15 ms·

Uber's Still Not Profitable

88 points by simongray 4y ago

blippage 4y ago
Two words: gig economy. Or put another way: shite.
insaider 4y ago
Shouldn't at least several people go to prison for this kind of thing? If my personal accounts were 'works of absolute fiction' I certainly would, what gives?
- Traubenfuchs 4y ago
  A company only needs to be able to claim that they really believed someones fair market value estimation of a company and they are good.
Traubenfuchs 4y ago
I think they were really betting on autonomous driving, fueled by Elon Musks lies and hype. They built up the digital infrastructure and so much clout their company name & product became a verb on the level of googling. But now taxi-level 100% autonomous no-driving-wheel cars are farther away than ever. The current broad generation of machine learning and sensors reached its maximum and it‘s looking bleak.
- smcl 4y ago
  I don't know if Elon Musk's nonsense was involved - they had their own autonomous driving project in-house didn't they?
  - nowherebeen 4y ago
    Have you forgetton the whole Google lawsuit against Uber? Anthony Levandowski. Uber’s self driving project is still no where near production ready.
    - lozenge 4y ago
      What does that have to do with Musk? Musk never worked at Google and Tesla s self driving technology lacks key sensors compared to what Waymo and Uber were working with.
      - fallingknife 4y ago
      - jmeister 4y ago
        /u/failingknife, I cannot reply to you, but thanks for making only relevant comment on this entire thread.
        rightbyte 4y ago
        You copy pasted something you were about to write on Reddit?
        smcl 4y ago
        The person they were replying to was flagged, so you may not see it unless you set showdead in your profile
        smcl 4y ago
        I can't see why it's relevant. We're talking about Uber's bet on self-driving cars and this person commented with an bitter, offtopic gripe about how they think HN commenters are losers.
    - smcl 4y ago
      I think you mis-read - I'm saying they did have a self-driving car project, not that they didn't. And yeah nobody has production ready self-driving tech, it wouldn't surprise me if they had canned it.
      - nowherebeen 4y ago
  - kibibu 4y ago
    Yes, they quite famously killed a person
  - Traubenfuchs 4y ago
    Just forget about me naming him. What I really meant was simply the whole autonomous driving bubble that just had him as its figurehead.
- snowpiercer 4y ago
  Wow. ..I'm really surprised by this comment..what do you mean by "farther away than ever" . I just recently started learning to code and I really want to go into machine learning ..does it mean there isn't any major innovation right now in the field ?
  - occz 4y ago
    That's probably not what they meant. What I interpreted it as was that the current iteration of machine learning will not be able to satisfactorily solve full self-driving cars.
    - Traubenfuchs 4y ago
      > That's probably not what they meant. It is, somewhat. The current generation of software and hardware was pushed to its limits by the smartest AI/ML engineers in the world and the best we got is Tesla FSD which is in no way ready to replace taxis and still needs someone at the wheel at all times. 100% self driving taxis for drunk night crawlers are not on the horizon anymore.
  - Traubenfuchs 4y ago
    Modern ML/AI became a fully accepted, mature part of the "production software engineering world", it's a solid career choice, from everything that can be predicted right now. Existing, non-startup companies are using ML/AI to solve real problems and its buzzword powers are shrinking every day. But regarding autonomous driving, there seems to be stagnation. We now got cars that can "autonomously drive in most conditions but required a driver at the wheel at all times" for many years now. Tesla FSD updates seem to be incremental at best. Is there any company left still planning 100% autonomous taxis that can get drunk people home? I don't think so. And that would be the fucking holy grail of the transportation business. There are about 18 million taxi drivers in the world and most of them would lose their job, saving customers and companies billions.
_8j50 4y ago
To be fair they are not going away soon, perhaps in a decade the initial investors will make $100 from it.
elisharobinson 4y ago
i am not siding with Uber but to claim that they are going to fail is a bit of hyperbole . the value proposition is quite simple for both drivers and passengers . for drivers you would make more income by driving more consistently , for passengers you get a cab instead of shouting like a cave-person on the street. It is true that there is an element of bezzle with money pumping and dumping over the last few years . They can be profitable as a much smaller company.
- hatenberg 4y ago
  Many cities in the world have cabs on equally capable apps now so that competitive advantage is gone. Nobody screams like a cave person on the street anymore
  - rciorba 4y ago
    And even before apps became common-place, in Europe it was common to call a dispatch and ask for a cab at an address.
    - sneak 4y ago
      Uber was founded because the same was true in SF; however then oftentimes the cab only arrived after an hour, if at all.
      - mudrockbestgirl 4y ago
        It's a fair value prop in SF, where you have to scream like a cave-person while wading through poop-filled streets with gun-wielding semi-homeless trying to mug you at each corner. Unfortunately for Uber the rest of the world doesn't look quite like that and normal taxis work just fine...
        thaumasiotes 4y ago
        > Unfortunately for Uber the rest of the world doesn't look quite like that and normal taxis work just fine... Not in the slightest. One of the biggest problems with normal taxis in Shanghai is that they won't stop if it's raining. And it rains all the time. I don't suddenly need a taxi less if it starts to rain; if anything, I need one more.
alkonaut 4y ago
Predatory pricing should be made more illegal than it is. No one wins when a company operates at a loss to kill incumbents in a market. At least for markets where the incumbents have no other protections (unregulated taxi markets). This is very few of Uber’s markets and probably not those where they do best, but the principle of not being allowed to operate at a loss with investor money year after year feels sound.
- bschne 4y ago
  This only occurred to me now in reference to Uber and other serial offenders, and I don't know what the situation in other countries is, but... In Switzerland there's actually a law against unfair competitive practices, and it has a clause prohibiting you from constantly or repeatedly (i.e. not as a one-off clearance sale or whatever) offering goods or services below cost! Wonder how it would go if you were to sue one of these companies operating here under that...
  - ReadTheLicense 4y ago
    Uber operates in "strict" (as in 'technically correct') adherence to local policy. That means, in places where the policy is strict, like for example Italy (Milan), they have only licensed taxi drivers with licensed taxi cars. And where law allows (even with a loophole) they have less. Uber is structured so that each country has one business entity, thus it's very easy for them to say "our Swiss entity does not do any such thing in Switzerland". Many EU countries have similar laws too, btw - and they have a very clear separation of base price and promo price here, and the base price is regulated.
    - rafale 4y ago
      This sounds like a great way to quantify policy/law impact on businesses, by comparing their financial performance.
      - swores 4y ago
        Obviously to an extent it can be compared, but considering laws aren't the only difference (economics of how many people in each country need work at what price, culture of who owns cars vs uses taxis vs cycles, etc etc) it would take an awful lot of analysis to compare them usefully (which no doubt various people both inside and outside Uber are doing, of course - and Ive no knowledge of how successful they are at that). You couldn't just look at one being twice as profitable and say "that's the effect of country A's legal regulations vs. country B's".
fallingknife 4y ago
I stopped reading at the claim that Uber provides worse service at a higher price than traditional cab companies. No one who experienced the hell of taxis could ever say that with a straight face.
- ghoomketu 4y ago
  100x more true for places like India which has notorious taxi and auto drivers who would charge you anywhere from 2x to 10x if you don't know the area or see you in need. For all the things uber has done wrong they have done a lot of right too. It was truly a nightmare to get a taxi here and most autos and taxis won't even stop or refuse fare outright if it wasn't for a profitable route.
- mst 4y ago
  Taxi quality varies wildly by location. In a lot of places that's absolutely true. In a lot of places that's a laughable idea that will probably never be true.
- Semaphor 4y ago
  This is very location dependent.
shreyshnaccount 4y ago
I don't get the endgame here. Uber provides super cheap cab rides by going into a loss so competitors don't spring up. then eventually when they've dominated the market they do what? increase prices? so competitors spring up again? makes no sense
- Eji1700 4y ago
  Regulatory capture most likely. As shitty as cabs were, they also had regulations to follow (in theory). Sooo they'll do something similar. Lock up the market, do all the suuuper unethical political junk they're known form, and make it impossible for anyone to compete with them. THEN they'll jack up the prices.
  - thriftwy 4y ago
    That's not very bright proposition. Suppose they have captured the market regulatorily and jacked up prices. Sure they have defended from new start-ups. What would prevent a big player such as Amazon or Meta from entering their market? They can surely afford to allocate tens of billions to do so. They can also hire an expensive team of lawyers and execs to enter this regulated market.
- incrudible 4y ago
  The idea is that Uber will develop a self-driving car that will ultimately offset its loss leader, much like Amazon and AWS.
  - semiquaver 4y ago
    That was the idea once; They gave up on that part, their self driving car division has been shuttered and they don’t plan to replace it. From the article: > Uber's bag of tricks is nearing its bottom. Its fantasy of magic, self-driving robo-taxis is over (the company spent $2.5b to make a car that had a fatal crash every 0.25 miles, and then had to pay another company $400m to take the division off its hands): > https://pluralistic.net/2020/12/08/required-reading/#goober
thematrixturtle 4y ago
I think this article conflates two different things: the concept of app-based ride-hail services like Uber, for which there is clearly a huge amount of demand even without VCs juicing it; and the actual implementation of it by Uber, which is a hugely bloated and unsustainable company that's proven primarily to be an unparalleled bonfire of VC money. > That is, rather than having to wait longer because drivers tapped "accept," realized they'd lose money on your business, and tapped "cancel," you would now wait longer because drivers just didn't accept your run. The blog is implying this is a bad thing, but this seems preferable both from the driver and rider's POV? > Today, Uber offers the same poor service as traditional taxis, but must charge enormously higher fares because of its much higher cost structure. No, Uber's model of being able to order a car from anywhere to anywhere with transparent location tracking, routing and pricing (as in, you know what you'll pay) has always been and remains superior to "traditional" taxis. In some markets taxi companies have finally followed suit, down to fares fixed in advance, but by doing so they've also shown the superiority of the Uber model.
- AndyMcConachie 4y ago
  Where I live, Rotterdam NL, traditional taxis work pretty well. Not everywhere is as fucked up as America.
  - boudin 4y ago
    Never really understood why people use uber either until I went to Austin. They are not filling a gap in taxis in my opinion but in public transport.
    - thematrixturtle 4y ago
      In America, that's a pretty big gap.
Havoc 4y ago
But they haven't run out of VC money so who cares, right?
- semiquaver 4y ago
  It’s a public company. VC funding necessarily implies pre-IPO. They absolutely have run out of VC money and are now preying on investors in the stock market.
epolanski 4y ago
As someone who has used Uber quite a bit across Europe I cannot understand how they are not profitable. They take what 10/20% of the ride and they do millions of rides every day. I myself have spent few thousands in their service alone. How can they not be profitable after all these years.
- arlcode 4y ago
  If the costs per ride are higher than the fare, it doesn't matter how many they do. In the end they have to pay for all the maintenance and initial purchase of the vehicle as well even if they manage to put those on the driver's as well. Their "independent contractor" employment model doesn't work in some markets where they end up paying regular benefits and taxes.
  - higeorge13 4y ago
    Is there a break down on their cost per ride? Infra/engineering/marketing/local regulation/etc. ?
- origin_path 4y ago
  There's the ride subsidies of course, which have never gone away really. But also, Uber is a valley tech firm, meaning it has extremely high overheads. To service all those markets Uber employed 29,300 people last year, a roughly 30% increase from 2020, and note that isn't including the drivers. That's nearly 30,000 people in operations and software development of various kinds. Uber probably can't make money even if it stops subsidizing rides because the extra added value of a ride-hailing app (which is certainly non zero) is nonetheless not enough to offset the cost of having such a massive company, especially given that so many are earning some of the world's highest salaries.
- Exness199507 4y ago
aetherson 4y ago
This article's tone is so over the top negative that I think it hurts its credibility. Most of its criticisms are directionally valid, but overstated. If you dig down into the source that this article is based on ( https://www.nakedcapitalism.com/2022/08/hubert-horan-can-uber-ever-deliver-part-thirty-one-ubers-legitimate-cumulative-losses-top-32-billion-pl-improvements-driven-by-much-higher-fares-and-multi-billion-dollar-transfers-from.html https://www.nakedcapitalism.com/2022/08/hubert-horan-can-ube... ), which is also pretty grumpy in tone but not quite as over the top, I think what you see is that Uber has genuinely improved its finances materially -- it's not all accounting tricks. But it's still hard to see how Uber gets from here to the kind of sustainably significantly profitable place it will need to get eventually in order to justify its valuation.
JCM9 4y ago
Uber has also just gotten really bad from a product standpoint in so many cities too. Canceled rides, terrible customer service. It seems like other app platforms are attracting more/better drivers. Plain old taxis are better than Uber in many cities again. Quite ironically Uber has become the terrible bloated transportation option with a bad customer experience that they set out originally to replace.
matsemann 4y ago
What is Uber's "moat"? After all, it's "just an app" and there are so many of them now. Most drivers here have like 5 different ride hailing apps installed and take a ride from whatever shows up.
- JCM9 4y ago
  I knew this whole space was a race to the bottom business wise the first time I had a driver rock up with multiple phones on the dash and he described how all the drivers in the area arbitrage the different companies against each other. I joked as a rider I had just done the same thing and taken the cheapest one. I certainly enjoyed my VC subsidized transportation while that craziness lasted.
- nroets 4y ago
  Uber will learn to satisfy riders' preferences: Some riders what VIP treatment, others want the fastest possible service. Some riders live in a bad neighbourhood and want a driver to take them there. Uber is also learning which drivers are not trustworthy and removing them from their system. Over time users will have bad experiences with competing apps and delete them from their phones.
the_black_hand 4y ago
I agree with the article about Uber's accounting games, but many of the arguments about why Uber can't be successful are unconvincing. > In Q2 alone, Uber transferred $2.8b from its drivers to its shareholders. From a business point of view thats exactly what it should be doing. Increasing margins and paying contractors less is what a business. I understand the ethical questions about minimum wage and pay for drivers, but from a purely business POV shareholders would be happy to see wider margins. > Today, Uber is offering much worse service at much higher prices than the traditional taxi I disagree. Many customers use Uber cause of the user experience, trust, easy of use e.t.c there's intangible value other than the sticker price. Cabs are terrible. Driver's are mean. You have to tell them you address, whistle down a cab. Even worse, in many foreign countries you have to haggle with the drivers or stare at the meter to make sure ur not scammed. not to mention the increased risk of theft. Personally, I've had so many nightmare experiences with cabs. Many Gen Zs/Millenials don't even know what a taxi cab is or how to wave one down. The proof is in the pudding. If customers are booking Ubers even if the price is more, it means they value the Uber brand and experience. > But sloppy drafting errors led to the California Supreme Court striking down Prop 22 Missing context. Prop 22 passed the ballot i.e people voted for it. It was later ruled unconstitutional but will still be in effect until the appeals. The gig-worker economy is too important today that something has to be done. I don't know if Uber will win these cases but eventually some legislation will come up. > Riders who face spiraling prices will drive their own cars, or take a bus, or take a cab, or take a Lyft. Why? The data is not indicating that. I'm writing this from a $2,000 Macbook even though I know very well a $200 PC can do the job just as well. Brand/User experience matter. If Uber cultivates a strong brand it may very well prove to have pricing power the same way people dish out cash on overpriced and often inferior Apple products. It may seem dumb that many kids are willing to pay $20 to get a $5 burger delivered to their doorstep but some people value convenience. I'm not saying Uber will succeed but they do have an opportunity. The TAM of their business is literally in the trillions. They probably have more data on transport and logistics than anybody else.
- vwcx 4y ago
  > Cabs are terrible. Driver's are mean. I'm sorry they hurt you, but I assure you this is not a universal trait of taxi drivers everywhere in 2022.
jwithington 4y ago
Uber has a still? Uber whiskey is coming??
shp0ngle 4y ago
On one hand, I hate Uber/Grab sham financials. And how it pretends it’s “car sharing” and not just regular taxi. (Also the Grab/Uber deal was explicitly illegal and was even ruled illegal in Singapore. Note that Grab and Uber are both owned by Masa and own each other.) And their explicit business plan of “losing on each sale in ordering to monopolise and then increase prices” is idiotic. (People always cite Amazon and their razor thin margins, but… Amazon never lost money on every sale.) On the other hand, they vastly improved experiences of both sides of the taxi deal. That’s just the truth. And articles like this pretend the state before these apps was beautiful pristine state of perfect taxis and public transport and they destroyed that. No? They didn’t. So… I’m glad that those apps exist, even when their economics make no sense.
varispeed 4y ago
Author hears the bells, but can't quite put a finger on it. If a highly successful company is not profitable, then it usually means only one thing - they are very good at tax avoidance. Profit attracts Corporation Tax, so big corporation use creative accounting techniques to transfer it somewhere where they don't have to pay tax or it is very very low. There are other reasons why one would want to pocket the profits / hide - for instance when a salary attracts very high tax - paying a CEO level salary may seem like a waste. So what often companies do, they are signing a contract with a company indirectly controlled by a CEO level for services that sound legitimate and pay the fees. Then that company is doing it's own creative accounting. People forget that a company does not have to have profit to be healthy. Profit comes after all obligations and investments are paid. It is actually in the company interest to not have any profit, so they reinvest money and pay good salaries. Only people interested in profit are shareholder and usually it comes at the expense of people who actually do the work.
tmsh 4y ago
The post only mentions Uber Eats in the article’s tags. That lowers credibility a bit I think? Uber Eats seems like it has the potential to level out the lack of profitability on the rides side. And they have a better, more reliable service than Doordash, imho, which has a 32B market cap.

88 points by simongray 4y ago

Two words: gig economy. Or put another way: shite.

Shouldn't at least several people go to prison for this kind of thing? If my personal accounts were 'works of absolute fiction' I certainly would, what gives?

Traubenfuchs 4y ago
A company only needs to be able to claim that they really believed someones fair market value estimation of a company and they are good.

Traubenfuchs 4y ago

I think they were really betting on autonomous driving, fueled by Elon Musks lies and hype. They built up the digital infrastructure and so much clout their company name & product became a verb on the level of googling. But now taxi-level 100% autonomous no-driving-wheel cars are farther away than ever. The current broad generation of machine learning and sensors reached its maximum and it‘s looking bleak.

smcl 4y ago
I don't know if Elon Musk's nonsense was involved - they had their own autonomous driving project in-house didn't they?
- nowherebeen 4y ago
  Have you forgetton the whole Google lawsuit against Uber? Anthony Levandowski. Uber’s self driving project is still no where near production ready.
  - lozenge 4y ago
    What does that have to do with Musk? Musk never worked at Google and Tesla s self driving technology lacks key sensors compared to what Waymo and Uber were working with.
    - fallingknife 4y ago
    - jmeister 4y ago
      /u/failingknife, I cannot reply to you, but thanks for making only relevant comment on this entire thread.
      - rightbyte 4y ago
        You copy pasted something you were about to write on Reddit?
        smcl 4y ago
        The person they were replying to was flagged, so you may not see it unless you set showdead in your profile
      - smcl 4y ago
        I can't see why it's relevant. We're talking about Uber's bet on self-driving cars and this person commented with an bitter, offtopic gripe about how they think HN commenters are losers.
  - smcl 4y ago
    I think you mis-read - I'm saying they did have a self-driving car project, not that they didn't. And yeah nobody has production ready self-driving tech, it wouldn't surprise me if they had canned it.
    - nowherebeen 4y ago
- kibibu 4y ago
  Yes, they quite famously killed a person
- Traubenfuchs 4y ago
  Just forget about me naming him. What I really meant was simply the whole autonomous driving bubble that just had him as its figurehead.
snowpiercer 4y ago
Wow. ..I'm really surprised by this comment..what do you mean by "farther away than ever" . I just recently started learning to code and I really want to go into machine learning ..does it mean there isn't any major innovation right now in the field ?
- occz 4y ago
  That's probably not what they meant. What I interpreted it as was that the current iteration of machine learning will not be able to satisfactorily solve full self-driving cars.
  - Traubenfuchs 4y ago
    > That's probably not what they meant. It is, somewhat. The current generation of software and hardware was pushed to its limits by the smartest AI/ML engineers in the world and the best we got is Tesla FSD which is in no way ready to replace taxis and still needs someone at the wheel at all times. 100% self driving taxis for drunk night crawlers are not on the horizon anymore.
- Traubenfuchs 4y ago
  Modern ML/AI became a fully accepted, mature part of the "production software engineering world", it's a solid career choice, from everything that can be predicted right now. Existing, non-startup companies are using ML/AI to solve real problems and its buzzword powers are shrinking every day. But regarding autonomous driving, there seems to be stagnation. We now got cars that can "autonomously drive in most conditions but required a driver at the wheel at all times" for many years now. Tesla FSD updates seem to be incremental at best. Is there any company left still planning 100% autonomous taxis that can get drunk people home? I don't think so. And that would be the fucking holy grail of the transportation business. There are about 18 million taxi drivers in the world and most of them would lose their job, saving customers and companies billions.

_8j50 4y ago

To be fair they are not going away soon, perhaps in a decade the initial investors will make $100 from it.

elisharobinson 4y ago

i am not siding with Uber but to claim that they are going to fail is a bit of hyperbole . the value proposition is quite simple for both drivers and passengers . for drivers you would make more income by driving more consistently , for passengers you get a cab instead of shouting like a cave-person on the street. It is true that there is an element of bezzle with money pumping and dumping over the last few years . They can be profitable as a much smaller company.

hatenberg 4y ago
Many cities in the world have cabs on equally capable apps now so that competitive advantage is gone. Nobody screams like a cave person on the street anymore
- rciorba 4y ago
  And even before apps became common-place, in Europe it was common to call a dispatch and ask for a cab at an address.
  - sneak 4y ago
    Uber was founded because the same was true in SF; however then oftentimes the cab only arrived after an hour, if at all.
    - mudrockbestgirl 4y ago
      It's a fair value prop in SF, where you have to scream like a cave-person while wading through poop-filled streets with gun-wielding semi-homeless trying to mug you at each corner. Unfortunately for Uber the rest of the world doesn't look quite like that and normal taxis work just fine...
      - thaumasiotes 4y ago
        > Unfortunately for Uber the rest of the world doesn't look quite like that and normal taxis work just fine... Not in the slightest. One of the biggest problems with normal taxis in Shanghai is that they won't stop if it's raining. And it rains all the time. I don't suddenly need a taxi less if it starts to rain; if anything, I need one more.

alkonaut 4y ago

Predatory pricing should be made more illegal than it is. No one wins when a company operates at a loss to kill incumbents in a market. At least for markets where the incumbents have no other protections (unregulated taxi markets). This is very few of Uber’s markets and probably not those where they do best, but the principle of not being allowed to operate at a loss with investor money year after year feels sound.

bschne 4y ago
This only occurred to me now in reference to Uber and other serial offenders, and I don't know what the situation in other countries is, but... In Switzerland there's actually a law against unfair competitive practices, and it has a clause prohibiting you from constantly or repeatedly (i.e. not as a one-off clearance sale or whatever) offering goods or services below cost! Wonder how it would go if you were to sue one of these companies operating here under that...
- ReadTheLicense 4y ago
  Uber operates in "strict" (as in 'technically correct') adherence to local policy. That means, in places where the policy is strict, like for example Italy (Milan), they have only licensed taxi drivers with licensed taxi cars. And where law allows (even with a loophole) they have less. Uber is structured so that each country has one business entity, thus it's very easy for them to say "our Swiss entity does not do any such thing in Switzerland". Many EU countries have similar laws too, btw - and they have a very clear separation of base price and promo price here, and the base price is regulated.
  - rafale 4y ago
    This sounds like a great way to quantify policy/law impact on businesses, by comparing their financial performance.
    - swores 4y ago
      Obviously to an extent it can be compared, but considering laws aren't the only difference (economics of how many people in each country need work at what price, culture of who owns cars vs uses taxis vs cycles, etc etc) it would take an awful lot of analysis to compare them usefully (which no doubt various people both inside and outside Uber are doing, of course - and Ive no knowledge of how successful they are at that). You couldn't just look at one being twice as profitable and say "that's the effect of country A's legal regulations vs. country B's".

fallingknife 4y ago

I stopped reading at the claim that Uber provides worse service at a higher price than traditional cab companies. No one who experienced the hell of taxis could ever say that with a straight face.

ghoomketu 4y ago
100x more true for places like India which has notorious taxi and auto drivers who would charge you anywhere from 2x to 10x if you don't know the area or see you in need. For all the things uber has done wrong they have done a lot of right too. It was truly a nightmare to get a taxi here and most autos and taxis won't even stop or refuse fare outright if it wasn't for a profitable route.
mst 4y ago
Taxi quality varies wildly by location. In a lot of places that's absolutely true. In a lot of places that's a laughable idea that will probably never be true.
Semaphor 4y ago
This is very location dependent.

shreyshnaccount 4y ago

I don't get the endgame here. Uber provides super cheap cab rides by going into a loss so competitors don't spring up. then eventually when they've dominated the market they do what? increase prices? so competitors spring up again? makes no sense

Eji1700 4y ago
Regulatory capture most likely. As shitty as cabs were, they also had regulations to follow (in theory). Sooo they'll do something similar. Lock up the market, do all the suuuper unethical political junk they're known form, and make it impossible for anyone to compete with them. THEN they'll jack up the prices.
- thriftwy 4y ago
  That's not very bright proposition. Suppose they have captured the market regulatorily and jacked up prices. Sure they have defended from new start-ups. What would prevent a big player such as Amazon or Meta from entering their market? They can surely afford to allocate tens of billions to do so. They can also hire an expensive team of lawyers and execs to enter this regulated market.
incrudible 4y ago
The idea is that Uber will develop a self-driving car that will ultimately offset its loss leader, much like Amazon and AWS.
- semiquaver 4y ago
  That was the idea once; They gave up on that part, their self driving car division has been shuttered and they don’t plan to replace it. From the article: > Uber's bag of tricks is nearing its bottom. Its fantasy of magic, self-driving robo-taxis is over (the company spent $2.5b to make a car that had a fatal crash every 0.25 miles, and then had to pay another company $400m to take the division off its hands): > https://pluralistic.net/2020/12/08/required-reading/#goober

thematrixturtle 4y ago

I think this article conflates two different things: the concept of app-based ride-hail services like Uber, for which there is clearly a huge amount of demand even without VCs juicing it; and the actual implementation of it by Uber, which is a hugely bloated and unsustainable company that's proven primarily to be an unparalleled bonfire of VC money. > That is, rather than having to wait longer because drivers tapped "accept," realized they'd lose money on your business, and tapped "cancel," you would now wait longer because drivers just didn't accept your run. The blog is implying this is a bad thing, but this seems preferable both from the driver and rider's POV? > Today, Uber offers the same poor service as traditional taxis, but must charge enormously higher fares because of its much higher cost structure. No, Uber's model of being able to order a car from anywhere to anywhere with transparent location tracking, routing and pricing (as in, you know what you'll pay) has always been and remains superior to "traditional" taxis. In some markets taxi companies have finally followed suit, down to fares fixed in advance, but by doing so they've also shown the superiority of the Uber model.

AndyMcConachie 4y ago
Where I live, Rotterdam NL, traditional taxis work pretty well. Not everywhere is as fucked up as America.
- boudin 4y ago
  Never really understood why people use uber either until I went to Austin. They are not filling a gap in taxis in my opinion but in public transport.
  - thematrixturtle 4y ago
    In America, that's a pretty big gap.

Havoc 4y ago

But they haven't run out of VC money so who cares, right?

semiquaver 4y ago
It’s a public company. VC funding necessarily implies pre-IPO. They absolutely have run out of VC money and are now preying on investors in the stock market.

epolanski 4y ago

As someone who has used Uber quite a bit across Europe I cannot understand how they are not profitable. They take what 10/20% of the ride and they do millions of rides every day. I myself have spent few thousands in their service alone. How can they not be profitable after all these years.

arlcode 4y ago
If the costs per ride are higher than the fare, it doesn't matter how many they do. In the end they have to pay for all the maintenance and initial purchase of the vehicle as well even if they manage to put those on the driver's as well. Their "independent contractor" employment model doesn't work in some markets where they end up paying regular benefits and taxes.
- higeorge13 4y ago
  Is there a break down on their cost per ride? Infra/engineering/marketing/local regulation/etc. ?
origin_path 4y ago
There's the ride subsidies of course, which have never gone away really. But also, Uber is a valley tech firm, meaning it has extremely high overheads. To service all those markets Uber employed 29,300 people last year, a roughly 30% increase from 2020, and note that isn't including the drivers. That's nearly 30,000 people in operations and software development of various kinds. Uber probably can't make money even if it stops subsidizing rides because the extra added value of a ride-hailing app (which is certainly non zero) is nonetheless not enough to offset the cost of having such a massive company, especially given that so many are earning some of the world's highest salaries.
Exness199507 4y ago

aetherson 4y ago

This article's tone is so over the top negative that I think it hurts its credibility. Most of its criticisms are directionally valid, but overstated. If you dig down into the source that this article is based on ( https://www.nakedcapitalism.com/2022/08/hubert-horan-can-uber-ever-deliver-part-thirty-one-ubers-legitimate-cumulative-losses-top-32-billion-pl-improvements-driven-by-much-higher-fares-and-multi-billion-dollar-transfers-from.html https://www.nakedcapitalism.com/2022/08/hubert-horan-can-ube... ), which is also pretty grumpy in tone but not quite as over the top, I think what you see is that Uber has genuinely improved its finances materially -- it's not all accounting tricks. But it's still hard to see how Uber gets from here to the kind of sustainably significantly profitable place it will need to get eventually in order to justify its valuation.

JCM9 4y ago

Uber has also just gotten really bad from a product standpoint in so many cities too. Canceled rides, terrible customer service. It seems like other app platforms are attracting more/better drivers. Plain old taxis are better than Uber in many cities again. Quite ironically Uber has become the terrible bloated transportation option with a bad customer experience that they set out originally to replace.

matsemann 4y ago

What is Uber's "moat"? After all, it's "just an app" and there are so many of them now. Most drivers here have like 5 different ride hailing apps installed and take a ride from whatever shows up.

JCM9 4y ago
I knew this whole space was a race to the bottom business wise the first time I had a driver rock up with multiple phones on the dash and he described how all the drivers in the area arbitrage the different companies against each other. I joked as a rider I had just done the same thing and taken the cheapest one. I certainly enjoyed my VC subsidized transportation while that craziness lasted.
nroets 4y ago
Uber will learn to satisfy riders' preferences: Some riders what VIP treatment, others want the fastest possible service. Some riders live in a bad neighbourhood and want a driver to take them there. Uber is also learning which drivers are not trustworthy and removing them from their system. Over time users will have bad experiences with competing apps and delete them from their phones.

the_black_hand 4y ago

I agree with the article about Uber's accounting games, but many of the arguments about why Uber can't be successful are unconvincing. > In Q2 alone, Uber transferred $2.8b from its drivers to its shareholders. From a business point of view thats exactly what it should be doing. Increasing margins and paying contractors less is what a business. I understand the ethical questions about minimum wage and pay for drivers, but from a purely business POV shareholders would be happy to see wider margins. > Today, Uber is offering much worse service at much higher prices than the traditional taxi I disagree. Many customers use Uber cause of the user experience, trust, easy of use e.t.c there's intangible value other than the sticker price. Cabs are terrible. Driver's are mean. You have to tell them you address, whistle down a cab. Even worse, in many foreign countries you have to haggle with the drivers or stare at the meter to make sure ur not scammed. not to mention the increased risk of theft. Personally, I've had so many nightmare experiences with cabs. Many Gen Zs/Millenials don't even know what a taxi cab is or how to wave one down. The proof is in the pudding. If customers are booking Ubers even if the price is more, it means they value the Uber brand and experience. > But sloppy drafting errors led to the California Supreme Court striking down Prop 22 Missing context. Prop 22 passed the ballot i.e people voted for it. It was later ruled unconstitutional but will still be in effect until the appeals. The gig-worker economy is too important today that something has to be done. I don't know if Uber will win these cases but eventually some legislation will come up. > Riders who face spiraling prices will drive their own cars, or take a bus, or take a cab, or take a Lyft. Why? The data is not indicating that. I'm writing this from a $2,000 Macbook even though I know very well a $200 PC can do the job just as well. Brand/User experience matter. If Uber cultivates a strong brand it may very well prove to have pricing power the same way people dish out cash on overpriced and often inferior Apple products. It may seem dumb that many kids are willing to pay $20 to get a $5 burger delivered to their doorstep but some people value convenience. I'm not saying Uber will succeed but they do have an opportunity. The TAM of their business is literally in the trillions. They probably have more data on transport and logistics than anybody else.

vwcx 4y ago
> Cabs are terrible. Driver's are mean. I'm sorry they hurt you, but I assure you this is not a universal trait of taxi drivers everywhere in 2022.

jwithington 4y ago

Uber has a still? Uber whiskey is coming??

shp0ngle 4y ago

On one hand, I hate Uber/Grab sham financials. And how it pretends it’s “car sharing” and not just regular taxi. (Also the Grab/Uber deal was explicitly illegal and was even ruled illegal in Singapore. Note that Grab and Uber are both owned by Masa and own each other.) And their explicit business plan of “losing on each sale in ordering to monopolise and then increase prices” is idiotic. (People always cite Amazon and their razor thin margins, but… Amazon never lost money on every sale.) On the other hand, they vastly improved experiences of both sides of the taxi deal. That’s just the truth. And articles like this pretend the state before these apps was beautiful pristine state of perfect taxis and public transport and they destroyed that. No? They didn’t. So… I’m glad that those apps exist, even when their economics make no sense.

varispeed 4y ago

Author hears the bells, but can't quite put a finger on it. If a highly successful company is not profitable, then it usually means only one thing - they are very good at tax avoidance. Profit attracts Corporation Tax, so big corporation use creative accounting techniques to transfer it somewhere where they don't have to pay tax or it is very very low. There are other reasons why one would want to pocket the profits / hide - for instance when a salary attracts very high tax - paying a CEO level salary may seem like a waste. So what often companies do, they are signing a contract with a company indirectly controlled by a CEO level for services that sound legitimate and pay the fees. Then that company is doing it's own creative accounting. People forget that a company does not have to have profit to be healthy. Profit comes after all obligations and investments are paid. It is actually in the company interest to not have any profit, so they reinvest money and pay good salaries. Only people interested in profit are shareholder and usually it comes at the expense of people who actually do the work.

tmsh 4y ago

The post only mentions Uber Eats in the article’s tags. That lowers credibility a bit I think? Uber Eats seems like it has the potential to level out the lack of profitability on the rides side. And they have a better, more reliable service than Doordash, imho, which has a 32B market cap.