23 ms·

End of the line for Uber?

308 points by Daishiman 5y ago

jffry 5y ago
A much better link, from the second tweet in the chain, is https://pluralistic.net/2021/08/10/unter/#bezzle-no-more https://pluralistic.net/2021/08/10/unter/#bezzle-no-more This is the same thing but all put on one page instead of broken into a long series of tweets.
- dang 5y ago
  Changed from https://twitter.com/doctorow/status/1425139419195998213 https://twitter.com/doctorow/status/1425139419195998213. Thanks!
- Kiro 5y ago
  I must be the only one who prefer to read it as short tweets.
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deanCommie 5y ago
I find the tone of the article a little uncharitable. Innovation is full of scenarios where visionary companies thought they could offer something at a loss, and then eventual improvements to technology/logistics/supply chain/process/etc would make the concept profitable. Whether it's Amazon offering free shipping, or Google offering OUTLANDISH (for the time) storage volumes for Gmail. I can definitely imagine that Uber's leadership genuinely believed that various economies of scale or technological innovations would allow them to be fully profitable in the long run. Same for Self-driving cars: When Uber was investing billions into it, it really looked like they were at the tip of the spear of innovation together with Google. People felt that Uber was actually BETTER Positioned for introducing self-driving technology than Google because they were focusing on adding extensions to existing cars, and they already had a built-in customer base using them for ordering point-to-point rides (Whereas Google/Waymo had to build out those capabilities themselves since) This is where my charity ends. Uber has not treated their drivers because it considers them completely fungible and replaceable. Everything to do with Public Transit is completely bang on - it's ludicrous to even imagine Uber participating here. And I buy the overall conclusion - in the long run we will look back at Uber and consider it a net loss for humanity's progress. But there is no getting around the pure delight of the original user experience - irrespective of pricing. And I'm willing to bet that the leadership did not consider it a con from the beginning, they really thought they could make a profitable business from this in the long run.
- Spooky23 5y ago
  Doctorow’s schtick is to be a snarky know it all. I worked in government and started doing services procurements years ago. When I first started doing that, I was really taken aback by the cynicism of the procurement officers and attorneys. Then I did two or three engagements… and it makes sense. Similarly, I experienced the delight aspect on a trip where I paid $20 for a ride in a Mercedes SUV in Baltimore that would have been a $30 cab ride. The next time I used Uber, 5 years later, it was a 10 year old Odyssey with an Afghan guy who was illegally sub-letting somebody’s Uber Driver account, and it cost $35 for a $20 cab ride. End of the day, all of these stories boil down the same thing. Commodity services are either luxury at a premium, or minimum viable level of delivery at a low price.
  - pwdisswordfish0 5y ago
    > an Afghan guy Why is that relevant?
    - Spooky23 5y ago
      It’s pretty typical for recent immigrants to be exploited with grifty gigs like that.
- Daishiman 5y ago
  > But there is no getting around the pure delight of the original user experience - irrespective of pricing. And I'm willing to bet that the leadership did not consider it a con from the beginning, they really thought they could make a profitable business from this in the long run. I have no doubt about the same. But the point isn't about what Uber was; it's about what Uber became, and how their over-promises turned into outrageous claims that snowballed into a completely unsustainable business. And while I do respect the spirit of the original app being a serious improvement over prior experience, truth is that nowadays even traditional banks and even government apps can be found that are just high-quality and show that you don't need a cutting-edge startup to have good service. I also believe that other entrepreneurs would have been able to plod a similar path without ripping off investors or mismanaging finances.
searealist 5y ago
> it also victimized workers, riders, cities and restaurants > Uber's founding CEO Travis Kalanick - a fratty bro who created a culture of dishonesty, physical and sexual harassment and abuse, and criminality. > It's true! Khosrowshahi is a better human being than Kalanick (who, to be clear, is one of the worst people alive today). > But the problem with Uber wasn't that just that it was a rapey, crimey, crooked grift - the OTHER problem with Uber is that it is doomed, and only exists today because of accounting fraud. Khosrowshahi didn't fix that part. He's not going to fix that part. Clearly the author hates Uber so much that you cant really trust any opinion they have of their financials. You can tell this because they aren't attacking ride sharing as a whole or ever mentioning Lyft.
- Daishiman 5y ago
  They attacked the models of similar ridesharing services in Southeast Asia. The whole model in itself is a con and the author isn't shying away from that; he's just demonstrating that the biggest player is a particularly egregious offender. And sorry, but the fact that he has strong opinions doesn't mean that they're not backed by facts. You can be impartial and have strong opinions if the opinions are the obvious, logical conclusion that all the evidence brings out. If anything, I applaud the author for not pretending the modern media BS narrative of theres-two-sides-to-the-story, as if they had equal weight.
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  - searealist 5y ago
    > They attacked the models of similar ridesharing services in Southeast Asia. Not really. Nothing more than mentioning keeping them on the book was a financial trick. > The whole model in itself is a con and the author isn't shying away from that; he's just demonstrating that the biggest player is a particularly egregious offender. I'm not sure what you mean when you say the author doesn't shy away from it. Not in this article. This only attacks Uber. > And sorry, but the fact that he has strong opinions doesn't mean that they're not backed by facts. You can be impartial and have strong opinions if the opinions are the obvious, logical conclusion that all the evidence brings out. When you adopt a tone of preaching to the choir don't be surprised when people think you are doing just that. > If anything, I applaud the author for not pretending the modern media BS narrative of theres-two-sides-to-the-story, as if they had equal weight. Do you also wish the modern media called companies "rapey" in articles meant to criticize financials?
northerdome 5y ago
Uber operates in almost every major US city today. It has overcome years of predictions it would fail. Yet I still can get an Uber in minutes almost anywhere in the country. Will it get more expensive? Probably. Is it a replacement for car ownership or transit? Definitely not. But Uber will live on. It's good enough to ensure sizable marketshare for the long term.
- nabla9 5y ago
  With -30% operating margin and -$2B operating cash flow it will not live on.
  - mypalmike 5y ago
    It's not a problem! I predict flooz will make a comeback and with some clever accounting, those negative dollar amounts can be changed into positive flooz.
- disgruntledphd2 5y ago
  How do you see them making a profit? Like, if you need to exclude stock based compensation (amongst other things) from your adjusted EBITDA metric, then you have problems with your business model.
  - djrogers 5y ago
    > How do you see them making a profit? By raising prices. There is a point at which the market will bear the cost and Uber can make a profit. It won’t be as cheap as it is now, and likely will be down in scale/volume, but that point does exist - the existence of taxis and all of their medallion cabal bs over the years proves it.
    - timr 5y ago
      Uber is already dramatically more expensive in NYC. It's to the point where, most of the time, it is smarter/faster/better to take a taxi, if you're paying attention. Most people still look at Uber first (if only because of muscle memory), but multiple times in the last few months I've watched someone do it and recoil from the sticker shock. Just this weekend, someone I knew was quoted $130 to get from Cobble Hill to the UES. Even if you're almost completely price-insensitive, that's a trip that can be made in 45 minutes (~about the same as driving) for $3 in subway fare. I don't know what's going on with Uber in the rest of the world, but here, there can't possibly be any more margin to consume.
CPLX 5y ago
The post certainly has a plausible and understandable narrative, but I have no insight into Uber's financials. I do however use Uber and Lyft constantly, all over the country and world, and the contrast between the services today and a a year or two ago is stark. Pricing is often 4-5x what I used to expect for the same trip, sometimes with wait times of 30-40 minutes, even in non-peak times in central business districts. As a regular user who just happened to be in 9 different cities over the past three weeks (I'm in the conference business) it's really clear something really severe is going on with these companies right now and their service level is in free fall.
- tunesmith 5y ago
  We noticed it while traveling recently, too - same family-visit trip we've made several times before, but this time there every single leg had at least one driver cancellation, sometimes two, and very inaccurate estimates of wait time.
- MaxfordAndSons 5y ago
  I noticed it in a large tourist-destination US city recently. You literally could not get an Uber from the airport (which is not at all far from the city center). Instead, drivers have formed an informal co-op, negotiating prices and dispatching in person or by phone. Basically an uncredentialed taxi service, that the city was looking the other way on because someone has to do it, and people still won't use the traditional taxis out of a habit - they go to the ride share pickup area, try to call an Uber or Lyft, can't, and then go to the grey market option out of desperation.
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cameronh90 5y ago
So according to this, Uber is ripping off the drivers, riders and investors - with no path to profitability. So where is the money going? Is the claim that it's just so poorly managed that it's all being blown on overpriced tech salaries? Incidentally, how is it that hyperscale tech companies such as Uber and Deliveroo are struggling to turn a profit on proven business models, while charging more to both the customer and provider? Isn't tech and scale meant to make it cheaper?
- disgruntledphd2 5y ago
  Because money is so cheap, that investors are literally burning cash up in search of growth. Uber has never made any sense to me as a business (since 2016), and it's crazy how long it's lasted.
  - reidjs 5y ago
    If you’ve ever not owned a car and lived somewhere with poor public transport, Uber makes a lot of sense. It sucked having to rely on friends, family, and especially yellow cabs. I’m not saying Uber is the best company or business model, but ride sharing makes total business sense to me.
    - nyghtly 5y ago
      Uber makes sense to riders at subsidized prices, but it stops making sense once they start charging what it actually costs to provide that service. The reason we don't take taxis everywhere is because they're expensive and infrequent. Creating an app to handle dispatch didn't magically change this reality. The hardest parts of operating a taxi service (maintaining a fleet of vehicles, hiring and retaining drivers) have not gotten any easier, except in the case of Prop 22, which is an unfair advantage for Uber compared to other transportation providers.
      - reidjs 5y ago
        Even if the prices doubled overnight it would still make sense for my main uses: an on-demand designated driver or rides to/from the airport. That said, I realize I'm financially better off than many people and would prefer to have safe, affordable, and widespread public transit.
joshstrange 5y ago
> I live in Burbank, where Ubers were never more than 5 minutes away. Now, a 30 minute wait is common – and the fare is comparable to the licensed taxi company, which is literally one app away from achieving feature parity with Uber. I'm not an Uber apologist in the slightest but why is it that apps for the alternatives still suck? In a similar vein a delivery co-op app launched in my area semi-recently and I tried their app and it's absolute garbage. I've done minor app development and while I'm not great at it, I don't think you need millions (or billions in Uber's case) of dollars to create something on-par. Honestly you could pair me with a good designer and for the price of 1 year of pay I have doubt it could be built.
- Spooky23 5y ago
  Because they don’t add value. Uber has a thousand engineers. Joe’s Taxi has zero. The people who are focused on the app crap use Uber and avoid the cab that is 10 feet away. The restaurant crap is even more ridiculous. It literally takes the customer 5x more time to order a pizza on an app. I’ll call and say “Hi, I’m Spooky23, two cheese pizza and garlic knots” and I’m done.
  - ceejayoz 5y ago
    > The restaurant crap is even more ridiculous. It literally takes the customer 5x more time to order a pizza on an app. I’ll call and say “Hi, I’m Spooky23, two cheese pizza and garlic knots” and I’m done. This depends heavily on the restaurant. (The app potentially wins, too, if have a recurring order saved to your favorites. My family tends to have the same fairly complex sushi order and I can re-order it in a click.)
    - Spooky23 5y ago
      Agreed. There are def good use cases. The sushi one is a good one. Starbucks is another great example of where it just works. But I would say many places, esp fast/casual service places are just trying to shave some labor and make it difficult to not buy combo meals, etc.
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Animats 5y ago
Well, yes. Self-driving is how they got Softbank to convince the Saudi sovereign wealth fund to invest. Also, the Saudis have an interest in promoting fuel powered vehicle usage.
srean 5y ago
I have often wondered if there are easy ways to invest easily on a 'patch'ed index fund, for example, NASDAQ_100 sans Uber. Of course one can buy the individual stocks in the patched index in the same proportions but that's going to be very expensive in terms of transaction costs (and general headache). @danhak For some reason I cant respond to you. I had put/call options in mind but shorting/longing would work.
- keyanp 5y ago
  The S&P 500 index already meets your needs. In order to qualify for the index a company must have positive earnings. This disqualifies a bunch of tech companies that may or may not ever succeed financially... See https://stockmarketmba.com/largeststocksnotinthesp500.php https://stockmarketmba.com/largeststocksnotinthesp500.php
  - srean 5y ago
    Ah thanks, I didnt realize S&P 500 had such a filter.
- deleted 5y ago
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RONROC 5y ago
Another compelling argument as to why the Silicon Valley experiment has failed so spectacularly (for most but not you) Uber is the Chernobyl of corporate malfeasance. Just a steaming pile of shit, rotten from top to bottom.
- dang 5y ago
  Ok, but please don't break the site guidelines like this. Maybe you don't owe Uber better, but you owe this community better if you're participating in it. "Please don't fulminate." "When disagreeing, please reply to the argument instead of calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be shortened to '1 + 1 is 2, not 3." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - RONROC 5y ago
    Sorry dang! Could of definitely left that last sentence out.
    - dang 5y ago
      Appreciated!
zby 5y ago
Oh - why it always needs to be so one-sided? When we don't like something than everything in the article needs to be a condemnation if we like the subject than there is only prise. In this particular article: if Uber is losing money by subsidising rides - then people get cheaper rides than they could otherwise have. But that also article suggests that Uber victimizes riders. That does not compute. Yes - it is anticompetitive and possibly without Uber we would have something else that could potentially be better - but also without it we would not have all those cheap rides and all those valuable things that the riders did because of the cheap transportation. That all subsidising in bad in the sense of disrupting normal market forces - but it is a stretch to declare the riders to be victims here.
- runawaybottle 5y ago
  The riders are the only ones that won hand over fist. I can get a cab anywhere within minutes. This used to not be the case. Will Uber be profitable? I don’t really care, they improved society, period.
  - oarsinsync 5y ago
    > I can get a cab anywhere within minutes. This used to not be the case... they improved society, period. They added an extra convenience to your life, and made your life better. This may or may not be true for a lot of passengers. It may or may not be true for a lot of drivers. It’s a stretch to call that an improvement to society, when the only example cited is a minor convenience improvement, that only the upper 50% of the society you live in can afford to use regularly.
    - zanellato19 5y ago
      On the long run, they helped put laws in place that eroded even more labor power, they setback public transit, they increased traffic in a lot of places, because why ride with friends when you can take an Uber? They added a small convenience to a bunch of peoples lives, but they certainly didn't make society better.
daxfohl 5y ago
So where exactly do the financials go south? How can taxi services survive but Uber can't? Does the same logic apply to airbnb vs hotels?
- nyghtly 5y ago
  Taxis charge more. And if Uber had their way, then all the taxi companies would go out of business because Uber is so much cheaper. And then Uber would raise their prices up to what the taxi companies were charging. It worked for WalMart. It worked for Amazon. Unfortunately for Uber, I think they may have missed their window. People aren't starry-eyed about tech like they used to be.
mysterEFrank 5y ago
this is so biased it has no place on hacker news
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Apocryphon 5y ago
> Adjusted EBITDA profitability Hey, isn’t that what WeWork was being valued with?
okareaman 5y ago
I get the same vibe from Uber (which I outlined here: https://news.ycombinator.com/item?id=27788509 https://news.ycombinator.com/item?id=27788509) as I did from working for an internet company before the dot com bubble burst that was all show to raise money from investors.
neonate 5y ago
What I don't understand about the "Uber can never be profitable" argument is, why can't they just raise prices until they're no longer selling at a loss? If the answer to that is, "because then demand would die", why doesn't that apply to taxis? Taxis make money. Why can't a better (in many people's opinion) service, with better tech, do at least that well? Setting aside the other reasons to dislike Uber, there is obviously a valuable product there. I get that it has been subsidized by VC dollars in a land grab, etc., but saying it can never be profitable is saying it can never find a fair market value, and that doesn't make sense to me. What am I missing?
- ceejayoz 5y ago
  Sure, the "sell dollars for $0.50" company can become profitable by raising prices to $1.10 after they wipe out the competitor who was selling for $1.00, but is that a good end result?
  - neonate 5y ago
    It's not, but that's a different argument.
- api 5y ago
  Maybe the company as it stands is so inefficient and cash burning that it can't actually compete with taxis. In that case a slimmed down Uber may be able to do so, but that would require a lot of blood to flow inside the company.
  - neonate 5y ago
    If the argument is not "Uber can never be profitable" but "Uber can never be profitable without a brutal corporate reorg", that's more plausible. But it's also a much weaker claim, no? Brutal corporate reorgs are a thing and I suppose that sometimes they even work.
- thebigman433 5y ago
  > why doesn't that apply to taxis? Taxis make money. Wouldnt it "just" be because of the massive overhead that Uber has with the software engineers, support staff, execs, etc?
underseacables 5y ago
Uber, Lyft, it seems regulators are intent on pushing up prices. Maybe to bring back taxis?
nice_byte 5y ago
i don't understand. transportation and food service in the era before uber was literal shit. remember, if you couldn't use your own car, you had to subject yourself to horrible smelly "licensed" taxis with drivers that barely know the city, or go on a bus with some meth head tweaking out in the back. you had to get yourself up and _physically go_ to a restaurant if you didn't have time to cook yourself. now you can get a fast safe ride at any time of day and get the meal of your choice without having to go and sit around in the same room with a bunch of other losers like you. all at a moment's notice, through a nice convenient interface. and people have the gall to complain about this? UPD: to be clear - it doesn't matter that uber subsidizes rides/deliveries. they could stop doing that and jack up the price, but the alternatives are so dreadful that i doubt it would make me stop using them.
- nyghtly 5y ago
  So you're saying that the only reason you didn't take a taxi everywhere before Uber was because the drivers are smelly? Well maybe you have money to burn, but most other people don't. If Uber charged what it really costs to operate their services, then you would see a massive drop in riders. It doesn't matter how much less smelly you think they are compared to taxi drivers.
  - nice_byte 5y ago
    pretty much yes. i used to live carless, and would need late rides on a regular basis. i was taking the fancy black lincolns in the days before uberX was introduced and pay ridiculous prices for them because uber was the only game in town - taxi services didn't need my money. it's not just that they were smelly or whatever - they were literally unavailable. quality of service matters. having to sit in a filthy car - if you can even get a hold of it - and help the driver navigate is not good quality service. there's demand for quick, convenient quality transportation, and uber fills it.
  - kelnos 5y ago
    Not the parent you're responding too, but -- yes, exactly this. I rarely took taxis pre-Uber because the drivers were surly, the pricing difficult to predict, cars impossible to hail, and dispatchers (if you could even reach them on the phone) useless. If you called for one and they actually agreed to send you one, you'd be waiting at least 20 minutes, and often after 40 minutes you'd finally realize they were never coming. Oh, and don't forget the frequent "sorry, the credit card machine is broken" bullshit lie, and the annoying fumbling for cash and getting change. I'm sure I don't need to enumerate how Uber/Lyft fixed all of these problems nearly perfectly. Sure, many cities have apps for their taxi services now, but they're nearly universally inferior and don't fix all of these problems, at least not to my satisfaction. Realistically, though, not using Uber for me means driving everywhere. Including the stress of traffic, the stress of finding parking, the stress of wondering if someone is going to smash my car windows, and the stress of ensuring I'm sober enough to drive when I want to go back home. I'll pay quite a bit to avoid that stress. I get that there are some people who won't, or can't, but all that means is that Uber's addressable market will be smaller when they charge enough to be profitable.
1helloworld1 5y ago
I don't know why seemingly knowledgeable people like the author keep spewing bullshit about drivers losing money. I live in an immigrant community in NYC. Pretty much every other person in this community is a Uber driver. Some are very industrious and do not mind working long hours or working on weekends. Making more than 100k per year (after all expenses) is not unheard of.
- Daishiman 5y ago
  How many working hours are they doing for that? How much will their cars last? Car rental companies keep cars generally for a year, are they factoring that in?
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diebeforei485 5y ago
At some level, why does it matter? They didn't make drivers buy useless medallions or anything like that. Companies fail all the time, some of them fail early, others may fail at a late stage.
- ppeetteerr 5y ago
  Medallions had value in that they were seemingly protected by the municipality that issued it. Prior to Uber, a medallion was an asset that appreciated in value.
  - diebeforei485 5y ago
    They didn't have any intrinsic value, plus municipalities and some large institutional investors were the only people you could sell a medallion to (other than taxi drivers/owners). On the other hand, Uber drivers can find any buyer for their used cars (which have, in fact, gone up in value since the pandemic began).
subsubzero 5y ago
Uber can make money but it won't be pretty, some steps in order to achieve profitability: #1 Get out of all expensive metro areas(corporate offices) and embrace a full remote workforce.(sublease commercial buildings where applicable) #2 Raise rideshare fees, reduce driver income. #3 Retreat from un-profitable regions for ride-hailing, ie. moving out of rural markets. #4 Reduce engineering workforce that isn't focused on running the business. #5 Get out of the food delivery business, the margins are too small for the engineering/marketing effort.
stvswn 5y ago
The author is mixing political arguments related to public transit funding, unionization and classification of workers with an analysis of Uber's financials and strategy, and I think it weakens the argument. Travis understood that Uber doesn't deserve its multiple without self-driving cars, he thought it was such an existential problem that he conspired to launder trade secrets from Google in order to jumpstart his program. His reasoning, I think, was that Uber's business model precludes it from being the exclusive platform for drivers (because of their IC status), meaning that he could never raise prices past the point where it entices a new competitor, nor can he lower payouts to the point where drivers abandon Uber. Uber has to do the heavy lifting to convince local jurisdictions to allow ridesharing and then any newcomer can swoop in and compete if Uber gets too greedy. Uber's greatest asset is that it's first and has a massive userbase, but for a cheaper ride many would compare prices in a new app without much thought. This doesn't mean that it's not very helpful to consumers to have on demand ride apps! I'm glad they exist. I live in suburbia and the other day I had to travel to a train station that was about 20 miles away. Public transit would have meant an hour and 2 bus transfers, Uber got me there in 25 minutes for the same cost. Lots of criticism of Uber compares it to dense urban areas with a taxi fleet, but there weren't taxis here before Uber, there were only car services at much higher prices. From a consumer standpoint, we should be happy that these platforms exist at relatively low cost, we end up getting rides via a very convenient app for only a 25% markup on what the driver grosses per ride (less including tip) -- and that middleman fee is likely to continue to get squeezed. The author presumably gets that they are popular because their very popularity seems to be an issue -- it's argued that the public is less likely to want to invest in public transit when Uber is available. One can't also argue that the general public is ditching Uber. It's sort of a Yogi Berra argument -- "That place is so crowded no one goes there anymore."
gentschev 5y ago
Ride sharing as a whole isn't going away. It's better than calling a cab or whatever used to be. But I could see Uber and Lyft each ending up as $5-10 B software layers on top of driving, not $50-100 B ones.
sharadov 5y ago
The pandemic was the nail in the coffin for Uber. How is Lyft doing?
- spats1990 5y ago
  the report cory refers to covers lyft as well. https://www.nakedcapitalism.com/2021/08/hubert-horan-can-uber-ever-deliver-part-twenty-six-with-no-hope-of-real-profits-uber-and-lyft-double-down-on-fake-profit-metrics.html https://www.nakedcapitalism.com/2021/08/hubert-horan-can-ube... i submitted it before i realised this "end of the line" post was on the front page.
sharadov 5y ago
They can't be profitable even after taking 50% of the driver's earnings! They deserve to die.
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toxicFork 5y ago
I have a theory that Uber's making a killing, but making sure that they don't look profitable on paper so that they don't have to pay taxes. I haven't done any research and I don't really care, it's just fun to consider.
- dyingkneepad 5y ago
  The CEO and other execs are definitely making a killing out of it. That's all that matters. If the ship sinks they'll gladly jump out of it and move on to the next thing.
99_00 5y ago
People took out loans to buy expensive taxi licences and were financially ruined by this speculation. And young professionals cheered the process on.
spywaregorilla 5y ago
I think his article is pretty poor and just has a bone to pick, even if I agree with the overall thesis. Yes, Uber is losing a lot of money. But no, it's not broke, and it's not going to be broke for probably a number of years still. I thought this linked source was a bit better: https://www.nakedcapitalism.com/2021/08/hubert-horan-can-uber-ever-deliver-part-twenty-six-with-no-hope-of-real-profits-uber-and-lyft-double-down-on-fake-profit-metrics.html https://www.nakedcapitalism.com/2021/08/hubert-horan-can-ube...
kelnos 5y ago
> I live in Burbank, where Ubers were never more than 5 minutes away. Now, a 30 minute wait is common – and the fare is comparable to the licensed taxi company, which is literally one app away from achieving feature parity with Uber. This sounds like the typical arrogant software developer declaring that they could build someone else's entire business during a weekend with a text editor. "Literally one app away" is exactly what was wrong with the taxi business before Uber and Lyft. And yet with 10 years to catch up, taxi apps -- many of them built specifically to try to compete with Uber/Lyft -- still suck.
- CogitoCogito 5y ago
  My app of choice for non-Uber/Lyft is the phone app. Usually works fine for me.
paxys 5y ago
I have been reading some version of this article for 10 years now. Yet Uber and Lyft and the entire "sharing" economy is surviving and thriving. Reading this article you'd be convinced that Uber is going to end tomorrow and all the investors who collectively value it at $80B are idiots.
slaw 5y ago
DiDi operates in Brazil under name 99. It is usually little bit cheaper for customer than Uber. At the same time DiDi pays more to the driver. How is DiDi profitable and Uber not? * Source mine, I talked to drivers and used both apps.
puranjay 5y ago
If there is ever a proper market crash, I feel that most of these startups built on endless VC-supplied liquidity and unfavorable unit economics will just wither away.
atlgator 5y ago
I really got used to ordering DoorDash during the pandemic. I hope they/Lyft don't follow Uber.
dzonga 5y ago
taxis don't have to be expensive. yeah, in NY and other US cities they're due to artificial constraints. currently, in Taipei TW. taxis dirt cheap. one thing that helps is public transport is everywhere and hence taxis have to be compete. so yeah, for taxis to be available cheaply, public transit has to be everywhere which we know in the US won't happen due to suburban sprawl.
bern4444 5y ago
One question I have is, what is Uber doing with all their engineers? Most of us are engineers as well. So we all understand maintenance, monitoring, feature development, tech debt etc. Technology products rarely can just be 'let alone' and left operating successfully. But they have over 2,000 engineers. That's a massive amount. Are there new features in development? New services? New capabilities? From a consumer perspective I haven't see anything new in a while. Are they all focused on growth in new cities, towns, and countries supporting local peculiarities? Is Uber going through a rewrite to align on a technology stack to support future features? What are those features? My old job was building out a (new) streaming service, so it was all about feature development, launching in new countries, supporting local payment methods etc. Now I work on building APIs for a different company with which other developers can integrate. Both are focused on building and maintaining new and existing features as well as growth. Just what the heck is Uber doing with its 2,000 engineers?
- seoulbran 5y ago
  I've been curious about that as well
- dave5104 5y ago
  Here's a comment from awhile back that answers your question: https://news.ycombinator.com/item?id=25373462 https://news.ycombinator.com/item?id=25373462
  - bern4444 5y ago
    Wow! What a wild ride. Thanks for linking to that story, it's fascinating to read about these types of experiences. My former role was in web development, I've always been stunned that native apps can get away with 100+mb sizes and yet still people complain about a 3mb JS bundle. My overall reaction is, web development seems like a MUCH better environment to code than app development. Especially with the ability to arbitrarily split and chunk JS. This especially seems useful to separate out regional features so only those who need it download it. And of course, any code can be cached so users don't have to re-download it.
  - 5y ago
pie_flavor 5y ago
One thing I don't like about this article is how much it thinks I should care about this for moral reasons. Is Uber fleecing me? No, they're fleecing investors. Hilarious, investors are chumps! Meanwhile, I'm getting the service I'm paying for, and it works flippin' great. Better than what came before by a mile. That California law was a long time coming, and everything else is temporary and would revert if Uber kicked it. Until that happens, it's a cautionary tale of why you never trust Silicon Valley investors, and a really great taxi service.
- bellyfullofbac 5y ago
  The 6th IPCC report came out yesterday. If I were an activist I'd start some social media campaign to demand better public transport and to tell people how Uber is contributing to burning the planet. So yeah, maybe that's a reason why you should care: Uber is a hindrance to sustainable public transport.
jet_32951 5y ago
Whatever one says about uber's bad and sleazy tactics I will miss them. Not in SF or where I live now, but in CDMX. Taxis in CDMX are risky: too many people get fooled and wind up draining their funds at gunpoint. Never happened with Uber; but also never happened when your lodgings called a taxi for you.
hamburgerwah 5y ago
I can't say how precisely the delineation of Uber's alleged accounting schemes are true but all of the same can be said for public transit such as light rail. Los angeles for example loses 2 billion per year on their metro (before covid) not including the 27 billion overall (non inflation adjusted) that was poured into it's construction. It would probably be cheaper to pay for the Uber fares of all the people that use the metro to use Uber instead. The author has an obvious political worldview and must fit all information rigidly into it. Edit: NYC subway loses 7 billion a year before covid when you remove it's tax revenue (government subsidy).
- ryan_lane 5y ago
  Public services don't need to make money. What we spend on those services isn't "losing money", it's spending tax money on a service that benefits all of us. Train (and bus) lines reduce traffic, cost less, and fuel commerce along their routes. Your estimate of what's being "lost" doesn't account for the economic gains that come along with public transport, which is estimated at 4x the cost of investment: https://www.apta.com/research-technical-resources/economic-impact-of-public-transit/ https://www.apta.com/research-technical-resources/economic-i... Spending that by funneling it into a private service (privatization) usually results in worse service at a higher cost. Specifically funding Uber reenforces building the city out for cars, rather than for people, making it more expensive to properly fund public transportation.
- supertrope 5y ago
  Public transportation is heavily subsidized. But liquidating it because it’s not profitable would cause extreme traffic congestion. The city would cease to function. Buses and trains are a multiplier for capacity. Private transportation is also heavily subsidized. Usually it’s in indirect ways like the government paying for roads and airports, mandating parking minimums, and keeping driver licensing lax. There’s rarely direct budget line items to keep fares low. But make no mistake marshaling capital and land are huge subsidies.
bertttles 5y ago
One can only hope
rkwasny 5y ago
Well, Uber created a lot of value for initial shareholders and riders, now even if it dies mutual funds and ETFs will foot the bill.
Reubend 5y ago
This is such a ridiculous characterization - it takes many negative consequences of Uber's business (which are admittedly real effects of its operations) and then uses exaggerated language to demonize them. Did cities drop the ball on improving public transport? Or did, as the article claims, Uber cause a "lost decade of transit activism"? Did restaurants fail to stay profitable during the biggest pandemic of modern history? Or maybe "thousands of locally owned restaurants will not survive the pandemic thanks to [Uber's] parasitic conduct"? Is Uber's former CEO a disgraced businessman with a sex harassment scandal and some shady political ties? Or is he "one of the worst people alive today", accompanying brutal dictators, human traffickers, and genocidal warlords? I would really prefer if the author just described all the reasons why they think Uber is a bad company, without acting like it's destroying society. There's plenty of bad stuff to talk about, so there's no need to exaggerate here.
- Reubend 5y ago
  I want to add another note: there's no evidence for this piece's assertion that they knew self driving wouldn't work out. There are still many large companies investing in this area - Waymo, Cruze, Tesla etc. The fact that Uber's program clearly failed in retrospect doesn't mean that it was a scam. You can even look at Lyft, which was doing a similar program, as evidence that there were several companies with similar ideas to create a robo taxi fleet, all of whom did some analysis that showed it could be possible. With that said, if someone had magically made me CEO of Uber at that time, I would have immediately scrapped their self driving program and just tried to negotiate an exclusive licensing deals with someone like Waymo who seemed to be farther ahead.
maerF0x0 5y ago
I always figured that Uber's only hope of profit would be when we have fully autonomous self driving cars. Then a commuter to an office could put their car into "earning mode" while they work, and then have the car return to pick them up at the end of the work day. Basically utilizing an idle resource w/o need for a human babysitter.
tgsovlerkhgsel 5y ago
The article is very short on how Uber "victimized" riders. Uber is a way for me to get a "taxi" in a foreign country largely without having to worry about which local scam I'm not aware of. It's also usually significantly cheaper than a taxi, and I doubt it's any more dangerous than a taxi. I've definitely had fewer bad experiences with Uber than with traditional taxis (disclaimer: male, so my issues were scams and bad customer service, not safety/rape). I'm pretty sure at least some drivers are getting royally fucked on hidden costs, although there seem to be many who seem to understand what they're doing and insist it's still profitable. Investors? Maybe/probably, but I don't care.
simonblack 5y ago
I've been saying for a year or more that Uber is a "Money for the Management" scam, which extracts money from drivers and investors. Once the investors and/or the drivers dry up, there'll be no more Uber. The riders won't give a shit. As long as they get from point A to point B for less than a taxi-fare they just won't care.
magwa101 5y ago
I'm surprised the conversation is just around the mechanics of Uber making money, clearly, they can't. How about the middling (affectionately known as "disintermediation) of the restaurants then demanding they join uber eats? These businesses have finally banded together and are suing Uber, but damn, they're small businesses. This is a fight they can ill afford.
ChefboyOG 5y ago
Last time I was in NYC, I used Uber-for-taxis Curb app, which I found to be consistently cheaper and largely interchangeable UX-wise with Uber (upfront fares, ride tracking, driver rating, etc). In NYC at least, Uber offered me as a user no tangible upside. I think their inherent competitive advantage against taxis, at least in major metropolitan areas, has been exaggerated.
- smeyer 5y ago
  Is it still the case that in NYC Ubers are required to have livery plates? I recall that making the price more expensive and closer to taxis than it is in many major cities where Ubers can drive with regular plates and no livery cab license, so I don't know that NYC is particularly representative of other major metropolitan areas.
  - _fat_santa 5y ago
    I think the big advantage with Uber is you don't have to shell out for a Medallion. I know they used to go for upwards of $1M but now I heard they can be had for $150k - 300k, much cheaper than the previous $1M but that's still an overhead you wouldn't have with Uber.
    - smeyer 5y ago
      Yes, I understand that. But my point was that in many cities you need neither a hackney license (i.e. a medallion) nor a livery license, whereas in New York you need a livery license. Livery licenses are much cheaper to acquire than a medallion, but they still raise the barrier to entry more than in other major cities, so I suspect that would be relevant for pricing.

308 points by Daishiman 5y ago

A much better link, from the second tweet in the chain, is https://pluralistic.net/2021/08/10/unter/#bezzle-no-more https://pluralistic.net/2021/08/10/unter/#bezzle-no-more This is the same thing but all put on one page instead of broken into a long series of tweets.

dang 5y ago
Changed from https://twitter.com/doctorow/status/1425139419195998213 https://twitter.com/doctorow/status/1425139419195998213. Thanks!
Kiro 5y ago
I must be the only one who prefer to read it as short tweets.

deleted 5y ago

[deleted]

deanCommie 5y ago

I find the tone of the article a little uncharitable. Innovation is full of scenarios where visionary companies thought they could offer something at a loss, and then eventual improvements to technology/logistics/supply chain/process/etc would make the concept profitable. Whether it's Amazon offering free shipping, or Google offering OUTLANDISH (for the time) storage volumes for Gmail. I can definitely imagine that Uber's leadership genuinely believed that various economies of scale or technological innovations would allow them to be fully profitable in the long run. Same for Self-driving cars: When Uber was investing billions into it, it really looked like they were at the tip of the spear of innovation together with Google. People felt that Uber was actually BETTER Positioned for introducing self-driving technology than Google because they were focusing on adding extensions to existing cars, and they already had a built-in customer base using them for ordering point-to-point rides (Whereas Google/Waymo had to build out those capabilities themselves since) This is where my charity ends. Uber has not treated their drivers because it considers them completely fungible and replaceable. Everything to do with Public Transit is completely bang on - it's ludicrous to even imagine Uber participating here. And I buy the overall conclusion - in the long run we will look back at Uber and consider it a net loss for humanity's progress. But there is no getting around the pure delight of the original user experience - irrespective of pricing. And I'm willing to bet that the leadership did not consider it a con from the beginning, they really thought they could make a profitable business from this in the long run.

Spooky23 5y ago
Doctorow’s schtick is to be a snarky know it all. I worked in government and started doing services procurements years ago. When I first started doing that, I was really taken aback by the cynicism of the procurement officers and attorneys. Then I did two or three engagements… and it makes sense. Similarly, I experienced the delight aspect on a trip where I paid $20 for a ride in a Mercedes SUV in Baltimore that would have been a $30 cab ride. The next time I used Uber, 5 years later, it was a 10 year old Odyssey with an Afghan guy who was illegally sub-letting somebody’s Uber Driver account, and it cost $35 for a $20 cab ride. End of the day, all of these stories boil down the same thing. Commodity services are either luxury at a premium, or minimum viable level of delivery at a low price.
- pwdisswordfish0 5y ago
  > an Afghan guy Why is that relevant?
  - Spooky23 5y ago
    It’s pretty typical for recent immigrants to be exploited with grifty gigs like that.
Daishiman 5y ago
> But there is no getting around the pure delight of the original user experience - irrespective of pricing. And I'm willing to bet that the leadership did not consider it a con from the beginning, they really thought they could make a profitable business from this in the long run. I have no doubt about the same. But the point isn't about what Uber was; it's about what Uber became, and how their over-promises turned into outrageous claims that snowballed into a completely unsustainable business. And while I do respect the spirit of the original app being a serious improvement over prior experience, truth is that nowadays even traditional banks and even government apps can be found that are just high-quality and show that you don't need a cutting-edge startup to have good service. I also believe that other entrepreneurs would have been able to plod a similar path without ripping off investors or mismanaging finances.

searealist 5y ago

> it also victimized workers, riders, cities and restaurants > Uber's founding CEO Travis Kalanick - a fratty bro who created a culture of dishonesty, physical and sexual harassment and abuse, and criminality. > It's true! Khosrowshahi is a better human being than Kalanick (who, to be clear, is one of the worst people alive today). > But the problem with Uber wasn't that just that it was a rapey, crimey, crooked grift - the OTHER problem with Uber is that it is doomed, and only exists today because of accounting fraud. Khosrowshahi didn't fix that part. He's not going to fix that part. Clearly the author hates Uber so much that you cant really trust any opinion they have of their financials. You can tell this because they aren't attacking ride sharing as a whole or ever mentioning Lyft.

Daishiman 5y ago
They attacked the models of similar ridesharing services in Southeast Asia. The whole model in itself is a con and the author isn't shying away from that; he's just demonstrating that the biggest player is a particularly egregious offender. And sorry, but the fact that he has strong opinions doesn't mean that they're not backed by facts. You can be impartial and have strong opinions if the opinions are the obvious, logical conclusion that all the evidence brings out. If anything, I applaud the author for not pretending the modern media BS narrative of theres-two-sides-to-the-story, as if they had equal weight.
- deleted 5y ago
  [deleted]
- searealist 5y ago
  > They attacked the models of similar ridesharing services in Southeast Asia. Not really. Nothing more than mentioning keeping them on the book was a financial trick. > The whole model in itself is a con and the author isn't shying away from that; he's just demonstrating that the biggest player is a particularly egregious offender. I'm not sure what you mean when you say the author doesn't shy away from it. Not in this article. This only attacks Uber. > And sorry, but the fact that he has strong opinions doesn't mean that they're not backed by facts. You can be impartial and have strong opinions if the opinions are the obvious, logical conclusion that all the evidence brings out. When you adopt a tone of preaching to the choir don't be surprised when people think you are doing just that. > If anything, I applaud the author for not pretending the modern media BS narrative of theres-two-sides-to-the-story, as if they had equal weight. Do you also wish the modern media called companies "rapey" in articles meant to criticize financials?

northerdome 5y ago

Uber operates in almost every major US city today. It has overcome years of predictions it would fail. Yet I still can get an Uber in minutes almost anywhere in the country. Will it get more expensive? Probably. Is it a replacement for car ownership or transit? Definitely not. But Uber will live on. It's good enough to ensure sizable marketshare for the long term.

nabla9 5y ago
With -30% operating margin and -$2B operating cash flow it will not live on.
- mypalmike 5y ago
  It's not a problem! I predict flooz will make a comeback and with some clever accounting, those negative dollar amounts can be changed into positive flooz.
disgruntledphd2 5y ago
How do you see them making a profit? Like, if you need to exclude stock based compensation (amongst other things) from your adjusted EBITDA metric, then you have problems with your business model.
- djrogers 5y ago
  > How do you see them making a profit? By raising prices. There is a point at which the market will bear the cost and Uber can make a profit. It won’t be as cheap as it is now, and likely will be down in scale/volume, but that point does exist - the existence of taxis and all of their medallion cabal bs over the years proves it.
  - timr 5y ago
    Uber is already dramatically more expensive in NYC. It's to the point where, most of the time, it is smarter/faster/better to take a taxi, if you're paying attention. Most people still look at Uber first (if only because of muscle memory), but multiple times in the last few months I've watched someone do it and recoil from the sticker shock. Just this weekend, someone I knew was quoted $130 to get from Cobble Hill to the UES. Even if you're almost completely price-insensitive, that's a trip that can be made in 45 minutes (~about the same as driving) for $3 in subway fare. I don't know what's going on with Uber in the rest of the world, but here, there can't possibly be any more margin to consume.

CPLX 5y ago

The post certainly has a plausible and understandable narrative, but I have no insight into Uber's financials. I do however use Uber and Lyft constantly, all over the country and world, and the contrast between the services today and a a year or two ago is stark. Pricing is often 4-5x what I used to expect for the same trip, sometimes with wait times of 30-40 minutes, even in non-peak times in central business districts. As a regular user who just happened to be in 9 different cities over the past three weeks (I'm in the conference business) it's really clear something really severe is going on with these companies right now and their service level is in free fall.

tunesmith 5y ago
We noticed it while traveling recently, too - same family-visit trip we've made several times before, but this time there every single leg had at least one driver cancellation, sometimes two, and very inaccurate estimates of wait time.
MaxfordAndSons 5y ago
I noticed it in a large tourist-destination US city recently. You literally could not get an Uber from the airport (which is not at all far from the city center). Instead, drivers have formed an informal co-op, negotiating prices and dispatching in person or by phone. Basically an uncredentialed taxi service, that the city was looking the other way on because someone has to do it, and people still won't use the traditional taxis out of a habit - they go to the ride share pickup area, try to call an Uber or Lyft, can't, and then go to the grey market option out of desperation.

deleted 5y ago

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cameronh90 5y ago

So according to this, Uber is ripping off the drivers, riders and investors - with no path to profitability. So where is the money going? Is the claim that it's just so poorly managed that it's all being blown on overpriced tech salaries? Incidentally, how is it that hyperscale tech companies such as Uber and Deliveroo are struggling to turn a profit on proven business models, while charging more to both the customer and provider? Isn't tech and scale meant to make it cheaper?

disgruntledphd2 5y ago
Because money is so cheap, that investors are literally burning cash up in search of growth. Uber has never made any sense to me as a business (since 2016), and it's crazy how long it's lasted.
- reidjs 5y ago
  If you’ve ever not owned a car and lived somewhere with poor public transport, Uber makes a lot of sense. It sucked having to rely on friends, family, and especially yellow cabs. I’m not saying Uber is the best company or business model, but ride sharing makes total business sense to me.
  - nyghtly 5y ago
    Uber makes sense to riders at subsidized prices, but it stops making sense once they start charging what it actually costs to provide that service. The reason we don't take taxis everywhere is because they're expensive and infrequent. Creating an app to handle dispatch didn't magically change this reality. The hardest parts of operating a taxi service (maintaining a fleet of vehicles, hiring and retaining drivers) have not gotten any easier, except in the case of Prop 22, which is an unfair advantage for Uber compared to other transportation providers.
    - reidjs 5y ago
      Even if the prices doubled overnight it would still make sense for my main uses: an on-demand designated driver or rides to/from the airport. That said, I realize I'm financially better off than many people and would prefer to have safe, affordable, and widespread public transit.

joshstrange 5y ago

> I live in Burbank, where Ubers were never more than 5 minutes away. Now, a 30 minute wait is common – and the fare is comparable to the licensed taxi company, which is literally one app away from achieving feature parity with Uber. I'm not an Uber apologist in the slightest but why is it that apps for the alternatives still suck? In a similar vein a delivery co-op app launched in my area semi-recently and I tried their app and it's absolute garbage. I've done minor app development and while I'm not great at it, I don't think you need millions (or billions in Uber's case) of dollars to create something on-par. Honestly you could pair me with a good designer and for the price of 1 year of pay I have doubt it could be built.

Spooky23 5y ago
Because they don’t add value. Uber has a thousand engineers. Joe’s Taxi has zero. The people who are focused on the app crap use Uber and avoid the cab that is 10 feet away. The restaurant crap is even more ridiculous. It literally takes the customer 5x more time to order a pizza on an app. I’ll call and say “Hi, I’m Spooky23, two cheese pizza and garlic knots” and I’m done.
- ceejayoz 5y ago
  > The restaurant crap is even more ridiculous. It literally takes the customer 5x more time to order a pizza on an app. I’ll call and say “Hi, I’m Spooky23, two cheese pizza and garlic knots” and I’m done. This depends heavily on the restaurant. (The app potentially wins, too, if have a recurring order saved to your favorites. My family tends to have the same fairly complex sushi order and I can re-order it in a click.)
  - Spooky23 5y ago
    Agreed. There are def good use cases. The sushi one is a good one. Starbucks is another great example of where it just works. But I would say many places, esp fast/casual service places are just trying to shave some labor and make it difficult to not buy combo meals, etc.
  - 5y ago

deleted 5y ago

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Animats 5y ago

Well, yes. Self-driving is how they got Softbank to convince the Saudi sovereign wealth fund to invest. Also, the Saudis have an interest in promoting fuel powered vehicle usage.

srean 5y ago

I have often wondered if there are easy ways to invest easily on a 'patch'ed index fund, for example, NASDAQ_100 sans Uber. Of course one can buy the individual stocks in the patched index in the same proportions but that's going to be very expensive in terms of transaction costs (and general headache). @danhak For some reason I cant respond to you. I had put/call options in mind but shorting/longing would work.

keyanp 5y ago
The S&P 500 index already meets your needs. In order to qualify for the index a company must have positive earnings. This disqualifies a bunch of tech companies that may or may not ever succeed financially... See https://stockmarketmba.com/largeststocksnotinthesp500.php https://stockmarketmba.com/largeststocksnotinthesp500.php
- srean 5y ago
  Ah thanks, I didnt realize S&P 500 had such a filter.
deleted 5y ago
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RONROC 5y ago

Another compelling argument as to why the Silicon Valley experiment has failed so spectacularly (for most but not you) Uber is the Chernobyl of corporate malfeasance. Just a steaming pile of shit, rotten from top to bottom.

dang 5y ago
Ok, but please don't break the site guidelines like this. Maybe you don't owe Uber better, but you owe this community better if you're participating in it. "Please don't fulminate." "When disagreeing, please reply to the argument instead of calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be shortened to '1 + 1 is 2, not 3." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- RONROC 5y ago
  Sorry dang! Could of definitely left that last sentence out.
  - dang 5y ago
    Appreciated!

zby 5y ago

Oh - why it always needs to be so one-sided? When we don't like something than everything in the article needs to be a condemnation if we like the subject than there is only prise. In this particular article: if Uber is losing money by subsidising rides - then people get cheaper rides than they could otherwise have. But that also article suggests that Uber victimizes riders. That does not compute. Yes - it is anticompetitive and possibly without Uber we would have something else that could potentially be better - but also without it we would not have all those cheap rides and all those valuable things that the riders did because of the cheap transportation. That all subsidising in bad in the sense of disrupting normal market forces - but it is a stretch to declare the riders to be victims here.

runawaybottle 5y ago
The riders are the only ones that won hand over fist. I can get a cab anywhere within minutes. This used to not be the case. Will Uber be profitable? I don’t really care, they improved society, period.
- oarsinsync 5y ago
  > I can get a cab anywhere within minutes. This used to not be the case... they improved society, period. They added an extra convenience to your life, and made your life better. This may or may not be true for a lot of passengers. It may or may not be true for a lot of drivers. It’s a stretch to call that an improvement to society, when the only example cited is a minor convenience improvement, that only the upper 50% of the society you live in can afford to use regularly.
  - zanellato19 5y ago
    On the long run, they helped put laws in place that eroded even more labor power, they setback public transit, they increased traffic in a lot of places, because why ride with friends when you can take an Uber? They added a small convenience to a bunch of peoples lives, but they certainly didn't make society better.

daxfohl 5y ago

So where exactly do the financials go south? How can taxi services survive but Uber can't? Does the same logic apply to airbnb vs hotels?

nyghtly 5y ago
Taxis charge more. And if Uber had their way, then all the taxi companies would go out of business because Uber is so much cheaper. And then Uber would raise their prices up to what the taxi companies were charging. It worked for WalMart. It worked for Amazon. Unfortunately for Uber, I think they may have missed their window. People aren't starry-eyed about tech like they used to be.

mysterEFrank 5y ago

this is so biased it has no place on hacker news

deleted 5y ago

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Apocryphon 5y ago

> Adjusted EBITDA profitability Hey, isn’t that what WeWork was being valued with?

okareaman 5y ago

I get the same vibe from Uber (which I outlined here: https://news.ycombinator.com/item?id=27788509 https://news.ycombinator.com/item?id=27788509) as I did from working for an internet company before the dot com bubble burst that was all show to raise money from investors.

neonate 5y ago

What I don't understand about the "Uber can never be profitable" argument is, why can't they just raise prices until they're no longer selling at a loss? If the answer to that is, "because then demand would die", why doesn't that apply to taxis? Taxis make money. Why can't a better (in many people's opinion) service, with better tech, do at least that well? Setting aside the other reasons to dislike Uber, there is obviously a valuable product there. I get that it has been subsidized by VC dollars in a land grab, etc., but saying it can never be profitable is saying it can never find a fair market value, and that doesn't make sense to me. What am I missing?

ceejayoz 5y ago
Sure, the "sell dollars for $0.50" company can become profitable by raising prices to $1.10 after they wipe out the competitor who was selling for $1.00, but is that a good end result?
- neonate 5y ago
  It's not, but that's a different argument.
api 5y ago
Maybe the company as it stands is so inefficient and cash burning that it can't actually compete with taxis. In that case a slimmed down Uber may be able to do so, but that would require a lot of blood to flow inside the company.
- neonate 5y ago
  If the argument is not "Uber can never be profitable" but "Uber can never be profitable without a brutal corporate reorg", that's more plausible. But it's also a much weaker claim, no? Brutal corporate reorgs are a thing and I suppose that sometimes they even work.
thebigman433 5y ago
> why doesn't that apply to taxis? Taxis make money. Wouldnt it "just" be because of the massive overhead that Uber has with the software engineers, support staff, execs, etc?

underseacables 5y ago

Uber, Lyft, it seems regulators are intent on pushing up prices. Maybe to bring back taxis?

nice_byte 5y ago

i don't understand. transportation and food service in the era before uber was literal shit. remember, if you couldn't use your own car, you had to subject yourself to horrible smelly "licensed" taxis with drivers that barely know the city, or go on a bus with some meth head tweaking out in the back. you had to get yourself up and _physically go_ to a restaurant if you didn't have time to cook yourself. now you can get a fast safe ride at any time of day and get the meal of your choice without having to go and sit around in the same room with a bunch of other losers like you. all at a moment's notice, through a nice convenient interface. and people have the gall to complain about this? UPD: to be clear - it doesn't matter that uber subsidizes rides/deliveries. they could stop doing that and jack up the price, but the alternatives are so dreadful that i doubt it would make me stop using them.

nyghtly 5y ago
So you're saying that the only reason you didn't take a taxi everywhere before Uber was because the drivers are smelly? Well maybe you have money to burn, but most other people don't. If Uber charged what it really costs to operate their services, then you would see a massive drop in riders. It doesn't matter how much less smelly you think they are compared to taxi drivers.
- nice_byte 5y ago
  pretty much yes. i used to live carless, and would need late rides on a regular basis. i was taking the fancy black lincolns in the days before uberX was introduced and pay ridiculous prices for them because uber was the only game in town - taxi services didn't need my money. it's not just that they were smelly or whatever - they were literally unavailable. quality of service matters. having to sit in a filthy car - if you can even get a hold of it - and help the driver navigate is not good quality service. there's demand for quick, convenient quality transportation, and uber fills it.
- kelnos 5y ago
  Not the parent you're responding too, but -- yes, exactly this. I rarely took taxis pre-Uber because the drivers were surly, the pricing difficult to predict, cars impossible to hail, and dispatchers (if you could even reach them on the phone) useless. If you called for one and they actually agreed to send you one, you'd be waiting at least 20 minutes, and often after 40 minutes you'd finally realize they were never coming. Oh, and don't forget the frequent "sorry, the credit card machine is broken" bullshit lie, and the annoying fumbling for cash and getting change. I'm sure I don't need to enumerate how Uber/Lyft fixed all of these problems nearly perfectly. Sure, many cities have apps for their taxi services now, but they're nearly universally inferior and don't fix all of these problems, at least not to my satisfaction. Realistically, though, not using Uber for me means driving everywhere. Including the stress of traffic, the stress of finding parking, the stress of wondering if someone is going to smash my car windows, and the stress of ensuring I'm sober enough to drive when I want to go back home. I'll pay quite a bit to avoid that stress. I get that there are some people who won't, or can't, but all that means is that Uber's addressable market will be smaller when they charge enough to be profitable.

1helloworld1 5y ago

I don't know why seemingly knowledgeable people like the author keep spewing bullshit about drivers losing money. I live in an immigrant community in NYC. Pretty much every other person in this community is a Uber driver. Some are very industrious and do not mind working long hours or working on weekends. Making more than 100k per year (after all expenses) is not unheard of.

Daishiman 5y ago
How many working hours are they doing for that? How much will their cars last? Car rental companies keep cars generally for a year, are they factoring that in?
- deleted 5y ago
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diebeforei485 5y ago

At some level, why does it matter? They didn't make drivers buy useless medallions or anything like that. Companies fail all the time, some of them fail early, others may fail at a late stage.

ppeetteerr 5y ago
Medallions had value in that they were seemingly protected by the municipality that issued it. Prior to Uber, a medallion was an asset that appreciated in value.
- diebeforei485 5y ago
  They didn't have any intrinsic value, plus municipalities and some large institutional investors were the only people you could sell a medallion to (other than taxi drivers/owners). On the other hand, Uber drivers can find any buyer for their used cars (which have, in fact, gone up in value since the pandemic began).

subsubzero 5y ago

Uber can make money but it won't be pretty, some steps in order to achieve profitability: #1 Get out of all expensive metro areas(corporate offices) and embrace a full remote workforce.(sublease commercial buildings where applicable) #2 Raise rideshare fees, reduce driver income. #3 Retreat from un-profitable regions for ride-hailing, ie. moving out of rural markets. #4 Reduce engineering workforce that isn't focused on running the business. #5 Get out of the food delivery business, the margins are too small for the engineering/marketing effort.

stvswn 5y ago

The author is mixing political arguments related to public transit funding, unionization and classification of workers with an analysis of Uber's financials and strategy, and I think it weakens the argument. Travis understood that Uber doesn't deserve its multiple without self-driving cars, he thought it was such an existential problem that he conspired to launder trade secrets from Google in order to jumpstart his program. His reasoning, I think, was that Uber's business model precludes it from being the exclusive platform for drivers (because of their IC status), meaning that he could never raise prices past the point where it entices a new competitor, nor can he lower payouts to the point where drivers abandon Uber. Uber has to do the heavy lifting to convince local jurisdictions to allow ridesharing and then any newcomer can swoop in and compete if Uber gets too greedy. Uber's greatest asset is that it's first and has a massive userbase, but for a cheaper ride many would compare prices in a new app without much thought. This doesn't mean that it's not very helpful to consumers to have on demand ride apps! I'm glad they exist. I live in suburbia and the other day I had to travel to a train station that was about 20 miles away. Public transit would have meant an hour and 2 bus transfers, Uber got me there in 25 minutes for the same cost. Lots of criticism of Uber compares it to dense urban areas with a taxi fleet, but there weren't taxis here before Uber, there were only car services at much higher prices. From a consumer standpoint, we should be happy that these platforms exist at relatively low cost, we end up getting rides via a very convenient app for only a 25% markup on what the driver grosses per ride (less including tip) -- and that middleman fee is likely to continue to get squeezed. The author presumably gets that they are popular because their very popularity seems to be an issue -- it's argued that the public is less likely to want to invest in public transit when Uber is available. One can't also argue that the general public is ditching Uber. It's sort of a Yogi Berra argument -- "That place is so crowded no one goes there anymore."

gentschev 5y ago

Ride sharing as a whole isn't going away. It's better than calling a cab or whatever used to be. But I could see Uber and Lyft each ending up as $5-10 B software layers on top of driving, not $50-100 B ones.

sharadov 5y ago

The pandemic was the nail in the coffin for Uber. How is Lyft doing?

spats1990 5y ago
the report cory refers to covers lyft as well. https://www.nakedcapitalism.com/2021/08/hubert-horan-can-uber-ever-deliver-part-twenty-six-with-no-hope-of-real-profits-uber-and-lyft-double-down-on-fake-profit-metrics.html https://www.nakedcapitalism.com/2021/08/hubert-horan-can-ube... i submitted it before i realised this "end of the line" post was on the front page.

sharadov 5y ago

They can't be profitable even after taking 50% of the driver's earnings! They deserve to die.

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toxicFork 5y ago

I have a theory that Uber's making a killing, but making sure that they don't look profitable on paper so that they don't have to pay taxes. I haven't done any research and I don't really care, it's just fun to consider.

dyingkneepad 5y ago
The CEO and other execs are definitely making a killing out of it. That's all that matters. If the ship sinks they'll gladly jump out of it and move on to the next thing.

99_00 5y ago

People took out loans to buy expensive taxi licences and were financially ruined by this speculation. And young professionals cheered the process on.

spywaregorilla 5y ago

I think his article is pretty poor and just has a bone to pick, even if I agree with the overall thesis. Yes, Uber is losing a lot of money. But no, it's not broke, and it's not going to be broke for probably a number of years still. I thought this linked source was a bit better: https://www.nakedcapitalism.com/2021/08/hubert-horan-can-uber-ever-deliver-part-twenty-six-with-no-hope-of-real-profits-uber-and-lyft-double-down-on-fake-profit-metrics.html https://www.nakedcapitalism.com/2021/08/hubert-horan-can-ube...

kelnos 5y ago

> I live in Burbank, where Ubers were never more than 5 minutes away. Now, a 30 minute wait is common – and the fare is comparable to the licensed taxi company, which is literally one app away from achieving feature parity with Uber. This sounds like the typical arrogant software developer declaring that they could build someone else's entire business during a weekend with a text editor. "Literally one app away" is exactly what was wrong with the taxi business before Uber and Lyft. And yet with 10 years to catch up, taxi apps -- many of them built specifically to try to compete with Uber/Lyft -- still suck.

CogitoCogito 5y ago
My app of choice for non-Uber/Lyft is the phone app. Usually works fine for me.

paxys 5y ago

I have been reading some version of this article for 10 years now. Yet Uber and Lyft and the entire "sharing" economy is surviving and thriving. Reading this article you'd be convinced that Uber is going to end tomorrow and all the investors who collectively value it at $80B are idiots.

slaw 5y ago

DiDi operates in Brazil under name 99. It is usually little bit cheaper for customer than Uber. At the same time DiDi pays more to the driver. How is DiDi profitable and Uber not? * Source mine, I talked to drivers and used both apps.

puranjay 5y ago

If there is ever a proper market crash, I feel that most of these startups built on endless VC-supplied liquidity and unfavorable unit economics will just wither away.

atlgator 5y ago

I really got used to ordering DoorDash during the pandemic. I hope they/Lyft don't follow Uber.

dzonga 5y ago

taxis don't have to be expensive. yeah, in NY and other US cities they're due to artificial constraints. currently, in Taipei TW. taxis dirt cheap. one thing that helps is public transport is everywhere and hence taxis have to be compete. so yeah, for taxis to be available cheaply, public transit has to be everywhere which we know in the US won't happen due to suburban sprawl.

bern4444 5y ago

One question I have is, what is Uber doing with all their engineers? Most of us are engineers as well. So we all understand maintenance, monitoring, feature development, tech debt etc. Technology products rarely can just be 'let alone' and left operating successfully. But they have over 2,000 engineers. That's a massive amount. Are there new features in development? New services? New capabilities? From a consumer perspective I haven't see anything new in a while. Are they all focused on growth in new cities, towns, and countries supporting local peculiarities? Is Uber going through a rewrite to align on a technology stack to support future features? What are those features? My old job was building out a (new) streaming service, so it was all about feature development, launching in new countries, supporting local payment methods etc. Now I work on building APIs for a different company with which other developers can integrate. Both are focused on building and maintaining new and existing features as well as growth. Just what the heck is Uber doing with its 2,000 engineers?

seoulbran 5y ago
I've been curious about that as well
dave5104 5y ago
Here's a comment from awhile back that answers your question: https://news.ycombinator.com/item?id=25373462 https://news.ycombinator.com/item?id=25373462
- bern4444 5y ago
  Wow! What a wild ride. Thanks for linking to that story, it's fascinating to read about these types of experiences. My former role was in web development, I've always been stunned that native apps can get away with 100+mb sizes and yet still people complain about a 3mb JS bundle. My overall reaction is, web development seems like a MUCH better environment to code than app development. Especially with the ability to arbitrarily split and chunk JS. This especially seems useful to separate out regional features so only those who need it download it. And of course, any code can be cached so users don't have to re-download it.
- 5y ago

pie_flavor 5y ago

One thing I don't like about this article is how much it thinks I should care about this for moral reasons. Is Uber fleecing me? No, they're fleecing investors. Hilarious, investors are chumps! Meanwhile, I'm getting the service I'm paying for, and it works flippin' great. Better than what came before by a mile. That California law was a long time coming, and everything else is temporary and would revert if Uber kicked it. Until that happens, it's a cautionary tale of why you never trust Silicon Valley investors, and a really great taxi service.

bellyfullofbac 5y ago
The 6th IPCC report came out yesterday. If I were an activist I'd start some social media campaign to demand better public transport and to tell people how Uber is contributing to burning the planet. So yeah, maybe that's a reason why you should care: Uber is a hindrance to sustainable public transport.

jet_32951 5y ago

Whatever one says about uber's bad and sleazy tactics I will miss them. Not in SF or where I live now, but in CDMX. Taxis in CDMX are risky: too many people get fooled and wind up draining their funds at gunpoint. Never happened with Uber; but also never happened when your lodgings called a taxi for you.

hamburgerwah 5y ago

I can't say how precisely the delineation of Uber's alleged accounting schemes are true but all of the same can be said for public transit such as light rail. Los angeles for example loses 2 billion per year on their metro (before covid) not including the 27 billion overall (non inflation adjusted) that was poured into it's construction. It would probably be cheaper to pay for the Uber fares of all the people that use the metro to use Uber instead. The author has an obvious political worldview and must fit all information rigidly into it. Edit: NYC subway loses 7 billion a year before covid when you remove it's tax revenue (government subsidy).

ryan_lane 5y ago
Public services don't need to make money. What we spend on those services isn't "losing money", it's spending tax money on a service that benefits all of us. Train (and bus) lines reduce traffic, cost less, and fuel commerce along their routes. Your estimate of what's being "lost" doesn't account for the economic gains that come along with public transport, which is estimated at 4x the cost of investment: https://www.apta.com/research-technical-resources/economic-impact-of-public-transit/ https://www.apta.com/research-technical-resources/economic-i... Spending that by funneling it into a private service (privatization) usually results in worse service at a higher cost. Specifically funding Uber reenforces building the city out for cars, rather than for people, making it more expensive to properly fund public transportation.
supertrope 5y ago
Public transportation is heavily subsidized. But liquidating it because it’s not profitable would cause extreme traffic congestion. The city would cease to function. Buses and trains are a multiplier for capacity. Private transportation is also heavily subsidized. Usually it’s in indirect ways like the government paying for roads and airports, mandating parking minimums, and keeping driver licensing lax. There’s rarely direct budget line items to keep fares low. But make no mistake marshaling capital and land are huge subsidies.

bertttles 5y ago

One can only hope

rkwasny 5y ago

Well, Uber created a lot of value for initial shareholders and riders, now even if it dies mutual funds and ETFs will foot the bill.

Reubend 5y ago

This is such a ridiculous characterization - it takes many negative consequences of Uber's business (which are admittedly real effects of its operations) and then uses exaggerated language to demonize them. Did cities drop the ball on improving public transport? Or did, as the article claims, Uber cause a "lost decade of transit activism"? Did restaurants fail to stay profitable during the biggest pandemic of modern history? Or maybe "thousands of locally owned restaurants will not survive the pandemic thanks to [Uber's] parasitic conduct"? Is Uber's former CEO a disgraced businessman with a sex harassment scandal and some shady political ties? Or is he "one of the worst people alive today", accompanying brutal dictators, human traffickers, and genocidal warlords? I would really prefer if the author just described all the reasons why they think Uber is a bad company, without acting like it's destroying society. There's plenty of bad stuff to talk about, so there's no need to exaggerate here.

Reubend 5y ago
I want to add another note: there's no evidence for this piece's assertion that they knew self driving wouldn't work out. There are still many large companies investing in this area - Waymo, Cruze, Tesla etc. The fact that Uber's program clearly failed in retrospect doesn't mean that it was a scam. You can even look at Lyft, which was doing a similar program, as evidence that there were several companies with similar ideas to create a robo taxi fleet, all of whom did some analysis that showed it could be possible. With that said, if someone had magically made me CEO of Uber at that time, I would have immediately scrapped their self driving program and just tried to negotiate an exclusive licensing deals with someone like Waymo who seemed to be farther ahead.

maerF0x0 5y ago

I always figured that Uber's only hope of profit would be when we have fully autonomous self driving cars. Then a commuter to an office could put their car into "earning mode" while they work, and then have the car return to pick them up at the end of the work day. Basically utilizing an idle resource w/o need for a human babysitter.

tgsovlerkhgsel 5y ago

The article is very short on how Uber "victimized" riders. Uber is a way for me to get a "taxi" in a foreign country largely without having to worry about which local scam I'm not aware of. It's also usually significantly cheaper than a taxi, and I doubt it's any more dangerous than a taxi. I've definitely had fewer bad experiences with Uber than with traditional taxis (disclaimer: male, so my issues were scams and bad customer service, not safety/rape). I'm pretty sure at least some drivers are getting royally fucked on hidden costs, although there seem to be many who seem to understand what they're doing and insist it's still profitable. Investors? Maybe/probably, but I don't care.

simonblack 5y ago

I've been saying for a year or more that Uber is a "Money for the Management" scam, which extracts money from drivers and investors. Once the investors and/or the drivers dry up, there'll be no more Uber. The riders won't give a shit. As long as they get from point A to point B for less than a taxi-fare they just won't care.

magwa101 5y ago

I'm surprised the conversation is just around the mechanics of Uber making money, clearly, they can't. How about the middling (affectionately known as "disintermediation) of the restaurants then demanding they join uber eats? These businesses have finally banded together and are suing Uber, but damn, they're small businesses. This is a fight they can ill afford.

ChefboyOG 5y ago

Last time I was in NYC, I used Uber-for-taxis Curb app, which I found to be consistently cheaper and largely interchangeable UX-wise with Uber (upfront fares, ride tracking, driver rating, etc). In NYC at least, Uber offered me as a user no tangible upside. I think their inherent competitive advantage against taxis, at least in major metropolitan areas, has been exaggerated.

smeyer 5y ago
Is it still the case that in NYC Ubers are required to have livery plates? I recall that making the price more expensive and closer to taxis than it is in many major cities where Ubers can drive with regular plates and no livery cab license, so I don't know that NYC is particularly representative of other major metropolitan areas.
- _fat_santa 5y ago
  I think the big advantage with Uber is you don't have to shell out for a Medallion. I know they used to go for upwards of $1M but now I heard they can be had for $150k - 300k, much cheaper than the previous $1M but that's still an overhead you wouldn't have with Uber.
  - smeyer 5y ago
    Yes, I understand that. But my point was that in many cities you need neither a hackney license (i.e. a medallion) nor a livery license, whereas in New York you need a livery license. Livery licenses are much cheaper to acquire than a medallion, but they still raise the barrier to entry more than in other major cities, so I suspect that would be relevant for pricing.