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Let's keep citing some famous failures to dismiss anything market might predict because these few examples mean none of it can be useful information. We obvious

Let's keep citing some famous failures to dismiss anything market might predict because these few examples mean none of it can be useful information. We obviously know better than the market and if we don't it's because markets are full of shit and manipulated by the feds. Furthermore all companies are evil, greedy and nobody wants to build things that develop and grow the world. All decisions made are corrupt and no one cares for our best interests.

arcticbull 7y ago
It's hard to argue that the market can get, uh, frothy from time to time. This is especially true as low-interest-rate money is chasing such limited yields (or more frequently, negative yields) in low-risk asset classes like bonds. Large investors and VCs are more interested in growth than they are in fundamentals because they believe the fundamentals will follow the growth. Often they do, but sometimes they don't. The size and employee counts of those organizations don't always mean much. It's worth being skeptical. I think you'd have made the same reply if I'd cited Luckin before last week, ya know? Especially for a company like Uber, whose operating economics have been -- let's just call them bleak. They burned $1B/quarter for years. I really like the write-up from Naked Capitalism (a few years old now, but aging well imo) [1] They have lost more money so far than any startup in recent history. But I'm sure genuine profitability is right around the corner ;) > Furthermore all companies are evil, greedy and nobody wants to build things that develop and grow the world. Uh... sir, this is a Wendy's. IRL, just because you really deeply want something doesn't mean you'll get it -- or that it was even a good idea to begin with. And it certainly doesn't mean losing a billion dollars per quarter is going to magically generate a profitable business from thin air. OR, I'm totally wrong! Either way's fine :) [1] https://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html https://www.nakedcapitalism.com/2016/11/can-uber-ever-delive...
- mewpmewp2 7y ago
  It's worth being skeptical, but it seems to me that people who criticise do so without having any idea how the business internally operates or what its goals and expectations are - and it seems like on falsely based assumptions. "Burning" cash is already an unfair term which to me implies that analysis is not founded on fair terms. How can you tell they are "burning" cash and not "investing" it in r&d and expansion which will have effect in the future? If you can differentiate between the two and bring forth a solid reason why it's actually burning, not investing in itself, I might think there's some truth to it. Certainly there are viable conditions in which it's possible to invest $1B in itself, right? You could certainly prove that with maths, if for example this $1B spent now will mean maybe $1B extra revenue after 5 years? > They have lost more money so far than any startup in recent history How can that be an argument? How can you tell it isn't "They have invested more money so far than any startup in recent history"?
  - arcticbull 7y ago
    For what it's worth I'd really recommend reading the Naked Capitalism write-up I linked to, as I do agree with their assessments broadly, but tldr: 1. There's no economy of scale in moving people from place to place in town. If there was it's likely we'd have national taxi companies by now. In fact, taxi companies recognize better unit economics than an Uber does because they pool their fleet leases and insurance, which not every Uber driver is interested in (or even offered). 2. Starting from a higher cost basis than a taxi means that people would have to pay more than a taxi for a profitable Uber company to exist. There's no evidence people are willing to pay as much as a taxi for their day to day transportation, let alone more than a taxi costs. 3. There's no consumer loyalty so margins are likely to remain razor thin in a race to the bottom commodity product -- only competitive against their incumbents (taxis) when priced at below the cost to deliver. 4. Unlike other startups which sell zero marginal cost products, Uber is selling a negative margin product at scale. There's no clear path toward meaningful margin expansion no matter what scale of ridership Uber achieves. Or alternatively, if it's not possible to eek out a profit off the back of $65B in rides per year in peak economic conditions as of Q4 2019, how many more rides can you possibly require to turn a profit? Let alone pay back your investors/debt holders $20B of capital. It's a crap business model, it was crap when they went public with an $85B market cap, and it's crap today with a $50B market cap. They're trading with a market cap of just 2.5X their VC investment -- think about that! You can justify a 5X valuation on your personal savings account when you take out a mortgage.
    - mewpmewp2 7y ago
      These are good arguments, so it comes down to the question whether this type of business could be profitable in the first place. As a frequent user of these services I would be fine with paying a bit more. What I most enjoy is the ability to get a ride within 1 minute timeframe and very comfortably through the app. Ideal to not lose any daily time when going to work and back. Taxis require more organising and waiting time. There is definite value for me. Are there enough other people who find value in this? I am not sure, but we definitely will find out. Do you think Uber blindly believes they can ask customer's more money or reduce their costs or are they deceitful? Regarding starting from higher price point. This seems like a solvable issue. I in general don't think we need specialist drivers or so called taxi to exist unless for niche crowds. It seems a lot more optimal if most people can go in and out when they want and do it. This must be cheaper and optimal due to scale and algorithms ability to select fitting driver's from a huge pool. One thing unnoted is though future potential for self driving transport. Right now I will be long on Uber though. My life has gotten so much easier with ride hailing services (I don't have a car and I find it cheaper to ride hail than to maintain a car anyway) so it definitely makes sense for me to invest in them.

arcticbull 7y ago

It's hard to argue that the market can get, uh, frothy from time to time. This is especially true as low-interest-rate money is chasing such limited yields (or more frequently, negative yields) in low-risk asset classes like bonds. Large investors and VCs are more interested in growth than they are in fundamentals because they believe the fundamentals will follow the growth. Often they do, but sometimes they don't. The size and employee counts of those organizations don't always mean much. It's worth being skeptical. I think you'd have made the same reply if I'd cited Luckin before last week, ya know? Especially for a company like Uber, whose operating economics have been -- let's just call them bleak. They burned $1B/quarter for years. I really like the write-up from Naked Capitalism (a few years old now, but aging well imo) [1] They have lost more money so far than any startup in recent history. But I'm sure genuine profitability is right around the corner ;) > Furthermore all companies are evil, greedy and nobody wants to build things that develop and grow the world. Uh... sir, this is a Wendy's. IRL, just because you really deeply want something doesn't mean you'll get it -- or that it was even a good idea to begin with. And it certainly doesn't mean losing a billion dollars per quarter is going to magically generate a profitable business from thin air. OR, I'm totally wrong! Either way's fine :) [1] https://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html https://www.nakedcapitalism.com/2016/11/can-uber-ever-delive...

mewpmewp2 7y ago
It's worth being skeptical, but it seems to me that people who criticise do so without having any idea how the business internally operates or what its goals and expectations are - and it seems like on falsely based assumptions. "Burning" cash is already an unfair term which to me implies that analysis is not founded on fair terms. How can you tell they are "burning" cash and not "investing" it in r&d and expansion which will have effect in the future? If you can differentiate between the two and bring forth a solid reason why it's actually burning, not investing in itself, I might think there's some truth to it. Certainly there are viable conditions in which it's possible to invest $1B in itself, right? You could certainly prove that with maths, if for example this $1B spent now will mean maybe $1B extra revenue after 5 years? > They have lost more money so far than any startup in recent history How can that be an argument? How can you tell it isn't "They have invested more money so far than any startup in recent history"?
- arcticbull 7y ago
  For what it's worth I'd really recommend reading the Naked Capitalism write-up I linked to, as I do agree with their assessments broadly, but tldr: 1. There's no economy of scale in moving people from place to place in town. If there was it's likely we'd have national taxi companies by now. In fact, taxi companies recognize better unit economics than an Uber does because they pool their fleet leases and insurance, which not every Uber driver is interested in (or even offered). 2. Starting from a higher cost basis than a taxi means that people would have to pay more than a taxi for a profitable Uber company to exist. There's no evidence people are willing to pay as much as a taxi for their day to day transportation, let alone more than a taxi costs. 3. There's no consumer loyalty so margins are likely to remain razor thin in a race to the bottom commodity product -- only competitive against their incumbents (taxis) when priced at below the cost to deliver. 4. Unlike other startups which sell zero marginal cost products, Uber is selling a negative margin product at scale. There's no clear path toward meaningful margin expansion no matter what scale of ridership Uber achieves. Or alternatively, if it's not possible to eek out a profit off the back of $65B in rides per year in peak economic conditions as of Q4 2019, how many more rides can you possibly require to turn a profit? Let alone pay back your investors/debt holders $20B of capital. It's a crap business model, it was crap when they went public with an $85B market cap, and it's crap today with a $50B market cap. They're trading with a market cap of just 2.5X their VC investment -- think about that! You can justify a 5X valuation on your personal savings account when you take out a mortgage.
  - mewpmewp2 7y ago
    These are good arguments, so it comes down to the question whether this type of business could be profitable in the first place. As a frequent user of these services I would be fine with paying a bit more. What I most enjoy is the ability to get a ride within 1 minute timeframe and very comfortably through the app. Ideal to not lose any daily time when going to work and back. Taxis require more organising and waiting time. There is definite value for me. Are there enough other people who find value in this? I am not sure, but we definitely will find out. Do you think Uber blindly believes they can ask customer's more money or reduce their costs or are they deceitful? Regarding starting from higher price point. This seems like a solvable issue. I in general don't think we need specialist drivers or so called taxi to exist unless for niche crowds. It seems a lot more optimal if most people can go in and out when they want and do it. This must be cheaper and optimal due to scale and algorithms ability to select fitting driver's from a huge pool. One thing unnoted is though future potential for self driving transport. Right now I will be long on Uber though. My life has gotten so much easier with ride hailing services (I don't have a car and I find it cheaper to ride hail than to maintain a car anyway) so it definitely makes sense for me to invest in them.