Uber Q3 Results(investor.uber.com)
investor.uber.com
Uber Q3 Results
https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Announces-Results-for-Third-Quarter-2019/default.aspx
171 comments
At least for me uber has huge brand loyalty, it’s sitting in the dock of my iPhone.
If I need to go somewhere, or get home, Uber has never let me down. Likewise with food delivery, I certainly have been let down on that but Uber does the best job of letting me track the order and get a refund if needed.
Sure Lyft is an alternative, I have it on my phone but simply never use it.
It’s incorrect that nothing has changed about the cost of a ride. Taxi medallions used to be 500k-1m and require essentially taking out a mortgage. Now they are worth effectively $0.
And cost was never the core issue with Taxi’s, it was the unpredictability of the cost, having to pay in cash because the drivers incentive is to skim from the owner, having to find one or call for one, having to put your trust in a random driver in a random country with no idea if you are going the right way.
Look to NYC where they seem to have set the goal of making Uber as expensive as possible (10s of dollars in random fees per ride). It’s still popular - in a city with some of the best taxi options.
If I need to go somewhere, or get home, Uber has never let me down. Likewise with food delivery, I certainly have been let down on that but Uber does the best job of letting me track the order and get a refund if needed.
Sure Lyft is an alternative, I have it on my phone but simply never use it.
It’s incorrect that nothing has changed about the cost of a ride. Taxi medallions used to be 500k-1m and require essentially taking out a mortgage. Now they are worth effectively $0.
And cost was never the core issue with Taxi’s, it was the unpredictability of the cost, having to pay in cash because the drivers incentive is to skim from the owner, having to find one or call for one, having to put your trust in a random driver in a random country with no idea if you are going the right way.
Look to NYC where they seem to have set the goal of making Uber as expensive as possible (10s of dollars in random fees per ride). It’s still popular - in a city with some of the best taxi options.
> One of Ubers biggest problems is that they have zero brand loyalty
> At least for me uber has huge brand loyalty, it’s sitting in the dock of my iPhone
Hear hear. It feels to me that brand loyalty arguments are really opinions being extrapolated to the rest of the population. For example, one can reasonably argue airlines don't command any brand loyalty for the average traveler and how they are in a race to the bottom, yet many people will readily tell you how much they hate X airline or how they love Y airline. One could say the same of hotels, shampoos, socks, what have you. There always are those that don't care for the brands, and those that do.
> At least for me uber has huge brand loyalty, it’s sitting in the dock of my iPhone
Hear hear. It feels to me that brand loyalty arguments are really opinions being extrapolated to the rest of the population. For example, one can reasonably argue airlines don't command any brand loyalty for the average traveler and how they are in a race to the bottom, yet many people will readily tell you how much they hate X airline or how they love Y airline. One could say the same of hotels, shampoos, socks, what have you. There always are those that don't care for the brands, and those that do.
Airlines are the prime example of a race to the bottom unprofitable “bad” business.
It’s clear that airlines do not have brand loyalty sufficient to create significant margins like Apple or some such.
It’s clear that airlines do not have brand loyalty sufficient to create significant margins like Apple or some such.
It's easy to stick with something when it's working for you:
> If I need to go somewhere, or get home, Uber has never let me down.
The real test of brand loyalty it staying with them after a few bad experiences.
> If I need to go somewhere, or get home, Uber has never let me down.
The real test of brand loyalty it staying with them after a few bad experiences.
There's one airline in particular that I dislike simply due multiple bad experiences. I vocalise this significantly. I still book their flights if it's the cheapest: I'd argue to myself that (a) flying is a transient experience and (b) I'll use the saving for a 'free' lounge pass, taxi to the airport, etc.
I wouldn't assume that just because people vocalise brand loyalty, means that they stick with it when it's time to open their wallets.
I wouldn't assume that just because people vocalise brand loyalty, means that they stick with it when it's time to open their wallets.
Shrug. I hear time and again people say they make it a point to always use Lyft, even if Uber is cheaper. So it's certainly not a 100% sure thing that people will always pick the cheapest option.
I switched to Lyft a few years ago because of Uber's evil ways. I've had zero problems.
If people won't stop using a company that is so blatantly bad we're in trouble.
If people won't stop using a company that is so blatantly bad we're in trouble.
For the past 25 years there has constantly been at least one tech company which is perceived in techie forums as so bad that it's incredible anyone would voluntarily use their products.
Those companies have been Microsoft, Apple, Google, Facebook and Amazon.
Financially you could have done amazingly well in the stock market simply by buying whatever big stock techies hate at the moment.
(Not saying Uber will necessarily continue this pattern. Even though they have the brand, I don't see how they intend to fix the enormous losses. That's very different from the optimized zero profit Amazon was making for years.)
Those companies have been Microsoft, Apple, Google, Facebook and Amazon.
Financially you could have done amazingly well in the stock market simply by buying whatever big stock techies hate at the moment.
(Not saying Uber will necessarily continue this pattern. Even though they have the brand, I don't see how they intend to fix the enormous losses. That's very different from the optimized zero profit Amazon was making for years.)
Sorry for being the hn stereotype, but that's pure survivor bias. That "buy the hated" strategy would have left you with lots of worthless Unisys shares for example, they are down >> 90% from back when the GIF patent was putting them in the spotlight of unpopularity.
> For the past 25 years there has constantly been at least one tech company which is perceived in techie forums as so bad that it's incredible anyone would voluntarily use their products.
> Those companies have been Microsoft, Apple, Google, Facebook and Amazon.
That's a great point. I'd add IBM to that list and the time frame would reach back to 35 years.
> Those companies have been Microsoft, Apple, Google, Facebook and Amazon.
That's a great point. I'd add IBM to that list and the time frame would reach back to 35 years.
Frankly they're basically interchangeable. I'm not sure what you mean by a company "so blatantly bad" -- most of the drivers in SF at least drive for both Uber and Lyft. You can use either app and end up with the same driver, in the same car, offering the same exact experience at a practically indistinguishable price point. Uber at least seems to know people are mad at them and offer excellent customer service.
Now, that doesn't mean they're a good business of course -- they're probably a terrible business -- but that's a reason to use them, not to avoid them.
With that in mind, unit economics at both Uber and Lyft seem to be about the same, and both equally dreadful. Lyft never made some of the even worse investments (like trying to compete in mainland China without government support). Those days appear long behind Uber, though, for better or worse.
Now, that doesn't mean they're a good business of course -- they're probably a terrible business -- but that's a reason to use them, not to avoid them.
With that in mind, unit economics at both Uber and Lyft seem to be about the same, and both equally dreadful. Lyft never made some of the even worse investments (like trying to compete in mainland China without government support). Those days appear long behind Uber, though, for better or worse.
By bad I meant doing bad things uber has done.
https://www.google.com/search?q=bad+things+uber+has+done
https://www.google.com/search?q=bad+things+uber+has+done
That's a pretty hilarious google search string :) I wasn't sure if you were complaining about them as a service or the way they run their business. The latter certainly has plenty of fodder.
[deleted]
Switched for same reason but now Lyft is being a bit shady. Changed my home address and credit cards won’t work. Gabe then PayPal, insists on “verifying” my home address with another credit card. Why do you need it? I thought PayPal was the middle man so I don’t have to tell you these details I find privileged information.
Also had trouble getting support- no way to contact them.
unfoetunate because t works great when I had it.
Also had trouble getting support- no way to contact them.
unfoetunate because t works great when I had it.
Is it shady for not accepting your money because of overly stringent security reasons?
I guess that’s one way to look at it. Another would be “metrics” or whatever companies sell nowadays to make money. Isn’t a credit card with an address not enough?
Same here. Switched to Lyft a year ago and never look back.
I check my Uber, my girlfriend checks hers and Lyfts. There’s various promos so it’s changes. And now there’s Opoli but maybe only at LAX.
Here we have at least four alternatives, if not more. Never used Uber, never going to.
> One of Ubers biggest problems is that they have zero brand loyalty.
It may not warrant as much customer loyalty as - say - Apple, but "zero" is simply untrue. To give a most ovious example, in a foreign country/city I'd be strongly inclined to choose Uber over other alternatives because I'm already familiar with it.
For the same reason why I'd eat at McDonald's (rather than some local hot-dog stand): not quality, but safety. I see the risk that I get scammed / food-poisoned as lower.
> Uber has only made finding the ride more efficient but it has not made the actual ride itself more efficient.
It has, to some extent: in the form of shared rides. Traditional taxi companies don't provide such option, for fairly obvious reasons.
> And what if there are robot drivers? Wouldn’t that eliminate at least the human cost? It would. But it would do so for every other transport company as well, and by the same amount.
Not if you've got your own IP behind it - whereas your competitors need to rely on third-party solutions - or even if you can get a better deal on a third-party solution.
> Uber would still be fighting the same competitors in a similar race to the bottom. In summary, nothing can save Uber.
The exact same case could be made for Burger King.
It's quite possible that nothing can save Uber, it's clearly struggling, but I don't think your reasoning correctly sums up actual causes of that.
It may not warrant as much customer loyalty as - say - Apple, but "zero" is simply untrue. To give a most ovious example, in a foreign country/city I'd be strongly inclined to choose Uber over other alternatives because I'm already familiar with it.
For the same reason why I'd eat at McDonald's (rather than some local hot-dog stand): not quality, but safety. I see the risk that I get scammed / food-poisoned as lower.
> Uber has only made finding the ride more efficient but it has not made the actual ride itself more efficient.
It has, to some extent: in the form of shared rides. Traditional taxi companies don't provide such option, for fairly obvious reasons.
> And what if there are robot drivers? Wouldn’t that eliminate at least the human cost? It would. But it would do so for every other transport company as well, and by the same amount.
Not if you've got your own IP behind it - whereas your competitors need to rely on third-party solutions - or even if you can get a better deal on a third-party solution.
> Uber would still be fighting the same competitors in a similar race to the bottom. In summary, nothing can save Uber.
The exact same case could be made for Burger King.
It's quite possible that nothing can save Uber, it's clearly struggling, but I don't think your reasoning correctly sums up actual causes of that.
Landed in Sydney a few weeks ago. First visit so I ordered an Uber (as I've used it a lot, trust it, etc.).
After we were picked up, the driver helpfully informed us if we'd ordered the same ride via Ola (he drives both), it'd have been ~50% cheaper (as a new user).
Naturally, I installed it and now I'll switch between Uber and m Ola. This then expands to Bolt, Grab, and so on, and you realise it's virtually the same experience with different branding and the sole differentiating factor is price.
I definitely buy the convenience aspect: it's way more comfortable to pull out your phone and order a ride on a platform you're already familiar with. My trouble is the barrier is so low to install another app (and new joiner incentives are financially motivating) that this leads to virtually no brand loyalty.
Perhaps in a different world, where there are no up significant upfront financial incentives and perhaps drivers were exclusive to a platform (i.e. to pass their rigorous screening processes is a sign of quality), that'd certainly buy some loyalty from me.
After we were picked up, the driver helpfully informed us if we'd ordered the same ride via Ola (he drives both), it'd have been ~50% cheaper (as a new user).
Naturally, I installed it and now I'll switch between Uber and m Ola. This then expands to Bolt, Grab, and so on, and you realise it's virtually the same experience with different branding and the sole differentiating factor is price.
I definitely buy the convenience aspect: it's way more comfortable to pull out your phone and order a ride on a platform you're already familiar with. My trouble is the barrier is so low to install another app (and new joiner incentives are financially motivating) that this leads to virtually no brand loyalty.
Perhaps in a different world, where there are no up significant upfront financial incentives and perhaps drivers were exclusive to a platform (i.e. to pass their rigorous screening processes is a sign of quality), that'd certainly buy some loyalty from me.
> Uber has only made finding the ride more efficient but it has not made the actual ride itself more efficient.
Back when Uber was new and everyone in SF was exclaiming how awesome it was and disruptive, one of the major taxi companies in Stockholm launched a new version of their app that basically had a big button going "I want a taxi to my location now", and you pressed it, and you got a "Hey, your taxi will arrive in X minutes".
And that's like the entire value of Uber right there, replicated cheaply by local competition.
Back when Uber was new and everyone in SF was exclaiming how awesome it was and disruptive, one of the major taxi companies in Stockholm launched a new version of their app that basically had a big button going "I want a taxi to my location now", and you pressed it, and you got a "Hey, your taxi will arrive in X minutes".
And that's like the entire value of Uber right there, replicated cheaply by local competition.
There are way more positives than that:
# No money changes hands, so safer for drivers.
# No payment is made in the vehicle, so faster exit times.
# Uber records all trips, so easier to work out costs to expense.
# Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
# Driver and passenger are tracked, so there it is easy to find who did what. There are a lot of rape charges and cases against Cabbies.
# Rating - I've been in a LOT of awful, awful cabs.
# Drivers can work 1 hour and make some money. Try that with any other job.
# No money changes hands, so safer for drivers.
# No payment is made in the vehicle, so faster exit times.
# Uber records all trips, so easier to work out costs to expense.
# Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
# Driver and passenger are tracked, so there it is easy to find who did what. There are a lot of rape charges and cases against Cabbies.
# Rating - I've been in a LOT of awful, awful cabs.
# Drivers can work 1 hour and make some money. Try that with any other job.
It's all an Uber illusion:
# No money changes hands, so safer for drivers.
Not true in many countries where cash is supported in Uber.
# No payment is made in the vehicle, so faster exit times.
Not true in many countries where cash is supported in Uber.
# Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
I wouldn't do that a lot of times - I switched a few cards on my Uber account and had to contact support a lot of times because they froze all my payment options after that. Imagine being in the middle of US as European then getting all of your cards declined by Uber because you added your friend's card.
# Rating - I've been in a LOT of awful, awful cabs.
And I've been in a lot of awful ubers - the rating system doesn't work unless people actually do rate drivers, and people don't rate as much as you think. Also, if you don't want a driver but there isn't many drivers online, you keep getting reconnected to him even after canceling and selecting it's because of the driver multiple times.
# Drivers can work 1 hour and make some money. Try that with any other job.
Not really, the amount they earn in that 1 hour - when you remove Uber's cut, tax cut, gas and vehicle amortisation is terribly low. Some say they barely make ends meet with 8 hours driving.
# No money changes hands, so safer for drivers.
Not true in many countries where cash is supported in Uber.
# No payment is made in the vehicle, so faster exit times.
Not true in many countries where cash is supported in Uber.
# Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
I wouldn't do that a lot of times - I switched a few cards on my Uber account and had to contact support a lot of times because they froze all my payment options after that. Imagine being in the middle of US as European then getting all of your cards declined by Uber because you added your friend's card.
# Rating - I've been in a LOT of awful, awful cabs.
And I've been in a lot of awful ubers - the rating system doesn't work unless people actually do rate drivers, and people don't rate as much as you think. Also, if you don't want a driver but there isn't many drivers online, you keep getting reconnected to him even after canceling and selecting it's because of the driver multiple times.
# Drivers can work 1 hour and make some money. Try that with any other job.
Not really, the amount they earn in that 1 hour - when you remove Uber's cut, tax cut, gas and vehicle amortisation is terribly low. Some say they barely make ends meet with 8 hours driving.
>Cash Argument
Im not sure what you're trying to say? All Uber markets that support cash also support card.
> Card Declines Of course you will get blocked if you add an active uber accounts payment method. Thats basically a huge red signal for fraud.
> Rating Of course someone needs to be the first one to rate the drivers. Yet this is 100000x better than nothing, which is what most regular cab companies give.
>Money Not really? This is absolutely country/city dependent and the whole point is that YOU as the driver get to decide if its worth it or not. There are no upfront costs involved.
Im not sure what you're trying to say? All Uber markets that support cash also support card.
> Card Declines Of course you will get blocked if you add an active uber accounts payment method. Thats basically a huge red signal for fraud.
> Rating Of course someone needs to be the first one to rate the drivers. Yet this is 100000x better than nothing, which is what most regular cab companies give.
>Money Not really? This is absolutely country/city dependent and the whole point is that YOU as the driver get to decide if its worth it or not. There are no upfront costs involved.
I'm trying to say that all these "advantages" are just in specific situations.
And the card decline wasn't done with a card that already was active on Uber. And their "fraud" system got triggered months later, repeatedly, after a drive or two.
Also yes there are upfront costs in my area, in US maybe it isn't but here you have them.
I'm not saying Uber is worse than cabs. I'm saying that a lot of "advantages" Uber has aren't really all that. They are in a race to not burn their money before their AV investment can can come in, and in the end, it's just cabs with an app, not much better or worse than cabs.
3-4 years ago, the play was different, but now, it's becoming "just another cab company" in that area.
And the card decline wasn't done with a card that already was active on Uber. And their "fraud" system got triggered months later, repeatedly, after a drive or two.
Also yes there are upfront costs in my area, in US maybe it isn't but here you have them.
I'm not saying Uber is worse than cabs. I'm saying that a lot of "advantages" Uber has aren't really all that. They are in a race to not burn their money before their AV investment can can come in, and in the end, it's just cabs with an app, not much better or worse than cabs.
3-4 years ago, the play was different, but now, it's becoming "just another cab company" in that area.
Specific situations which make for a majority of their market? I don't think "specific" is an honest word here when it's mostly standard per continent.
Their fraud system is one of the best in the world, but of course it will have false positives. You know that your anecdote is not applicable to the business in general.
What upfront costs do you have? Where are you based?
I maybe get your point but I think you're vastly underestimsting the difference between a tech company optimizing digital transportation vs. A local cab company hiring a consultancy to make them a white label app.
Their fraud system is one of the best in the world, but of course it will have false positives. You know that your anecdote is not applicable to the business in general.
What upfront costs do you have? Where are you based?
I maybe get your point but I think you're vastly underestimsting the difference between a tech company optimizing digital transportation vs. A local cab company hiring a consultancy to make them a white label app.
> Not true in many countries where cash is supported in Uber.
I've taken Ubers in at least 7 countries, many of which have had a cash option (India and Vietnam), neither of which I took up. The average uber driver will have considerably less cash on them then the average cabbie.
> No payment is made in the vehicle, so faster exit times.
Only if you pay in cash.
> Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
Uber supports having both a business and personal profile, which you can change before or during a ride. Every business uber I take has the receipt sent directly to my work email, and charged to my work CC.
I've taken Ubers in at least 7 countries, many of which have had a cash option (India and Vietnam), neither of which I took up. The average uber driver will have considerably less cash on them then the average cabbie.
> No payment is made in the vehicle, so faster exit times.
Only if you pay in cash.
> Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
Uber supports having both a business and personal profile, which you can change before or during a ride. Every business uber I take has the receipt sent directly to my work email, and charged to my work CC.
There's at least one country I've been to (Egypt), where it's cash-only. Unsure if it's the standout, but I really wouldn't be surprised if there were others.
It's not true anymore, with the Careem acquisition.
I left my umbrella in an Uber in NYC once. I found the driver's number in the app and they were back a few minutes later and I got my umbrella back. This wouldn't have been so easy if it were a regular cab.
And? You got a $5 umbrella back. That has zero relevance to the business model of a multi-billion dollar enterprise.
I left $5000+ worth of camera equipment in an uber once.
They went 40 mins out of their way to return it and tried to refuse the money I offered them for their trouble.
This would have absolutely not happened with a cab.
They went 40 mins out of their way to return it and tried to refuse the money I offered them for their trouble.
This would have absolutely not happened with a cab.
It's why I pick Uber over a taxi. How is that irrelevant to this discussion?
Those are all great things. And all of them are done by the competitors. In Europe I use MyTaxi, same thing as Uber but much nicer cars
You mean FreeNow or whatever... Don't understand that rebrand at all, MyTaxi is a great name. Not sexy or enigmatic, but it's a challenger brand.
Right?! I was so confused when I was scrolling through my app list and saw this logo, I briefly wondered if I had installed some kind of social awareness app, I just had no idea what I was looking at.
[deleted]
Could not agree more. There are lots of things, easily copied, that make the Uber app great, not just the ride. The question longer terms becomes who continues to get rides, and why?
IMHO, ubiquity, especially when traveling, will ultimately be the winning move.
IMHO, ubiquity, especially when traveling, will ultimately be the winning move.
> IMHO, ubiquity, especially when traveling, will ultimately be the winning move.
Many of Uber’s customers are price sensitive. The minority who are not price sensitive are more likely to (be able to afford frequent) travel, but I fail to see how loyalty from this segment will translate into profits over the long term, especially since their international presence in multiple but not homogenous markets is a bet that economies of scale will yield a handsome pay off, where it clearly hasn’t as they had to pull out from direct competition in China for instance.
Many of Uber’s customers are price sensitive. The minority who are not price sensitive are more likely to (be able to afford frequent) travel, but I fail to see how loyalty from this segment will translate into profits over the long term, especially since their international presence in multiple but not homogenous markets is a bet that economies of scale will yield a handsome pay off, where it clearly hasn’t as they had to pull out from direct competition in China for instance.
> No money changes hands, so safer for drivers.
All their taxis do card payments, and have done card payments for decades before Uber.
> No payment is made in the vehicle, so faster exit times.
They didn't have that option when they launched the app with GPS booking, but they added it later. It now works just like Uber, you have cards on your profile, it charges your chosen card after the trip.
> Uber records all trips, so easier to work out costs to expense.
Of course they can email you your receipts if you want.
> Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
So does this taxi app. Companies can also have accounts with the taxi company, so if it's a work trip you just use the company account that you've already entered into the app.
> Driver and passenger are tracked, so there it is easy to find who did what. There are a lot of rape charges and cases against Cabbies.
There are not a lot of rape charges and cases against cabbies in Stockholm, at all, so that's not a problem to solve.
> Rating - I've been in a LOT of awful, awful cabs.
Taxis in SF are godawful compared to taxis in Stockholm, so yeah, if you're used to the shitty cabs of SF, Uber is a step up. If you're used to pretty much every single taxi being a Mercedes like in Stockholm, Random Dude's Toyota is a step down.
> Drivers can work 1 hour and make some money. Try that with any other job.
That doesn't affect me as a customer, really. Also, when I get in a taxi in Stockholm I know I'm getting a properly licensed and insured ride, not just some gung-ho gig-economy hopeful who is driving his Toyota an hour a week.
Like I said, I understand that Uber was a step-up for the SF taxi market, but there are plenty of markets where it isn't, and where it's much-hyped technological invention just isn't very hard to replicate for local competition.
All their taxis do card payments, and have done card payments for decades before Uber.
> No payment is made in the vehicle, so faster exit times.
They didn't have that option when they launched the app with GPS booking, but they added it later. It now works just like Uber, you have cards on your profile, it charges your chosen card after the trip.
> Uber records all trips, so easier to work out costs to expense.
Of course they can email you your receipts if you want.
> Uber uses any credit card, so your boss can pay for your ride without the need for separate expensing.
So does this taxi app. Companies can also have accounts with the taxi company, so if it's a work trip you just use the company account that you've already entered into the app.
> Driver and passenger are tracked, so there it is easy to find who did what. There are a lot of rape charges and cases against Cabbies.
There are not a lot of rape charges and cases against cabbies in Stockholm, at all, so that's not a problem to solve.
> Rating - I've been in a LOT of awful, awful cabs.
Taxis in SF are godawful compared to taxis in Stockholm, so yeah, if you're used to the shitty cabs of SF, Uber is a step up. If you're used to pretty much every single taxi being a Mercedes like in Stockholm, Random Dude's Toyota is a step down.
> Drivers can work 1 hour and make some money. Try that with any other job.
That doesn't affect me as a customer, really. Also, when I get in a taxi in Stockholm I know I'm getting a properly licensed and insured ride, not just some gung-ho gig-economy hopeful who is driving his Toyota an hour a week.
Like I said, I understand that Uber was a step-up for the SF taxi market, but there are plenty of markets where it isn't, and where it's much-hyped technological invention just isn't very hard to replicate for local competition.
The payment is non-issue in countries with mobile pay. Or payment using contactless chip without PIN for small charges. Soon non-issue everywhere. All those other things are in apps that modern taxicabs use.
Nothing in this list is unique to Uber or difficult to replicate.
It's not just the app that makes Uber, Lyft, Grab extra better than cabs. It's that unlike cabs they can scale with demand. Cabs can't have enough drivers and cars to cover peak demand or they'd run out of money from expenses. Those others can as when there is peak demand more drivers will volunteer to work.
I disagree that they have zero brand loyalty. Yes it is a price sensitive industry but you're doing something right when your brand becomes a verb. I'm in Melbourne, Australia and I generally pay the extra few dollars for Uber rather than dealing with Didi, Taxify et al's inferior interfaces and slower pick up times. I think Uber take 28% commission vs Didi's 15% and that is reflected in the pricing eg. a $25 Didi fare is usually $30ish on Uber.
Didi is 5% commission, massive difference to the driver. As an alternative Melbourne opinion, no way am I using Uber.
Last ride I got the driver told me he only considers the premium jobs from uber and prefers Didi.
Last ride I got the driver told me he only considers the premium jobs from uber and prefers Didi.
Ya wow if looks like they dropped it late last year. I'll have to try it again as that's a significant discount.
People in tech industry have excessive bias against businesses with no network effects or other obscenely effective barriers to entry. There are lots of successful, large corporations with varying levels of barriers to entry. Exxon Mobil doesn't have a network effect and has zero brand loyalty, but it's still a huge business. McDonald's also lacks network effects, though it does have some brand loyalty, perhaps similar to Uber.
Of course these businesses have some barriers to entry (so does Uber. Lyft et al. notwithstanding), but it's not a result of network effects that we're used to with companies like FB and eBay.
Of course these businesses have some barriers to entry (so does Uber. Lyft et al. notwithstanding), but it's not a result of network effects that we're used to with companies like FB and eBay.
> There are lots of successful, large corporations with varying levels of barriers to entry.
Of course! But they’re not valued at 10x revenue like tech companies. Uber stock has nowhere to go but down.
Of course! But they’re not valued at 10x revenue like tech companies. Uber stock has nowhere to go but down.
I think the tech industry has been infected by a monopoly mindset, that the only way to build a business is to be the only business in that space.
It doesn't help that the most visible "successful" tech companies are all monopolies or duopolies (Google, Facebook, etc.)
But for every category-dominating Microsoft, there are dozens of very successful software companies in every vertical. Dozens of project management software companies, countless task management software companies, etc.
It doesn't help that the most visible "successful" tech companies are all monopolies or duopolies (Google, Facebook, etc.)
But for every category-dominating Microsoft, there are dozens of very successful software companies in every vertical. Dozens of project management software companies, countless task management software companies, etc.
> McDonald's also lacks network effects, though it does have some brand loyalty
McDonald's is top 10 most valuable brand in the world. It has massive brand loyalty & defensibility through it.
McDonald's is top 10 most valuable brand in the world. It has massive brand loyalty & defensibility through it.
Businesses without network effects or barriers to entry are fine, but they can't afford to burn billions in investor cash every quarter the way that Uber does. They are never going to have the out-sized profits to justify those initial losses.
The only way Uber works as a service is if you leverage all the people that want to be a taxi driver for a few minutes, so are will g to take less than a living wage because it's extra income that they trade time (and a vehicle) that they weren't utilizing much already during that time, which allows rates lower than taxis.
The only way Uber works as an investment (at the level they've accepted money) is if they somehow kill off traditional taxis and all competition and become the only game in town (where "town" is basically the whole U.S.), and charge taxi rates or above.
Given that the cost of entry I to the market (at least for customers willing to see the cheaper rates) is essentially zero as by the nature of the business your drivers can drive for anyone, making Uber work as an investment doesn't look very likely to me. Not that I'll feel all that bad when those people lose money. I'll just call that karmic justice for investing in a company with such a horrible record (I believe if Uber didn't have billions invested by the elite they would have been shut down or heavily regulated for bad business practices years ago).
The only way Uber works as an investment (at the level they've accepted money) is if they somehow kill off traditional taxis and all competition and become the only game in town (where "town" is basically the whole U.S.), and charge taxi rates or above.
Given that the cost of entry I to the market (at least for customers willing to see the cheaper rates) is essentially zero as by the nature of the business your drivers can drive for anyone, making Uber work as an investment doesn't look very likely to me. Not that I'll feel all that bad when those people lose money. I'll just call that karmic justice for investing in a company with such a horrible record (I believe if Uber didn't have billions invested by the elite they would have been shut down or heavily regulated for bad business practices years ago).
Experience matters - a lot! Recently I got new phone and it was bit of an adventure just to login to Uber. After that I'd to add CC numbers manually. For Lyft it was simply taking a photo. There are several other small things, for example, I want tips to be included in single charge for easier receipts for business trips. I want review to be annonymous. I want app to ask me landmark if it detects poor GPS in places like NYC. I want some sort of negative reward for driver if they cancel on me. In my trip to India I learned that there was 50% chance drivers would cancel on you in Ola and 20% in Uber. All these are complex issues and neither Uber or Lyft has solved it perfectly. My money will go to company which provides greatest experience, not the 10% difference in price.
Both companies are doing right thing to invest heavily in new businesses + experiences + new markets - despite what pundits say around here and that wall street wants to suck out all growth for short term "shareholder value maximization".
Both companies are doing right thing to invest heavily in new businesses + experiences + new markets - despite what pundits say around here and that wall street wants to suck out all growth for short term "shareholder value maximization".
They do have a loyalty program now, which is designed to drive brand loyalty. Whether it actually works is up to the market.
I'm in the NYC market. I use Lyft to get around and Uber Eats to order things that could never have a business model delivering to me. To me market capture is just as bad as the original Taxi model, but even Taxis have gotten around to handling this problem. You can switch to the app in the middle of a ride and pay with the code on the back seat tv screen. The convenience factor is only there for food until another competitor enters that arena.
It's a race to the bottom and I suspect after all the hard work is said and done Uber will be the Yahoo of ride share. Tesla may very well swoop in and say "Thanks for blazing the trail"
It's a race to the bottom and I suspect after all the hard work is said and done Uber will be the Yahoo of ride share. Tesla may very well swoop in and say "Thanks for blazing the trail"
A low price is not loyalty
Uber Rewards [0] is, though. Basically airline status.
0: https://www.uber.com/us/en/u/rewards/
0: https://www.uber.com/us/en/u/rewards/
I believe the person is referring to ‘uber cash’ as an loyalty incentive, paired with changes to the uber credit card coming next year which will only give uber cash (akin to airline miles).
> For a company that sells a utility (...) rather than an experience (...), I will always pick the cheapest option.
That's exactly how they built their business. They should not be surprised of the consequences!
That's exactly how they built their business. They should not be surprised of the consequences!
The first time I got in an Uber and saw two other phones on the dashboard with the driver working Lyft and another competitor at the same time I knew it was game over for these companies. Both the drivers and the riders were taking the best deal each ride and the VCs were in the middle subsidizing the whole thing for both sides. It’s a race to the bottom.
I enjoy the product and will enjoy the cheap rides while they last but the business mode seems flawed.
I enjoy the product and will enjoy the cheap rides while they last but the business mode seems flawed.
Much of your post is wrong.
Would need to evaluate the one-time charges to determine if they actually would be ongoing. Simply having some one-time charges doesn't mean they will necessarily be perpetual.
In fact, the vast majority of riders have a preferred option even without the frequent rider incentives. This is even starker on the driver side.
The advent of pooling and continuing improvement absolutely have had a significant impact on the economics.
Uber has delivered various efficiency improvements including map-based routing and pricing, pooling. Lyft has "Shared Savers" that trade time/walking for lower fares and more efficient pickups/drop-ffs.
In fact, Uber & Lyft are frequently more expensive than taxis because of surge pricing and superior product.
Uber & Lyft are in the best position to take advantage of robo-drivers.
Would need to evaluate the one-time charges to determine if they actually would be ongoing. Simply having some one-time charges doesn't mean they will necessarily be perpetual.
In fact, the vast majority of riders have a preferred option even without the frequent rider incentives. This is even starker on the driver side.
The advent of pooling and continuing improvement absolutely have had a significant impact on the economics.
Uber has delivered various efficiency improvements including map-based routing and pricing, pooling. Lyft has "Shared Savers" that trade time/walking for lower fares and more efficient pickups/drop-ffs.
In fact, Uber & Lyft are frequently more expensive than taxis because of surge pricing and superior product.
Uber & Lyft are in the best position to take advantage of robo-drivers.
Uber & Lyft are in the best position to take advantage of robo-drivers.
I don't think they are. The cost savings on using driveless cars for taxis are huge. Any operator will be able to massively undercut the competition. Consequently the most sensible thing for whichever company gets a level 5 driverless car first would be to run their own ride company and not sell or license the tech to anyone else. That's what Waymo is all about and why Uber are trying to invent their own driverless tech.
Any brand loyalty will evaporate literally overnight as soon as someone launches a driverless ride service simply because it'll be half the price of all the other human-operated services, far more reliable (no more cancellations for a better fare), and probably have many more cars available 24/7.
I don't think they are. The cost savings on using driveless cars for taxis are huge. Any operator will be able to massively undercut the competition. Consequently the most sensible thing for whichever company gets a level 5 driverless car first would be to run their own ride company and not sell or license the tech to anyone else. That's what Waymo is all about and why Uber are trying to invent their own driverless tech.
Any brand loyalty will evaporate literally overnight as soon as someone launches a driverless ride service simply because it'll be half the price of all the other human-operated services, far more reliable (no more cancellations for a better fare), and probably have many more cars available 24/7.
> (no more cancellations for a better fare)
Wouldn’t be so sure about that. The operating company will still be trying to maximise profits after all.
Wouldn’t be so sure about that. The operating company will still be trying to maximise profits after all.
> Any brand loyalty will evaporate literally overnight as soon as someone launches a driverless ride service
This argument only makes sense if a driverless ride service can be launched overnight. Driverless rollout will take many many years. The slower the rollout and patchier the service availability, the better off the TNCs are.
This argument only makes sense if a driverless ride service can be launched overnight. Driverless rollout will take many many years. The slower the rollout and patchier the service availability, the better off the TNCs are.
Once we have robo drivers everyone will have them. If Uber survives until that day, it will have no advantage over a localized competitor like Bobs Taxis with robo drivers.
Might be different in other markets, but in my home city picking the best (price, time) ride is not so easy. The time it takes for the car to arrive varies a lot. In all the services available I need to first place the order, then they find the car and after that I get estimate how long it takes to arrive. I can cancel and try another one, but that’s quite inconvenient. Also the time estimates seem to be fairly optimistic.
At least on my case this means that I’m not always trying to pick the cheapest option, but instead go with the option that has had good price/performance ratio in the past.
At least on my case this means that I’m not always trying to pick the cheapest option, but instead go with the option that has had good price/performance ratio in the past.
Uber is actually marketplace and it's goal is to balance demand and supply. Great upsides of being big company, e.g. having more cars and drivers, is 1) less waiting time for passenger and 2) less empty mileage for drivers/cars. First is good catch for client (I will not wait extra 10 minutes for Bobs Taxis even with 5% price difference), second is a no-brainer for drivers (one got paid for more hours ber day). Actually second one is a good edge against any local Bobs Taxis: with less idle time bigger company pays minimal wage faster and can make overall prices better.
Which one-time charges are we talking about? Neither the linked results nor the supplemental call any out.
> Uber has only made finding the ride more efficient but it has not made the actual ride itself more efficient.
Driver cost per trip = Driver cost per hour / Driver utilization.
By making finding the ride more efficient, Uber meaningfully increases driver utilization, decreasing driver cost per trip.
Driver cost per trip = Driver cost per hour / Driver utilization.
By making finding the ride more efficient, Uber meaningfully increases driver utilization, decreasing driver cost per trip.
Drivers arent paid per hour though
Apparently the decrease hasn’t been enough to have a positive impact on Uber financials
I use Uber and don't have any inclination to switch because the price difference is negligible. I also Uber to the airport maybe 1-2 times a year. So it's rarely used and there's little benefit to switching. Why change?
It’s not that you want to switch. It’s that you wouldn’t care if you did.
But I also have no desire to, since there isn't any difference.
Profitable business are the one when one can not add Further value to it. i.e. advertise. Or retail trading like business.
"I will always pick the cheapest option... That means this whole business is a race to the bottom."
wow. how many trips do you do?
wow. how many trips do you do?
Not OP, but in the same boat, and currently travel regularly. I always almost all of them installed (e.g. Uber/Lyft/Ola/Bolt/Grab etc.) and pick the cheapest. For now, there's the added incentive that you never pay full-fare for your first ride, too, so new competition is great.
> That means this whole business is a race to the bottom.
Seems like that's why they started limiting hackney carriages and regulating rates in London in 1662.
Also the horse had to be less than 14 hands high!
https://www.british-history.ac.uk/statutes-realm/vol5/pp351-...
Seems like that's why they started limiting hackney carriages and regulating rates in London in 1662.
Also the horse had to be less than 14 hands high!
https://www.british-history.ac.uk/statutes-realm/vol5/pp351-...
> I will always pick the cheapest option.
My friend's sister got hospitalized after her Uber driver ran a red light because they were not privy to traffic queues most normal people would have caught on to (like stopping when a light is turning red)
I will gladly spend a couple extra bucks the ~20 times I need to Uber a year so that I am not getting into a screaming metal death trap with an unfit driver.
My friend's sister got hospitalized after her Uber driver ran a red light because they were not privy to traffic queues most normal people would have caught on to (like stopping when a light is turning red)
I will gladly spend a couple extra bucks the ~20 times I need to Uber a year so that I am not getting into a screaming metal death trap with an unfit driver.
It’s not clear what you are spending extra money on or how you are evaluating driver aptitude. What about Uber’s driver requirements doesn’t work for you?
I wouldn't feel comfortable knowing Uber cut driver wages to beyond razor thin because I'd question if the driver (who is willing to work for next to nothing) is qualified to safely drive me around.
[deleted]
You have to go past a lot of non-GAAP accounting to see that they actually lost $1.1B last quarter, almost all from operations. There is a nice chart showing all the things they are taking out to get their adjusted EBITDA of -0.5B.
It seems like they are always taking out a bunch of one time charges to claim that there core business would be profitable. But every quarter they have those charges. I don't understand how people say their ride sharing business is profitable. I mean maybe it is and I just don't understand how people think that. I would love it if someone would walk me through that.
It seems like they are always taking out a bunch of one time charges to claim that there core business would be profitable. But every quarter they have those charges. I don't understand how people say their ride sharing business is profitable. I mean maybe it is and I just don't understand how people think that. I would love it if someone would walk me through that.
You're an idiot if you lose $100 from your pocket, but you're a genius if you lose -$1.1B of other people's money every quarter.
My personal goal is to become too big to fail. It's doable, I mean, it worked for Adam Neumann.
Someday, I want to see a financial statement where the non-GAAP accounting makes the company look worse than GAAP accounting. Statistically, that should happen half the time. It doesn't.
Having worked with investment bankers: Statistically speaking, bankers develop various hypotheses re: what "adjustments" might be added to a financial model to make the company look better to investors. They tell their junior analysts to run the numbers, this flows down the chain, and many late nights and Seamless orders ensue. Experienced bankers have pretty good priors, so most of these hypotheses make the company look better. Even so, all but the best outcomes are rejected, and the analysts whose analyses ended up being useless complain to each other over copious amounts of alcohol.
Essentially, it's as if p-hacking were codified as an industry standard, which is to say, it's exactly p-hacking.
Essentially, it's as if p-hacking were codified as an industry standard, which is to say, it's exactly p-hacking.
Non-GAAP accounting shown to the general public/investors is marketing material. Of course it's going to make them look good. That doesn't mean it's the only non-GAAP accounting being done. They're just using the useful stuff internally.
The criteria for figures you use is audience dependent. Report creation 101. Decision makers, regulators, investors are all different audiences.
The criteria for figures you use is audience dependent. Report creation 101. Decision makers, regulators, investors are all different audiences.
> Statistically, that should happen half the time.
Uhh...no. Non-GAAP is financials manipulated against accounting standards to show a better picture. No company wants to show a worse picture.
Uhh...no. Non-GAAP is financials manipulated against accounting standards to show a better picture. No company wants to show a worse picture.
Reminds me of the time when Uber’s lawyer said they are not a ride sharing company they are provide a marketplace (the app).
What statistical model is this?
Stock based compensation is a big chunk of that which arguably doesn't really cost Uber anything really. I think the bigger takeaway is that its STILL 500 million dollars lost per quarter which is insane.
That makes sense. I see based on p. 28 - 29 it looks like they spent about ~500m in this quarter on stock based compensation. So I guess the argument would be if they have more salary type employees and they blew off some of their new money losing divisions they would be closer to break even.
I think you can argue that in the long run Uber doesn't need to be more high tech than FedEx or WalMart. They are an app powered by logistics. You maybe don't need to offer Silicon Valley incentives to do that in the long run.
I think you can argue that in the long run Uber doesn't need to be more high tech than FedEx or WalMart. They are an app powered by logistics. You maybe don't need to offer Silicon Valley incentives to do that in the long run.
What do you mean it doesn't cost them anything?
https://www.ft.com/content/6999dc72-893e-11e9-97ea-05ac2431f...
This explains it decently IMO
> Assume that you own a business that has an overall value of $100m and generates $10m in annual income, and that you hire me as your manager. Assume also that my compensation is $1m and that rather than pay me with cash, you give me 1 per cent of the business as compensation. While you may maintain the fiction that this is a non-cash expense and that your income is still $10m, you are now entitled to only 99 per cent of that income in perpetuity. In effect, your share of the business is worth less and it will get even smaller over time, if you continue to pay me with equity. But if you are a common stockholder in any company that grants options or restricted stock to its employees, then you are in exactly the same position.
While it's obviously bad for shareholders, it basically dilutes their profits in the future, but if those never come, who cares about that dilution? I think it would affect my opinion of the stock long term, but short term any way they get towards profitability minus stocks is a way that someone actually sees a dividend.
But of course, most people actually looking to buy and sell individual stocks won't really care a ton about the dividends IMO. And it's not like people really use voting rights today on tech stocks even if they are offered. It's always fascinated me that stock games like that really come down to just betting on future performance compared to the opinions of others. It's comically confidence based and nothing else.
So if Uber were to eve somehow reach profitability minus stock compensation, their business itself could actually take advantage, even if the shares of others were diluted in terms of dividends.* So if you're buying and selling stocks individually in the current pattern, Uber hitting that middle zone of technically nonprofitable but adjusted profitable would be a good sign for long term resilience, however that factors into the current confidence equation.
How the stock market hasn't been classified as gambling at this point is wild to me.
*I'm actually not personally clear on if it is a dilution or those specifics, its surprisingly hard info to find online easily. One thing is clear though: the company's cash flow itself is not affected at all.
This explains it decently IMO
> Assume that you own a business that has an overall value of $100m and generates $10m in annual income, and that you hire me as your manager. Assume also that my compensation is $1m and that rather than pay me with cash, you give me 1 per cent of the business as compensation. While you may maintain the fiction that this is a non-cash expense and that your income is still $10m, you are now entitled to only 99 per cent of that income in perpetuity. In effect, your share of the business is worth less and it will get even smaller over time, if you continue to pay me with equity. But if you are a common stockholder in any company that grants options or restricted stock to its employees, then you are in exactly the same position.
While it's obviously bad for shareholders, it basically dilutes their profits in the future, but if those never come, who cares about that dilution? I think it would affect my opinion of the stock long term, but short term any way they get towards profitability minus stocks is a way that someone actually sees a dividend.
But of course, most people actually looking to buy and sell individual stocks won't really care a ton about the dividends IMO. And it's not like people really use voting rights today on tech stocks even if they are offered. It's always fascinated me that stock games like that really come down to just betting on future performance compared to the opinions of others. It's comically confidence based and nothing else.
So if Uber were to eve somehow reach profitability minus stock compensation, their business itself could actually take advantage, even if the shares of others were diluted in terms of dividends.* So if you're buying and selling stocks individually in the current pattern, Uber hitting that middle zone of technically nonprofitable but adjusted profitable would be a good sign for long term resilience, however that factors into the current confidence equation.
How the stock market hasn't been classified as gambling at this point is wild to me.
*I'm actually not personally clear on if it is a dilution or those specifics, its surprisingly hard info to find online easily. One thing is clear though: the company's cash flow itself is not affected at all.
They pass the cost directly onto the shareholders :-)
> I think the bigger takeaway is that its STILL 500 million dollars lost per quarter which is insane.
And that’s to develop and maintain an app, probably one of the absolutely cheapest things one can do in any industry.
Quite maddening indeed.
And that’s to develop and maintain an app, probably one of the absolutely cheapest things one can do in any industry.
Quite maddening indeed.
I think that is massively trivializing the technical complexity of engineering a system that powers millions of rides, food orders, freight orders, etc globally every single day.
As an example, look at how they've improved upon GPS in urban areas to take into account satellite visibility to determine which side of the street you're on: https://eng.uber.com/rethinking-gps/
They invest tons into just solving small problems like that. Not to mention all the open source work they do, ATG, etc.
Then consider that Uber has to have pretty big operations, sales, marketing, and support teams in each market they operate in. It's not just a handful of engineers working in SF. Their massive costs considering their scale makes total sense to me. This is not to conclude one way or another whether or not they are a viable business.
As an example, look at how they've improved upon GPS in urban areas to take into account satellite visibility to determine which side of the street you're on: https://eng.uber.com/rethinking-gps/
They invest tons into just solving small problems like that. Not to mention all the open source work they do, ATG, etc.
Then consider that Uber has to have pretty big operations, sales, marketing, and support teams in each market they operate in. It's not just a handful of engineers working in SF. Their massive costs considering their scale makes total sense to me. This is not to conclude one way or another whether or not they are a viable business.
wouldn't that violate accounting practices if they took one time charges? That's what constitutes fraud right?
They need to provide GAAP numbers and so long as everything else is clearly labeled (i.e. "non-GAAP"), there's no problems.
For those interested in the world of non-GAAP accounting, there are a wealth of resources (particularly from the Big 4 accountancies who are eager to consult on such matters). Broadly, the use of non-GAAP has grown to a point where the SEC ramped up enforcement measures (sending letters to companies regarding their presentation of non-GAAP measures)[1]. Particularly, GAAP measures need to be presented "with equal or greater prominence" to their non-GAAP counterparts.
From a Deloitte piece[2]:
"A study published by Audit Analytics noted that 97 percent of S&P 500 companies used non-GAAP measures in earnings releases during 2017. Further, the number of non-GAAP measures used per filing has almost tripled from 2.35 in 1996 to 7.45 in 2016.
In addition, a study published by FactSet indicated that for the second quarter of 2018, 77 percent of the companies in the Dow Jones Industrial Average reported non-GAAP earnings per share and 61 percent of these companies reported non-GAAP earning per share that exceeded GAAP earnings per share."
[1] https://corpgov.law.harvard.edu/2019/02/07/sec-scrutiny-of-n... [2] https://www2.deloitte.com/us/en/pages/audit/articles/a-roadm...
From a Deloitte piece[2]:
"A study published by Audit Analytics noted that 97 percent of S&P 500 companies used non-GAAP measures in earnings releases during 2017. Further, the number of non-GAAP measures used per filing has almost tripled from 2.35 in 1996 to 7.45 in 2016.
In addition, a study published by FactSet indicated that for the second quarter of 2018, 77 percent of the companies in the Dow Jones Industrial Average reported non-GAAP earnings per share and 61 percent of these companies reported non-GAAP earning per share that exceeded GAAP earnings per share."
[1] https://corpgov.law.harvard.edu/2019/02/07/sec-scrutiny-of-n... [2] https://www2.deloitte.com/us/en/pages/audit/articles/a-roadm...
Basically they lost 10% of their gross bookings.
Does this mean that raising the price by 10% has them breaking even? Maybe.
It does show the immense potential though, their bookings are so large that 10 percent change would net them billions more. They are booking 1 billion dollars worth of rides every week.
Does this mean that raising the price by 10% has them breaking even? Maybe.
It does show the immense potential though, their bookings are so large that 10 percent change would net them billions more. They are booking 1 billion dollars worth of rides every week.
> their bookings are so large that 10 percent change would net them billions more.
Kind of a hot take, but this is why I'm long Uber. They're processing an insane amount of orders, and getting a huge amount of people using their app. If Lyft dies, or if a merger occurs, then we have a large ride share company that is still a lot more than 10% better than taxis. Most customers will still be taking Ubers, regardless of that 10% price hike.
Of course, this is just for the ride share business. I don't see how food delivery will be profitable long-term. Maybe it'll be just a loss leader for them?
Kind of a hot take, but this is why I'm long Uber. They're processing an insane amount of orders, and getting a huge amount of people using their app. If Lyft dies, or if a merger occurs, then we have a large ride share company that is still a lot more than 10% better than taxis. Most customers will still be taking Ubers, regardless of that 10% price hike.
Of course, this is just for the ride share business. I don't see how food delivery will be profitable long-term. Maybe it'll be just a loss leader for them?
Hm, but to me it seems like Uber is getting more competitors not fewer. Bolt for example has started competing with Uber in more cities and the traditional taxi companies are getting their shit together in some countries.
I think most talk surrounding Uber in HN is just biased/centered around US market.
No way a Lyft merger could be approved in any kind of sane society. It would turn a duopoly into a monopoly.
If both companies are approaching bankruptcy trying to outlast the other, wouldn't the lesser evil be a world with a ride-share monopoly rather than a world without (large scale) ridesharing?
With the amount of people that use these rideshare companies as their primary job or to make their daily commute, it seems hard to imagine going back to the pre-Uber/Lyft days. Not that the government or any regulatory body would see it this way. I just think consumers are better off with a monopoly here. Plus, whatever rideshare service that survives will still have to compete with local taxi companies.
With the amount of people that use these rideshare companies as their primary job or to make their daily commute, it seems hard to imagine going back to the pre-Uber/Lyft days. Not that the government or any regulatory body would see it this way. I just think consumers are better off with a monopoly here. Plus, whatever rideshare service that survives will still have to compete with local taxi companies.
If both Uber and Lyft go bankrupt we’d have a new rideshare service (or 20) before the ink was dry on the court papers. The public value is embodied in the concept, not in the companies.
There is a good chance suburban areas would not have ride sharing for a long time if that happened. All the alternatives popping up would be in cities and dense urban areas for a long time. Or if they get them, they might just be priced worse than the taxis.
Suburban areas already suck for ride shade. Try hailing a lyft in the proper suburbs, should take you over a half hour.
What is a proper suburb to you? Ride sharing is great for me in suburban areas of Delaware before as one example. Wait can be 15-20 min sometimes. Though it shouldn’t be like that all the time. You can still see where the driver is, etc, via app. The price is cheap (I’d be willing to pay more). The experience is far better than hailing taxis used to be.
Suburban life is also different from city life. A 15-20 min isn’t that bad in suburbs.
Life has become a lot more convenient currently for me in suburbs knowing ride sharing is around. I almost shivered thinking about the last time I used a taxi a decade ago in suburbs.
Suburban life is also different from city life. A 15-20 min isn’t that bad in suburbs.
Life has become a lot more convenient currently for me in suburbs knowing ride sharing is around. I almost shivered thinking about the last time I used a taxi a decade ago in suburbs.
What about Uber? I ordered it in a podunk city in eastern Washington recently and the wait was like 7 minutes.
In fact, there are already lots of competitors worldwide, likely more lean than Uber/Lyft and probably ready to pounce on the US market once those two implode.
Competitors driving each other towards near-zero profits is how capitalism is supposed to work.
The problem is that there is no willingness to enforce laws against predatory pricing, so no one can even break even on this type of transportation.
The problem is that there is no willingness to enforce laws against predatory pricing, so no one can even break even on this type of transportation.
the market is transportation, not ridesharing. It's not just uber and lyft competing with one another. They also compete with private cars, public transportation, taxis, bicycles, etc.
Together the two of them are just a paltry 1% or so of vehicle miles traveled last I heard. Combined they are still almost two orders of magnitude away from having monopoly power.
Together the two of them are just a paltry 1% or so of vehicle miles traveled last I heard. Combined they are still almost two orders of magnitude away from having monopoly power.
[deleted]
I mean if they increased their prices by 10%, their sales quantity would certainly decrease. So to make that 10% revenue increase would take potentially a significantly greater price increase, substantially changing their value proposition.
Granted most studies show that demand for ridesharing is inelastic at current prices, it says nothing about switching to Lyft etc...
Granted most studies show that demand for ridesharing is inelastic at current prices, it says nothing about switching to Lyft etc...
They're still losing money hand over fist - no surprise there. Looks like that is hitting the stock in after-hours for about -5%. Biggest takeaway for me is that gross revenue actually grew slower than total trips (30% vs 31%), which is an interesting trend.
> Biggest takeaway for me is that gross revenue actually grew slower than total trips (30% vs 31%)
But on a constant currency basis gross revenue grew at the same rate, so the only reason it was slower was due to exchange rate changes.
But on a constant currency basis gross revenue grew at the same rate, so the only reason it was slower was due to exchange rate changes.
Looks like Uber has two types of businesses. a) Ones that are slowing down, e.g. Rides with growth rate of ~20% and b) Ones that are growing faster by unsustainable economics, e.g. Freight -40% EBITDA.
For Uber ever to thrive, they need a business that is growing fast with good economics. It doesn't look they have one anywhere on the horizon.
[deleted]
[deleted]
There's another thing that needs to be said. Uber is receiving a lot of criticism here, but whether they eventually make it as a company or not, Uber is doing one important thing: Showing that a business model and profits matter. This has been neglected in the last decade or so. If bringing back that awareness is Uber's only contribution, then no matter the company's outcome, it will have done a good thing.
I'd love to hear some smart people opinions on this idea:
"Uber doesn't need to be profitable, they just need to survive until their autonomous cars are deployed"
"Uber doesn't need to be profitable, they just need to survive until their autonomous cars are deployed"
IMHO, autonomous cars actually breaks Uber's model. It changes it from taking a % off the top of a market to a capital and maintenance intensive business. Only seems to work if they end up with some sort of franchise model. Sort of like how Coke has a bunch of distributors.
That's about right. Running a fleet of autonomous vehicles is an expensive proposition, and probably will be for years after they start working. Waymo outsources some of that to Avis Rent-A-Car, which already has garages, maintenance facilities, parking lots, car washes, etc.
It's quite possible that when automomous vehicle operations start working, the big players will be car rental companies. It's a natural extension to their business.
It's quite possible that when automomous vehicle operations start working, the big players will be car rental companies. It's a natural extension to their business.
I have a hard time believing that anyone on HN legitimately things that companies like Hertz and Avis will be able to become efficient in the ridesharing market before one of the two TNCs become efficient in the fleet management market (which is a subset of the rental car market that overlaps with TNCs once they choose to have their own fleet.
One set of businesses here has modern engineering practices and the other set are dinosaurs. Furthermore, rental companies have more employees dedicated to sales than to fleet management and their entire current customer base is rental car consumers. They literally need to redirect money to R&D long term where that R&D serves no benefit to their current customer base. Wall Street will punish the stock of rental car companies short term for spending R&D on becoming ridesharing businesses that serve a customer they don't yet even have mindshare with. With the TNCs however, wall street won't see any problem with them building out their own fleet. The only condition where wall street looks down on the idea of own fleet management is if they believe a franchise model with third party fleet managers make sense. Either way the TNCs own the relationship with the customer and therefore has all the power.
One set of businesses here has modern engineering practices and the other set are dinosaurs. Furthermore, rental companies have more employees dedicated to sales than to fleet management and their entire current customer base is rental car consumers. They literally need to redirect money to R&D long term where that R&D serves no benefit to their current customer base. Wall Street will punish the stock of rental car companies short term for spending R&D on becoming ridesharing businesses that serve a customer they don't yet even have mindshare with. With the TNCs however, wall street won't see any problem with them building out their own fleet. The only condition where wall street looks down on the idea of own fleet management is if they believe a franchise model with third party fleet managers make sense. Either way the TNCs own the relationship with the customer and therefore has all the power.
I would not be so sure. Avis, in particular, is actively pushing for a flow where you book online, use "secret" promo code to get full insurance for basically zero, pick up car directly on parking lot with keys inside, and drive away. It takes literally 5 minutes and a single employee to check your driving license and contract. Hertz is trying to do same, though less effectively. Their websites and apps are still horrible, and it's perplexing why, but the cost of building decent apps will be immaterial compared to the cost of the vehicles, and from that, building actual on-demand short-term rental network does not seem so unlikely.
I suspect this is what Waymo plans to do with Chrysler. Waymo will be the brand of AI driving the car, and probably own the app/marketplace, but the car companies will take care of building/capitalizing the fleet (and probably maintaining it, too).
The upside is that they keep 100% of fares, benefit from the economies of scale of having a large fleet, and can run the cars 24/7.
Cars can be leased, reducing capex, and maintenance can be handled by specialised companies.
Overall it seems that this upside far outweighs the downside.
Cars can be leased, reducing capex, and maintenance can be handled by specialised companies.
Overall it seems that this upside far outweighs the downside.
Do they need to own the car. They could just run not in use consumer cars.
Are people prepared to do this?
I get my car to drive to me to work and then it goes out and operates like a taxi while I'm working. I'd be worried it comes back damaged or vomit all over the place.
No thanks.
I get my car to drive to me to work and then it goes out and operates like a taxi while I'm working. I'd be worried it comes back damaged or vomit all over the place.
No thanks.
I am not smart , but before the phoenix accident that statement may have some basis but after that the uber autonomous car is tainted to an extent couple that with theft of intellectual property from Alphabet autonomous trucking and the subsequent deal made, it is hard to argue Uber is going to lead the autonomous revolution when it happens. Their current moat is their driver network (one of the moats), once that is gone Waymo and Tesla can pretty much pull what Uber does.
Waymo/Alphabet/Tesla are one push notification to their apps away from building a driver network.
I've seen Waymo's cars driving around plenty of times in Arizona. The ones without a human safety driver are so rare I haven't seen one in person yet. If they were actually confident they were close to FSD they would have more cars without human safety drivers.
While I can understand why autonomous cars can improve the efficiency of the market, unless Uber is able to gain semi-exclusive access self driving cars alone I don’t understand how this will fix their economics.
Let’s pretend Waymo has 100% safe, easy producible, street legal self driving cars available today and everyone else was clearly several years behind. I see this would play out in a few ways:
1) Would Waymo actually want to spend billions to buy enough cars to maintain their own fleet in most cities in the world/US so that you could quickly and reliably hail a self driving car (and spend on marketing / referrals to grow marketshare). Would Waymos/Google investors actually allow them to lose this much money to start a new business that has historically been so unprofitable?
2) Would Waymo just sell cars to consumers/rental car companies, who would then deploy the vehicles to uber/lyft. In this scenario wouldn’t the cars be even more price sensitive about automatically switching between driving for different platforms and optimizing for the cars time. Wouldn’t consumer still open their uber/Lyft apps, check for the lowest price and then take the cheapest ride? Isn’t this fundamentally the same economics issue (unless the rides perhaps get so cheap that consumer no longer bother to check)
Let’s pretend Waymo has 100% safe, easy producible, street legal self driving cars available today and everyone else was clearly several years behind. I see this would play out in a few ways:
1) Would Waymo actually want to spend billions to buy enough cars to maintain their own fleet in most cities in the world/US so that you could quickly and reliably hail a self driving car (and spend on marketing / referrals to grow marketshare). Would Waymos/Google investors actually allow them to lose this much money to start a new business that has historically been so unprofitable?
2) Would Waymo just sell cars to consumers/rental car companies, who would then deploy the vehicles to uber/lyft. In this scenario wouldn’t the cars be even more price sensitive about automatically switching between driving for different platforms and optimizing for the cars time. Wouldn’t consumer still open their uber/Lyft apps, check for the lowest price and then take the cheapest ride? Isn’t this fundamentally the same economics issue (unless the rides perhaps get so cheap that consumer no longer bother to check)
Any savings from not paying a driver would probably be taken up by maintaining and deploying their own vehicle fleet. And that's assuming the tech is ready in a reasonable timeframe and doesn't cost a ridiculous amount.
Well as someone who works in machine learning, I'm not convinced autonomous cars are anywhere close to becoming a reality, so they could have to survive for quite a long time.
2015 would like its hot take back.
I think the surplus from self-driving tech is going to go to the owners of self-driving IP and consumers.
Uber doesn't need to be profitable, they just need to survive until their investors can cash out
Who's going to give them more captial to build autonomous cars?
[deleted]
They'd need the following to really make it with autonomous cars:
1) Own the technology, not lease it
2) Have the capital to build out a fleet
3) Have the technology before others for long enough to build a moat.
1) Own the technology, not lease it
2) Have the capital to build out a fleet
3) Have the technology before others for long enough to build a moat.
Why do we believe that Uber would be the beneficiary of autonomous cars? They aren't developing them anymore, so if Waymo pushes them first why wouldn't the Google Maps app simply replace Uber, eg.
[deleted]
If they hadn't gotten into food delivery, freight, scooters, etc. they'd be profitable by now.
Only if you take their made up, non GAAP, financial measurement of “adjusted EBITDA” seriously. This is no better than WeWork’s “community adjusted EBITDA” and we see how that worked out.
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from discontinued operations, net of income taxes, (ii) net income (loss) attributable to non-controlling interests, net of tax, (iii) provision for (benefit from) income taxes, (iv) income (loss) from equity method investment, net of tax, (v) interest expense, (vi) other income (expense), net, (vii) depreciation and amortization, (viii) stock-based compensation expense, (ix) certain legal, tax, and regulatory reserve changes and settlements, (x) asset impairment/loss on sale of assets, (xi) acquisition and financing related expenses, (xii) restructuring charges and (xiii) other items not indicative of our ongoing operating performance.
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from discontinued operations, net of income taxes, (ii) net income (loss) attributable to non-controlling interests, net of tax, (iii) provision for (benefit from) income taxes, (iv) income (loss) from equity method investment, net of tax, (v) interest expense, (vi) other income (expense), net, (vii) depreciation and amortization, (viii) stock-based compensation expense, (ix) certain legal, tax, and regulatory reserve changes and settlements, (x) asset impairment/loss on sale of assets, (xi) acquisition and financing related expenses, (xii) restructuring charges and (xiii) other items not indicative of our ongoing operating performance.
Well ok first, there's a world of difference between the reasonably widespread practice of adjusted EBITDA and inventing your definition that does not account for the costs of marketing or leases.
But I'm really not even commenting on these results precisely. They would have been in an entirely different position without all the distractions. Uber's ride business now makes a billion dollars a month in revenue. That's after paying drivers. If they had been laser-focused on making the ride business work, they could have grown a much lower-overhead business. They could have taken the company public years ago. An earlier IPO would have meant those huge stock-based compensation packages would be off the books by now. A just-get-me-a-car Uber would have been GAAP profitable by now.
But I'm really not even commenting on these results precisely. They would have been in an entirely different position without all the distractions. Uber's ride business now makes a billion dollars a month in revenue. That's after paying drivers. If they had been laser-focused on making the ride business work, they could have grown a much lower-overhead business. They could have taken the company public years ago. An earlier IPO would have meant those huge stock-based compensation packages would be off the books by now. A just-get-me-a-car Uber would have been GAAP profitable by now.
There is a reason we have a GAAP as a way of not letting companies just make up metrics. Any company can show a “profit” as long as you don’t count expenses that make you unprofitable. They leave out over a dozen expenses to claim some made up definition of “profitability”. From their numbers, how do you get that just the ride hailing business would make more money than it cost to run?
Adjusted EBITDA is just a made up term. It is isn’t GAAP so by definition it isn’t Generally Accepted. Made up metrics are generally used by startups and non profitable public companies to justify their valuations to investors.
Adjusted EBITDA is just a made up term. It is isn’t GAAP so by definition it isn’t Generally Accepted. Made up metrics are generally used by startups and non profitable public companies to justify their valuations to investors.
This is a fundamentally "what-if" scenario so it's not going to be perfect math, but we can look for hints. To go from non-GAAP to GAAP, you can add the adjustments up. The biggest non-GAAP adjustment (around 2/3rds of total) is stock-based compensation. That $401 million in stock-based compensation really can't be repeated, and wouldn't have been so large if they had IPO'd sooner. The next big they spent another ~$250million on driver incentives, almost entirely on UberEats.
How much of their expenses are required for a theoretical rides-only Uber? Impossible to say; they don't break out spending by segment. But we can make some guesses. The rides product has now existed for many, many years. Did they really need to become a ~22,000 employee company if all they were going to do is rides? I would guess no. So the question here is really: how much of their current expenses do we think only exist due non-rideshare business? The autonomy program is evidently an expensive bust. I see a lot of scooter marketing, which we can tell from this report isn't selling. Food is growing but they're in 3rd place, and it seems like they spend a lot of money to even get to third. So really the question is: are >30% of their expenses due to the non-ride business? I would guess yes.
How much of their expenses are required for a theoretical rides-only Uber? Impossible to say; they don't break out spending by segment. But we can make some guesses. The rides product has now existed for many, many years. Did they really need to become a ~22,000 employee company if all they were going to do is rides? I would guess no. So the question here is really: how much of their current expenses do we think only exist due non-rideshare business? The autonomy program is evidently an expensive bust. I see a lot of scooter marketing, which we can tell from this report isn't selling. Food is growing but they're in 3rd place, and it seems like they spend a lot of money to even get to third. So really the question is: are >30% of their expenses due to the non-ride business? I would guess yes.
Really interesting. Yeah wonder how many fewer employees would be needed. Interesting thought exercise overall.
EBITDA is a wipespread (though still somewhat sketchy) practice. "Adjusted EBITDA" is just making up fairy-tale numbers.
I didn’t realize the EBiTDA wasn’t GAAP. But you are absolutely right.
https://www.investopedia.com/terms/e/ebitda.asp
https://www.investopedia.com/terms/e/ebitda.asp
There are legitimate reasons to report non-GAAP numbers next to the required GAAP numbers. When it was required to recognize revenue phone sales over 2 years, Apple included non-GAAP numbers to give investors a better sense of how sales were actually growing, and reported it as "Adjusted Sales" and "Adjusted Net Income." These were completely made up terms, but they did give a vastly more accurate image of where the company was going than the GAAP numbers did.
Which adjustments in particular do you find deceptive in Uber's case?
They aren’t “deceptive”, they spell out how they arrived at those numbers, they disclosed that they aren’t GAAP and did all of the other disclosures that anyone who knows how to read financial statements would understand and should be able to make a judgement call on how to weight them.
I’m more calling out the tech industry in general and some posters on HN specifically about how they sugar coat the performance of money losing present and former unicorns and they don’t measure success by profitability or at least marginal profits where you could see a clear road to profitability.
Dropbox for instance is a YC/HN darling. It is one of only two YC funded companies to ever go public, has never been profitable and looks like it’s going to be squished as other players like Microsoft, Google and even Apple make their entire business “just a feature”.
I’m more calling out the tech industry in general and some posters on HN specifically about how they sugar coat the performance of money losing present and former unicorns and they don’t measure success by profitability or at least marginal profits where you could see a clear road to profitability.
Dropbox for instance is a YC/HN darling. It is one of only two YC funded companies to ever go public, has never been profitable and looks like it’s going to be squished as other players like Microsoft, Google and even Apple make their entire business “just a feature”.
I agree that the industry would be healthier if companies tried to become viable/profitable earlier. I think in particular many took the wrong lesson from Amazon's ability to grow without making money for ~20 years.
Warren Buffett famously said: "When you read EBITDA, you should think BULLSHIT". The only reliable metrics are EBIT (if you precisely know the debt and tax situation of the company, which is usually laid open in the reports), and NET PROFIT.
Remember just 1 month ago, when WeWork tried to FRAUD everyone with their "we invented our own EBITDA"-metric, which they called 'EBIT adjusted for consciousness, because we sell consciousness, so we factor in the amount of consciousness we generate per square mile!!!!' ?
Remember just 1 month ago, when WeWork tried to FRAUD everyone with their "we invented our own EBITDA"-metric, which they called 'EBIT adjusted for consciousness, because we sell consciousness, so we factor in the amount of consciousness we generate per square mile!!!!' ?
What the frick is consciousness?
That's not an actual quote, FYI. They peddled something called "community-adjusted EBITDA."
if uber, wasn't doing business on an uber scale. then maybe, instead of lighting money, they would be printing money. correct ideas, but wrong execution. but alas, a holoi polloi like me will enjoy the VC subsidized rides
Another user, gok, has a point that if they were just doing ride sharing, they could possibly be break even or profitable.
https://news.ycombinator.com/item?id=21450647
One of Ubers biggest problems is that they have zero brand loyalty. For a company that sells a utility (get me, or my food, from A to B) rather than an experience (like a cool vacation in a unique mansion), I will always pick the cheapest option. Whether that’s Uber or Bobs Taxis it doesn’t matter. That means this whole business is a race to the bottom. Profits will stabilize at approximately zero for everyone in that business. The second huge problem is that nothing about providing this utility (neither the driving itself, nor the human labor required of the driver) has decreased since Uber came into existence. Driving a car from A to B still costs the same per mile (gas or electricity and wear and tear), and the driver still costs the same per hour (at least minimum wage). Uber has only made finding the ride more efficient but it has not made the actual ride itself more efficient. So in the best case, Uber can be as profitable as a taxi company. But ONLY if it raises its prices to taxi company levels. And then it’s a taxi company. Taxis are expensive for a reason, because without a VC subsidy they have to be profitable to exist. And what if there are robot drivers? Wouldn’t that eliminate at least the human cost? It would. But it would do so for every other transport company as well, and by the same amount. Since there is no customer loyalty for a transport like this, Uber would still be fighting the same competitors in a similar race to the bottom. In summary, nothing can save Uber.