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What am I misunderstanding about Uber's business model where it needs lots of capital to expand? It seems like it is just a middleman and doesn't need any capi
by outside1234 12y ago
What am I misunderstanding about Uber's business model where it needs lots of capital to expand? It seems like it is just a middleman and doesn't need any capital assets to expand into a geography - what am I missing?
- mattwad 12y agolegal costs?
- bfwi 12y agoLook at Uber's job postings, and you can see what kind of employees are required for each new geography.
- untog 12y agoIt needs to sell itself to drivers, for one. Manage drivers. Advertise...
- gaius 12y agoRaising a ton of VC and spending it on banner ads is sooooo 90s.
- threeseed 12y agoAt least in Australia, Uber is paying a ton of money in fine subsidisation to drivers. They are quite sizeable so would be interested if Uber is even making a profit.
- forrestthewoods 12y agoThey often bootstrap an area with cheap rates. They did -25% everywhere in the US last summer to compete with Lyft. Driver gets paid 100% but rider only paid 75%. I believe they eventually made a permanent -20% discount much to the chagrin of drivers who were suddenly making less money for the same work.
- choppaface 12y agoIt's also probably a lot easier now to take on VC and sell debt than it will be in the next 1-2 years. VC funding is starting to decline, it's anticipated that a good amount of oil-related corporate debt will probably default in the coming year, and interest rates will probably go up a bit. The opportunity to take Goldman client cash will only diminish from here.
- matthewowen 12y agoEvery time you take an UberPool and aren't matched to another rider, Uber pays out more to the driver than you pay to Uber (for unmatched UberPool rides riders get a 20% discount, but drivers get their full payout: this generally obliterates Uber's margin).