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The value is only partially in the driver base. Drivers are tangible. But the true value is intangible. There is enormous brand value in thinking "I'll get a

The value is only partially in the driver base. Drivers are tangible. But the true value is intangible. There is enormous brand value in thinking "I'll get an Uber" as a synonym for "I'll get a taxi, but right what I need it, and it probably will smell better." There is value of having that app on the phone, with credit card # already in place. But perhaps more important is that Uber is building a graph of everyone who wants to go somewhere at any point in time. (And where they all wanted to go in the past) This is what's worth $40 billion. If two companies have automatic cars, the one who knows where they want to go wins. Perhaps Google wanted to buy at $2 billion or $5, but not at $40.

dkarapetyan 12y ago
How many data points do you think you need to make predictions about where people want to go? Uber's data isn't as hard to get as you think. The article mentions also that Uber is already using Google maps to do routing so Google already has all the data it needs.
- mathattack 12y ago
  Google Maps has destinations and directions. Not sure if they store histories of where people searched for directions. (Anyone in the know have thoughts?) Uber has, or eventually will have, "User 1VB7X has hailed an Uber from 45th and 6th nine times out of ten when they were within two blocks. They are now 5 blocks away and headed in that direction." If you add this up for everyone who has the app on their phone, it becomes incredibly powerful for optimizing the motion of Uber cars. I'm still not 100% convinced that Uber wins, but the value of the company is in their data, and the location signals they get from everyone who has the app.
  - andygates 12y ago
    I have a directions search history, and as half of my searches are "from here", that ties my searches to my location as well.
  - uptown 12y ago
    "Google Maps has destinations and directions. Not sure if they store histories of where people searched for directions. (Anyone in the know have thoughts?)" They do have your search history. And if you've established addresses as "Home" and "Work" or others with Google Maps they have that too. They also have your social graph based on your emails if you or those you communicate with use GMail. And they probably have the addresses of those people you correspond with, over email, to use as destinations. And they have your emails to connect relationships across that graph when your Mom signs her email "Love Mom". And they may have your calendar to figure out where you may want to go on what date if you use Google for your calendar. They have street traffic information to let you know how long it'll take you to get where you're going. They may have your Uber receipts in your GMail to connect an Uber driver's use of Google Maps with your email receipt -- so they now may know at least some of the "who" was riding in which Uber at any given time. Google likely knows WAY more than Uber does about its potential riders.
visakanv 12y ago
> There is enormous brand value in thinking "I'll get an Uber" as a synonym for "I'll get a taxi, but right what I need it, and it probably will smell better." There is value of having that app on the phone, with credit card # already in place. Hrm. I see where you're coming from, but I can also imagine opening up Google Maps, clicking directions to go somewhere, and then when it says "press to be picked up by your driverless car", I'd just press that. If it were cheaper than Uber, I wouldn't bother subsequently opening up Uber to look for something. Caveat: I'm a person who currently uses buses and trains because I can't afford Uber. I might not be representative, but I don't care about Uber. I'd be happy to jump ship, and I'm very used to using Google to search for things.
- mathattack 12y ago
  I'm not saying that Uber wins, just that it has quite a bit of value independently. And similar to Google with search (which learns each time someone searches) there is a reinforcing edge when you're first. The key probably isn't price. I think it will be convenience. If Uber knows to have a car nearby you when you need it, you'll pay a dollar more to save 10 minutes. (Same with Google) I wonder about other entrants... Perhaps Apple? Or Tesla?
  - visakanv 12y ago
    From my POV of Tesla's mission, I think Tesla would be happy to bow out of this fight and probably go into battery production/innovation. Giga-factory and all. I think for ME as a consumer, I will prioritize price over convenience unless I'm in a huge rush... so as long as the car arrives in 20-mins ish, I'll pick the cheaper option. But I suppose someone will aim to be hyper-fast, and someone will aim to be hyper-cheap. Pretty exciting to be a consumer either way! (I'm probably being naive...)
    - smeyer 12y ago
      >so as long as the car arrives in 20-mins ish I have to say, this is not a use case that any of my friends typically use when using Uber right now. Often it's people going to work or to meet up with other people (20 minutes makes you very late), going to a show or other event (same), or going home after some event/night out (waiting 20 minutes is a pain in the ass, since you're not at home). A 20 minute delay could be acceptable for running errands and such, but I think that is a pretty small fraction of Uber's current market.
puranjay 12y ago
I understand where you are coming from, but the competitor here is Google. The Google brand is arguably even stronger than the Uber brand and I don't see why it wouldn't transplant easily to cabs. People trust and like Google. They might as well like its cabs. This is particularly true because unlike Uber, Google hasn't been maligned by the perception of being a bully (the 'Dont be Evil' mantra is widely still held to be true by the general public). Here in India, for instance, the Uber brand was tarnished heavily by a rape in New Delhi followed by utterly callous handling of the case by Uber employees (which included sending everyone, along with the rape victim, an email saying 'we are back!'). Google doesn't have that problem. As for payment information, Google already has that for a lot of consumers thanks to Google Play
cabalamat 12y ago
> There is enormous brand value in thinking "I'll get an Uber" Yes, and there is enormous value in "I'll Google it", but that doesn't stop people from using other search engines (and online services) as soon as a better one comes along, because the cost to the user of switching is small. Name recognition does not, IMO, make Uber worth $40bn.
- deleted 12y ago
  [deleted]
- mathattack 12y ago
  It's not just name recognition - it's the data, and already being the first app on someone's phone to do the task.
jasim 12y ago
Brands do carry a premium (eg: soft-drinks, luxury goods), but not in this case. Here the brand value is overshadowed by utility: access, comfort, and pricing.
marcosdumay 12y ago
> If two companies have automatic cars, the one who knows where they want to go wins. Kind of a good explanation why Google brought Waze.
exelius 12y ago
I don't know that Google has a disadvantage to Uber on data: they likely already have your credit card number (Google Play or Google Checkout) and they also likely have your location history. Car service apps like Uber are headed towards commoditization. My local taxi company has one; it works almost as well as Uber but at half the price. Throw in self-driving cars (where Google has a technological advantage over Uber) and brand value becomes really important. The market will be completely commoditized if anyone with money can go buy a fleet of cars and build an app for $100k (replicating Uber would not be complicated). Branding is the biggest differentiator in commoditized markets. CPG companies are the masters of this: Tide doesn't actually get your clothes any cleaner than the store brand, but you pay for it anyway. They may adjust the packaging too (pods versus powder versus liquid) but fundamentally, it's the same product. I would expect similar segmentation to happen in the car-on-demand market: one company will specialize in cargo, another in short-distance trips, another in trips to the airport, etc. There will likely be very little difference between these services other than branding/positioning.
raisedbyninjas 12y ago
I think we're putting the cart before the horse in who wins the driverless taxi industry. The winner must have a reservation system and a driverless car. One of these problems is hard and Google has clearly made some progress already. The first mover advantage is enormous because when it hits, it will be a media frenzy somewhere between the launch of the iPhone and landing on the moon (the first time). The name attached to all of those media hits will steamroll any competitor.
- mathattack 12y ago
  True. It's hard. And the industry may not have a winner. That Uber is at all in contention is a big surprise. It's also what justifies the valuation.
rasz_pl 12y ago
>There is enormous brand value in thinking "I'll get an Uber" I'll get an Uber, maybe I wont get raped I'll get an Uber, maybe I wont be billed $200
dojomouse 12y ago
Uber's brand doesn't seem very strong to me ("Oh yeah! Uber! They're the ones who deny any responsibility for accidents and attempted kidnappings of users of their service, right?"), and in any case it's only going to be significant for the tiny fraction of the travelling population who currently use Uber. The vast majority (for whom the human chauffeur model is too expensive) will have no brand loyalty at all, and are there for the taking. Also, for Google, getting the necessary visibility is basically effortless. They have Maps (which Uber integrated their hail system into for a reason), and they have incredible robot cars that will be featured everywhere when they appear anywhere. As for the trip data: a) I don't think this is either worth as much or is as hard to get as Uber would like their investors to think. You only really need average bulk commuter flows in order to get a near optimal fleet distribution, and this is surprisingly easy to get surprisingly quickly, and especially easy to manage when you don't need to worry about the vehicle distribution constraints human drivers create. b) Google have this data in spades through Android device tracking. It doesn't matter that it's anonymized and aggregated, because individual trips don't matter; only having your cars in roughly the right place to respond to specific demands. I think Uber have grossly misrepresented the extent to which this market (personal transport using self driving vehicles) will be 'winner take most', and equally grossly misrepresented the extent to which their current position creates any sort of moat guaranteeing them the 'win'.

dkarapetyan 12y ago

How many data points do you think you need to make predictions about where people want to go? Uber's data isn't as hard to get as you think. The article mentions also that Uber is already using Google maps to do routing so Google already has all the data it needs.

mathattack 12y ago
Google Maps has destinations and directions. Not sure if they store histories of where people searched for directions. (Anyone in the know have thoughts?) Uber has, or eventually will have, "User 1VB7X has hailed an Uber from 45th and 6th nine times out of ten when they were within two blocks. They are now 5 blocks away and headed in that direction." If you add this up for everyone who has the app on their phone, it becomes incredibly powerful for optimizing the motion of Uber cars. I'm still not 100% convinced that Uber wins, but the value of the company is in their data, and the location signals they get from everyone who has the app.
- andygates 12y ago
  I have a directions search history, and as half of my searches are "from here", that ties my searches to my location as well.
- uptown 12y ago
  "Google Maps has destinations and directions. Not sure if they store histories of where people searched for directions. (Anyone in the know have thoughts?)" They do have your search history. And if you've established addresses as "Home" and "Work" or others with Google Maps they have that too. They also have your social graph based on your emails if you or those you communicate with use GMail. And they probably have the addresses of those people you correspond with, over email, to use as destinations. And they have your emails to connect relationships across that graph when your Mom signs her email "Love Mom". And they may have your calendar to figure out where you may want to go on what date if you use Google for your calendar. They have street traffic information to let you know how long it'll take you to get where you're going. They may have your Uber receipts in your GMail to connect an Uber driver's use of Google Maps with your email receipt -- so they now may know at least some of the "who" was riding in which Uber at any given time. Google likely knows WAY more than Uber does about its potential riders.

visakanv 12y ago

> There is enormous brand value in thinking "I'll get an Uber" as a synonym for "I'll get a taxi, but right what I need it, and it probably will smell better." There is value of having that app on the phone, with credit card # already in place. Hrm. I see where you're coming from, but I can also imagine opening up Google Maps, clicking directions to go somewhere, and then when it says "press to be picked up by your driverless car", I'd just press that. If it were cheaper than Uber, I wouldn't bother subsequently opening up Uber to look for something. Caveat: I'm a person who currently uses buses and trains because I can't afford Uber. I might not be representative, but I don't care about Uber. I'd be happy to jump ship, and I'm very used to using Google to search for things.

mathattack 12y ago
I'm not saying that Uber wins, just that it has quite a bit of value independently. And similar to Google with search (which learns each time someone searches) there is a reinforcing edge when you're first. The key probably isn't price. I think it will be convenience. If Uber knows to have a car nearby you when you need it, you'll pay a dollar more to save 10 minutes. (Same with Google) I wonder about other entrants... Perhaps Apple? Or Tesla?
- visakanv 12y ago
  From my POV of Tesla's mission, I think Tesla would be happy to bow out of this fight and probably go into battery production/innovation. Giga-factory and all. I think for ME as a consumer, I will prioritize price over convenience unless I'm in a huge rush... so as long as the car arrives in 20-mins ish, I'll pick the cheaper option. But I suppose someone will aim to be hyper-fast, and someone will aim to be hyper-cheap. Pretty exciting to be a consumer either way! (I'm probably being naive...)
  - smeyer 12y ago
    >so as long as the car arrives in 20-mins ish I have to say, this is not a use case that any of my friends typically use when using Uber right now. Often it's people going to work or to meet up with other people (20 minutes makes you very late), going to a show or other event (same), or going home after some event/night out (waiting 20 minutes is a pain in the ass, since you're not at home). A 20 minute delay could be acceptable for running errands and such, but I think that is a pretty small fraction of Uber's current market.

puranjay 12y ago

I understand where you are coming from, but the competitor here is Google. The Google brand is arguably even stronger than the Uber brand and I don't see why it wouldn't transplant easily to cabs. People trust and like Google. They might as well like its cabs. This is particularly true because unlike Uber, Google hasn't been maligned by the perception of being a bully (the 'Dont be Evil' mantra is widely still held to be true by the general public). Here in India, for instance, the Uber brand was tarnished heavily by a rape in New Delhi followed by utterly callous handling of the case by Uber employees (which included sending everyone, along with the rape victim, an email saying 'we are back!'). Google doesn't have that problem. As for payment information, Google already has that for a lot of consumers thanks to Google Play

cabalamat 12y ago

> There is enormous brand value in thinking "I'll get an Uber" Yes, and there is enormous value in "I'll Google it", but that doesn't stop people from using other search engines (and online services) as soon as a better one comes along, because the cost to the user of switching is small. Name recognition does not, IMO, make Uber worth $40bn.

deleted 12y ago
[deleted]
mathattack 12y ago
It's not just name recognition - it's the data, and already being the first app on someone's phone to do the task.

jasim 12y ago

Brands do carry a premium (eg: soft-drinks, luxury goods), but not in this case. Here the brand value is overshadowed by utility: access, comfort, and pricing.

marcosdumay 12y ago

> If two companies have automatic cars, the one who knows where they want to go wins. Kind of a good explanation why Google brought Waze.

exelius 12y ago

I don't know that Google has a disadvantage to Uber on data: they likely already have your credit card number (Google Play or Google Checkout) and they also likely have your location history. Car service apps like Uber are headed towards commoditization. My local taxi company has one; it works almost as well as Uber but at half the price. Throw in self-driving cars (where Google has a technological advantage over Uber) and brand value becomes really important. The market will be completely commoditized if anyone with money can go buy a fleet of cars and build an app for $100k (replicating Uber would not be complicated). Branding is the biggest differentiator in commoditized markets. CPG companies are the masters of this: Tide doesn't actually get your clothes any cleaner than the store brand, but you pay for it anyway. They may adjust the packaging too (pods versus powder versus liquid) but fundamentally, it's the same product. I would expect similar segmentation to happen in the car-on-demand market: one company will specialize in cargo, another in short-distance trips, another in trips to the airport, etc. There will likely be very little difference between these services other than branding/positioning.

raisedbyninjas 12y ago

I think we're putting the cart before the horse in who wins the driverless taxi industry. The winner must have a reservation system and a driverless car. One of these problems is hard and Google has clearly made some progress already. The first mover advantage is enormous because when it hits, it will be a media frenzy somewhere between the launch of the iPhone and landing on the moon (the first time). The name attached to all of those media hits will steamroll any competitor.

mathattack 12y ago
True. It's hard. And the industry may not have a winner. That Uber is at all in contention is a big surprise. It's also what justifies the valuation.

rasz_pl 12y ago

>There is enormous brand value in thinking "I'll get an Uber" I'll get an Uber, maybe I wont get raped I'll get an Uber, maybe I wont be billed $200

dojomouse 12y ago

Uber's brand doesn't seem very strong to me ("Oh yeah! Uber! They're the ones who deny any responsibility for accidents and attempted kidnappings of users of their service, right?"), and in any case it's only going to be significant for the tiny fraction of the travelling population who currently use Uber. The vast majority (for whom the human chauffeur model is too expensive) will have no brand loyalty at all, and are there for the taking. Also, for Google, getting the necessary visibility is basically effortless. They have Maps (which Uber integrated their hail system into for a reason), and they have incredible robot cars that will be featured everywhere when they appear anywhere. As for the trip data: a) I don't think this is either worth as much or is as hard to get as Uber would like their investors to think. You only really need average bulk commuter flows in order to get a near optimal fleet distribution, and this is surprisingly easy to get surprisingly quickly, and especially easy to manage when you don't need to worry about the vehicle distribution constraints human drivers create. b) Google have this data in spades through Android device tracking. It doesn't matter that it's anonymized and aggregated, because individual trips don't matter; only having your cars in roughly the right place to respond to specific demands. I think Uber have grossly misrepresented the extent to which this market (personal transport using self driving vehicles) will be 'winner take most', and equally grossly misrepresented the extent to which their current position creates any sort of moat guaranteeing them the 'win'.