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Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless c

Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon. So this isn't too surprising, and also the status quo for most startups to burn investor cash ad-infinitum until they reach the theoretical gold at the end of the rainbow.

quickthrower2 4y ago
Well they are not the mafia. If Uber has a monopoly, and wants to charge me $50 instead of $10 to get to the city centre, I won't go, or find another (non-ride-sharing) way to get there. I might go 1 in 100 times of course because of urgency. But then regular cabs are still a thing too. This is the problem with being the middleman in a low margin world. I don't want to pay a fortune to get somewhere, and the driver has other jobs they can do if Uber effectively pays below minimum wage. Uber just needs to survive until the self-driving car thing is fully online, which means they are the Stripe of self-driving car micro-rentals. Then they will do very well and be very profitable, IMO.
- aetherson 4y ago
  Yeah, this was somewhat obscured in Uber's early days when the US unemployment rate was 7-9%, and it was easier to get drivers. But even then, it really only worked because drivers were paid more than passengers paid, with VCs picking up the difference. In today's low-unemployment-rate world, there's pressure to pay drivers more and VCs aren't going to pick up the costs, so... it's expensive.
- Icathian 4y ago
  I think at this point it's pretty well-established that general availability of self-driving cars is not going to happen any time soon. Do you think Uber can hemorrhage money for another ~20 years? I think that's probably a reasonable guess at the relevant timeline.
- martinald 4y ago
  How does Uber come out top in that? Surely that self driving software/car makers take the rewards. Uber is just a booking platform on top. Why would Google (with Waymo) allow Uber to book their cars, or Tesla to book their cars? They'd surely set up their own competing service to Uber and force them out of the market within months (as the prices would be so much lower). I'd imagine the software licensing of self driving cars would be so that when you bought a self driving GM/Ford/whatever that is only for personal use and using it for taxi rides would be against the ToS. Which they could quickly catch people out on, and maybe a "taxi" version of the car costs $xxx/month more. Unless you are suggesting that Uber actually wins the race to self driving, which I really can't see happening. Do they even have a program anymore?
  - quickthrower2 4y ago
    I guess it depends on who is 'they' in 'their cars'? Maybe Tesla sell the cars to individuals / businesses, and now the individual wants to find a way to get some extra money from it so they rent it out via a platform. Uber already has the mindshare and the tech. Maybe Tesla just wants to sell / rent the cars and not get into the market place. Tesla could try to compete on that, but they could try right now and compete with Uber, right? It is the same thing. All that financial risk is now pushed down to individual 'franchisers'.
  - potemkin_buster 4y ago
    > How does Uber come out top in that? Surely that self driving software/car makers take the rewards. There's a lot of variables but the car-makers are probably better positioned espcially when it comes to moving around fleets of self-driving cars and servicing them at a nationwide scale I'm guessing they may be better at dealing with the legal and regulartory issues that could emerge
- Ekaros 4y ago
  I never understood hailing self-driving as some money printing greatness. Unless there is just single company selling them. Otherwise it is race to bottom. Maybe if they are lucky generating 2-10% profit on the vehicle. With certain operators having massive fleets and very high capital investments.
- pessimizer 4y ago
  > I won't go, What if not going costs you more money than Uber? For example, it costs you your job, or visitation with your child? Then you will go. > or find another (non-ride-sharing) way to get there. Oh, you'd just do the other thing that is available to do. Why doesn't everyone think of that? > But then regular cabs are still a thing too. That would mean that Uber didn't have a monopoly. The goal was for Uber to dump deeply discounted service into the market until the cab companies died. They were pretty successful, because I can't hail a cab on the street anymore. They weren't as successful as they needed to be, because people who drive cabs can do Uber and Lyft at the same time. > the driver has other jobs they can do if Uber effectively pays below minimum wage. But if Uber has driven the industry wage down, the other job they do will not be driving you around. They will get a different job, and you will still be paying more.
grandmczeb 4y ago
> Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon. What do you mean by “pretty much”? Where in the prospectus do they say this?
- prophesi 4y ago
  It's a 248 page document, but I know on page 161 in the "Increasing scale, creating category leadership and a margin advantage" you can read how they're hoping that other ride-share companies popular in various regions will pivot to seek profitability and reduce incentives, thus allowing Uber to overtake their market as they keep their own incentives (ie, low prices). You can ctrl-f "self-driving" to find their strategy in that venture. edit: Should be easy to find the prospectus via search engines, but here's a link: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9ae-31ea-40c2-ac8b-36d85158c8a2.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9a...
sshine 4y ago
> if they can achieve a global monopoly to charge their own prices Since they're banned in several countries, good luck to them.
- seanmcdirmid 4y ago
  I don’t get it. It’s not like I’m going to fly to China to get food delivered to me.
skippyboxedhero 4y ago
This isn't the case. Uber repeatedly, and likely fraudulently, claimed that they were profitable ex-growth markets (iirc, they made this claim shortly before their IPO, I remember it being leaked to compliant journalists). They have never attempted to obtain a global monopoly either (they bought stakes in companies outside the US, which clearly wouldn't have given Uber itself scale economies). The only place that you saw people make the claim about driverless cars was on Reddit, management never made that claim...because it makes no sense. The underlying business can, obviously, be profitable. There is a guy near me who runs a taxi app, town has a population of ~5k people (no city with an Uber taxi service for miles around), and he is profitable. The problem is that most tech companies are run by morons who have a big stack of other people's money to burn (it really is that simple, all of these companies thought this day would never come...it has come, it is today).
- prophesi 4y ago
  > The only place that you saw people make the claim about driverless cars was on Reddit, management never made that claim...because it makes no sense. No need to insult me, you can read my response to another comment in this thread where I direct them where exactly in Uber's prospectus they make these claims. Whether they actually do what they said would make them profitable is another matter.
  - skippyboxedhero 4y ago
    I didn't insult you.
    - prophesi 4y ago
      Assuming I got my information from Reddit posts and not actual credible sources felt insulting to me, but if you didn't mean it that way then I have no qualms.

quickthrower2 4y ago

Well they are not the mafia. If Uber has a monopoly, and wants to charge me $50 instead of $10 to get to the city centre, I won't go, or find another (non-ride-sharing) way to get there. I might go 1 in 100 times of course because of urgency. But then regular cabs are still a thing too. This is the problem with being the middleman in a low margin world. I don't want to pay a fortune to get somewhere, and the driver has other jobs they can do if Uber effectively pays below minimum wage. Uber just needs to survive until the self-driving car thing is fully online, which means they are the Stripe of self-driving car micro-rentals. Then they will do very well and be very profitable, IMO.

aetherson 4y ago
Yeah, this was somewhat obscured in Uber's early days when the US unemployment rate was 7-9%, and it was easier to get drivers. But even then, it really only worked because drivers were paid more than passengers paid, with VCs picking up the difference. In today's low-unemployment-rate world, there's pressure to pay drivers more and VCs aren't going to pick up the costs, so... it's expensive.
Icathian 4y ago
I think at this point it's pretty well-established that general availability of self-driving cars is not going to happen any time soon. Do you think Uber can hemorrhage money for another ~20 years? I think that's probably a reasonable guess at the relevant timeline.
martinald 4y ago
How does Uber come out top in that? Surely that self driving software/car makers take the rewards. Uber is just a booking platform on top. Why would Google (with Waymo) allow Uber to book their cars, or Tesla to book their cars? They'd surely set up their own competing service to Uber and force them out of the market within months (as the prices would be so much lower). I'd imagine the software licensing of self driving cars would be so that when you bought a self driving GM/Ford/whatever that is only for personal use and using it for taxi rides would be against the ToS. Which they could quickly catch people out on, and maybe a "taxi" version of the car costs $xxx/month more. Unless you are suggesting that Uber actually wins the race to self driving, which I really can't see happening. Do they even have a program anymore?
- quickthrower2 4y ago
  I guess it depends on who is 'they' in 'their cars'? Maybe Tesla sell the cars to individuals / businesses, and now the individual wants to find a way to get some extra money from it so they rent it out via a platform. Uber already has the mindshare and the tech. Maybe Tesla just wants to sell / rent the cars and not get into the market place. Tesla could try to compete on that, but they could try right now and compete with Uber, right? It is the same thing. All that financial risk is now pushed down to individual 'franchisers'.
- potemkin_buster 4y ago
  > How does Uber come out top in that? Surely that self driving software/car makers take the rewards. There's a lot of variables but the car-makers are probably better positioned espcially when it comes to moving around fleets of self-driving cars and servicing them at a nationwide scale I'm guessing they may be better at dealing with the legal and regulartory issues that could emerge
Ekaros 4y ago
I never understood hailing self-driving as some money printing greatness. Unless there is just single company selling them. Otherwise it is race to bottom. Maybe if they are lucky generating 2-10% profit on the vehicle. With certain operators having massive fleets and very high capital investments.
pessimizer 4y ago
> I won't go, What if not going costs you more money than Uber? For example, it costs you your job, or visitation with your child? Then you will go. > or find another (non-ride-sharing) way to get there. Oh, you'd just do the other thing that is available to do. Why doesn't everyone think of that? > But then regular cabs are still a thing too. That would mean that Uber didn't have a monopoly. The goal was for Uber to dump deeply discounted service into the market until the cab companies died. They were pretty successful, because I can't hail a cab on the street anymore. They weren't as successful as they needed to be, because people who drive cabs can do Uber and Lyft at the same time. > the driver has other jobs they can do if Uber effectively pays below minimum wage. But if Uber has driven the industry wage down, the other job they do will not be driving you around. They will get a different job, and you will still be paying more.

grandmczeb 4y ago

> Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon. What do you mean by “pretty much”? Where in the prospectus do they say this?

prophesi 4y ago
It's a 248 page document, but I know on page 161 in the "Increasing scale, creating category leadership and a margin advantage" you can read how they're hoping that other ride-share companies popular in various regions will pivot to seek profitability and reduce incentives, thus allowing Uber to overtake their market as they keep their own incentives (ie, low prices). You can ctrl-f "self-driving" to find their strategy in that venture. edit: Should be easy to find the prospectus via search engines, but here's a link: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9ae-31ea-40c2-ac8b-36d85158c8a2.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9a...

sshine 4y ago

> if they can achieve a global monopoly to charge their own prices Since they're banned in several countries, good luck to them.

seanmcdirmid 4y ago
I don’t get it. It’s not like I’m going to fly to China to get food delivered to me.

skippyboxedhero 4y ago

This isn't the case. Uber repeatedly, and likely fraudulently, claimed that they were profitable ex-growth markets (iirc, they made this claim shortly before their IPO, I remember it being leaked to compliant journalists). They have never attempted to obtain a global monopoly either (they bought stakes in companies outside the US, which clearly wouldn't have given Uber itself scale economies). The only place that you saw people make the claim about driverless cars was on Reddit, management never made that claim...because it makes no sense. The underlying business can, obviously, be profitable. There is a guy near me who runs a taxi app, town has a population of ~5k people (no city with an Uber taxi service for miles around), and he is profitable. The problem is that most tech companies are run by morons who have a big stack of other people's money to burn (it really is that simple, all of these companies thought this day would never come...it has come, it is today).

prophesi 4y ago
> The only place that you saw people make the claim about driverless cars was on Reddit, management never made that claim...because it makes no sense. No need to insult me, you can read my response to another comment in this thread where I direct them where exactly in Uber's prospectus they make these claims. Whether they actually do what they said would make them profitable is another matter.
- skippyboxedhero 4y ago
  I didn't insult you.
  - prophesi 4y ago
    Assuming I got my information from Reddit posts and not actual credible sources felt insulting to me, but if you didn't mean it that way then I have no qualms.