Uber Loses At Least $1.2 Billion In First Half of 2016 (bloomberg.com) 156
An anonymous reader writes: The ride-hailing giant Uber Technologies Inc. is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta. On Friday, Gupta told investors that Uber's losses mounted in the second quarter. Even in the U.S., where Uber had turned a profit during its first quarter, the company was once again losing money. In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said. That means Uber's losses in the first half of 2016 totalled at least $1.27 billion. "It's hardly rare for companies to lose large sums of money as they try to build significant markets and battle for market share," said Joe Grundfest, professor of law and business at Stanford. "The interesting challenge is for them to turn the corner to become profitable, cash-flow-positive entities."
Offtopic (Score:5, Interesting)
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I've been meaning to mention that, too. The related articles seem to have been frozen/broken ages ago. I think it's based on some function of high post count (those are all around 1000 comments). Might be vaguely related to topic, too. On a lot of articles the "Kentucky man shoots down drone" article shows up as top recommendation.
Regardless, that feature badly needs some attention.
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10 Confirmed Dead In Shooting at Oregon's Umpqua Community College
VC, Entrepreneur Says Basic Income Would Work Even If 90% People 'Smoked Pot' and Didn't Work
Yelp Employee Posts Open Letter About Cost Of Living And Low Wages, Gets Fired
Universal Basic Income Programs Arrive
Explosions and Multiple Shootings In Paris, Possible Hostages
Linked to virtually every story.
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Yes, that is a standard setting.
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You can turn off the +1 karma bonus in your account settings. At least the option was there the last time I looked.
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funny, when I look at it, it says -1 Troll
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If you have high karma, your posts start at +2 instead of the normal +1 for logged in users.
Most people will stop modding a post up when it has 5 points. That 5-point threshold represents a net +3 moderation above your starting value.
Your profile page only adjusts your +3 moderation with the baseline +1 value for being logged in.
If you receive excessive positive moderation, that post can show as +5 on your user page, but I expect this to be uncommon.
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Worse than just that, the subject is "You may like to read" ... "10 Confirmed Dead."
Even if these articles were related, I certainly would not like to read that 10 people were confirmed dead.
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Worked for Amazon. (Score:5, Insightful)
"It's hardly rare for companies to lose large sums of money as they try to build significant markets and battle for market share,"
How long did Amazon lose money? Uber's just collecting data until they can get rid of the drivers and their cars and move to their own self driven vehicles using the infrastructure they're building now.
Re:Worked for Amazon. (Score:5, Informative)
"Amazon's initial business plan was unusual; it did not expect to make a profit for four to five years. This "slow" growth caused stockholders to complain about the company not reaching profitability fast enough to justify investing in, or to even survive in the long-term. ... It finally turned its first profit in the fourth quarter of 2001: $5 million"
Seven years it took to hit profit, but they knew that and said it would be like that all along.
I suspect that Amazon's turnover and revenue were significantly higher than anything Uber's ever seen, and I suspect they never lost $1.2bn at any stage of their inception.
It was also - as stated - highly unusual.
Re:Worked for Amazon. (Score:5, Insightful)
Also unlike many of its Late 1990's .COM counterparts when it started Amazon had a business plan, that sold stuff not shares. They knew enough to price under the Brick and Mortar competition without any sustainable plan. Its prices and products were based on the cost it will be after they had completed their infrastructure. So while they were selling at a loss for a while, once the infrastructure was in place then they can make profit without having to change their competitivity.
Most of the other .COM plan was based on the idea if they sell at a low enough price then their suppliers will start giving them bulk discount... However with too much competition all trying to undercut themselves in prices they couldn't get enough traction to make it worth the suppliers effort to give them bulk pricing.
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Wat?
http://www.wikinvest.com/stock... [wikinvest.com]
Amazon ran a deficit of far beyond 1.2 billion, for a relatively long time. The lessons of the 90's have already been forgotten, as predicted.
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That does not say how long it took for them to get that deficit. We are talking about losing $1.2 billion in six months here.
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HInt on what to look for:
How much money did the actual drivers make/lose?
How much did the Uber Execs give themselves as huge raises?
I think you'll find the loss somewhere on the exec side...
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"Amazon's initial business plan was unusual; it did not expect to make a profit for four to five years. This "slow" growth caused stockholders to complain about the company not reaching profitability fast enough to justify investing in, or to even survive in the long-term. ... It finally turned its first profit in the fourth quarter of 2001: $5 million"
Seven years it took to hit profit, but they knew that and said it would be like that all along.
I suspect that Amazon's turnover and revenue were significantly higher than anything Uber's ever seen, and I suspect they never lost $1.2bn at any stage of their inception.
It was also - as stated - highly unusual.
How much of that 1.2billion were director salaries and initial owners (Pres, CFO, CEO, etc.) of course, no dividends. It does require large data centers to manage Uber, but these centers need only be regionalized, say one center for each timezone or 15 million people population, with the neighbouring centre serving as a backup-recovery role, if needed.
Very few people want autonomous vehicles. If they did, municipal bus companies would be a thriving business.
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Uber's business model should dictate it needs nothing beyond a handful of servers and headquarters.
Not true moving forward, assuming they will own the self-driving cars they use.
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I pointed this out last time it was brought up... Amazon had huge capital expenditures in goods and warehouses. Uber's business model should dictate it needs nothing beyond a handful of servers and headquarters. Heck, their software requirements are even far less than something like Amazon.
Uber has nothing to do with ride sharing whatsoever. Uber exists to monopolize self-driving taxis, they spend money to build up a user base temporarily utilizing drivers to fill the role. Drivers have minimum costs they don't pass on to the riders specifically to build up a name and drive the existing taxi services out of business while waiting on self driving cars. Once the technology is in place and functional for self driving cars they will make a profit pretty much equal to the entire taxi industry b
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Yup. Uber's deficits serve purely to push everyone else out of the marketplace by offering well-below-market priced services. Its working in a number of places too.
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Sure, from a technical perspective you could probably run Uber off a small server farm*. But, you forgot about all the lawyers, lobbyists, and canvassers needed to sway local populations and politicians to change the laws to make Uber legal. And the subsidies to drivers so they can undercut their competition's prices.
*Though I doubt the Uber developers architected for performance (when you have money, you hardware looks cheap) and it's probably running on a few thousand nodes on some cloud service somewhere
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When I first used Google Maps it was mind blowing.
Not because I thought they invented it, but because I could zoom in and out and pan far quicker.
I don't think google pretended they invented mapping, they made it awesome.
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If their goal is to collect data for autonomous car research they're doing a piss poor job of it. "Comma.AI" has an open source dataset published and I KNOW it didn't cost them $1 billion dollars to make.
The future of autonomous vehicles is doing more training in video games.
Right now, training a basic convolution neural network on ImageNet requires 8-12GB of GPU memory. That's a $1200 investment to get your feet wet!
256x256x3 tensors are NOTHING compared to the 1080p-4K images which are trivial to collect
How is this possible? (Score:2, Insightful)
Others have compared Uber to Amazon, but Amazon had real, huge cost drivers: They needed stocks, warehouses and logistics. Even so, and even given their aggressive growth, they never lost this much money - I think the record was around $1 billion in one year. Uber is purely a service, with essentially no capital costs and no logistical infrastructure. They are an app and a money conduit. How can they lose $1.2 billion in six months?!
They attribute the losses to subsidizing drivers, i.e., paying drivers more
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Uber was supposed to be all about UberBLACK. They only started UberX later. Even Amazon looks more like eBay than a store these days...
Re:Worked for Amazon. (Score:5, Interesting)
get rid of the drivers and their cars and move to their own self driven vehicles
This is the thing that a lot of people quote as being the thing that will help Uber turn the corner but if anything it'll make turning a profit that much more difficult. As it currently stands Uber is deferring a lot of business costs to drivers. Things like equipment, insurance, fuel, repair, and so on. When they have their own fleet of self driving cars, they take on all of those things that they haven't been paying for. Not only that, depending on the regulation a state/city might have for self driving cars, there might be a very high cost associated with self driving taxis. Yes, Philadelphia is all too happy to jump on, but that's because of the novelty. Years from now when it goes mundane, I'm pretty sure governments will be less affable to companies wanting to have a lot of self driving autos crowding their streets wearing down their roads. Switching over to self driving isn't going to be this panacea that allows them to go crazy insane profitable, there's a lot of costs involved and Uber will have to switch (or pivot since that's the fun word this season) from being just a purely service based company to a more complex company altogether. Pair with that, the ever evolving attitude of governments that will ultimately wane as time marches on, with ever increasing expectations from locals. If they don't have that mental change happen early in the game as they go self driving, they won't last long. I've seen tons of companies try automation and them not fully understanding what they're getting into is a killer (worst case)/hindrance (best case) for most of them.
I'll add this, what Uber wants to do is of a scale that I've never dealt with personally, so something this large might have totally different challenges and I'm just talking out my butt. So that said, take all the above with grains of salt. But I do think that those are rationale challenges that they're going to run into down the road which will prevent them from being insta-profitable the second a robot hits the street.
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And they will finance those self driving vehicles with their mountain of debt and excellent lack of credit rating.
I like Uber. But this seriously reminds me of the DotCom days. The usual business formula is to keep income GREATER than expenses.
But will they ever be profitable? (Score:5, Insightful)
They are in a market where the bar is so low that anyone with a car and access to craigslist can set themselves up as a ride-hailing business. Apparently you don't need commercial license, vehicle inspections, or liability insurance. They are nothing but a 99 cent app and a marketing department - no special sauce.
Re: But will they ever be profitable? (Score:5, Interesting)
Uber looking forward to driverless cars (Score:1)
But will they ever be profitable?
When they switch to driverless cars.
Re:But will they ever be profitable? (Score:4, Insightful)
They are in a market where the bar is so low that anyone with a car and access to craigslist can set themselves up as a ride-hailing business
Except for that nasty thing called customers. The bar may look low, but when you're one person with a car and an app no one knows about, good luck competing with Uber.
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Trusted? That's just for those who believe the marketing, there are plenty who do not trust Uber at all.
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yes
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What's different about their business model? They connect drivers with passengers and take a cut of the fare.
Now, lets look at a typical taxi company business model - they connect drivers with passengers and take a cut of the fare. Sounds familiar.
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And uber doesn't have the overhead of buying cars/radios/meters or having depots..... so again, how are they managing to lose that much money?
Truckload of cocaine and on-site hookers for employees. It's the new perks for working in Silicon Valley. You have to top the on-site masseuse and chef in order to recruit the best people.
MS spent $2 billion on Xbox (Score:3)
As the summary notes, breaking into an existing entrenched market is extremely expensive.
Especially when you're trying to upset the status quo.
We'll see if Uber is still around in 5 years.
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It was a lot more than that. The figures vary but this article puts the loss on the original Xbox at $5-7billion:
http://n4g.com/news/1789459/former-xbox-head-says-original-xbox-lost-between-5-billion-and-7-billion
They then launched the 360 and immediately had to allocate $1billion to fixing units that had RROD.
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WOW.
I didn't realize it was that bad.
Thanks for the update!
I would invest (Score:2, Flamebait)
Re:I would invest (Score:5, Insightful)
Webvan was great. So was Pets.com. So is Uber.
Unfortunately, none of those companies had/have a chance without investor money to subsidize their services. Once forced to actually pay their costs, they will have no choice but to raise their rates or go out of business. With Webvan and Pets.com, customers left when the rates went up. Same will happen with Uber.
That said, I'm happy to spend investor's money to save a buck. Use it while it's there!
-Chris
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Webvan was great. So was Pets.com. So is Uber.
Unfortunately, none of those companies had/have a chance without investor money to subsidize their services. Once forced to actually pay their costs, they will have no choice but to raise their rates or go out of business. With Webvan and Pets.com, customers left when the rates went up. Same will happen with Uber.
That said, I'm happy to spend investor's money to save a buck. Use it while it's there!
-Chris
Okay, but what exactly is Uber spending $1.2B on? I ask this seriously. I understand a pets.com scenario where you have to build up inventory and all that - it takes capital up front and you won't get it back quickly. But Uber? They have a $100K app and some rented servers? I mean, I'm missing something *really* big somewhere. I don't see how they can blow that much cash with nothing to show for it.
Re:I would invest (Score:4, Insightful)
Re:I would invest (Score:5, Funny)
Okay, but what exactly is Uber spending $1.2B on?
Strippers, hookers, and blow. Drugs and sex are the fastest way to burn money from what I have seen.
Re:I would invest (Score:5, Funny)
Strippers, hookers, and blow. Drugs and sex are the fastest way to burn money from what I have seen.
Don't have children, do you...
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Strippers, hookers, and blow. Drugs and sex are the fastest way to burn money from what I have seen.
Don't have children, do you...
Like I said... Sex is one of the fastest ways to blow money.
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Okay, but what exactly is Uber spending $1.2B on?
Strippers, hookers, and blow. Drugs and sex are the fastest way to burn money from what I have seen.
The rest they squandered on useless stuff.
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Free rides and lobbying local govs. I think they blew 10 mil on a failed prop in austin. They left. And as I told friends, they'll be back after a few months begging to come back. I hear they did a meet and greet with council last week. Maybe they will do the fingerprint check (along with all the other requirements the city has for ride shares) after all even though when the prop was being pushed, they said they could not possibly do that. Their other big cost in an effort to push out cab companies is to gi
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Uber has actually made money in certain financial quarters. Webvan and Pets.com didn't. Uber rates can go up and people will still use them: what is the alternative?
Back in my day, we called them taxis.
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Where do you live that taxis are a viable alternative?
I saw someone at work wait 2 hours for a cab, uber had three drivers in 10 minute range (if I knew her I would have offered to call one).
My house has a thirty minute wait for cab, uber 5.
I've been areas where can companies have refused to route a ten minute drive, uber, shows up in ten, no complaints.
In the larger cities uber may be competing on price, but in much of the country, it's convenience and reliability.
When I was in New Orleans, $8 cab ride from bourbon st, I frequently paid uber surge of $15 to get into town (could flag a cab the other way, but took 30-60 minutes to call from where I was sleeping). In the college town I grew up (Newark, DE) cabs were useless, in Wilmington, DE where I love now, they're bad.
I fully expect uber to start creeping up prices in areas and make a killing, out side of downtown in million person plus cities, cabs aren't an option.
I have never lived anywhere that has had a 2 hour wait for a taxi. I live on an island right now with a very low population density and could get a taxi to my door in 10 minutes if I called the dispatcher. And that's with them coming from the city next door. There's a bridge to the island, obviously, not a ferry. I have lived in California and Florida and have been all over the US and have actually seen instances in California where it is faster to get a taxi than to get an uber. That's rare, but it ca
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In suburban south Eastern PA, they refused to pick me up from the bar, so much for the call a cab campaign, but they may be an uber dead zone too.
As for California, in San Francisco, I used uber as a convenient way to get an official cab.
I'm sure it all depends on where you are. I've never tried a NYC cab or somewhere like that but I know my experience in Boston with a taxi wasn't amazing. It was easy enough to get a taxi but the driver was very difficult to communicate with and didn't know the city at all. I ended up pulling up my destination on google maps and directed him there myself.
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Uber rates can go up and people will still use them: what is the alternative?
Walk.
Bike.
Buy a car.
Take public transit.
Use your current car.
Call a friend.
Use a taxi.
Make fewer trips.
You are mistaken if you think Uber's customer base is a bunch shut-ins that were finally able to come out and see the light of day thanks to Uber. For me Uber is a luxury. I can bike or use public transit, just like I did prior to Uber (because I hate taxis).
You are right, some people would take Uber at higher prices, but it doesn't take much of a downturn in business to make startups like this shutter the
Re:I would invest (Score:5, Insightful)
...So is Uber...
Uber isn't great. It's s scam that is allowed to persist simply because there are no laws against running this type of scam.
It's basically a Kansas City Shuffle. The key to a Kansas City Shuffle is getting the mark to think that they're part of the scam. Uber has done a masterful job in convincing marks (the drivers) that they're in on a sure thing. I'm sure you've seen the advertisements: "Make $20/hr just driving you're car!". "Stick it to the taxis while making buku bucks!". "Set your own hours!". You aren't an "employee", you're a "partner".
In reality though, you're neither. Your a mark. They rely on the fact that most people won't bother to dig beneath the surface of the scam. Eventually though, reality comes crashing in on the "driving dream" and the marks realize just how much they're being screwed over. They stop driving for Uber, but Uber doesn't care because they already have their cut and have thousands of other ignorant/naive marks lined up to continue the churn and burn cycle.
Start with $20/hr nonsense. Let's say you hustle, do 3 rides, and live in the right area and you manage to get $20/hr in fares. But you don't get $20. Uber takes 30% right off the top (if you're a new driver).
But we're just getting started. There's an additional "booking fee" that Uber takes as well. That can be anywhere from $1.50 to $2.50 PER RIDE. You did 3 rides, and let's use $2 as an average. So from $20, you're down to $8.
Well, that's not great but you could do worse, right? Well it does get worse. An average car is going to go through about a gallon a gas for that hour. Let's be generous and say that's another $2. Now you're down to $6. And then there's taxes, and again let's be generous and say that's another dollar gone. Now you're down to $5. Then there's wear/tear/maitenance costs of your vehicle which can drastically increase due to the increase usage (some of that can be offset by deductions). Let's say that's $.50/hour.
So out of $20 of fares, you're actually getting maybe a quarter of that in real dollars. And it's just going to get worse. Over the past couple of years, they've increased their take from 20% to 30%, while dropping driver rates 40% across the country. Once they do away with surges (and that's a when, not if) there won't be any real way to even make minimum wage.
And the cherry on top? Their lease and sub-prime lending programs are borderline criminal. I truly feel bad for anyone naive enough to get suckered into one of those. They're the ultimate marks.
Uber, and pretty much every other "gig" company out there (freelancer, rent-a-coder, etc) all operate on the same principles. Race to the bottom, and feed off the truly desperate. The sooner drivers realize it's a scam, the faster Uber will go up in flames.
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in NYC the market seems to be people too lazy to walk 20 minutes to the train if you're somewhere away from the subway. or drunk people who need a ride out of manhattan on weekends.
otherwise the idiot drivers seem to be no better than the murderous taxi drivers in how they drive around manhattan
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2) Uber is at the forefront of autonomous cars.
Re:I would invest (Score:4, Insightful)
1) Driverless cars are NOT GOING TO HAPPEN.
I expect they will happen, but not as quickly as most people are predicting.
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Are you really this daft? The story posted to Slashdot RIGHT BEFORE this one is "Singapore Launches World's First 'Self-driving' Taxi Service". Also, Uber is planning on deploying autonomous cars to Pittsburgh "as soon as this month". Yes, there will be a "driver" (at least for now) but autonomous driving systems are only getting better and cheaper while human drivers keep the same skill level and get more expensive. They're not only coming, they are here today.
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Those Singapore cars rely on not just one, but two drivers.
That's what's fascinating about the self-driving car movement. So much money, and so many promises - entire companies even are banking on a technology that doesn't exist in a meaningful way. What we get instead are pledges and advertisements that are completely disconnected from reality.
They may come eventually, but no one in the industry seriously expects to see an autonomous car that can handle city driving within the next 10 years.
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Uber drivers aren't getting ripped off. Those who pay their taxes and licenses are. The governments not getting their taxes are.
The same rules should apply to all taxi services, Uber included.
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Oh I don't like the rules either. I'd prefer not to pay any tax too (but still benefit from all services).
There is a way to change that and it is called democracy.
The early bird gets the worm, (Score:2)
but the second mouse gets the cheese. Uber may survive being one of the early distributed ride hailing services, but the danger is that the spend so much money in the process that they go bankrupt and only the name will carry on after someone buys it in a fire sale when the company assets are liquidated.
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Re: I would invest (Score:4)
Don't forget that they're also screwing the city by putting lots of wear and tear on the streets without generally paying any commercial fees/taxes that would otherwise go to offset that damage - street infrastructure is stupid-expensive and they're basically using it for free (individual car fees are generally much lower on the expectation that you're not spending all day driving around downtown).
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Re: I would invest (Score:1)
Kind of like people pulling the equity out of their houses during the real estate boom, to them it seemed rational at the time but in hindsight wasn't the best plan.
Of course. (Score:3)
They are a taxi company. Offering prices lower than the market rate. So of course they are losing tons of money.
Their goal is to roll out self-driving taxis before they go bankrupt. If they succeed in being the first company with self-driving taxis, they will become incredibly successful. Because of this possibility, they have attracted a huge amount of investment. This allows them to lose lots of money for a long time without going bankrupt.
In the short term, customers are winners from Uber's lower prices (disregarding legal/ethical issues, which are real, but tangential to my description of the business model).
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I don't understand how they think they will be first to market with a self driving taxi? Just about every other auto company is working on the same problem but those companies actually build the cars.
What is Uber going to do - buy a bunch of regular cars, attach sensors, and then try to compete with integrated self driving systems? These auto companies could easily just stop selling cars to Uber. I don't get the plan. Where is the competitive position? The app? I can download a new app is seconds and
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They are a taxi company. Offering prices lower than the market rate. So of course they are losing tons of money.
Except Taxi fares are fixed; not based on any sort of supply and demand.
EBITDA? Really? (Score:2)
Normally companies use "earnings before interest, tax, depreciation, and amortization" to make it look like they are profitable when they really aren't. It's not recognized as a proper measurement of profitability by generally accepted accounting principles. In the words of Warren Buffett, "Does management think the tooth fairy pays for capital expenditures?"
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Depreciation & amortization aren't going to be hugely relevant for Uber (unlike the companies Buffett tends to invest in), and in the context of startups where capital expenditures relate to growth not replacement, and are going to be sourced from further investment rather than retained earnings, these noncash expenses just clutter the laser focus on operating profits, which are the overriding interest... the first thing you
How the hell (Score:2)
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offer 20$ of rides free as introduction offer, undercut taxis by subsidizing rides
Does this mean, eventually, uber fares == taxi fares, when the subsidizing stops?
No, they'll be far more expensive if everything stays the same. Taxi drivers make very little and most taxi companies are run on shoestring margins (sometimes for a lot of money because of volume, but still very low margins), and they're selling a far lower quality product in most markets.
Robots (Score:2)
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So in about 15-25 years?
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The main costs for a transportation company (ignoring lobbying, which is Uber's actual largest cost) are drivers, vehicles, and fuel. Uber's found a clever way to avoid the last two entirely and seriously underpay the first. All autonomous cars will do is bring vehicles and fuel back onto Uber's balance sheet. Given that those costs aren't covered Uber right now (their drivers tend to quit once they do the math and realize that they're not going to come out ahead on car/fuel costs), Uber's expenses will go
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Simple: driverless cars. [bloomberg.com] Survive long enough to get driverless cars perfected, dump your largest cost (driver pay), and there you go.
Are you serious? Drivers are their biggest asset. Drivers keep them from paying for cars up front, paying for insurance, paying for car maintenance, and paying for gas. Do you have any idea what it would cost them to fund a fleet of self-driving cars that's even a fraction of the number of drivers they "employee" today?
It's the ol' scale up fast and dominate strategy (Score:2)
Sure they lost $1.2 billion (Score:2)
How? (Score:2)
What are Uber's expenses? I can't imagine it costs $1 billion+ to run a phone app. Let along lose that much when they make money on every ride.
Exactly how much cocaine are they paying their execs?
Or is all in court cases and bribes to local officials?
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How can a taxi company with literally no expenses except for keeping a few servers running run a loss in the billions?
Uber spends far more money on marketing and ride subsidies than on running their servers. They undercut taxi companies by simply losing money on each ride in many markets. The claim is their costs would go down once economy of scale raises, but there is also a good chance prices would go up significantly if they ever win their battle with taxi companies.
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Uber spends far more money on marketing and ride subsidies than on running their servers. They undercut taxi companies by simply losing money on each ride in many markets.
And also by paying less in taxes and licenses than competitors.
Uber is not a tech company. It is not a taxi company either (the drivers are, though). It's a lobbying company.
but there is also a good chance prices would go up significantly if they ever win their battle with taxi companies.
This is the only reason why Uber investors accept loosing that much money now. They want a future monopoly with higher prices.
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Admittedly,
I don't understand how Uber works, as I'm not a driver. I assumed you paid an Uber driver to take you from point A to point B for some amount. The driver kept some percent and the rest went to Uber.
How does Uber lose money on this transaction. Or, more to the point, how does Uber lose money on each ride?
I have the same question as the parent post. It seems like Uber is an App that provides a matching service between driver and rider. Aside from Uber employees, servers, and whatever administr
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I don't understand how Uber works, as I'm not a driver. I assumed you paid an Uber driver to take you from point A to point B for some amount. The driver kept some percent and the rest went to Uber.
How does Uber lose money on this transaction. Or, more to the point, how does Uber lose money on each ride?
The passenger pays the fare in the app, and the driver gets a percentage of the fare. In some instances, Uber will pay the driver more than the fare, otherwise known as ride subsidizing.
This is mostly done to get more drivers into a new market. Uber has a chicken or the egg problem in new markets (like China) so they need to pay a premium to drivers when there are few passengers. They might have to pay a driver $50 per ride because they will only have 2-3 rides per day, even though they only charge $25 per
Re:How can a taxi company... (Score:5, Interesting)
Uber CEO Travis Kalanick is worth over $6 billion. The loss belongs strictly to the investors. The company's doing fine, otherwise.
This is why Uber is not a public company. It's a money laundering operation.
http://www.cnbc.com/2016/03/28... [cnbc.com]
http://investorplace.com/ipo-p... [investorplace.com]
Re:Uber is doomed to fail (Score:4, Insightful)
There is no brand loyalty.
Don't underestimate the network effect.
People use Uber because there are drivers. Drivers are on Uber because that's what people use.
Re: (Score:2)
maybe in your town. Globally, Lyft is far from Uber.
Re: (Score:2)
Re: developed ride sharing app around the same ti (Score:2)