22 ms·
Wasn't Uber's whole money losing strategy based on the vision that one day they'll use their self-driving cars to get the driving done for cheaper?
by thesimon 6y ago
Wasn't Uber's whole money losing strategy based on the vision that one day they'll use their self-driving cars to get the driving done for cheaper?
- ghaff 6y agoWas there anyone who actually still believed that story? I mean, it should have been pretty obvious for at least a few years but did someone still believe it? (Less snarkily, they do still have a financial interest but yeah.)
- redis_mlc 6y agoIt was an investor narrative, similar to most of the stuff you read about WeWork. Companies need a topic to write PR stories about periodically.
- lhorie 6y agoWithin Uber, it was categorized as a "big bet", as opposed to a core vertical, like ride share/eats. Having now shed new mobility, elevate and now SDV, It looks like Dara is really set on focusing on the core verticals now.
- cyrux004 6y agoElevate is also gone ? Didnt read about that
- st1x7 6y agoBig bets and promises for the future was all they had. Trying to be a solid profitable business in a dying industry isn't going to work out well for them.
- _coveredInBees 6y agoWait, how is ride-sharing / cabs a dying industry? People are always going to need to get from point A to point B, and if anything, the younger generations are less likely to own cars. Public infrastructure is never going to fill the gap except in certain urban areas.
- lhorie 6y agoSometimes I wonder if people talking about this "inevitable unprofitability" have used ridesharing recently. At least around SF, prices were steadily going up for the past couple of years.
- ghaff 6y ago>the younger generations are less likely to own cars There's nothing inherent about this. If the promised alternatives to owning cars turn out to be BS, the younger generations will have to own cars whether they want to or not.
- scythe 6y agoA much more durable change is the shift in social norms towards intoxicated driving being unacceptable under any circumstances. Just 40 years ago the DUI threshold was .15 and even then the penalty was light. Today it's .08 with talk of lowering it, penalties have been ramped up multiple times, and nobody sees DUI enforcement as a technicality. That's a pretty big opportunity for any firm that gets you home from the club at 3 AM.
- ghaff 6y agoI don't disagree with that but is the shift in drunk driving norms really enough to shift from owning cars to taking taxis? In my experience, most people don't primarily use cars to go out drinking--including among those in a position to just take Ubers instead.
- beisner 6y agoThey’ll have a major share in Aurora after the fact. They just are focusing on their core competencies, I assume. To compete in the self driving space, you need to have 1) a crap ton of money and 2) the patience to wait 10 years before you see any ROI. Uber is not structured to do that this late in the game. They’ll probably get a preferred partnership for licensing the tech once it rolls out, if Uber still exists in 10 years.
- zerocrates 6y agoDo they get ROI on rides or Eats? I was under the impression they were still pretty substantially subsidizing prices on those, though maybe that's just out of date information.
- pishpash 6y agoIt's not about subsidies as a business model so much as a war of capital attrition with weaker competitors, which is necessarily not endless.
- jessaustin 6y agoCurrent competitors may go out of business. If there really is a niche, however, seeing off current competitors won't be the end of it. There's always someone else, who may not have burned so much VC. The other option is that there will never be a sustainable business here.
- pishpash 6y agoIf so then why would VC's fund new competitors? The answer is they would not. VC's may throw their free money at new unquantifiable opportunities, but for this niche the financials will have become well known. In other words there would be less risk premium.
- jessaustin 6y ago
- paxys 6y agoThat claim was infinitely repeated on internet message boards but never acknowledged by the company or taken seriously in the industry or by investors. That entire division was an expensive moonshot. Uber's core strategy and valuation have always been rooted in being a taxi company with human drivers.
- asdff 6y agoSo whats the big plan to lower overhead on rides? I looked up their last quarter and it was billions lost yet again. This doesn't seem sustainable, just shoveling money into the furnace quarter after quarter like that.
- alejohausner 6y agoUber's true mission is a charitable effort by SV capitalists to subsidize the cost of taxi rides. Of course they're not meant to make money. How silly to think so!
- astrange 6y agoIt’s actually charity by SoftBank and Saudi Arabia at this point, but yes, this is what it actually seems to be. Amazon is also an investor charity to give us all one day shipping since the investors show no sign of wanting profit margins above 1%.
- AnimalMuppet 6y agoThey can sustain it as long as investors are willing to shovel money into Uber... and no longer.
- somethoughts 6y agoThe big plan is a war of attrition to capture a monopoly/duopoly status for taxi services within a given country. Acquire all competing taxi companies or price them out of business.Once that is done, raise prices. If competition arises, lower prices again until they go away. In some senses, its just like Amazon.
- _fat_santa 6y agoThe headline is a little decieving. Though Uber sold their self-driving division to Aurora, Uber is taking a stake in the company so it seems like a partnership.
- necubi 6y agoNo, that was never the strategy, no matter how many times people on HN claimed it was. Both Uber and Lyft are aiming for profitability next year with human drivers. (Disclaimer, I work for Lyft but this has been said in public many, many times by both companies.)
- esotericimpl 6y agoexcept this is impossible: https://www.nakedcapitalism.com/2020/08/hubert-horan-can-uber-ever-deliver-part-twenty-three-ubers-already-hopelessly-unprofitable-economics-take-a-major-coronavirus-hit.html https://www.nakedcapitalism.com/2020/08/hubert-horan-can-ube...
- dcolkitt 6y agoThat might not be their internal strategy, but that's pretty much the investment thesis of every Uber bull buying their stock at $100 billion market cap.
- ghaff 6y agoI actually poked into this a bit out of curiosity. Without doing deeper research than I have any interest in, indeed Kalanick never seems to have publicly said anything like "We are so f'ed without self-driving" (which would be a truly idiotic thing to do) and even made some references to the length of the transition. But he also made reference to things like Uber's growth being limited until Uber was cheaper than owning a car and a ton of pubs seem to have "independently" reached the opinion that this was necessary. And I also don't see a lot of fervent denials from Uber in this regard.
- marcinzm 6y ago>And I also don't see a lot of fervent denials from Uber in this regard. Why would there be? If it's helping their stock price or even neutral to it then why deny it and risk it going down?
- 6y ago
- cactus2093 6y agoClearly not since they're still sitting at a $95B market cap after this news. Or perhaps just nobody else has realized this, so why don't you short the stock?
- onion2k 6y agoUber don't need to invent self-driving themselves so long as whoever does invent self-driving cars sells them on the free market. Uber has a strong brand and loyal customers, and they could make out like bandits even if they have to buy the tech from someone else. Their real problem is if some other company perfects self-driving cars and doesn't sell them. Perhaps Uber have decided that's unlikely, either because no one will or because a company that isn't looking at ride-sharing will.
- lozaning 6y agoUber has a strong network effect, but I don't think there's actually much brand loyalty.
- saagarjha 6y agoPerhaps negative brand loyalty, to be honest.
- ghaff 6y agoI'm not sure how strong a network effect other than in a local area. I'd be pretty sure that (in normal times) their primary market isn't business travelers flitting from SF to NYC to London but residents of $CITY using Uber Pool for commuting or Uber to go out with friends on a night out to a bar.
- krrrh 6y agoContrary to that, local profitable markets like Manhattan have had significant entrants eat away at Uber’s market share with companies like Juno scooping up the best customers and drivers. The same thing happened in many cities in the early 20th century before streetcar operators managed to get jitney cabs (the unlicensed pool taxis of their day) banned because too many teens would borrow the family car after school and drive in front of streetcars on profitable lines and scoop riders for nickels instead of dimes. Uber and Lyft have a de facto duopoly amongst those hopping off planes because it’s hard to know that there are any other local options available.
- SilasX 6y agoI always considered that a dubious business model. It's outside of Uber's core competence, and it won't lead to superprofits/a moat for very long, since they'll have competitors. Sure, it lowers their costs, but once a second (third, etc) competitor has SDCs, Uber will be able to charge a lot less as well, because competitors will have lower costs too. It's not the golden ticket to profitability. I've been long hoping, for their own sake, that they'd sell off the SDC division, since it was hurting their balance sheet anyway. Glad they've seen the light.
- iainmerrick 6y agoEven if that were the case, selling your self-driving car unit might still make sense. If you assume that self-driving cars eventually become a commodity, Uber and Lyft could just buy them rather than develop the tech in-house. The key strategic bit of the landscape to own would be the app that everyone uses to book them.
- wavefunction 6y agoMaybe they've decided that Uber's future lies in letting someone else solve that hard problem of self-driving cars and Uber figuring out how to line up the capital to lease self-driving cars from that winner.
- ape4 6y agoIt doesn't have to be developed by them. Just like the don't make their own cars. If some car company makes a reliable level-5 car Uber can just offer a deal with owners of those cars.
- israrkhan 6y agoNo matter who makes the driverless cars, they will still need a network to run those cars on. I think Uber/Lyft area better off allowing thirdparty self-driving cars on their network. Waymo on other hand is trying to build its own network, but that is going to be extremely expensive proposition.
- michaelt 6y agoIMHO being the only one with self-driving car technology would be a much better moat than having 'a network' London has Uber, Bolt, Kapten, Ola, Viavan, Hailo, Wheely, Xoox and that's just a single city - so the ride-hailing-app tech isn't a moat. A self-driving-car business doesn't need any drivers on board, so driver recruitment isn't a moat. And Google already have Google Maps on a big fraction of phones, so app installation is scarcely a moat. Of course Google will have plenty of opportunities to shoot themselves in the feet, so it's certainly not a done deal.
- beerandt 6y agoYou don't need to own the tech to use it, anymore than they would need to be manufacturing the cars they're using. OR: they finally accepted the fact that self-driving cars aren't realistically happening anytime soon, at least to the level needed to entirely eliminate the driver cost. That, and they probably realize they have enough market share at this point to be able to (long-term) raise prices instead of lower expenses.
- freyir 6y agoKalanick said that self-driving was “existential” to the company. But in context, he didn’t mean Uber needed self-driving to exist. He meant Uber can’t be left out if self-driving becomes a reality. In that sense, the sale seems pessimistic. They no longer see self-driving on the horizon, or they aren’t on track to deliver the technology themselves.
- jocker12 6y agoWhen you look at the numbers, you actually see how Uber actually paid Aurora to take ATG.