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Uber Bonds Term Sheet Reveals $470M in Operating Losses

104 points by dzhao 11y ago

ravenkat 11y ago
This is really interesting. I believe this might be attribute to all the Uber promotions in Asia. I have heard from all my friends in India/China that Uber rides are actually free for around 10-15 rides. Also, they are giving tons of money to Drivers to promote Uber in India. An average Uber driver in Bangalore earns 110000 INR per month where as an entry level software engineer in GOOG/AMZN in India earns 80000 INR/month. I was shocked that one of my friends who drove Uber in Bangalore told me that he made 180000 INR two months back. It would be interesting to know Uber's customer acquistion cost and driver acquisition cost.
- cheriot 11y ago
  I'm still surprised that Uber is entering such competitive markets. I mean, in much of the western world, they're using a mobile app to side step cab hailing laws and break long standing taxi oligopolies. Does anyone know what market flaws they're solving in India and Asia?
  - rodgerd 11y ago
    The same is true in New Zealand, where the only real requirements to be a taxi are around having a passenger endorsement to your license and police background checks. > Does anyone know what market flaws they're solving in India and Asia? Well the only market flaw they appear to be solving here is that they aren't hoarding more of the money in the market...
    - jordanthoms 11y ago
      In NZ the advantage is convenience and cost - you can get a ride far faster, payment is automatic, and the rates are lower, especially for shorter trips, than the incumbent taxi companies. Some of the local competitors have some of that (e.g. Zoomy), but they charge extra fees for paying though the app which makes them expensive, and also means you need to go through more of a process when the ride is finished.
  - colechristensen 11y ago
    I don't like how uber flaunts the law in so many places, but their competitive advantage doesn't come from non-compliance. The service is plainly better. The cars are better, the drivers are rated, payment is easier, hailing is easier, knowing where your cab is and how long it will be and how much is will cost before you start your ride ... is better. I live in the Twin Cities ... not a place where cabs are dense enough to just hail one walking down the street (unless it's in a prime drinking/sporting hour & location). Uber, Lyft, and the city of Minneapolis worked together to make uber-like services legal while giving concessions to the local traditional taxi drivers without compromising appropriate regulations. Everyone behaved reasonably which is sadly extremely rare everywhere else. The running theory is that unreasonable people either leave Minnesota or are found only after the snow thaws (please don't take this too seriously :) )
    - dylanjermiah 11y ago
      If flaunting the law results in an all round better service perhaps the laws don't do what they're supposed to.
      - colechristensen 11y ago
        There is a difference between trying to behave reasonably outside the law starting up while trying fix regulations fairly and in good faith when you get enough attention ... and ostentatious defiance, which is how many would describe Uber's behavior in many circumstances. 'flaunting' was a carefully chosen word.
        dylanjermiah 11y ago
        There is no behaving 'reasonably' outside the law. It's clear that if they had not won over the consumers, the people who the law is supposed to help, Uber would not exist.
  - khc 11y ago
    When I went to Delhi, I had to haggle with the tuk tuk driver. In some cities in China, there seemed to be the impression that some taxies were not trustworthy and some people only ride from particular taxi companies. Uber was not in China or India when I last visited, but they do solve the trust problem and I would take them when I visit again.
    - jordanthoms 11y ago
      This is a often understated advantage which Uber brings - the ability to land anywhere in the world and, modulo internet connection, get a safe ride within minutes where you know you won't be overcharged or longhauled.
  - howlingfantods 11y ago
    In China the taxi oligopolies are very strong and the taxis are notorious for poor service. In Beijing, they come with their doors locked and roll the windows down to ask you where you want to go, to see if they feel like going in that direction.
    - cma 11y ago
      Don't Uber drivers do the same by just not choosing fares that go to certain locations?
      - hooo 11y ago
        They don't see the destination before accepting
  - namanyayg 11y ago
    Primarily two things: 1. Time/Convenience: India does not have a system like America where you can hail cabs, they are only booked via an agency. These bookings need to be made some hours in advance. A pre-Uber thing (which I'm sure is still common in non-metropolotian parts of india) was to book an appropriately sized cab a day before we have a flight or train to catch. With Uber, request an Uber XL and you're done. 2. Price: As expected, these agencies work out to be pretty expensive. Uber is almost 50% cheaper. I personally use Uber when I'm with people or have luggage with me. Otherwise India does have a very good metro train and also has autorickshaws (aka tuk tuk) but the former is not point to point and the latter seats 3 people at best (and an Uber sometimes works out to be cheaper than a autorickshaw) I think that currently only a small part of India uses Uber significantly, but those who do have nothing but praise (anecdotal). Uber has better quality and better drivers for a better price. That said, the market seems large enough to warrant competitors like Ola and Meru.
  - _nedR 11y ago
    You are overestimating the competitiveness of these markets. In many(perhaps most) parts of India, these operate as unions/ price cartels. The tuk-tuks in particularly ignore meter pricing, in most parts of India, and may resort to violence/harassment to protect themselves from competition. Also most taxis/tuk tuks are independent and do not belong to any company. As such, I imagine they don't enjoy the benefits of economies of scale, efficiencies, and technology that Uber can afford. The quality of service is very poor, which makes Uber something of a Godsend. All these are points on which Uber can and is currently exploiting to gain a foothold, although they face strong challenges.
  - onewaystreet 11y ago
    If you think taxis are bad in the US, they are 10x worse outside of it.
    - SilasX 11y ago
      Maybe in the 3rd world, but I consistently hear that they are good in Germany: nice cars, show up on time, well trained drivers, overinsured, cheap.
  - peteretep 11y ago
    In Bangkok: * I'm yet to have an Uber driver clearly on methamphetamine, but a notable number of taximeter drivers * No quibbling over the price or trying to overcharge from Uber * Uber cars always have seatbelts, it's rare to find them in the back seat of taximeters * Even if the Uber driver doesn't know the place you're going to, they've got a map, and directions, and they'll use them * No worrying about if you've got sufficient loose change; you can be sure the taximeter driver will have a real shortage currently if you have only big notes And on and on and on...
  - ajani 11y ago
    Regular (black and yellow) taxis and rickshaws exist in Mumbai and very few other Indian cities including Delhi. However only in Mumbai do they ply according to a meter. The rest of the cities, they just charge whatever they feel like. Also most cab drivers will refuse to take passengers depending on destination on a regular basis. Maybe 50% of the time. Other radio cab services like Meru (the oldest radio cab service), need at least a half hour for booking. You also need to provide your destination. Also paying cash is a real pain, because most cab drivers will just claim to not have change and try to pocket it. Uber is a breath of fresh air here. It doesn't force a destination, you can instantly know whether cars are available or not, generally arrives in 10 minutes or so, and there is no cash payment needed. Where price is concerned, they've now managed to figure out the right pricing, so that an Uber ride costs only marginally more than a regular cab ride. e.g. Home to work takes around Rs 200 for a regular cab. Uber costs anywhere from Rs 220 (Uber X), to 350 (Uber Black).
- ajani 11y ago
  There are no free rides here in India (at least Mumbai). You get a promo of up to Rs 600 (USD 10) to start with. And that's it. I very much doubt the claims about drivers earning Rs 100,000+. I am going to ask my Uber drivers to and from work about how much they make.
personjerry 11y ago
Tangential to OP: How does HN feel about the "evilness" of Uber? At my school the general feel is that Uber is pretty evil, notably for its attitudes towards its drivers as well as towards Lyft.
- deleted 11y ago
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- my-bullshit-job 11y ago
  I didn't downvote you, but this should really be submitted as an AskHN.
  - personjerry 11y ago
    You're right, I will attempt not to hijack threads in the future.
- blhack 11y ago
  I feel like most of the hatred of Uber is manufactured, and that the people who whip themselves into a frenzy over it are allowing themselves to be manipulated.
  - chx 11y ago
    OK I will take your challenge. You can read a detailed description of why I hate Uber above (tl;dr: shady practices pushing towards indentured servitude and weaking the very rule of law). What's manufactured of it and how am I being manipulated?
- joshjkim 11y ago
  This is from an old post but I think you'll find interesting: Note on Uber: I think Uber is a great business and has a significantly net-positive impact on society, and I reserve judgment w/r/t whether TK and the other Uber execs are good or bad people - I can't conclude they are good because they run a good business, and I can't conclude they are bad because they say stupid things in public. Note on Nietzche: In Thus Spake Zarathrusa, the "uberman" concept is (maybe) considered a positive that humanity should work towards in the absence of belief in God, and I think it can still be understood as such. The fact that history has attributed some very negative actions to the belief in this concept (Hitler, Leopold & Loeb's murder, etc.) is, in my opinion, not definitive but at the same time not entirely insignificant, but I'm also a Christian that believes in capital-M Morality so I'm biased against nihilism in general. here's a thought I had a few months ago: how have there not been more thought pieces relating Uber-the-business's recent/relentless PR-debacles to Nietzsche's Ubermensch concept? I guess I'll give it a go. Uber/Travis and his execs seem to demonstrate the belief that they are "overmen" in that they seem to believe that they transcend the rules of society and are destined to shape society and its values rather than the other way around (probably something not too uncommonly shared with HN readers…). A few fun/funny/serious examples (in no particular order): 1. They outrightly express resistance to laws-as-is, and regularly threaten to ignore and sometimes do break those regs as necessary to conduct their business / benefit themselves and their consumers. 2. They hire lobbyists and other high-level political actors to change the laws they don't like and/or influence lawmakers - not atypical for a large company, but they did this earlier than most companies at their stage, with much more specific agendas in place and with a lot more PR surrounding it (the last may or may not have been their doing, hard to say). They have a belief (probably well-founded) that they can use the political process to make the law bend to their will. “Creating New Values” as any good uberman should. 3. They call their central system “Godmode” which implies that they, the viewers, are like God (a bit of a stretch I know…couldn’t resist) 4. They are proud that using the data in Godmode they can track, predict and identify specifics of other human being’s behavior. 5. The whole “we’ll pay our own researchers to smear journalists” thing - another good example of Creating New Values and constructing narratives. 6. The general feeling that Uber (perhaps correctly) operates against “states” and “sovereigns” and “systems” more than corporate competitors (who even writes about Lyft anymore these days…) The funny thing is that after thinking this through, all (good?) CEOs of major corporations basically operate like this (and so do many other tech-leaders - it is often associated with libertarian-leaning individuals like P. Thiel, etc.) - the difference is that Uber (1) has a name that calls it out and (2) seems to be especially prone to doing this in public and (3) sometimes appears to relishes their “overlord-iness” a little too much. You can call it being crass or being honest. In any case, they seem to be getting hip to the system and playing nice which of course can be viewed as just another level of the game, etc. - still, glad to see them do it because I overall think that playing nice is best (especially when you can afford to do it) and with a $50b val. and a couple billion raised, I think they can spare some good behavior, at least for now =)
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- chirau 11y ago
  Do you even understand what this means? It means they have 415M in revenue against costs of ~885M. Why is that clickbait?
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boomzilla 11y ago
This just shows that there is not much margin in this industry. They are essentially buying market share. However, as soon as Uber try to squeeze out some profit, they'll be undercut by the competitors.
- omarchowdhury 11y ago
  Competitors lowering their pricing is not going to magically cause an exodus of customers who are attached to using Uber. Price change would be gradual, if done correctly, imperceptible. Plus, those competitors are being squeezed right now, who knows if they will be around once Uber decides to raise pricing to move towards profit. As they say on Wall Street, the market can stay irrational longer than you can stay solvent. No doubt this saying is apt for this present circumstance, especially since Wall Street is involved. Uber is in the service industry, and winning in the service is not always on price.
  - erispoe 11y ago
    Customer attachement is still a largely unproven hypothesis. How many people in San Francisco have both Lyft and Uber? The cost, as a consumer, to use indifferently one or the other is null. The really hard challenge for Uber is: not becoming a commodity. I have no doubt they can crush incumbent taxi companies. How Uber will avoid being swallowed by the competitive beast they created is another, and harder, challenge.
  - onion2k 11y ago
    Let's assume their strategy works and they win an effective monopoly. What's stopping a "new Uber" coming along, funded by a couple of billion in VC money, to attack Uber's monopoly position by offering the same service cheaper. If winning a market can be done by subsidising your offering with VC cash then someone else will come along and do it as soon as Uber push for higher prices. While there's huge amounts of private equity money available Uber will never be able to raise prices, especially considering there are plenty of investors around who are unhappy about missing Uber's first few rounds.
    - 11y ago
dylanjermiah 11y ago
These are old numbers. IIRC they're estimating 10bn gross this year, with 20-30% margins.
- foobarqux 11y ago
  > These are old numbers. IIRC they're estimating 10bn gross this year, with 20-30% margins. That's gross margin.
- pbreit 11y ago
  I think you mean "net revenue" (rider receipts less payments to drivers). And if the $417m is from Q4 2014 (or even Q1 2015), 200% growth this year would surpass $3b (i.e., 30% of $10b).
sdenton4 11y ago
We're losing a dollar on every unit, but we'll make it up in volume!
geofft 11y ago
There was a comment thread earlier today about whether Uber is solving rich-people problems or common-people problems. I wonder the extent to which Uber's pricing is sustainable -- are they subsidizing uberX and uberPOOL pricing out of money they're raising, or are the debts just in the pursuit of growth to new cities? Or put another way, if they ceased all growth, froze prices, and laid off all engineering and marketing staff except for one person to keep up with mobile OS updates (but kept the staff to recruit drivers, deal with legal issues, etc.), would the company be profitable, or would it go bankrupt? I certainly don't complain when I get subsidized lunches delivered to me on VC money, but when existing Uber cities are debating regularizing Uber's legal status or just fixing the inefficiencies / problems with the taxi industry that Uber capitalized on, I want to know if Uber's going to be around for the people of that city, at the same effective prices, in 20 years.
- pbreit 11y ago
  It would be crazy profitable. But it is subsidizing a lot of rides right now, for example "Pool" rides where riders get the discount even if they are the only passenger.
  - chralieboy 11y ago
    That was the parent's question. If they froze prices with these subsidies, would it continue?
    - geofft 11y ago
      Yup. Alternatively, if they ended the subsidies and raised prices to match costs, would it go back to being a rich people's service? Don't get me wrong, taxis in many cities (especially SF) aren't serving the public reasonably. But Uber is only part of that conversation because it's price-competitive with taxis. If we thank them for identifying the problem, and then solve it by regularizing Uber's legal status, will the problem come back in three years once uberX and uberPOOL need to be profitable? Should we instead focus legislative effort on making taxis work?
- 11y ago
lsc 11y ago
I've been pondering how you'd break the uber lock on the market. I mean, I use Uber and not Lyft 'cause there are more Uber drivers, so on average, the car is gonna be there faster if I use Uber. However, if I had an app on my phone to check the nearest uber and the nearest lyft and the nearest whatever else? that would remove the barrier to entry that Uber has set up. in that case (at least when lyft had a nearby car) I'd be happy to take lyft or the local cab company, if they had a similar app. Of course, you'd end up with an arms race with uber, or whoever the dominant player was, with them trying to break your app. Interestingly, I bet that the second and third tier ride-sharing companies would cooperate, so if there were enough of them in the area, the idea would work fine even when uber was winning the arms race.
- Dwolb 11y ago
  You could break the Uber lock on the market if supply and demand are not sufficiently random to require Uber's marketplace to coordinate. That is, if it is usually convenient for Joe to depart from work at a certain hour and this is a time when Maureen typically likes to drive, both Joe and Maureen could potentially disintermediate Uber and split the marginal gain. This solution could look like a simple payments app, ride scheduler, and a local 'I'm here' function. Another option could be to structure the market to enable 'teams' of drivers (ie like a taxi company brand). Allow these teams to find further operational gains through pooling resources and greater coordination. This solution would re-imagine the Uber market and driver tools for full-time workers.
  - lsc 11y ago
    Eh, I think the "one big marketplace" model is best. I... honestly, I don't want another relationship I have to worry about. I know it sounds terrible, but I just want to get to work every now and again, and I don't want to have to plan it ahead. My point is that you don't have to run the cars to run a marketplace, though the money is being thrown at doing both at once in an effort to lock the running of the cars into the monopoly. Running the marketplace is the only real natural monopoly here, though; If you can decouple the marketplace from the running of the cars, you could potentially become a lot more efficient, by allowing smaller players to run the cars.
zouhair 11y ago
So they operate illegally, pay no taxes and still make no money. I don't get it.
mrweasel 11y ago
Did anyone actually believe that Uber was making a profit? Honestly the question should be: Can you have a $50 billion valuation, while losing money? I'm not saying the the valuation should be zero, because they do have assets, but $50 billion is a lot of money.
- adventured 11y ago
  The answer to that question is: Amazon. At various times they've managed around a $100 to $200 billion valuation while losing money. They're an extreme outlier of course. Salesforce.com hit near a $50 billion market cap recently, and they've never once printed a positive net income result. If the sales growth and market dominance is there, the valuation will float a lot longer than seems reasonable given the lack of profits. This is especially true in tech, as it's believed that market dominance in tech inevitably leads to later outsized profit. It also helps if the losses are brought under some control, such that they aren't threatening the survival of the business.
digitalzombie 11y ago
If the bubble burst now, Uber will be the poster child of what's wrong with start ups. I would probably be happy if they were to fail, for their past actions toward their competitor and their CEO's comments on the drivers were disgusting. With the back lash with California's ruling and France, I think the laws are catching up to the new tech service and it doesn't look good currently for Uber. While people may argue that it's just California, California has a big population and a big market. But a silver lining would be Telsa look like it were doom until Model S and they survived. I personally thought they were going to make it.
pratyushag 11y ago
The concept of Uber (i.e., being able to reliably call a taxi from the phone) has a lot of value but there are significant competitive advantages of being the first to a customer's phone or by being the cheaper option to get adoption. Hate to simplify it, but in many ways what we saw with Uber was similar to GroupOn. Uber will likely collapse, let's hope it does not take the tech market down with it. Although, I'm all for bubbles bursting and markets normalizing.
icedchai 11y ago
Big surprise. But don't worry, they'll make it up in volume...

104 points by dzhao 11y ago

This is really interesting. I believe this might be attribute to all the Uber promotions in Asia. I have heard from all my friends in India/China that Uber rides are actually free for around 10-15 rides. Also, they are giving tons of money to Drivers to promote Uber in India. An average Uber driver in Bangalore earns 110000 INR per month where as an entry level software engineer in GOOG/AMZN in India earns 80000 INR/month. I was shocked that one of my friends who drove Uber in Bangalore told me that he made 180000 INR two months back. It would be interesting to know Uber's customer acquistion cost and driver acquisition cost.

cheriot 11y ago
I'm still surprised that Uber is entering such competitive markets. I mean, in much of the western world, they're using a mobile app to side step cab hailing laws and break long standing taxi oligopolies. Does anyone know what market flaws they're solving in India and Asia?
- rodgerd 11y ago
  The same is true in New Zealand, where the only real requirements to be a taxi are around having a passenger endorsement to your license and police background checks. > Does anyone know what market flaws they're solving in India and Asia? Well the only market flaw they appear to be solving here is that they aren't hoarding more of the money in the market...
  - jordanthoms 11y ago
    In NZ the advantage is convenience and cost - you can get a ride far faster, payment is automatic, and the rates are lower, especially for shorter trips, than the incumbent taxi companies. Some of the local competitors have some of that (e.g. Zoomy), but they charge extra fees for paying though the app which makes them expensive, and also means you need to go through more of a process when the ride is finished.
- colechristensen 11y ago
  I don't like how uber flaunts the law in so many places, but their competitive advantage doesn't come from non-compliance. The service is plainly better. The cars are better, the drivers are rated, payment is easier, hailing is easier, knowing where your cab is and how long it will be and how much is will cost before you start your ride ... is better. I live in the Twin Cities ... not a place where cabs are dense enough to just hail one walking down the street (unless it's in a prime drinking/sporting hour & location). Uber, Lyft, and the city of Minneapolis worked together to make uber-like services legal while giving concessions to the local traditional taxi drivers without compromising appropriate regulations. Everyone behaved reasonably which is sadly extremely rare everywhere else. The running theory is that unreasonable people either leave Minnesota or are found only after the snow thaws (please don't take this too seriously :) )
  - dylanjermiah 11y ago
    If flaunting the law results in an all round better service perhaps the laws don't do what they're supposed to.
    - colechristensen 11y ago
      There is a difference between trying to behave reasonably outside the law starting up while trying fix regulations fairly and in good faith when you get enough attention ... and ostentatious defiance, which is how many would describe Uber's behavior in many circumstances. 'flaunting' was a carefully chosen word.
      - dylanjermiah 11y ago
        There is no behaving 'reasonably' outside the law. It's clear that if they had not won over the consumers, the people who the law is supposed to help, Uber would not exist.
- khc 11y ago
  When I went to Delhi, I had to haggle with the tuk tuk driver. In some cities in China, there seemed to be the impression that some taxies were not trustworthy and some people only ride from particular taxi companies. Uber was not in China or India when I last visited, but they do solve the trust problem and I would take them when I visit again.
  - jordanthoms 11y ago
    This is a often understated advantage which Uber brings - the ability to land anywhere in the world and, modulo internet connection, get a safe ride within minutes where you know you won't be overcharged or longhauled.
- howlingfantods 11y ago
  In China the taxi oligopolies are very strong and the taxis are notorious for poor service. In Beijing, they come with their doors locked and roll the windows down to ask you where you want to go, to see if they feel like going in that direction.
  - cma 11y ago
    Don't Uber drivers do the same by just not choosing fares that go to certain locations?
    - hooo 11y ago
      They don't see the destination before accepting
- namanyayg 11y ago
  Primarily two things: 1. Time/Convenience: India does not have a system like America where you can hail cabs, they are only booked via an agency. These bookings need to be made some hours in advance. A pre-Uber thing (which I'm sure is still common in non-metropolotian parts of india) was to book an appropriately sized cab a day before we have a flight or train to catch. With Uber, request an Uber XL and you're done. 2. Price: As expected, these agencies work out to be pretty expensive. Uber is almost 50% cheaper. I personally use Uber when I'm with people or have luggage with me. Otherwise India does have a very good metro train and also has autorickshaws (aka tuk tuk) but the former is not point to point and the latter seats 3 people at best (and an Uber sometimes works out to be cheaper than a autorickshaw) I think that currently only a small part of India uses Uber significantly, but those who do have nothing but praise (anecdotal). Uber has better quality and better drivers for a better price. That said, the market seems large enough to warrant competitors like Ola and Meru.
- _nedR 11y ago
  You are overestimating the competitiveness of these markets. In many(perhaps most) parts of India, these operate as unions/ price cartels. The tuk-tuks in particularly ignore meter pricing, in most parts of India, and may resort to violence/harassment to protect themselves from competition. Also most taxis/tuk tuks are independent and do not belong to any company. As such, I imagine they don't enjoy the benefits of economies of scale, efficiencies, and technology that Uber can afford. The quality of service is very poor, which makes Uber something of a Godsend. All these are points on which Uber can and is currently exploiting to gain a foothold, although they face strong challenges.
- onewaystreet 11y ago
  If you think taxis are bad in the US, they are 10x worse outside of it.
  - SilasX 11y ago
    Maybe in the 3rd world, but I consistently hear that they are good in Germany: nice cars, show up on time, well trained drivers, overinsured, cheap.
- peteretep 11y ago
  In Bangkok: * I'm yet to have an Uber driver clearly on methamphetamine, but a notable number of taximeter drivers * No quibbling over the price or trying to overcharge from Uber * Uber cars always have seatbelts, it's rare to find them in the back seat of taximeters * Even if the Uber driver doesn't know the place you're going to, they've got a map, and directions, and they'll use them * No worrying about if you've got sufficient loose change; you can be sure the taximeter driver will have a real shortage currently if you have only big notes And on and on and on...
- ajani 11y ago
  Regular (black and yellow) taxis and rickshaws exist in Mumbai and very few other Indian cities including Delhi. However only in Mumbai do they ply according to a meter. The rest of the cities, they just charge whatever they feel like. Also most cab drivers will refuse to take passengers depending on destination on a regular basis. Maybe 50% of the time. Other radio cab services like Meru (the oldest radio cab service), need at least a half hour for booking. You also need to provide your destination. Also paying cash is a real pain, because most cab drivers will just claim to not have change and try to pocket it. Uber is a breath of fresh air here. It doesn't force a destination, you can instantly know whether cars are available or not, generally arrives in 10 minutes or so, and there is no cash payment needed. Where price is concerned, they've now managed to figure out the right pricing, so that an Uber ride costs only marginally more than a regular cab ride. e.g. Home to work takes around Rs 200 for a regular cab. Uber costs anywhere from Rs 220 (Uber X), to 350 (Uber Black).
ajani 11y ago
There are no free rides here in India (at least Mumbai). You get a promo of up to Rs 600 (USD 10) to start with. And that's it. I very much doubt the claims about drivers earning Rs 100,000+. I am going to ask my Uber drivers to and from work about how much they make.

personjerry 11y ago

Tangential to OP: How does HN feel about the "evilness" of Uber? At my school the general feel is that Uber is pretty evil, notably for its attitudes towards its drivers as well as towards Lyft.

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my-bullshit-job 11y ago
I didn't downvote you, but this should really be submitted as an AskHN.
- personjerry 11y ago
  You're right, I will attempt not to hijack threads in the future.
blhack 11y ago
I feel like most of the hatred of Uber is manufactured, and that the people who whip themselves into a frenzy over it are allowing themselves to be manipulated.
- chx 11y ago
  OK I will take your challenge. You can read a detailed description of why I hate Uber above (tl;dr: shady practices pushing towards indentured servitude and weaking the very rule of law). What's manufactured of it and how am I being manipulated?
joshjkim 11y ago
This is from an old post but I think you'll find interesting: Note on Uber: I think Uber is a great business and has a significantly net-positive impact on society, and I reserve judgment w/r/t whether TK and the other Uber execs are good or bad people - I can't conclude they are good because they run a good business, and I can't conclude they are bad because they say stupid things in public. Note on Nietzche: In Thus Spake Zarathrusa, the "uberman" concept is (maybe) considered a positive that humanity should work towards in the absence of belief in God, and I think it can still be understood as such. The fact that history has attributed some very negative actions to the belief in this concept (Hitler, Leopold & Loeb's murder, etc.) is, in my opinion, not definitive but at the same time not entirely insignificant, but I'm also a Christian that believes in capital-M Morality so I'm biased against nihilism in general. here's a thought I had a few months ago: how have there not been more thought pieces relating Uber-the-business's recent/relentless PR-debacles to Nietzsche's Ubermensch concept? I guess I'll give it a go. Uber/Travis and his execs seem to demonstrate the belief that they are "overmen" in that they seem to believe that they transcend the rules of society and are destined to shape society and its values rather than the other way around (probably something not too uncommonly shared with HN readers…). A few fun/funny/serious examples (in no particular order): 1. They outrightly express resistance to laws-as-is, and regularly threaten to ignore and sometimes do break those regs as necessary to conduct their business / benefit themselves and their consumers. 2. They hire lobbyists and other high-level political actors to change the laws they don't like and/or influence lawmakers - not atypical for a large company, but they did this earlier than most companies at their stage, with much more specific agendas in place and with a lot more PR surrounding it (the last may or may not have been their doing, hard to say). They have a belief (probably well-founded) that they can use the political process to make the law bend to their will. “Creating New Values” as any good uberman should. 3. They call their central system “Godmode” which implies that they, the viewers, are like God (a bit of a stretch I know…couldn’t resist) 4. They are proud that using the data in Godmode they can track, predict and identify specifics of other human being’s behavior. 5. The whole “we’ll pay our own researchers to smear journalists” thing - another good example of Creating New Values and constructing narratives. 6. The general feeling that Uber (perhaps correctly) operates against “states” and “sovereigns” and “systems” more than corporate competitors (who even writes about Lyft anymore these days…) The funny thing is that after thinking this through, all (good?) CEOs of major corporations basically operate like this (and so do many other tech-leaders - it is often associated with libertarian-leaning individuals like P. Thiel, etc.) - the difference is that Uber (1) has a name that calls it out and (2) seems to be especially prone to doing this in public and (3) sometimes appears to relishes their “overlord-iness” a little too much. You can call it being crass or being honest. In any case, they seem to be getting hip to the system and playing nice which of course can be viewed as just another level of the game, etc. - still, glad to see them do it because I overall think that playing nice is best (especially when you can afford to do it) and with a $50b val. and a couple billion raised, I think they can spare some good behavior, at least for now =)

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chirau 11y ago
Do you even understand what this means? It means they have 415M in revenue against costs of ~885M. Why is that clickbait?
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boomzilla 11y ago

This just shows that there is not much margin in this industry. They are essentially buying market share. However, as soon as Uber try to squeeze out some profit, they'll be undercut by the competitors.

omarchowdhury 11y ago
Competitors lowering their pricing is not going to magically cause an exodus of customers who are attached to using Uber. Price change would be gradual, if done correctly, imperceptible. Plus, those competitors are being squeezed right now, who knows if they will be around once Uber decides to raise pricing to move towards profit. As they say on Wall Street, the market can stay irrational longer than you can stay solvent. No doubt this saying is apt for this present circumstance, especially since Wall Street is involved. Uber is in the service industry, and winning in the service is not always on price.
- erispoe 11y ago
  Customer attachement is still a largely unproven hypothesis. How many people in San Francisco have both Lyft and Uber? The cost, as a consumer, to use indifferently one or the other is null. The really hard challenge for Uber is: not becoming a commodity. I have no doubt they can crush incumbent taxi companies. How Uber will avoid being swallowed by the competitive beast they created is another, and harder, challenge.
- onion2k 11y ago
  Let's assume their strategy works and they win an effective monopoly. What's stopping a "new Uber" coming along, funded by a couple of billion in VC money, to attack Uber's monopoly position by offering the same service cheaper. If winning a market can be done by subsidising your offering with VC cash then someone else will come along and do it as soon as Uber push for higher prices. While there's huge amounts of private equity money available Uber will never be able to raise prices, especially considering there are plenty of investors around who are unhappy about missing Uber's first few rounds.
  - 11y ago

dylanjermiah 11y ago

These are old numbers. IIRC they're estimating 10bn gross this year, with 20-30% margins.

foobarqux 11y ago
> These are old numbers. IIRC they're estimating 10bn gross this year, with 20-30% margins. That's gross margin.
pbreit 11y ago
I think you mean "net revenue" (rider receipts less payments to drivers). And if the $417m is from Q4 2014 (or even Q1 2015), 200% growth this year would surpass $3b (i.e., 30% of $10b).

sdenton4 11y ago

We're losing a dollar on every unit, but we'll make it up in volume!

geofft 11y ago

There was a comment thread earlier today about whether Uber is solving rich-people problems or common-people problems. I wonder the extent to which Uber's pricing is sustainable -- are they subsidizing uberX and uberPOOL pricing out of money they're raising, or are the debts just in the pursuit of growth to new cities? Or put another way, if they ceased all growth, froze prices, and laid off all engineering and marketing staff except for one person to keep up with mobile OS updates (but kept the staff to recruit drivers, deal with legal issues, etc.), would the company be profitable, or would it go bankrupt? I certainly don't complain when I get subsidized lunches delivered to me on VC money, but when existing Uber cities are debating regularizing Uber's legal status or just fixing the inefficiencies / problems with the taxi industry that Uber capitalized on, I want to know if Uber's going to be around for the people of that city, at the same effective prices, in 20 years.

pbreit 11y ago
It would be crazy profitable. But it is subsidizing a lot of rides right now, for example "Pool" rides where riders get the discount even if they are the only passenger.
- chralieboy 11y ago
  That was the parent's question. If they froze prices with these subsidies, would it continue?
  - geofft 11y ago
    Yup. Alternatively, if they ended the subsidies and raised prices to match costs, would it go back to being a rich people's service? Don't get me wrong, taxis in many cities (especially SF) aren't serving the public reasonably. But Uber is only part of that conversation because it's price-competitive with taxis. If we thank them for identifying the problem, and then solve it by regularizing Uber's legal status, will the problem come back in three years once uberX and uberPOOL need to be profitable? Should we instead focus legislative effort on making taxis work?
11y ago

lsc 11y ago

I've been pondering how you'd break the uber lock on the market. I mean, I use Uber and not Lyft 'cause there are more Uber drivers, so on average, the car is gonna be there faster if I use Uber. However, if I had an app on my phone to check the nearest uber and the nearest lyft and the nearest whatever else? that would remove the barrier to entry that Uber has set up. in that case (at least when lyft had a nearby car) I'd be happy to take lyft or the local cab company, if they had a similar app. Of course, you'd end up with an arms race with uber, or whoever the dominant player was, with them trying to break your app. Interestingly, I bet that the second and third tier ride-sharing companies would cooperate, so if there were enough of them in the area, the idea would work fine even when uber was winning the arms race.

Dwolb 11y ago
You could break the Uber lock on the market if supply and demand are not sufficiently random to require Uber's marketplace to coordinate. That is, if it is usually convenient for Joe to depart from work at a certain hour and this is a time when Maureen typically likes to drive, both Joe and Maureen could potentially disintermediate Uber and split the marginal gain. This solution could look like a simple payments app, ride scheduler, and a local 'I'm here' function. Another option could be to structure the market to enable 'teams' of drivers (ie like a taxi company brand). Allow these teams to find further operational gains through pooling resources and greater coordination. This solution would re-imagine the Uber market and driver tools for full-time workers.
- lsc 11y ago
  Eh, I think the "one big marketplace" model is best. I... honestly, I don't want another relationship I have to worry about. I know it sounds terrible, but I just want to get to work every now and again, and I don't want to have to plan it ahead. My point is that you don't have to run the cars to run a marketplace, though the money is being thrown at doing both at once in an effort to lock the running of the cars into the monopoly. Running the marketplace is the only real natural monopoly here, though; If you can decouple the marketplace from the running of the cars, you could potentially become a lot more efficient, by allowing smaller players to run the cars.

zouhair 11y ago

So they operate illegally, pay no taxes and still make no money. I don't get it.

mrweasel 11y ago

Did anyone actually believe that Uber was making a profit? Honestly the question should be: Can you have a $50 billion valuation, while losing money? I'm not saying the the valuation should be zero, because they do have assets, but $50 billion is a lot of money.

adventured 11y ago
The answer to that question is: Amazon. At various times they've managed around a $100 to $200 billion valuation while losing money. They're an extreme outlier of course. Salesforce.com hit near a $50 billion market cap recently, and they've never once printed a positive net income result. If the sales growth and market dominance is there, the valuation will float a lot longer than seems reasonable given the lack of profits. This is especially true in tech, as it's believed that market dominance in tech inevitably leads to later outsized profit. It also helps if the losses are brought under some control, such that they aren't threatening the survival of the business.

digitalzombie 11y ago

If the bubble burst now, Uber will be the poster child of what's wrong with start ups. I would probably be happy if they were to fail, for their past actions toward their competitor and their CEO's comments on the drivers were disgusting. With the back lash with California's ruling and France, I think the laws are catching up to the new tech service and it doesn't look good currently for Uber. While people may argue that it's just California, California has a big population and a big market. But a silver lining would be Telsa look like it were doom until Model S and they survived. I personally thought they were going to make it.

pratyushag 11y ago

The concept of Uber (i.e., being able to reliably call a taxi from the phone) has a lot of value but there are significant competitive advantages of being the first to a customer's phone or by being the cheaper option to get adoption. Hate to simplify it, but in many ways what we saw with Uber was similar to GroupOn. Uber will likely collapse, let's hope it does not take the tech market down with it. Although, I'm all for bubbles bursting and markets normalizing.

icedchai 11y ago

Big surprise. But don't worry, they'll make it up in volume...