to lose this much money to start a new business that has historically been so unprofitable? 2) Would Waymo just sell cars to consumers/rental car companies, who would then deploy the vehicles to uber/lyft. In this scenario wouldn’t the cars be even more price sensitive about automatically switching between driving for different platforms and optimizing for the cars time. Wouldn’t consumer still open their uber/Lyft apps, check for the lowest price and then take the cheapest ride? Isn’t this fundamentally the same economics issue (unless the rides perhaps get so cheap that consumer no longer bother to check)
manigandham 7y ago
Any savings from not paying a driver would probably be taken up by maintaining and deploying their own vehicle fleet. And that's assuming the tech is ready in a reasonable timeframe and doesn't cost a ridiculous amount.
shsjxjbsbs 7y ago
I think the surplus from self-driving tech is going to go to the owners of self-driving IP and consumers.
jdjdjjsjs 7y ago
Why do we believe that Uber would be the beneficiary of autonomous cars? They aren't developing them anymore, so if Waymo pushes them first why wouldn't the Google Maps app simply replace Uber, eg.
trimbo 7y ago
Who's going to give them more captial to build autonomous cars?
X6S1x6Okd1st 7y ago
They'd need the following to really make it with autonomous cars: 1) Own the technology, not lease it 2) Have the capital to build out a fleet 3) Have the technology before others for long enough to build a moat.
hyperbovine 7y ago
2015 would like its hot take back.
bart_spoon 7y ago
Well as someone who works in machine learning, I'm not convinced autonomous cars are anywhere close to becoming a reality, so they could have to survive for quite a long time.

I'd love to hear some smart people opinions on this idea: "Uber doesn't need to be profitable, they just need to survive until their autonomous cars are deployed"

treis 7y ago

IMHO, autonomous cars actually breaks Uber's model. It changes it from taking a % off the top of a market to a capital and maintenance intensive business. Only seems to work if they end up with some sort of franchise model. Sort of like how Coke has a bunch of distributors.

Animats 7y ago
That's about right. Running a fleet of autonomous vehicles is an expensive proposition, and probably will be for years after they start working. Waymo outsources some of that to Avis Rent-A-Car, which already has garages, maintenance facilities, parking lots, car washes, etc. It's quite possible that when automomous vehicle operations start working, the big players will be car rental companies. It's a natural extension to their business.
- malandrew 7y ago
  I have a hard time believing that anyone on HN legitimately things that companies like Hertz and Avis will be able to become efficient in the ridesharing market before one of the two TNCs become efficient in the fleet management market (which is a subset of the rental car market that overlaps with TNCs once they choose to have their own fleet. One set of businesses here has modern engineering practices and the other set are dinosaurs. Furthermore, rental companies have more employees dedicated to sales than to fleet management and their entire current customer base is rental car consumers. They literally need to redirect money to R&D long term where that R&D serves no benefit to their current customer base. Wall Street will punish the stock of rental car companies short term for spending R&D on becoming ridesharing businesses that serve a customer they don't yet even have mindshare with. With the TNCs however, wall street won't see any problem with them building out their own fleet. The only condition where wall street looks down on the idea of own fleet management is if they believe a franchise model with third party fleet managers make sense. Either way the TNCs own the relationship with the customer and therefore has all the power.
  - vladimir_prus 7y ago
    I would not be so sure. Avis, in particular, is actively pushing for a flow where you book online, use "secret" promo code to get full insurance for basically zero, pick up car directly on parking lot with keys inside, and drive away. It takes literally 5 minutes and a single employee to check your driving license and contract. Hertz is trying to do same, though less effectively. Their websites and apps are still horrible, and it's perplexing why, but the cost of building decent apps will be immaterial compared to the cost of the vehicles, and from that, building actual on-demand short-term rental network does not seem so unlikely.
onlyrealcuzzo 7y ago
I suspect this is what Waymo plans to do with Chrysler. Waymo will be the brand of AI driving the car, and probably own the app/marketplace, but the car companies will take care of building/capitalizing the fleet (and probably maintaining it, too).
PretzelFisch 7y ago
Do they need to own the car. They could just run not in use consumer cars.
- LandR 7y ago
  Are people prepared to do this? I get my car to drive to me to work and then it goes out and operates like a taxi while I'm working. I'd be worried it comes back damaged or vomit all over the place. No thanks.
mytailorisrich 7y ago
The upside is that they keep 100% of fares, benefit from the economies of scale of having a large fleet, and can run the cars 24/7. Cars can be leased, reducing capex, and maintenance can be handled by specialised companies. Overall it seems that this upside far outweighs the downside.

sremani 7y ago

I am not smart , but before the phoenix accident that statement may have some basis but after that the uber autonomous car is tainted to an extent couple that with theft of intellectual property from Alphabet autonomous trucking and the subsequent deal made, it is hard to argue Uber is going to lead the autonomous revolution when it happens. Their current moat is their driver network (one of the moats), once that is gone Waymo and Tesla can pretty much pull what Uber does.

toomuchtodo 7y ago
Waymo/Alphabet/Tesla are one push notification to their apps away from building a driver network.
- kn0where 7y ago
  I've seen Waymo's cars driving around plenty of times in Arizona. The ones without a human safety driver are so rare I haven't seen one in person yet. If they were actually confident they were close to FSD they would have more cars without human safety drivers.

ganitarashid 7y ago

Uber doesn't need to be profitable, they just need to survive until their investors can cash out

deleted 7y ago

[deleted]

julianozen 7y ago

While I can understand why autonomous cars can improve the efficiency of the market, unless Uber is able to gain semi-exclusive access self driving cars alone I don’t understand how this will fix their economics. Let’s pretend Waymo has 100% safe, easy producible, street legal self driving cars available today and everyone else was clearly several years behind. I see this would play out in a few ways: 1) Would Waymo actually want to spend billions to buy enough cars to maintain their own fleet in most cities in the world/US so that you could quickly and reliably hail a self driving car (and spend on marketing / referrals to grow marketshare). Would Waymos/Google investors actually allow them to lose this much money to start a new business that has historically been so unprofitable? 2) Would Waymo just sell cars to consumers/rental car companies, who would then deploy the vehicles to uber/lyft. In this scenario wouldn’t the cars be even more price sensitive about automatically switching between driving for different platforms and optimizing for the cars time. Wouldn’t consumer still open their uber/Lyft apps, check for the lowest price and then take the cheapest ride? Isn’t this fundamentally the same economics issue (unless the rides perhaps get so cheap that consumer no longer bother to check)

manigandham 7y ago

Any savings from not paying a driver would probably be taken up by maintaining and deploying their own vehicle fleet. And that's assuming the tech is ready in a reasonable timeframe and doesn't cost a ridiculous amount.

shsjxjbsbs 7y ago

I think the surplus from self-driving tech is going to go to the owners of self-driving IP and consumers.

jdjdjjsjs 7y ago

Why do we believe that Uber would be the beneficiary of autonomous cars? They aren't developing them anymore, so if Waymo pushes them first why wouldn't the Google Maps app simply replace Uber, eg.

trimbo 7y ago

Who's going to give them more captial to build autonomous cars?

X6S1x6Okd1st 7y ago

They'd need the following to really make it with autonomous cars: 1) Own the technology, not lease it 2) Have the capital to build out a fleet 3) Have the technology before others for long enough to build a moat.

hyperbovine 7y ago

2015 would like its hot take back.

bart_spoon 7y ago

Well as someone who works in machine learning, I'm not convinced autonomous cars are anywhere close to becoming a reality, so they could have to survive for quite a long time.