Uber gushing money like a jugular wound

[12,000 RPM]

*JALOPNIK WARNING*

http://jalopnik.com/why-uber-is-continuing-to-hemorrhage-cash-1790313866

Cliffs: $2B losses against $3.3B revenue through first 3 quarters IIRC.... "thank God for stupid investors"

[GoCougs]

Like many "startups" Uber exists to get purchased by Big Tech. I mean, I love it, for the taxi industry is absolutely awful, but the endeavor will never be sustainabley profitable at anything remotely close to its current business model.

[ifcar]

I guess the idea is supposed to be to undercut the competition, force it out, and then raise prices? I imagine the original business model had been that Uber gets a certain percentage of each fare, with fairly little overhead.

[Eye of the Tiger]

So ... Lyft?

[Lebowski]

The fares are lower than they need to be, it's a valuable service even at or closer to taxi prices. Seems like they are pricing below market for share, not sure how sustainable that share will be if/when they raise prices.

I took it to the airport the other day it was $16. A taxi probably would have been $35-$40 plus you're expected to tip plus it's far less convenient. It has always seemed to me (or at least since they cut prices) they price way below where they need to.

[MrH]

I guess the idea is supposed to be to undercut the competition, force it out, and then raise prices? I imagine the original business model had been that Uber gets a certain percentage of each fare, with fairly little overhead.

I'm guessing the idea is to keep prices artificially low, hemorrhage money, grab market share, and rush to get to autonomous driving.  Costs would drop significantly, and at their current pricing, would probably be incredibly profitable if they were able to eliminate drivers.  They're eating the overhead to develop this tech right now too.  It'll be a few years before they get cash flow positive, but if they're able to survive and actually pull it off, they're probably going to be rolling in the money.

[SJ_GTI]

The barrier to entry in to this business seems too low. Hard to see how it will ever have good return on investment (much less above normal market returns).

[CaminoRacer]

So ... Lyft?

Are Lyft's finances publicly available? It'd be interesting to see their bottomline to compare.

[2o6]

I'm still not sure what the end goal is, morally. Uber takes a whopping 28% of every fare. With thousands of fares a day, I don't understand wtf they're spending money on, not like the drivers are getting benefits or insurance. Or even a car.


Also, I think chasing after autonomous driving is a fool's errand.


Lyft is so much better of a company.

[2o6]

The fares are lower than they need to be, it's a valuable service even at or closer to taxi prices. Seems like they are pricing below market for share, not sure how sustainable that share will be if/when they raise prices.

I took it to the airport the other day it was $16. A taxi probably would have been $35-$40 plus you're expected to tip plus it's far less convenient. It has always seemed to me (or at least since they cut prices) they price way below where they need to.

There's been a race to the bottom that has fucked everyone over. Uber isn't making so much, and neither are the drivers.

[Soup DeVille]

I'm still not sure what the end goal is, morally. Uber takes a whopping 28% of every fare. With thousands of fares a day, I don't understand wtf they're spending money on, not like the drivers are getting benefits or insurance. Or even a car.


Also, I think chasing after autonomous driving is a fool's errand.


Lyft is so much better of a company.

28% used to be a pretty standard rate for owner operator cabs.

[MrH]

There's been a race to the bottom that has fucked everyone over. Uber isn't making so much, and neither are the drivers.

It hasn't fucked everyone over.  The users have benefited greatly!  Most people love using Uber.

[Lebowski]

Uber takes a whopping 28% of every fare. With thousands of fares a day, I don't understand wtf they're spending money on, not like the drivers are getting benefits or insurance. Or even a car.

That was my understanding but according to that article they are subsidizing the fare somehow.

They also have had legal costs muscling their way through taxi regs but seems that war is mostly won, at least in the US.



I agree if they took a true 28% of the fare (w/ no subsidizing) that's a hugely attractive business model just for providing the app and back end.

[Lebowski]

It hasn't fucked everyone over.  The users have benefited greatly!  Most people love using Uber.

To a certain degree I agree with him. Yes it's still good for users but as they have cut fares the quality of the drivers, cleanliness of their cars etc has deteriorated IME.

A couple years ago it was new clean cars, drivers who knew their way around the area etc. Lately I've been getting drivers that don't speak English, can't figure out where they're going even with the app, dirtier cars etc. I would gladly pay a higher fare for better service.

That said it's still way way way better than a taxi and I still use it a lot, I just don't see the point of this race to the bottom wrt pricing, it was a great value even before they started cutting prices.

[2o6]

It hasn't fucked everyone over.  The users have benefited greatly!  Most people love using Uber.

To a certain degree I agree with him. Yes it's still good for users but as they have cut fares the quality of the drivers, cleanliness of their cars etc has deteriorated IME.

A couple years ago it was new clean cars, drivers who knew their way around the area etc. Lately I've been getting drivers that don't speak English, can't figure out where they're going even with the app, dirtier cars etc. I would gladly pay a higher fare for better service.

That said it's still way way way better than a taxi and I still use it a lot, I just don't see the point of this race to the bottom wrt pricing, it was a great value even before they started cutting prices.

This.

Uber's checks on vehicles and drivers is woeful. And that gets more exaggerated in a bigger city.

That was my understanding but according to that article they are subsidizing the fare somehow.

They also have had legal costs muscling their way through taxi regs but seems that war is mostly won, at least in the US.



I agree if they took a true 28% of the fare (w/ no subsidizing) that's a hugely attractive business model just for providing the app and back end.

Uber tried to take over China, and although ridership is higher, they can't compete with Didi (which is partnered with Lyft, and I think Apple - I get a handful of trips requested from Chinese students on visa who request a ride for Lyft via Didi) and they are paying out the ass to try and catch up. And failing.

[veeman]

To a certain degree I agree with him. Yes it's still good for users but as they have cut fares the quality of the drivers, cleanliness of their cars etc has deteriorated IME.

A couple years ago it was new clean cars, drivers who knew their way around the area etc. Lately I've been getting drivers that don't speak English, can't figure out where they're going even with the app, dirtier cars etc. I would gladly pay a higher fare for better service.

That said it's still way way way better than a taxi and I still use it a lot, I just don't see the point of this race to the bottom wrt pricing, it was a great value even before they started cutting prices.

I think people say they value customer service but mostly people value the cheapest pricing.  That's whats happened to the airline industry.  Race to the bottom.  A lot of regular drivers in cities can't speak English and so Uber is going to reflect what the population of drivers are in a given area.  If it's 25% first generation immigrants then I expect Uber to be even higher than that because first generation immigrants tend to be very hard working.

[TBR]

I think I heard at some point that they are making money in the US but are losing their shirts in developing markets like China and India.

[Lebowski]

I think people say they value customer service but mostly people value the cheapest pricing.  That's whats happened to the airline industry.  Race to the bottom.  A lot of regular drivers in cities can't speak English and so Uber is going to reflect what the population of drivers are in a given area.  If it's 25% first generation immigrants then I expect Uber to be even higher than that because first generation immigrants tend to be very hard working.

There is some truth to that. People will often say they want something but when it comes time to open their wallet they won't do it.

I'd be curious to know how much uber is "subsidizing" fares in the US, if at all (I'm dubious of that claim from the article, at least on any large scale).  It may just be that while they could price much higher and represent a good value compared to taxis, once the taxi monopoly was broken open the barriers to entry are now low and the race to the bottom was inevitable to some degree.

[giant_mtb]

So...Uber will be dead before it even reaches anything resembling rural America?  Fine, we'll just keep getting DUIs, then.

[Lebowski]

So...Uber will be dead before it even reaches anything resembling rural America?  Fine, we'll just keep getting DUIs, then.

Do you not have it where you are and if not where are you?

I've successfully had coverage in fairly rural locations, certainly as much or more luck vs. finding a taxi. 

[MX793]

No Uber here.  Mostly because such services are illegal in NY outside of NYC.

[MrH]

I was going to say....Dayton and all the surrounding suburbs have had it for awhile. If you don't have uber in your area by now, you really live in the sticks or it's illegal in your area

[giant_mtb]

Do you not have it where you are and if not where are you?

I've successfully had coverage in fairly rural locations, certainly as much or more luck vs. finding a taxi. 

Nope.  There's no Uber in the U.P.  I'm in Marquette county, Michigan.  Marquette is the biggest city up here (~25k) and no Uber.  Just taxis (and even those haven't been around long...).

I'd be curious to see how well Uber drivers would do up here.  Marquette and Houghton are college towns so they may do well in that one isolated area but outside of there...meh.

[ifcar]

Nope.  There's no Uber in the U.P.  I'm in Marquette county, Michigan.  Marquette is the biggest city up here (~25k) and no Uber.  Just taxis (and even those haven't been around long...).

I'd be curious to see how well Uber drivers would do up here.  Marquette and Houghton are college towns so they may do well in that one isolated area but outside of there...meh.

The driver only gets paid during the duration of the ride, right? So if you have to drive an hour to get to the person requesting the service, that's not going to be a very good wage.

[AutobahnSHO]

Do you not have it where you are and if not where are you?

I've successfully had coverage in fairly rural locations, certainly as much or more luck vs. finding a taxi. 

I checked it out when I was in the Kansas City, KS/MO area. In the city there were quite a few. When I needed a ride at Ft Leavonworth, KS, there was NOTHING.  I was 30min away from the Int'l airport, and the Fort is a decent-sized installation, with tons of visitors going to/from said airport.