Support NeoGAF

[KingV]

Uber is trying to hold it's place until it can actually cut the costs with automated cars. It's a risky strategy but if they pull it off

This is unlikely to provide the economy of scale needed.

Still need people to clean the cars, need to buy fuel, park them somewhere, insure the cars, etc. currently the drivers take care of all that.

It seems like the end game is create a monopoly, the price gouge.

 

[Skellig Gra]

If its untenable now I wonder how they are going to manage when they have to purchase and upkeep millions of automated vehicles?

Based on those numbers in the OP they are completely fucked. I'm sure there will be a massive IPO at some point but with self driving cars are many years away from being mainstream. Optimistically say that happens in 5 years, they'll have lost 10 billion dollars just waiting out the tech. Now they need to buy a worldwide fleet of cars. How many billions more is that?

 

[Galang]

No one mentioning Lyft is it not big outside of SoCal or something?

just curious

I've never heard of lyft before this thread

 

[WorldStar]

I've never heard of lyft before this thread

Interesting, maybe they just have a huge grip in LA county

Maybe I thought they were more widespread than they really are

 

[Jisgsaw]

Uber is trying to hold it's place until it can actually cut the costs with automated cars. It's a risky strategy but if they pull it off

I don't see them surviving 8+ years like this.

In 10 years, I am sure many places will not require a driver. We're like 5 yrs from the automatic cars hitting the masses, right?

For Highways? Yes, even probably less.
But Uber rides are overwhelmingly inner city, and that's a very long way off.

 

[Sean C]

trying to enter a low-margin market versus a monopoly is not something that's ever going to get investor funding.

In an economy that is now heavily oriented toward the provision of services, I wouldn't take that bet.

 

[Boney]

How can you effectively build a monopoly in such a relatively low entry cost. Hires are rotating all the time and pricing would be elastic.

Electric cars and automated cars should drive the costs down at least.

Lyft and cabify are popular competitors. And then there's traditional taxis and radio taxi companies.

 

[-Pyromaniac-]

Obvious strategy is obvious. Gain market share by undercutting price. Then slowly raise prices. Has been done before in other industries and is being done here as well.

 

[danm999]

If the end game is simply to remove humans and go to cars as a service, what's to stop auto manufacturers competing with Uber and making their dream of a monopoly impossible?

I'm sure they're positioning themselves to do so given the development of self driving cars.

 

[Skellig Gra]

Interesting, maybe they just have a huge grip in LA county

Maybe I thought they were more widespread than they really are

It's a solid #2. Lyft is in lots of places I've been not just SoCal.

 

[Mesoian]

I should also add Lyft is about a thousand times more popular in Los Angeles than Uber

I live in an extremely active social area and Uber drivers are uncommon compared to Lyft

I'll see a few local drivers on Uber app yet my Lyft app shows them everywhere

It's getting that way in boston as well. Lyft constant has cheaper prices and more readily available vehicles and is more hesitant to inact the "Your drive will now cost 3 times as much because people want to go home at the same time so your ride now costs more than a regualr cab" shit.

 

[ReAxion]

Lately every Uber driver I've seen is also a Lyft driver.

 

[Peter Ian Staker]

Uber is trying to hold it's place until it can actually cut the costs with automated cars. It's a risky strategy but if they pull it off

It's a dumb strategy. There is no way they can survive the 10+ years that will take for that tech to take off.

 

[aeolist]

If the end game is simply to remove humans and go to cars as a service, what's to stop auto manufacturers competing with Uber and making their dream of a monopoly impossible?

I'm sure they're positioning themselves to do so given the development of self driving cars.

every major manufacturer and big tech company is trying to get in on this, there's no possible way uber can take over

the entire company is basically a vehicle for fleecing venture capitalists, and the fact that it's seen as a model for other silicon valley startups is revealing

 

[cwmartin]

No one mentioning Lyft is it not big outside of SoCal or something?

just curious

This thread is about Uber's financial status, so I'm not really sure why we would be discussing Lyft.

Also, Lyft's model is identical to Uber so if you think they aren't facing the same issues, on a much smaller scale, that's just delusion.

 

[Slayven]

Right now they're basically hiring as many drivers and giving as many rides as possible to look more attractive to VCs

Isn't that standard Silicon Valley nowadays. Get popular enough for the IPO or for someone to buy you, then figure out how to make money?

 

[kiguel182]

If they don't manage to transition to automated cars smoothly people are going to lose a bunch of money...

 

[WorldStar]

Lately every Uber driver I've seen is also a Lyft driver.

I don't think you can drive for both services at once tho

When I compare my Lyft app and Uber app I have never seen crossover

They might just drive for Uber as a backup or something, at least here.

 

[kirblar]

How can you effectively build a monopoly in such a relatively low entry cost. Hires are rotating all the time and pricing would be elastic.

Electric cars and automated cars should drive the costs down at least.

Lyft and cabify are popular competitors. And then there's traditional taxis and radio taxi companies.

They're not trying to build a monopoly. They're trying to get their foot in the door and are using the funds to keep the door open.

 

[danm999]

every major manufacturer and big tech company is trying to get in on this, there's no possible way uber can take over

the entire company is basically a vehicle for fleecing venture capitalists, and the fact that it's seen as a model for other silicon valley startups is revealing

Yeah just seems like they'll shift from competing with the taxi industry to competing with Ford and GM.

 

[TheAbsolution]

It's getting that way in boston as well. Lyft constant has cheaper prices and more readily available vehicles and is more hesitant to inact the "Your drive will now cost 3 times as much because people want to go home at the same time so your ride now costs more than a regualr cab" shit.

To be fair, surge pricing is just simply low supply and high demand and Lyft does it as well. There's just not as many people demanding Lyft rides.

 

[WorldStar]

Also, Lyft's model is identical to Uber so if you think they aren't facing the same issues, on a much smaller scale, that's just delusion.

This is exactly why I brought up Lyft: I was under the impression Lyft is not facing these same issues

And they're offering a cheaper alternative

 

[aeolist]

ah thanks for the mod edit, i should have phrased the title differently

 

[KingV]

every major manufacturer and big tech company is trying to get in on this, there's no possible way uber can take over

the entire company is basically a vehicle for fleecing venture capitalists, and the fact that it's seen as a model for other silicon valley startups is revealing

This should be a big red flag to all of the Web 3.0 (or whatever the fuck you want to call it) companies and investors.

If Uber is this overvalued... what about Snapchat, or any other web company with tons of users and no real profit? We are seeing the warning signs of a huge bubble.

 

[TheAbsolution]

I don't think you can drive for both services at once tho

When I compare my Lyft app and Uber app I have never seen crossover

They might just drive for Uber as a backup or something, at least here.

Nah, it's possible. Once you get a Lyft/Uber ping you can just turn the other app off.

 

[WorldStar]

Nah, it's possible. Once you get a Lyft/Uber ping you can just turn the other app off.

Got it

 

[Snaku]

Uber is trying to hold it's place until it can actually cut the costs with automated cars. It's a risky strategy but if they pull it off

This.

 

[Colin.]

Interesting. I wonder how long they can sustain these kind of losses for. It seems like they're trying to bank on driverless cars being fully operational within the next <10 years, so that they will be one if, if not the first company to offer this driverless service. It's technology that I'm a fan of, so I hope this is the case. But yeah.. Risky stuff.

 

[VanMardigan]

When I rode in the back of a leather seated Mercedes from the Philadelphia Airport to a downtown hotel and it only cost me $6 I knew something was way way way wrong. I just felt bad, I felt I was ripping somebody off.

 

[turtle553]

Massive upfront costs for sure, but in the long run maintenance and insurance will probably be much much lower than what they currently deal with. Cutting out the need to provide even the current sub-standard wage they provide drivers now, which is not going to last much longer, will be a huge boon for them.

Until they realize that unsupervised people are animals that will destroy the cars. Just wait until half the rides get cancelled on a Friday night because there is puke all over the seats.

 

[StanleyStutters]

I always wonder how the drivers feel about Uber being pretty open about them being a mere stop-gap solution till they go automated. They are what dvd by mail was to Netflix.

People I know who are Uber drivers are PT only. I don't think too many people do it as a FT gig, I hear their radio ads every day on my way to work and they promote themselves as "the ultimate side hustle". Though, if I was a FT driver for them, I'd be very worried long-term.

 

[B-Dubs]

This should be a big red flag to all of the Web 3.0 (or whatever the fuck you want to call it) companies and investors.

If Uber is this overvalued... what about Snapchat, or any other web company with tons of users and no real profit? We are seeing the warning signs of a huge bubble.

A bunch of investors have been saying this for a long while now, but everyone wants that sweet return.

 

[Stumpokapow]

That won't work because Uber will then take on the buying the vehicle, costs of maintaining the car, providing insurance etc.

Automation looks like it will massively increase their costs compared to the contractor model they currently operate.

They already provide insurance, and buying the vehicle allows them to use various asset depreciation tax schemes--it'll require upfront investment but it'll be expected value positive on their balance sheet. Alternatively, they'll let drivers provide their cars (the same way you can rent a farm animal for a while if you need one) but give owners even less than they give drivers now.

 

[LJ11]

I don't think you can drive for both services at once tho

When I compare my Lyft app and Uber app I have never seen crossover

They might just drive for Uber as a backup or something, at least here.

Uber drivers need to respond to X amount of requests, not sure what X is now, or if they've changed their policy but it was as high as 80% so yeah being on both apps is tough as fuck.

Nah, it's possible. Once you get a Lyft/Uber ping you can just turn the other app off.

Ah, so you have to bounce back and forth to get around the restriction correct?

 

[WorldStar]

Uber drivers need to respond to X amount of requests, not sure what X is now, or if they've changed their policy but it was as high as 80% so yeah being on both apps is tough as fuck.

That would explain what I'm seeing then

 

[aeolist]

This should be a big red flag to all of the Web 3.0 (or whatever the fuck you want to call it) companies and investors.

If Uber is this overvalued... what about Snapchat, or any other web company with tons of users and no real profit? We are seeing the warning signs of a huge bubble.

web services are much better understood and can become profitable more easily.

what we need to worry about is the trend of silicon valley branching out from purely tech-oriented markets. there's an extremely pervasive attitude with these people that they're just smarter and more innovative and could easily dominate other markets with the kinds of ideas that made google and facebook so big, but when the rubber meets the road in areas like transportation (uber) or healthcare (theranos) the SV model does not seem so good.

 

[Operations]

People in this thread assuming automation means Uber will have to own the autonomous vehicles. Not at all. It will work just like today: individuals will be able to buy or credit finance a car to put it under Uber's fleet for a fare.

 

[Freshmaker]

Ever thought Uber's prices were too good to be true? Well they were.

How the hell is Uber losing money? They don't actually do anything.

 

[jstevenson]

People in this thread assuming automation means Uber will have to own the autonomous vehicles. Not at all. It will work just like today: individuals will be able to buy or credit finance a car to put it under Uber's fleet for a fare.

yup, bingo.

you buy an automated car, and then when you aren't using it, you let it go pick up fares and such. Uber cuts you a tiny slice that makes up for the energy usage, wear and tear, and a little profit to reduce your cost of ownership. It'll just be part of the thing with the cars when you buy them. Probably built into the software (or a very easy download add-on to the car)

 

[KingV]

People in this thread assuming automation means Uber will have to own the autonomous vehicles. Not at all. It will work just like today: individuals will be able to buy or credit finance a car to put it under Uber's fleet for a fare.

Like literally none of that infrastructure exists. There isn't even an inkling of setting up that kind of market. And how much does Uber have to pay you to let literal strangers ride around and throw miles down on your car?

They're losing $2 billion/year on the hopes of being able to lease products that don't exist, that utilizes an automated platform that doesn't exist, in 5 years or less?

IMO, they'd probably be better served using their software platform to integrate with actual taxi companies, even though this would indicate they are hugely overvalued.

As it is, they are a $13 billion Hail Mary.

 

[Slayven]

yup, bingo.

you buy an automated car, and then when you aren't using it, you let it go pick up fares and such. Uber cuts you a tiny slice that makes up for the energy usage, wear and tear, and a little profit to reduce your cost of ownership. It'll just be part of the thing with the cars when you buy them. Probably built into the software (or a very easy download add-on to the car)

Big gamble on betting on people to buying automated cars AND letting Uber use them.

 

[Enduin]

Until they realize that unsupervised people are animals that will destroy the cars. Just wait until half the rides get cancelled on a Friday night because there is puke all over the seats.

Honestly they might make more money off that. I believe they already charge people for damages to driver's cars in some circumstances. Just put some cameras in the car, which they'll probably have regardless for security/safety reasons, and they'll just charge you hefty fines for any spills, messes or damages. They'll be able to gouge people and have the evidence to back it up.

 

[ClosingADoor]

How the hell is Uber losing money? They don't actually do anything.

Paying the driver more per mile then they actually earn from the ride.

 

[border]

They already provide insurance, and buying the vehicle allows them to use various asset depreciation tax schemes--it'll require upfront investment but it'll be expected value positive on their balance sheet.

I thought that the massive scam of Uber was that they weren't providing ANY insurance for drivers, and anyone that gets into a wreck is left out to dry since they are an independent contractor.

 

[Kyuur]

That could be a REALLY long way away. Not self-driving cars - we have those - but self-driving cars that don't require a driver to be present. I mean, does everybody realize that? Both the tech and the law require a human behind the wheel for when/if something goes wrong, and that person still has to be paid.

Getting truly driverless vehicles that can deal with rural country roads, weird weather conditions, etc is so far off that it might have to wait for a total overhaul of the nation's infrastructure. Creating a car that can drive and turn and follow GPS is no big deal. Getting a car's AI to be so advanced that it can deal with any weird road surface or traffic fuckup is way over the horizon.And once it exists, working through the legal and liability implications is further still - there'll be a whole lot of lawsuits needed to decide who pays when a car's AI fucks up and kills six people in a head-on collision.

There's always one person in any thread involving automation that pops up with this sort of uninformed opinion.

Cars that are currently automated do not just 'turn and follow GPS'. They do exactly what you are describing as "way over the horizon".

 

[jstevenson]

Big gamble on betting on people to buying automated cars AND letting Uber use them.

I mean, why wouldn't you though? Like, my car is sitting downstairs in the parking garage at work. Imagine if it was busy working this whole time.

It wouldn't bring in a lot of money, but I'm right by the airport, so 200 hours a month of uber driving that I don't have to do? I bet it'll pay for a huge chunk of the car payment/lease each month.

 

[WorldStar]

I thought that the massive scam of Uber was that they weren't providing ANY insurance for drivers, and anyone that gets into a wreck is left out to dry since they are an independent contractor.

Wouldn't the driver be covered by his own personal insurance?

 

[Slayven]

I mean, why wouldn't you though? Like, my car is sitting downstairs in the parking garage at work. Imagine if it was busy working this whole time.

It wouldn't bring in a lot of money, but I'm right by the airport, so 200 hours a month of uber driving that I don't have to do? I bet it'll pay for a huge chunk of the car payment/lease each month.

I am guessing first gen automated cars will be expensive and probably luxury models. Chances are if you can afford them, you probably don't need to work for Uber. And not to mention the insurance issue

 

[turtle553]

Honestly they might make more money off that. I believe they already charge people for damages to driver's cars in some circumstances. Just put some cameras in the car, which they'll probably have regardless for security/safety reasons, and they'll just charge you hefty fines for any spills, messes or damages. They'll be able to gouge people and have the evidence to back it up.

Sure, but the first person who messes up a car will take it out of service the whole night. Having a driver there at least has some accountability. They need to have all plastic backseats that wash themselves.

 

[aeolist]

Wouldn't the driver be covered by his own personal insurance?

normal insurance won't cover someone operating their car as a cab, you need commercial insurance. most drivers don't have this because it's much more expensive.

i don't know about uber covering drivers, last i heard that wasn't the case.