Can you short Uber?(qz.com)
qz.com
Can you short Uber?
http://qz.com/707947/investors-have-placed-a-one-way-bet-on-uber-which-made-us-want-to-figure-out-a-way-to-short-it/
61 comments
Well, assuming that its competition has made it that far. If Uber is years ahead of everyone and has the volume it could expand like crazy and crush future competition on the economies of scale alone.
if.
if.
While there are other companies like ZipCar or Car2Go have already the technology, the experience, and the infrastructure on how to own cars, how to service cars, and how to bring the users and those cars together.
On the other side, Uber does not own any car neither have any infrastructure for those cars.
So it should be easier for ZipCar, Car2Go and alike to exchange those cars with self-driving cars vs. Uber to build up that infrastructure.
On the other side, Uber does not own any car neither have any infrastructure for those cars.
So it should be easier for ZipCar, Car2Go and alike to exchange those cars with self-driving cars vs. Uber to build up that infrastructure.
Maybe that's how it works in Europe, but that's not how it works in the US where territories will be divided and companies will be price fixing.
no, the way it works in Europe is the taxi drivers blockade the street with burning tires because uber and immigrants driving its cars are stealing their property: customers.
wait so uber is legal and licensed to taxi in europe?
One of the trends propelling Uber is that of self-driving cars.
HOWEVER: What's stopping the car companies from simply running it themselves and cutting out uber as the middleman? Tesla already announced they plan to facilitate ride sharing. (https://www.tesla.com/blog/master-plan-part-deux)
HOWEVER: What's stopping the car companies from simply running it themselves and cutting out uber as the middleman? Tesla already announced they plan to facilitate ride sharing. (https://www.tesla.com/blog/master-plan-part-deux)
>HOWEVER: What's stopping the car companies from simply running it themselves and cutting out uber as the middleman?
Ignoring tesla for a minute:
1) Engineering prowess. User-facing software in cars is notoriously poor, and the idea that the same people that greenlit the nissan cube can deploy and scale an uber rival seems generous to say the least.
2) Exclusivity/overcrowdedness. Uber and lyft don't have strong opinions about brand of car (though the prius is the default, and they care about newness). This is likely not true of more traditional car companies. This leads to one of two scenarios: in the first, companies try to limit their ride hailing to on-brand cars, meaning you can only hail fords with ford-uber, etc, requiring that users have multiple apps and pit them against each other. This seems silly. In the second, they allow others brands to be hailed as well, and then you've got mostly identical ride hailing apps, each from a different car company, and the car companies are now competing on experiential nuances that aren't even centered around their vehicle offerings. That's nutty too.
This wasn't my thought going in, but having written all that, tesla seems like a much better buy all of the sudden, because it's the only player that feels like it has the software skills to solve 1, and the apple-esque brand clout to solve 2.
Ignoring tesla for a minute:
1) Engineering prowess. User-facing software in cars is notoriously poor, and the idea that the same people that greenlit the nissan cube can deploy and scale an uber rival seems generous to say the least.
2) Exclusivity/overcrowdedness. Uber and lyft don't have strong opinions about brand of car (though the prius is the default, and they care about newness). This is likely not true of more traditional car companies. This leads to one of two scenarios: in the first, companies try to limit their ride hailing to on-brand cars, meaning you can only hail fords with ford-uber, etc, requiring that users have multiple apps and pit them against each other. This seems silly. In the second, they allow others brands to be hailed as well, and then you've got mostly identical ride hailing apps, each from a different car company, and the car companies are now competing on experiential nuances that aren't even centered around their vehicle offerings. That's nutty too.
This wasn't my thought going in, but having written all that, tesla seems like a much better buy all of the sudden, because it's the only player that feels like it has the software skills to solve 1, and the apple-esque brand clout to solve 2.
You seem to ignore that those car companies have such services already in place and run them successfully. Car2Go from Mercedes was first and started with the Smart. It is now being supplemented by higher-end models.
BMW has the same service running together with SIXT in Europe with BMW Mini and other smaller models.
Also VW started the same just a few years ago, but is not widely used, AFAIK.
BMW has the same service running together with SIXT in Europe with BMW Mini and other smaller models.
Also VW started the same just a few years ago, but is not widely used, AFAIK.
BMW also recently launched ReachNow[1] in Seattle, which lets users rent BMWs and Minis.
[1]: http://reachnow.com/
[1]: http://reachnow.com/
What you miss is that most car companies have a really akward company structure. What I've read in german teach forums after the bad thing happened to VW, it's really good to understand why that happened. It's really fearful to look at such org charts
We've got DRM on batteries (Renault's electric vehicles) requiring a renewal with unknown terms and conditions.
What's to stop vehicle manufacturers from slapping on a Personal-Use Terms of Service to their vehicles which prohibits the Commercial Use (under different ToS), or Restricted Commercial Use Policy which prevents self-driving passenger rides outside their approved apps? They would be able to enforce it by remotely disabling the battery when such practices are found (Renault can do that already).
What's to stop vehicle manufacturers from slapping on a Personal-Use Terms of Service to their vehicles which prohibits the Commercial Use (under different ToS), or Restricted Commercial Use Policy which prevents self-driving passenger rides outside their approved apps? They would be able to enforce it by remotely disabling the battery when such practices are found (Renault can do that already).
Because people who want to rent their self-driving cars won't buy those, and companies with lower marketshare (therefore, less likely to be able to form a competitive network by themselves) will have an incentive to go after those buyers.
I.e., competition.
I.e., competition.
> companies with lower marketshare (therefore, less likely to be able to form a competitive network by themselves) will have an incentive to go after those buyers
Perhaps a rise in Chinese car makers
Perhaps a rise in Chinese car makers
> User-facing software in cars is notoriously poor
Good thing companies like Apple and Google aren't getting into the self-driving car business
Good thing companies like Apple and Google aren't getting into the self-driving car business
What will be disappointing is that although you may have purchased a self driving car. You will most likely not able to to offer self driving ride sharing without paying some sort of fee to the car company or 3rd party.
Cars are slowly moving into the direction where you no longer own it outright. Tesla could prevent you from selling your car even though you "own" it.
Cars are slowly moving into the direction where you no longer own it outright. Tesla could prevent you from selling your car even though you "own" it.
Do most Americans even own their car anyway? I was under the impression most were on finance/leased.
Getting a loan doesn't mean you don't own the car. And leases represent one in three sales, but most cars on the road are not new.
http://www.wsj.com/articles/record-vehicle-leasing-could-pin...
> What's stopping the car companies from simply running it themselves and cutting out uber as the middleman?
The exact same thing that's stopping them from competing with Uber right now?
Self-driving has nothing to do with the equation.
The exact same thing that's stopping them from competing with Uber right now?
Self-driving has nothing to do with the equation.
I disagree:
To my mind, the coordination with drivers -- and their need to have enough work to stick with you -- is a huge factor.
Once you cut out the driver by having self-driving cars, you're left mostly with a capital issue. Then the car companies are able to add cars to the fleet at a better price than Uber.
Once you cut out the driver by having self-driving cars, you're left mostly with a capital issue. Then the car companies are able to add cars to the fleet at a better price than Uber.
Ford has publicly announced that they are doing the same thing, and allocating billions to it.
I like Uber. I use it from time to time. I use it less frequently nowadays because the government here blocked UberPop. I enjoy using it as much as I hate using taxis. I particularly enjoy it because I can rely on Uber when I travel abroad when I am most vulnerable to taxi scams.
Having said that, I am one of those who does not get this type of ultra high valuations. That's another topic of course, I am not going to claim anything as I am not an expert.
The thing is if yet another company pops up, maybe a local one, with similar offerings as Uber, I might as well start using their service. It's so easy to switch or use them both, I don't have a emotional connection to Uber, why should I? I'd always use whatever works for me. So, I see Uber is not something irreplaceable. The most valuable thing is the idea itself, car sharing etc. It's not like building up a search engine, with secretive ranking algorithms that works better among competitors. Of course, what Uber had been doing is phenomenal, they probably do a lot of things behind the scenes. Uber had more capital and did more. The others will catch up. Which is a good thing, I'd rather have multiple service offerings, it's good for consumers.
To me, Uber is a ice breaker ship. Started exploring in the frozen seas. Opening up new paths. That's expensive. They have to do a lot of things right. It's difficult. They are ambitious. I am excited that new paths appear in the frozen seas that I can benefit eventually. On the other hand, what I see is, once the paths are open, others can follow easily. They don't need tank-like ships to overcome the icebergs, they don't need the best captains and crews, they don't need the most of the crucial stuff Uber needed. They will just sail along the paths Uber opened.
Having said that, I am one of those who does not get this type of ultra high valuations. That's another topic of course, I am not going to claim anything as I am not an expert.
The thing is if yet another company pops up, maybe a local one, with similar offerings as Uber, I might as well start using their service. It's so easy to switch or use them both, I don't have a emotional connection to Uber, why should I? I'd always use whatever works for me. So, I see Uber is not something irreplaceable. The most valuable thing is the idea itself, car sharing etc. It's not like building up a search engine, with secretive ranking algorithms that works better among competitors. Of course, what Uber had been doing is phenomenal, they probably do a lot of things behind the scenes. Uber had more capital and did more. The others will catch up. Which is a good thing, I'd rather have multiple service offerings, it's good for consumers.
To me, Uber is a ice breaker ship. Started exploring in the frozen seas. Opening up new paths. That's expensive. They have to do a lot of things right. It's difficult. They are ambitious. I am excited that new paths appear in the frozen seas that I can benefit eventually. On the other hand, what I see is, once the paths are open, others can follow easily. They don't need tank-like ships to overcome the icebergs, they don't need the best captains and crews, they don't need the most of the crucial stuff Uber needed. They will just sail along the paths Uber opened.
After reading the very long article (it's extremely detailed, I recommend it, but only if you highly value business strategy), I'll save everyone the trouble:
No. You can't, currently.
No. You can't, currently.
I skimmed the article, and even though I am not much into business strategy, there were several very interesting bits in there.
https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headli...
"Any headline that ends in a question mark can be answered by the word no."
"Any headline that ends in a question mark can be answered by the word no."
I think there are a lot of interesting points to the article. It's currently not possible to short Uber directly, but you could go through a derivatives broker, or you could short a company indirectly, like Xchange, or buy stocks in a company that would profit if Uber collapsed. I think that while you can't directly short Uber, you can get creative... and I'm sure that with the number of people that want to short Uber, and if it did a down round that would be even higher, that there will be some possibility of shorting Uber directly before IPO.
I'm curious why Uber isn't on any of those private exchanges. Is Uber worried it would be shorted if it were?
I'm curious why Uber isn't on any of those private exchanges. Is Uber worried it would be shorted if it were?
Private companies often want to control who and how many of their shareholders are. It is likely not because they fear being shorted. The market for short selling private companies is currently a very distant threat.
Let's say you place a short bet on Uber through one these "creative" methods that uses a smaller exchange, then you have to worry not just about Uber's price rising, but also that you will not be able to unwind the trade should it become profitable. Doing so could prove to be impossible either for legal reasons (e.g., if Uber or some other company launches lawsuits as their price drops), or if the exchange simply goes belly up. In short, you better be very, very sure that Uber's price will drop substantially in order to make sure a risky bet.
Let's say you place a short bet on Uber through one these "creative" methods that uses a smaller exchange, then you have to worry not just about Uber's price rising, but also that you will not be able to unwind the trade should it become profitable. Doing so could prove to be impossible either for legal reasons (e.g., if Uber or some other company launches lawsuits as their price drops), or if the exchange simply goes belly up. In short, you better be very, very sure that Uber's price will drop substantially in order to make sure a risky bet.
What is Uber isn't a car/personal transport company at all?
As has been pointed out numerous times, network effects don't really have the same power in the "taxi competitor" market as they do in - say - social networking.
But there is a business where network effects are potentially at least as powerful as social networking, where market leadership is divided between multiple ~$40B companies and where there is proven huge potential for market disruption.
It's a market where software powered efficiencies can make a huge difference, where automation can increase margins and improve service and where the company having the most drivers (or automated devices) in each city has a huge advantage. What's more, it is one of the few markets where international expansion gives critical network effects beyond what is possible in the US market alone.
Finally, Uber is already aggressively moving into this market, and yet no one seems to talk about it - I guess it just isn't as sexy as cars.
As they say: amateurs talk tactics, professionals study logistics.
In this article's defence, it does at least mention this. But I think the potential here is huge. Think of Uber as an Amazon competitor, taking responsibility for everything after the production of a product.
As has been pointed out numerous times, network effects don't really have the same power in the "taxi competitor" market as they do in - say - social networking.
But there is a business where network effects are potentially at least as powerful as social networking, where market leadership is divided between multiple ~$40B companies and where there is proven huge potential for market disruption.
It's a market where software powered efficiencies can make a huge difference, where automation can increase margins and improve service and where the company having the most drivers (or automated devices) in each city has a huge advantage. What's more, it is one of the few markets where international expansion gives critical network effects beyond what is possible in the US market alone.
Finally, Uber is already aggressively moving into this market, and yet no one seems to talk about it - I guess it just isn't as sexy as cars.
As they say: amateurs talk tactics, professionals study logistics.
In this article's defence, it does at least mention this. But I think the potential here is huge. Think of Uber as an Amazon competitor, taking responsibility for everything after the production of a product.
> Finally, Uber is already aggressively moving into this market, and yet no one seems to talk about it - I guess it just isn't as sexy as cars.
No, it's because right now, they're not a logistics company, they're a taxi company. All they do is match supply and demand in a very localized setting, which is a far cry from the likes of DHL or FedEx.
Uber is not exactly printing money [1], so I have no idea why you assume that they'll have an edge in the transition to a very different business model?
[1] In fact, their only moat seems to be their brand name, and the expensive legal and lobbying battles they fight profit their competitors just a much.
No, it's because right now, they're not a logistics company, they're a taxi company. All they do is match supply and demand in a very localized setting, which is a far cry from the likes of DHL or FedEx.
Uber is not exactly printing money [1], so I have no idea why you assume that they'll have an edge in the transition to a very different business model?
[1] In fact, their only moat seems to be their brand name, and the expensive legal and lobbying battles they fight profit their competitors just a much.
>, so I have no idea why you assume that they'll have an edge in the transition to a very different business model?
Like gp, I also think Uber is pursuing the more ambitious goal of generalized logistics rather than just replacing taxis in cities. I have no insider knowledge of this so I just base it on factors such as the number of developers exceeding 1200[1]. It doesn't seem like you need 1200 programmers just to dispatch taxi rides via mobile phones.
My wild guess is that they want to turn the mass of drivers out on the streets into a massive "packet switched network" or "mesh network" of transportation. Instead of transporting just people, imagine you could move packages/groceries/deliveries from one car to the next. The drivers don't even have to make the complete trip from point A to point B. The drivers could hand off packages to the next driver using the mobile phones' cameras as builtin "barcode scanners" to track progress within the network. The so-called "Uber logistics network" would be innovative in the sense that they don't require "hubs" like UPS/Fedex. An Uber driver could simultaneously take a passenger to the airport while there's a package in the trunk for delivery to a business that's next to that airport. Today, we have a lot of cars wasting gas on "single purpose" trips. A multi-purpose utilization of the cars already on the road via "smart logistics" could offer cheap same-day deliveries while reducing gas consumption by society. This type of network coordination would require crazy mathematics and algorithms in graphs and combinatorial optimization.
Like I said, it's just speculation but the above scenario seems more immediate than the arrival self-driving cars. The "Uber network" is actually complementary to the future of self-driving vehicles. They could first deploy the network of "package delivery" to human drivers and in 15 to 20 years, it is then 100% driven by robots. The underlying graph algorithms stay the same.
If Uber isn't the company working on that, then I'm not sure who else is pursuing it. If other companies like Lyft/Amazon/Fedex/UPS are looking into crowdsourced logistics, they are really doing an amazing job of keeping their "skunkworks projects" a secret.
[1]http://www.businessinsider.com/the-power-players-of-uber-201...
Like gp, I also think Uber is pursuing the more ambitious goal of generalized logistics rather than just replacing taxis in cities. I have no insider knowledge of this so I just base it on factors such as the number of developers exceeding 1200[1]. It doesn't seem like you need 1200 programmers just to dispatch taxi rides via mobile phones.
My wild guess is that they want to turn the mass of drivers out on the streets into a massive "packet switched network" or "mesh network" of transportation. Instead of transporting just people, imagine you could move packages/groceries/deliveries from one car to the next. The drivers don't even have to make the complete trip from point A to point B. The drivers could hand off packages to the next driver using the mobile phones' cameras as builtin "barcode scanners" to track progress within the network. The so-called "Uber logistics network" would be innovative in the sense that they don't require "hubs" like UPS/Fedex. An Uber driver could simultaneously take a passenger to the airport while there's a package in the trunk for delivery to a business that's next to that airport. Today, we have a lot of cars wasting gas on "single purpose" trips. A multi-purpose utilization of the cars already on the road via "smart logistics" could offer cheap same-day deliveries while reducing gas consumption by society. This type of network coordination would require crazy mathematics and algorithms in graphs and combinatorial optimization.
Like I said, it's just speculation but the above scenario seems more immediate than the arrival self-driving cars. The "Uber network" is actually complementary to the future of self-driving vehicles. They could first deploy the network of "package delivery" to human drivers and in 15 to 20 years, it is then 100% driven by robots. The underlying graph algorithms stay the same.
If Uber isn't the company working on that, then I'm not sure who else is pursuing it. If other companies like Lyft/Amazon/Fedex/UPS are looking into crowdsourced logistics, they are really doing an amazing job of keeping their "skunkworks projects" a secret.
[1]http://www.businessinsider.com/the-power-players-of-uber-201...
I can see this maybe making sense for food deliveries, but I don't see the economics working for parcel deliveries. A UPS truck probably costs under $4/mile (including the driver) and carries hundreds of packages. An Uber costing only $0.54/mile (GSA rate) and carrying 1 package is ~20x as expensive on a package-mile basis (and that's not leaving anything for the driver).
Uber will need to either dramatically increase the packages per car or (more likely) Uber delivery will be confined to very time-sensitive packages (food delivery and maybe competing in the bike courier space).
Uber will need to either dramatically increase the packages per car or (more likely) Uber delivery will be confined to very time-sensitive packages (food delivery and maybe competing in the bike courier space).
> Uber delivery will be confined to very time-sensitive packages (food delivery and maybe competing in the bike courier space).
Yes, it seems like the most obvious pricing advantage would be same-day deliveries.
To send a 5 pound package from my address to another address in the adjacent zipcode (~10 miles), the transit time is 1 day and costs $9.85. For that price, I also have to get in the car myself and drive my package to a retail store and drop it off.
If I arrange for UPS driver to come to my house to pick it up, the price shoots up to $19.55!
Let's say my house is point "C" and my ship address is point "D". If the Uber servers can determine that point "C" is a very minor detour for an Uber driver going from point "A" to point "B" ... then he can cheaply pick up my package and drop it off at point "D" with minimal increase in gas costs. Uber could charge way less than $19 while the driver gets a revenue boost. The UPS "hub" model doesn't make that type of dynamic rerouting cost effective.
Yes, it seems like the most obvious pricing advantage would be same-day deliveries.
To send a 5 pound package from my address to another address in the adjacent zipcode (~10 miles), the transit time is 1 day and costs $9.85. For that price, I also have to get in the car myself and drive my package to a retail store and drop it off.
If I arrange for UPS driver to come to my house to pick it up, the price shoots up to $19.55!
Let's say my house is point "C" and my ship address is point "D". If the Uber servers can determine that point "C" is a very minor detour for an Uber driver going from point "A" to point "B" ... then he can cheaply pick up my package and drop it off at point "D" with minimal increase in gas costs. Uber could charge way less than $19 while the driver gets a revenue boost. The UPS "hub" model doesn't make that type of dynamic rerouting cost effective.
Or they price packages as a marginal cost on top of the ride-sharing service, and offer steep discounts for people who share rides.
> Like gp, I also think Uber is pursuing the more ambitious goal of generalized logistics rather than just replacing taxis in cities.
I don't deny that. My question was, why would one be so sure that Uber will be successful with that? So far, they haven't demonstrated their expertise in this task (taxi matching is trivial compared with a general peer-to-peer delivery mesh), and putting a lot of investor-backed manpower behind it is not a guarantee. Consider Google or Microsoft, two hugely successful companies, which failed at entering important new markets (social networks resp. mobile devices), and Uber is far from being "hugely successful".
I don't deny that. My question was, why would one be so sure that Uber will be successful with that? So far, they haven't demonstrated their expertise in this task (taxi matching is trivial compared with a general peer-to-peer delivery mesh), and putting a lot of investor-backed manpower behind it is not a guarantee. Consider Google or Microsoft, two hugely successful companies, which failed at entering important new markets (social networks resp. mobile devices), and Uber is far from being "hugely successful".
>My question was, why would one be so sure that Uber will be successful with that?
I can't predict the future so I won't claim they will be successful. You previously wrote:
>why you assume that they'll have an edge in the transition to a very different business model?
I responding to whether or not they had an "edge" in comparison to other companies which is a much weaker claim than "success".
Industry analysts like to play the "guess-the-next-product" from Apple by working backwards from
Applying that game to decipher Uber's hidden master plan by factoring in their army of 1200 programmers, their $15 billion of raised cash, the acquisition of deCarta (logistics mapping), etc... it seems like they have an "edge" over the other competitors to pursue bigger goals other than crowdsourced taxis. (Lyft hasn't raised the amount of money that Uber has and Amazon's new fleet of Amazon branded delivery trucks seems to an extension of their warehouse logistics rather than generalized non-Amazon logistics.)
Like you said, it doesn't mean they'll succeed.
I can't predict the future so I won't claim they will be successful. You previously wrote:
>why you assume that they'll have an edge in the transition to a very different business model?
I responding to whether or not they had an "edge" in comparison to other companies which is a much weaker claim than "success".
Industry analysts like to play the "guess-the-next-product" from Apple by working backwards from
+ Apple patents filed
+ open job listings (what competencies)
+ type of companies acquired
+ supply chain contracts signed, broken
+ etc,
Applying that game to decipher Uber's hidden master plan by factoring in their army of 1200 programmers, their $15 billion of raised cash, the acquisition of deCarta (logistics mapping), etc... it seems like they have an "edge" over the other competitors to pursue bigger goals other than crowdsourced taxis. (Lyft hasn't raised the amount of money that Uber has and Amazon's new fleet of Amazon branded delivery trucks seems to an extension of their warehouse logistics rather than generalized non-Amazon logistics.)
Like you said, it doesn't mean they'll succeed.
> I responding to whether or not they had an "edge" in comparison to other companies which is a much weaker claim than "success".
Fair enough.
You raise some good points. I guess I just assign lower values of advantage to their investments and acquisitions than you or nl seem to do, mainly because existing companies tend to have a bad track record for breaking into established markets.
Fair enough.
You raise some good points. I guess I just assign lower values of advantage to their investments and acquisitions than you or nl seem to do, mainly because existing companies tend to have a bad track record for breaking into established markets.
I don't think it is a different business model. I think it has been the business model from the beginning.
Having a multinational, on the ground door-to-door delivery service really is a moat.
I'm in Australia - hardly the poorest market on earth, and FedEx outsources delivery here.
Uber has both ends of the delivery service covered for a huge majority of population centers, and I think they are one of the few companies that have that.
Yes, I completely concede there is that small airfreight thing to figure out, and that isn't trivial.
But the only way the money that have raised makes any sense to me is if they do have some kind of defensible advantage, and I could see it working for them in the logistics market.
Having a multinational, on the ground door-to-door delivery service really is a moat.
I'm in Australia - hardly the poorest market on earth, and FedEx outsources delivery here.
Uber has both ends of the delivery service covered for a huge majority of population centers, and I think they are one of the few companies that have that.
Yes, I completely concede there is that small airfreight thing to figure out, and that isn't trivial.
But the only way the money that have raised makes any sense to me is if they do have some kind of defensible advantage, and I could see it working for them in the logistics market.
> I think it has been the business model from the beginning.
The delivery business might have been their plan and ambition from day one, but their business model right now is taxi supply/demand matching.
> Having a multinational, on the ground door-to-door delivery service really is a moat.
What? I said that they don't have a large moat now, I wasn't talking about a hypothetical future.
> But the only way the money that have raised makes any sense to me is if they do have some kind of defensible advantage, and I could see it working for them in the logistics market.
No, they raised that money to build this advantage, they don't have it yet. Their investors gave them money in the hopes of getting in on the next Google. They might succeed, but it's anything but certain.
The delivery business might have been their plan and ambition from day one, but their business model right now is taxi supply/demand matching.
> Having a multinational, on the ground door-to-door delivery service really is a moat.
What? I said that they don't have a large moat now, I wasn't talking about a hypothetical future.
> But the only way the money that have raised makes any sense to me is if they do have some kind of defensible advantage, and I could see it working for them in the logistics market.
No, they raised that money to build this advantage, they don't have it yet. Their investors gave them money in the hopes of getting in on the next Google. They might succeed, but it's anything but certain.
> For the major carmakers, [car sharing] could mean catastrophe.
I don't see this. A car currently lasts for 100,000-150,000 miles. Typically, several different owners use it for 10-15 years before it's worn out. If a car is 80% utilized, it will rack up the mileage much faster, and the owner (whether you, Uber, or Ford) will have to buy a new one in a year or two.
Maybe the fleet market will start demanding longer-lasting cars. If so, manufacturers will have reason to charge more. Or maybe cars will move to a two-year obsolescence cycle like phones. In any case, the amount we spend on cars will roughly track how far we travel.
> Starting as soon as a decade and a half from now, large numbers of people around the world will get around by hailing driverless taxis that operate like robots, so ubiquitous that they will arrive an average of a minute after being summoned by an app.
I only partly see this. People who live in city centers already hail taxis. Uber may well displace the taxi industry, but they aren't growing the market (ignoring future takeout delivery plans). Outside the densest cities, it's still not clear that fleet cars make sense unless the price seriously undercuts the status quo (the notorious 10X improvement).
I don't see this. A car currently lasts for 100,000-150,000 miles. Typically, several different owners use it for 10-15 years before it's worn out. If a car is 80% utilized, it will rack up the mileage much faster, and the owner (whether you, Uber, or Ford) will have to buy a new one in a year or two.
Maybe the fleet market will start demanding longer-lasting cars. If so, manufacturers will have reason to charge more. Or maybe cars will move to a two-year obsolescence cycle like phones. In any case, the amount we spend on cars will roughly track how far we travel.
> Starting as soon as a decade and a half from now, large numbers of people around the world will get around by hailing driverless taxis that operate like robots, so ubiquitous that they will arrive an average of a minute after being summoned by an app.
I only partly see this. People who live in city centers already hail taxis. Uber may well displace the taxi industry, but they aren't growing the market (ignoring future takeout delivery plans). Outside the densest cities, it's still not clear that fleet cars make sense unless the price seriously undercuts the status quo (the notorious 10X improvement).
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I really don't get Uber's business model. It seems to me that the whole company is just based around the brand. Anybody could start an Uber clone tomorrow. There is totally no lock-in potential (except they could claim exclusivity for their drivers, but I think this is limited). This means that any large party with sufficient marketing budget could just push Uber away.
Uber's primary barrier to entry is a network effect - if more cars are on Uber that means more word of mouth for Uber less people interested in the other app which means less drivers interested in the other app. They reinforce this not by pure exclusivity deals but by paying drivers who drive more on Uber higher rates (which is a tactic I've seen in the stock photo industry as well, which is also reliant on a marketplace model where a big player brokers access to lots of individual contributors.)
Its secondary barrier is that getting quality software right is more expensive and harder than it looks and benefits from economies of scale. (I don't trust Uber further than I can throw my cell phone but the app is far slicker than Lyft or Karhoo or whatever.)
That's not insurmountable but it's nothing either.
Its secondary barrier is that getting quality software right is more expensive and harder than it looks and benefits from economies of scale. (I don't trust Uber further than I can throw my cell phone but the app is far slicker than Lyft or Karhoo or whatever.)
That's not insurmountable but it's nothing either.
Interesting.
> more word of mouth for Uber less people interested in the other app
This is branding, which I mentioned. Or am I missing something?
> Its secondary barrier is that getting quality software right is more expensive and harder than it looks and benefits from economies of scale.
I'm not sure this is true. The software of Uber does not need to scale larger than, say, the size (in users) of a city. Phrased differently, a city is a natural sharding point. Of course, there is software that needs to use the full dataset (for statistics etc.), but this software can run in batch mode.
> more word of mouth for Uber less people interested in the other app
This is branding, which I mentioned. Or am I missing something?
> Its secondary barrier is that getting quality software right is more expensive and harder than it looks and benefits from economies of scale.
I'm not sure this is true. The software of Uber does not need to scale larger than, say, the size (in users) of a city. Phrased differently, a city is a natural sharding point. Of course, there is software that needs to use the full dataset (for statistics etc.), but this software can run in batch mode.
> A city is a natural sharding point.
No no, wrong type of scale. I'm talking economies of scale.
Uber needs to pay N SFBay-area engineers upwards of $200,000 USD/yr (including health expenses, employer-side taxes, and other overhead) for N years in order to build a well-functioning, city-scale software ecosystem - including server software, devops and maintenance tools, payment provider integration, antifraud efforts around payments, client software on multiple app stores, internal tools for the support team, business tools for the traveling consultants who want easier expense report receipts, all sorts of fun data collection for the business analysts, and all the ongoing maintenance and operations costs associated with that mountain of code. With all that effort expended, all those millions spent, they have a bunch of software they can deploy to one, single city and do a top-notch bang-up job of it.
But now this $N million piece of software can be deployed to its second and third and three-thousandth locality with little more than extra computers, some clever sharding work, and maybe some localization: a puny fraction of the original development effort.
If they need a whole new country, throw in some more internationalization/localization and maybe a new payment provider integration.
Those are the economies of scale. Every feature that Uber adds for $N in developer time is hundreds of times more impactful than if Single City Carshare [tm] were to add it, even if they can use cheaper developers outside the Bay Area.
Of course, there are diseconomies too (if only because of managing additional headcount on the per-city operations side of things), but as you said, cities are a natural sharding point, and this keeps those diseconomies down.
No no, wrong type of scale. I'm talking economies of scale.
Uber needs to pay N SFBay-area engineers upwards of $200,000 USD/yr (including health expenses, employer-side taxes, and other overhead) for N years in order to build a well-functioning, city-scale software ecosystem - including server software, devops and maintenance tools, payment provider integration, antifraud efforts around payments, client software on multiple app stores, internal tools for the support team, business tools for the traveling consultants who want easier expense report receipts, all sorts of fun data collection for the business analysts, and all the ongoing maintenance and operations costs associated with that mountain of code. With all that effort expended, all those millions spent, they have a bunch of software they can deploy to one, single city and do a top-notch bang-up job of it.
But now this $N million piece of software can be deployed to its second and third and three-thousandth locality with little more than extra computers, some clever sharding work, and maybe some localization: a puny fraction of the original development effort.
If they need a whole new country, throw in some more internationalization/localization and maybe a new payment provider integration.
Those are the economies of scale. Every feature that Uber adds for $N in developer time is hundreds of times more impactful than if Single City Carshare [tm] were to add it, even if they can use cheaper developers outside the Bay Area.
Of course, there are diseconomies too (if only because of managing additional headcount on the per-city operations side of things), but as you said, cities are a natural sharding point, and this keeps those diseconomies down.
Then perhaps I am the only one here who is not convinced of the complexity of Uber's software. Basically, it is just a CRUD application, with some realtime features to make it look a little more sexy. Yes, software like that could cost on the order of millions, but there are lots of companies/investors who could cough up this kind of money without even blinking. I just don't understand Uber's huge valuation. They seem to have no secured business position, other than by branding (and perhaps a little by binding their "employees").
Oh no, this isn't to justify the valuation by a long shot.
There's some (mild) network effect. As a customer, if you install only one ride sharing app, you obviously want the app with the most cars. And similarly as a driver you want the app with the most potential customers.
You can see the weakness here immediately -- it's possible to install two or more ride-sharing apps (apparently drivers do this routinely). There's some difficulty as a customer in having to check two or more apps. Maybe there is an opportunity here for a meta-/aggregator ride-sharing app that scrapes the data from the other apps and presents it in a unified interface?
You can see the weakness here immediately -- it's possible to install two or more ride-sharing apps (apparently drivers do this routinely). There's some difficulty as a customer in having to check two or more apps. Maybe there is an opportunity here for a meta-/aggregator ride-sharing app that scrapes the data from the other apps and presents it in a unified interface?
Uber is well aware of the "problem" (from its point of view) and has been aggressively using its TOS to shut down attempts to create aggregators. Uber is all about using information to create a more efficient market just so long as it controls the information.
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You mean like Lyft, who's been around as long as uber and raised billions of dollars?
Or like SideCar, and other companies, who have been left in Uber's wake?
While not the same, I think Uber has similiar network effects to EBay. Uber recruits drivers and riders and acts as the market for the matching between the two.
Riders want their driver to be close by, and drivers want their next rider to be close by- meaning the market with the most drivers wins big.
Sure, drivers and riders could install a different app- but what's the incentive to do so? Buyers- sellers of old collectibles could get off eBay, but they haven't yet, and why would they start now?
Or like SideCar, and other companies, who have been left in Uber's wake?
While not the same, I think Uber has similiar network effects to EBay. Uber recruits drivers and riders and acts as the market for the matching between the two.
Riders want their driver to be close by, and drivers want their next rider to be close by- meaning the market with the most drivers wins big.
Sure, drivers and riders could install a different app- but what's the incentive to do so? Buyers- sellers of old collectibles could get off eBay, but they haven't yet, and why would they start now?
TL;DR: No, you can't.
I read the article and couldn't find anything about liquidation preferences. I'm going to go out and a limb here.
If you think that if you could short Uber, you could do so at a $62.5 billion valuation, you should stay away from making those kinds of risky financial plays.
If you think that if you could short Uber, you could do so at a $62.5 billion valuation, you should stay away from making those kinds of risky financial plays.
That was a long piece simply to suggest someone is creating swaps against the valuation.
self-driving cars are a no-no in indian roads! the chaos is and will be beyond AI that we will get to see in the near future.
reference : me (an indian)
reference : me (an indian)
India needs to get its act together with traffic. I'm heartened that there are anti-honking groups already --- that's a big start. The first step in fixing driving in India is changing the honking culture. Seriously.
Efficient transit is just table stakes for being a serious economic power. Indians are smart. They'll figure out how to fix things.
Efficient transit is just table stakes for being a serious economic power. Indians are smart. They'll figure out how to fix things.
No, then Uber will have to lower prices to stay competitive against competition that exactly like uber will be in the same situation.