Uber doesn't have much of a moat or lock-in effect. I just switched one day from being a frequent Uber rider to 100% using Lyft, simply because I don't like Uber's behavior as a company. The prices are so close it doesn't make any practical difference to me.
Anecdotally, among my friends I also see Lyft becoming the default, and sometimes price-checking with Uber. If Waymo or whoever came out tomorrow with a cheaper/safer driverless car, I'd just as likely drop Lyft in a heartbeat.
I have found that the drivers for Lyft are much happier than the drivers for Uber. This holds true even when a driver drives for both services. I asked several drivers why this is and the universal response was that Lyft treats them better, so they are happier to pick up Lyft customers.
I switched over to only using Lyft, but like the OP states, if Waymo came out tomorrow I'd probably switch to that.
My experience as well; started asking drivers which they preferred, and they all said Lyft. That alone is a good reason to switch. I'd happily pay a 10-20% premium if I can feel confident that it's encouraging better working conditions.
This goes for other markets as well, it's just generally hard to get good information.
Ditto, except I’ve mostly stopped using Lyft in favor of ReachNow Ride which is driven by employees (i.e. not contractors) who show up in a BMW and generally drive like their income is decoupled from working long hours and the need to turn over lots of rides.
If you’re in a market where they operate, I can heartily recommend it.
I've had a slightly different experience. My Lyft drivers have definitely been happier and nicer, but most of them say that there is no real difference between the two services from a driver's point of view. I'm not sure how that could be the case.
Sexual harassment cases were on the HQ, not the drivers. Also, most drivers drive for multiple companies. All they need is 'one more app' on their phones, and they're off to go. Since Lyft/Uber/everyone is monitoring their competitors' s prices, they make sure they adapt pricing to make themselves antagonistic.
Thus the drivers won't care which app is running, since they will be making (more or less) the same $$$$$. All they need it to do is ensure they are driving people around/keeping busy, and if one company is bleeding customers, they will simple start 'the other app' and continue driving.
I may be oversimplifying the above, but it's the general idea/practice.
I wasn't really questioning how the drivers can easily work for multiple companies. That is pretty clear. My question is really around how I can generally have nicer Lyft drivers, with drivers having no preference on what service they drive for. Why wouldn't I have similar driver experiences on each app?
I feel like it would force prices down but it would also force Uber/Lyft to reduce their take, because presumably drivers don't care whether the ride was $10 or $11 if they get $7 either way.
While this is true, I feel like there are more 'average' folks looking to pick up extra income on the Lyft platform, as opposed to Uber. In US cities like SF, NYC, LA, Seattle, Chicago, it seems like most of the Uber drivers I encounter these days are former taxi or livery drivers -- Uber is clearly their profession. It's apparent in their approaches to discussing the destination (particular landmarks, hotel names, business names, cross streets), and in sometimes in their driving style. And they're usually driving a car that optimizes for rideshare/taxi service type driving: Accords, Corollas, Camrys, Prius, etc. The conversation tends to be all business with a few pleasantries.
On Lyft in the same cities, I always get a much more oddball mix of vehicles, with much more diverse conversation from the driver. I've had biotech founders looking to recruit and make beer money pick me up on Lyft rides going from the South Bay to the SF in the Bay Area, real estate agents and recruiters drive me in many cities, and many others that are clearly doing Lyft as a side gig rather than a profession. On the downside, this usually means that they're less aggressive drivers in terms of optimizing for speed and route efficiency, but it can make for a more interesting ride and better chitchat along the way.
As a result, I almost always default to Lyft unless there's a huge price spread in Uber's favor.
Agree that the lock-in is weak compared to other markets. Their strategy has been to incentivize drivers and riders to not split usage between other apps.
Uber drivers who do a certain number of hours or rides per day/week often get bonuses, so they'd have to forego these bonuses to split time with Lyft.
I have often compared Uber to the airlines and not in kind way. There is simply no loyalty. I am skeptical that the airline frequent flier model will work. I predominately use Delta for international travel because of Delta One, but will probably switch to United when the 767 and 777 retrofit to Polaris is complete. I prefer United because I live in SF and there are more good flights from here. I don't know what Uber or Lyft could offer me because the networks are largely the same, the product is identical and there is very little chance for differentiation. Maybe they will figure something out but I am skeptical. For me to believe there is margin anywhere in there I would need to see what their equivalent of business class would be.
I gave up on airline frequent flier plans (except Southwest and Alaska) decades ago. The big US-flagged airlines suck (cramped planes, consistently late flights, extra fees, treating customers like shit) and their FF plans suck too (expiring miles, too many restrictions on when you can fly).
Southwest and Alaska are a different story; they're still trying to compete. But the majors are so terrible I feel the opposite of loyalty toward them.
To attract users to these services, would Uber have to take a further hit to profitability? It seems they would in order to make customers lock themselves in.
I'm not sure. We would need to add up the costs of free shipping, unlimited photo storage, licensing of 3rd party video content, creating 1st party video content, licensing music content, free 6-month Washington Post subscription, Whole Foods discounts, free eBooks, free games and more. [1]
They also don't have a direct competitor/s like Uber. I think the better comparison would be the loyalty programs from United or American.
Converse to this, I get a lot of bad behavior when I try to book Uber, especially late at night or in odd areas. Drivers who cancel, intentionally drive in the wrong direction to force you to cancel, who don’t wait or drive to the wrong place to pick you up, who don’t know where to go, who are rude, who refuse to turn off music...
I started using Uber because it was worth paying more to not deal with taxis. Now Uber is the cheap, bad option. I really wish there was a “middle of market” ridesharing service. Cheaper than a black car from whatever service, but still with good quality control. Uber used to be that but isn’t anymore. Lyft is kind of that but isn’t quite there.
Anyway, it feels like Uber is trading goodwill for volume. I only use it for free rides with Amex platinum or when I need a car ASAP and no taxis are available. Otherwise I use Lyft (and sometimes Lyft is cheaper anyway). It feels like Uber is shorting quality control and trading long-term profitablility for short-term volume with more, cheaper drivers.
Since my impression is a large population of drivers drive for both I don't think you would find different behavior in Uber or Lyft. A dickhead is doing to be a dickhead whether driving for Uber or Lyft right?
I have experienced the drive in the wrong direction for >10 minutes uber driver and it is very frustrating. They must get dinged massively for cancelations?
It doesn't matter if the end result is a duopoly. The two need only stop competing and raise prices. It will be hard for a third entrant to come in because of the large cost to enter markets. The only viable entrant is, as mentioned Waymo, because driverless cars alters the economics and because they have the tech.
I thought this for a while but I'm pretty sure I was wrong. When thinking about all these services that exist I didn't understand how divers would stay busy: Uber, Lyft, Uber eats, Amazon restaurants, doordash, GrubHub, etc. Then I realized they actually reinforce each other because all divers can work for all the services. So they don't have to wait around for an Amazon restaurants order to come in, they'll just do Ubers until then, or whatever else comes in first. This actually makes it easier for new entrants the more services are already out there demanding divers and maintaining a large pool of contract drivers.
To this day I don't even really understand the value that Uber et al are supposedly adding that justifies the size and evaluation of their companies.
At the end of the day they're a layer on top of a taxi business. Sure this is useful in some way but like Airbnb or weworks or all these other companies that just throw one layer of service over the actual business I don't understand why they are treated like high tech companies.
The most extreme example was possibly moviepass which was basically just a subsidy from investors to movie goers.
I believe it was originally a big bet on the eventual profit margins from having the market share when deploying driverless cars instead of human drivers
That always seemed insane to me. The potential moat I saw was in controlling a two sided market (like eBay for collectibles). Drivers drive for you because you control the riders. Riders ride with you because you have all the drivers. This would be a competitive advantage because you’re getting your drivers to deploy capital (cars) for you.
But driverless cars change that dynamic. Now you need to own a fleet. Well, guess what: there are already businesses like this! They are called car rental companies. Last time I checked, they were shitty, low margin businesses.
That is the story they spin since their growth exploded and they realised that they will never be profitable with the original model. That future is so far away though.
They have different company culture for now but at the end of the day, the business practice dictates direction and I don't think there's anything fundamentally different with Lyft.
Their rides are both VC subsidized and unsustainable. They both punish customer loyalty. My wife and I rotate hiring rideshares. If one of us books too many, one person's fare becomes much costlier than the other. They're both godsends when initially disrupting markets (our Egyptian Uber driver definitely took a lot of personal risks engaging in shouting matches against street touts who were throwing themselves at the car and ready to drag us out so we spend our money at their shops) but once they reach semi-duopoly status in mature markets like the Bay Area, more and more crappy things happen. Things like drivers canceling you after 10 minutes or people using GPS spoofers to pick up rides while not even in the same county. And you clearly see both companies, over the years, trying to hide ways to get problems resolved behind more and more layers of circular forms labyrinths.
I've been taking more traditional taxies to keep the balance of power competitive (and because it's sometimes less frustrating).
With their new loyalty program and Uber Visa card, I definitely think they are trying hard to build that lock-in effect. Once that happens, I do think they'll reap the rewards of their platform. It's just hard at first. I hope they can pull it off tho. But then again, I do know a lot of Uber drivers who only use Lyft personally for rides.
Why? I mean, most taxi cab companies have rideshare apps. They were a first mover and showed us the way, but they burned a ton of cash and did some really shitty things. Heck, they've killed more than a few people.
The extent of their lock-in is that of any C2C company: the marketplace. Can one side be confident there are enough on the other side? And then it becomes about brand recognition and marketing. (And in this particular case, the Uber brand has some issues....)
No different than, say, consumer rental companies like Airbnb.
> As a rider, there's no "cost" to having both apps, so I'll just check both
Sure, if you never left your country. I certainly didn’t want to register to Italy’s official taxi app - don’t wanna trust them my CC nor my life to horrible service I’ve received (same price as Uber, horrible car)
Sure. If a competitor has managed to get good consumer market share, then switching is easy. The marketplaces are not exclusive.
If, for example, HomeAway got a similar number of rentals to Airbnb (though in this particular case, it hasn't), then both markets could easily co-exist.
Creating C2C marketplaces, however, is not an easy task.
Depends, where I am there's Uber or Traditional Cabs. My experience phoning for a cab is pretty pleasent though (quicker than using uber). Although their app is unusable.
(When it comes to dodgey companies CabCharge is pretty terrible)
No moat? Of course it has a moat! So far Lyft has raised $1.5 BILLION dollars in order to compete [1]. Capital requirements are absolutely a barrier to entry and protect their position.
Why do these ride companies need so much capital? They don't buy cars; the drivers aren't employees. They're a mobile app with a big backend. So why do they need more capital than, say, a game company?
Try Gett. They have less drivers, but their quality is much better – they actually know the city, have excellent manners, and I've hardly ever heard any horror stories.
while it is true that you can easily switch from uber to Lyft or vice versa, there are only two of them. so they do have moats. its not easy for a new competitor to emerge unless they are doing something different like perhaps driverless cars.
In Singapore Uber did an equity swap with Grab (they both own parts of each other and are invested in by Softbank too) to cease business. Now I just use a normal taxi booking again (as well as Grab when it's cheaper).
The reason I'm reluctant to use Lyft is that they do not say beforehand how much my ride is going to be.
Edit: I stand corrected. Their UI mislead me because for airport rides the price is only shown after you hit a Confirm button, but that does not order the car as I thought, only takes you to the next screen.
I stand corrected. Their UI mislead me because the price is only shown after you hit a Confirm button, but that does not order the car as I thought, only takes you to the next screen.
I've been misled in the exact same way when using Lyft at airports. This has caused me to use Uber instead of Lyft at least once, until I figured it out.
I use Lyft frequently on iOS all over the US, it gives an estimate that tends to be conservative (i.e. high). Do you not see the same thing in your app?
In the parent comment's defense, I remember trying to price-check with Lyft and being scared about pressing 'Confirm.'
They should really think about switching it to 'Confirm route' or 'location'.. something that ensures me I'm not ordering it yet. Maybe an arrow where I can swipe and see the next step? Or some visual cue that there are more steps ahead?
Yeah, it’s not exactly clear. I figured it must not be the “send me a car” button since it doesn’t have all the info it needs yet, but I can totally see why you’d get stuck at that point.
Interestingly, it only uses the “Confirm” label for airports. Other destinations say “Set Destination” which is about eight thousand times more clear.
This is one of those no-shit responses, parroted over and over again.
At the end of the day, Pepsi and Coca-Cola sells you sugar water. McDonald's and Burger King get the same meat form the same vendor trucks. You charge a credit card whether Visa or MasterCard.
The point isn't who brings you the convenience, it's that you have convenience at all.
Uber/Lyft has commoditized driving to a product sold at ~$2/mile. That's why this week they both launched loyalty programs, back to back.
And from there they'll just keep trying to add more value bit by bit. Not surprised at all if in 10 yrs Uber doesn't have cab hailing anymore, but you ended up on an Uber flight to Shanghai.
"BPI was a major supplier to McDonald's and Burger King, as well as restaurants and grocery stores, and its products were reportedly used in 75% of the United States' hamburger patties in 2008. The School Lunch Program, another large buyer of Beef Product's goods, used about 5.5 million pounds in 2009."
I think the problem really is profit. Pepsi and Coca-Cola both sell sugar water, a commodity, at a profit. Lyft and Uber have made rides a commodity but at this point it looks like commoditization of rides is not able to be sold at a profit. I think they both are touting that scale and technology will lead them to profitable rides but its not obvious that this is going to ever come true in a way that justifies their value. To me the scary part for them is that they already have commoditized their product.
In my opinion the outstanding question today is: are they both too early? It's currently a race to the bottom of driver oriented rides. As soon as driverless becomes viable the current rider fee suddenly shifts to being a more positive profit margin and also shifts opex back in favor of both. But can either last long enough to get there?
Alexa can't even turn on my living room lights more than 50% percent of the time. I'm not holding my breath for driverless cars coming any time soon (if ever).
That is not a happy balance sheet. They have raised over $24B, then they shifted around the cap table when Soft Bank came in[1] where they valued the company at $48B. I have never played poker where the lowest valued chips were a million dollars but it has to feel like that to senior management at the company right? And their investors, they have serious money in the pot too. It feels like they have managed to create a company that is 'too big to fail.'
Every time I think I've seen the most amazingly challenging business situation I'll ever see, something comes along to top it. Win or lose, the book about Uber is going to be really amazing.
At this point, I would have zero doubts about betting against Uber. The fact that company with ginormous loss continues to pursue loss-making ventures is beyond me. Food delivery was already an established market in India, and UberEats had no competitive value compared market leaders when it came--except, of course, zero delivery fees. The market itself is extremely challenging and not even the biggest companies have profitability in sight, and yet for Uber it somehow fits in their long term vision.
Wake up, Uber management. No company, however appealing, can continue to raise money making a billion in quarterly loss.
>>Food delivery was already an established market in India
Same Uber model there too.
`Eat this 500 rupees biryani for 50 rupees`
`Let me help you order this Baskin Robbins Ice cream for 80% discount`
`Diwali food festival, expensive ad on TV, Dal Maakhni at 60% discount`
These people are hoping that people will get so addicted to their app, eventually they will either stop cooking(Which ridiculous at the very face of it), or stop driving/walking up to their nearest restaurant.
Also, this luring people into using apps with discounts has max utility, its not a infinite trick you can play forever.
Honestly, I've been seeing so many ads advertising referral bonuses for new Uber drivers lately that I'm surprised no one is calling them a pyramid scheme.
Capture market share and introduce autonomous services. This is the game plan and it's only a matter of timing. Uber might have been slightly too early. Only time will tell.
Critically though it isn't retail investors who would bear the cost of a failure, that would be born by the folks like Softbank and the hedge funds who have invested.
Of course the employees are also victims. I have been in the situation of holding untradeable (by me) stock being valued a high number (woohoo! I'm rich) only to watch helplessly as it became worthless (uh, I'm not rich). While the value of things change is understandable intellectually it is also painful.
> Critically though it isn't retail investors who would bear the cost of a failure, that would be born by the folks like Softbank and the hedge funds who have invested.
This is highly optimistic. A failure of a big startup such as Uber could easily start a chain reaction, failure of other similar big unicorns, perhaps steep losses in stock market, spreading panic etc. It could easily could get to a point when government bails out the investors and banks in some way, just so they don't lose money. This is more likely scenario in my case.
Nah. The irony is that while staying private, being combative with governments and relying on independent contractors to operate their business allowed them to reach this size, it also prevents them from having any leverage to ask for a bailout. No jobs to save. No retail investors to protect. No switching costs. No feel-good story for a politician to get behind.
If Uber fails it'll get parceled up by the remaining players in a heartbeat, either by selling parts of itself (at best) or everyone just switching.
The capital from the capitalists is "redistributed", spent by Uber on salaries and various purchases (more salaries). The working class collects their salaries, roughly commensurate with the cost of living (aka "according to their needs").
Too big to fail can also be having a well capitalised investor like Softbank in a multi-trillion dollar future market. Uber is right there at the sweet spot.
My "Uber sucks" story is that I left a jacket in the back seat of a car. I immediately tried to figure out how to call the driver but Uber decided they needed to make money off my misfortune. Not only did they charge me $15 to connect with the driver but they refused to let me message the driver directly, so what could have been a few minutes of time turned into a week long saga. Once I finally got a hold of the driver several days later she had the same story as me where she had immediately tried to contact me and return my item but Uber didn't let her contact me.
That permanently cost Uber a customer because now I know that they'll try to use dark patterns to screw me over any chance they get.
What if the driver doesn't want to charge a fee and is happy to just circle the block and drop the item off to a thankful customer, as described in this episode? Maybe things won't be as convenient for some drivers, in which case a fee is appropriate. But imposing a fee without asking the driver or allowing the driver an easy way to notify the customer of the lost item is dishonest; Uber is not doing it on the driver's behalf but acting in loco parentis of the driver and deciding on their behalf, thus robbing the driver of autonomy.
The driver chooses to return the item in the first place (and they know the fee), and they can notify riders about lost items via their app.
Uber avoids price negotiation, and considering that it takes time and effort to resolve your mistake, it's likely much better to just charge a standard fee instead of planning for every single case.
The lost items were returned, so the return process is actually successful. It's designed to work for many people under various conditions, not just you. Whether it was as quick as possible is irrelevant to the original claim of being charged for the wrong reason.
Perhaps try and remember your items if you don't want to worry about recovering them later. There are plenty of drivers who also immediately check for and return items before they set off. Saying a system has failed because it doesn't perfectly suit your exact life situation/mistake is disingenuous and unproductive.
The fact that you made a mistake doesn't absolve another party of all duty to act like a reasonable person. Is capital punishment for stealing a loaf of bread okay, because perhaps you should try to remember not to steal things?
I also question the assertion that this process is designed to be as effective as possible for anyone, unless you mean Uber. As stated in the original post, both parties were trying to resolve this, while a busybody middleman stopped them.
This is what I mean by disingenuous. Nobody is getting punished. Uber is being reasonable, which is why the user got their items back, using a standardized process.
Why do you keep saying they failed under some arbitrary scenario?
Again, just because it could've been faster does not mean that it didn't work. That specific scenario is not the majority nor the only one that matters.
What arbitrary scenario? I'm literally discussing the scenario which kicked off this discussion.
The problem is not that it _could_ have been faster, the problem is that it _would_ have been faster if they'd done nothing at all. They injected themselves unnecessarily to slow down something which would have worked fine without interference.
If I find someone's wallet in the back of my car and I call them two years later to give it back, am I being reasonable? I mean, they got their items back. Or is it specifically a week which is acceptable? What's the maximum amount of time that it's reasonable to delay a by-default two-minute interaction?
I don't understand your comment but I'll try one last time:
The problem is helping riders get back lost items. The solution, taking into account potential abuse with open communication and all other scenarios in millions of rides, is to have a "report" button that then notifies the driver to find and return the items on their own, and get rewarded with a standard fee.
In any arbitrary scenario (meaning not representative of all of them), this process may not be the fastest or most effective, but it does solve the problem.
Sometimes a 2 minute situation might be stretched out, and sometimes it might mean things are lost forever, but vast majority of the time it works fine, and that's the trade-off. You are focusing on 0.1% scenario while ignoring everything else.
I lost a phone in a taxi once (didn't realize it, it was a burner). A week later I had the same taxi driver and he goes "Glad I finally picked you up again, here is your phone". Sometimes people are good.
Would you have preferred it if parent wrote that sometimes people are nice? I didn't read into parent's statement as much as you did. Sometimes communication is messy.
I have no preference on other's comments. Changing that word doesn't change the implication that some people are good/nice because they did it for free, in the context of a discussion about fees.
Can you describe what other meaning there would be in that statement?
The word nice doesn't have as much a moral implication as the word good, which is why I asked.
As for the original sentence, I didn't think it was saying that some people are good/nice because they did it for free. I thought it was saying that some people dit it for free because they are good. That has no implication on whether a person is good based on whether they do it for free. But even if it did, the logic doesn't fall apart if you do an If A Then B analysis. I see no problem with someone doing something for free being a signal that someone is good, especially because I do not say it's an if and only if situation either.
I can imagine there are very solid reasons related to stalking that result in Uber wanting to make it hard to contact past riders or drivers in either direction.
Unless of course they don't want to be paid for it, and the service gets in the way of them returning it to you immediately for free just so they can charge $15 that they get a cut of ;)
If you read the posted link, you would see that the fee is entirely sent to the driver.
And if you read the other comments, you would see that direct communications can be abused so this current process is likely the best compromise to help both riders and drivers.
And as stated before, many drivers return items immediately for free while many others probably don't find items until days after the original rider reports it, so there are vastly different scenarios under which you need a process to work.
Is the tiny detail of whether the driver can set the exact fee really that important?
Well, not having the driver's phone number is good. Can you imagine passengers calling drivers and harassing them for whatever reason? It will happen.
Should the driver drive for free to return your jacket?
What if the driver is already en route to another passenger and they told the passenger 5 minutes, and your cost will be additional 10 minutes. Do you think another passenger will understand and be forgiving that their ride is 10 minutes late because of your situation?
If you really think about all the reasons and complexity involved in just returning your jacket, it's not as simple. But then, what if you were traveling and forgot your luggage?
I dunno what the right answer is, what do you think?
> Well, not having the driver's phone number is good.
There is no need to actually give out the drivers phone number, Uber could easily have an 800 number that when called would prompt you for a case or ticket number generated by the app and then would provide you with options for anonymously connecting to your driver or a customer support agent.
> Should the driver drive for free to return your jacket?
When I drove cabs, we would take lost items back to the shop. If they were called for we might deliver them to you for free if it was really slow, but we would usually just charge you a regular fare from the shop to where you wanted it. Otherwise, you could come down to the shop and claim it in person.
> Do you think another passenger will understand and be forgiving that their ride is 10 minutes late because of your situation?
If you lost the item, I think the primary concern is that you actually get it back not how timely it is. Clearly you'll just have to wait until the driver is free and pay the fare to get the item back to where you are currently.
Why are you inventing new facts to rationalize this practice? The other poster told you that the driver noticed the forgotten jacket and immediately attempted to contact the rider, but couldn't. Uber is choosing to interpose itself between the two and collect a fee that neither of them wanted to pay.
> Why are you inventing new facts to rationalize this practice?
The driver being nice and wanting to contact the driver is cool at a small scale but at a large scale with millions(?) of trips per day, that sort of casual niceness doesn't scale at all. At scale, you run into all the questions asked by the parent. You have to address the "oh shit, I need to get/give something back" issue in a more systemic, scalable way that accounts for all the ways drivers and passengers might try to screw each other.
Whether the fee is the right way to make this happen, I cannot answer. But what I can say is the questions asked by the parent are the kinds of questions you absolutely have to answer when creating a feature allowing "call backs" that might get used by thousands or tens of thousands of people per day.
> Well, not having the driver's phone number is good. Can you imagine passengers calling drivers and harassing them for whatever reason? It will happen.
I'm pretty sure you can get their number if you call them via the app during the drive.
That's pretty misleading. You are not charged to contact the driver in the app, you are charged once the item is returned. I've been through this process myself, and it's even stated on their FAQ:
> A $15 fee is charged to you once your lost item is returned.[0]
Uber has to do all kinds of things that a taxi company wouldn't need to do. For example they have an entire department related to resolving sexual assault/harassment issues between customers and drivers. A taxi company would just send the the matter to the police and be done with it.
They also must have a large "compliance" department as each city, state and country seems to be enacting a different set of rules around how the company can operate.
All these different departments need software to support them (no point in having compliance if the app forgets to charge the right tax somewhere!), which means they need more accountants, more HR people, etc.
It seems like Uber could trim some fat (I had an interview with them that was laughably easy), but who knows if the CEO thinks he can do that without causing low morale and a stampede of the actual talent.
Nothing reminds me how out of loop the Hacker News and Silicone Valley is from the rest of the America like an Uber post. It always degrades into an anecdotal competition on who had the worst experience with Uber and how amazing Lyft has been. The fact that they are growing 38% in a quarter at their scale and we're calling that 'slow' is pretty nuts.
Personally I've had good and bad experiences with both, but almost everyone of my friends outside of tech uses Uber exclusively and love it. Can't wait to see how the race to a better self driving experience goes.
Uber's been buying revenue at the cost of margin in at least two ways by shifting rides to Pool (where they can declare the entire ride's cost as revenue, not just their cut), and ramping up Uber Eats (where they take a percentage of the total cost of the food and may actually lose money on the ride). Neither strategy can continue indefinitely.
Uber's new "cheap" pool option forces you to walk up to 5 blocks (!!) and is the same price that it used to be. Lyft's pool option doesn't make you walk and the prices have remained unchanged.
Uber lost all of my (bi-daily) business when they moved to the pool express business model.
Interesting! That’s new to me, and honestly a benefit in places like SF, where dropping someone off or picking someone up at a specific address might involve numerous annoying loops / turns around one way streets, where the passenger could just make everyone else’s life easier and walk a block or two.
This feels like a positive change as long as weather isn’t a huge concern.
Lyft offered this back in 2015 and called it "HotSpots". I thought it was great for the same reasons, but unfortunately they discontinued it after one summer.
Agreed. A lot of one-way streets in Seattle. I had been setting the pickup spot 2 blocks away just for traffic / one-way / highway access, now UberPool automatically selects that spot and I save money. It's been a win for me personally.
An issue with this, from a greedy consumer perspective, is that it allows the app more time to get you to your destination. If I do an uber pool express, the time saved from walking doesn't credit to my day; that time is used to pick up more and further passengers, and introduces further room for driver error.
With old-pool, the driver did have to make more loops to get to me, which lowered the available time to get to my destination (as per the estimated arrival time provided by the app). Due to the tighter timeline, I typically arrived at my destination quicker and with fewer pickups.
I've tried to use pool a number of times in the bay area, all it did was make me waste about 30m each time, at the end of which I used Lyft to get to where I need to get to.
I've ordered pizza to my apartment 100 times and never had an issues, but Uber Eats drivers consistently can't find it. It's a nice service, but literally anything would be better.
Plenty of companies prioritize margin over revenue. Owning a profitable niche is a much more defensible strategy in the long run than relying on investment dollars to grow unprofitably.
Speaking as a infrequent user (1-3 times per month) in Lisbon, Portugal, I can't choose Uber anymore. There are so many other apps providing the same service with cheaper prices (some of them such as Taxify do not have surge pricing) and better drivers. The drivers' quality declined a lot: sometimes they don't speak portuguese or english and if they notice you're drunk they try to scam you (leave you in some random spot far away from destination and gaslight you with "nah mate you put the wrong address, but try again and I'll get you hoe"). I'm not that drunk and I'm not stupid.
Are you sure you're not thinking of legacy minicabs? Uber shows you where you're going, shows you where you are. Your journey is tracked, as is the address you entered.
I left his car, checked the app (my address was correctly entered). Then I hailed a regular taxi and when I got home I filed a complaintto Uber and got refunded.
UberX doesn't operate in Tokyo, if you use Uber there you get a regular taxi with a surcharge on top. (Which may still be worth paying if you're not up to communicating in Japanese with GPS-less regular cabbies, mind you...)
How did the scammy uber drivers not get kicked off the platform for poor ratings? If you take me to an address that isn't the one I entered you can't tell me I entered something wrong.
It was 5 AM or so, many many people at that hour is trying to catch taxis and so on. I think he was preying on really drunk people that can't think properly.
> sometimes they don't speak portuguese or english
Isn't that a good thing? At least you don't have to talk to them... The point of Uber (and similar apps) is that they abstract the human interaction through the app (although in London very annoyingly many drivers still ask me where I'm going, despite me having entered the destination into the app).
I still have plenty of reasons to communicate with the drivers. From giving more specific information about where I'd like to be dropped off, asking if they can make a detour, talking to them when they call me because I'm at a busy pick-up spot like a festival that just let out, saying hi, etc.
Lately in Guadalajara, police have been unfairly cracking down on Uber drivers even thought it's legal (they're in bed with the taxistas), pulling them over for things like not having a baby seat (???). And I've had to communicate with most drivers through the app so we can arrange a more low-key pickup away from the police hotspots.
Besides, I'm human. I don't mind talking to others. Maybe it's because I'm 30 and part of the old guard now, but talking to another human isn't the worst thing in the world.
There is always an "Uber is dead" sentiment floating around when losses come out, but I don't buy it. The long term on-demand transportation opportunity is absolutely massive. Uber has tried to win the land grab and "outlast" everybody with obviously unsustainable subsidies, and maybe that didn't exactly work out. But if the economics don't work for Uber, they won't work for anybody else at scale either. Consumers are benefitting as the industry is subsidized, but it won't last. As with most mature industries, there will eventually be 2-3 players that stay alive, and eventually become profitable. Uber, Lyft, Waymo, Tesla? I don't know, it will be interesting to see. But just because the economics are bad today doesn't mean they always will be. I wouldn't count them out.
The business model appears to be to get established and then use a combination of network effects and monopolistic pricing techniques to be profitable. The problem is though, you need to establish yourself as the dominant player, and jack up prices to start being profitable. That's a fine business strategy. The problem is that Uber has an outside clock ticking. The first player to economically produce a fleet of self-driving cars is likely to undercut Uber on price so violently that Uber's business model goes up in smoke pretty quick.
So either Uber wins the race to autonomous vehicles (which I think most people now regard as unlikely) or they have a hard limit on when their profitability is going to go away. So the valuation needs to reflect something along the lines of "How much money can uber make between now and 2025" and every year that goes by without profit, is a year towards the day that uber's business model goes poof!
> But if the economics don't work for Uber, they won't work for anybody else at scale either.
Uber has no other profit center to prop it up. Everyone else has profitable businesses to lean on (Tesla, Waymo) or corporate backing (Lyft through GM) until they get to the finish line.
If you bet on Uber as an investment, you bet on the wrong horse.
I post Uber news because I'm fascinated by the death spiral. It is literally a dumpster fire of investor money investors continue to pour money into with no hope of ever seeing a return. It's illogical! I mention Uber being terrible when I do because their actions have been legitimately illegal and immoral. I have a strong moral compass, and abhor the abuse of both workers and customers perpetuated by Uber.
Do I feel bad for Uber employees who have worthless options or exercised stock? Unfortunately not. Do I think they'll ever reach any semblance of vehicle autonomy before they exhaust their runway? I think it's overwhelmingly clear that isn't the case.
Their prices are often worse than yellow cabs in NYC. They act like locals won't be able to tell but it's pretty obvious when it's a $10 more ask at a time that isn't even busy and there are yellow cabs everywhere.
I had a yellow cab driver claim just last month that his credit card machine was broken, after a ride from the airport into Manhattan. I told him too bad, plastic is all I got, and wouldn't you know it miraculously the machine worked when he tried it (with a sour face). As a cherry on top he then tried to charge me more than the fixed rate set for the airport fares. So taking a yellow cab in NYC still absolutely sucks in 2018 and you'll get swindled if you're a tourist.
I'm not defending yellow cabs here. There's a reason ride-share has taken so much of their market.
I'm just pointing out how ridiculous Uber is by trying to charge me significantly more than a yellow cab to get somewhere when I can ballpark the cost pretty easily. It's just a very poor longterm business decision.
Only now do I try other services because I am suspicious that Uber is trying to rip me off.
For different locations, yes. But if my wife and I, at the same time and same location try and buy the exact same thing, we are given the same price.
This is a case of Uber using a variety of algorithms to determine just how much they can get out of you. I prefer the old surge pricing model where it was a conscious choice to overpay.
But however clever they may think they are I’m not fooled by their fake market pricing. Only now do I look for cabs and have accounts on competitors when I’m sure Uber is mispricing actual market value.
Been there. And if you pay for a $30 fare with $40 they won't have change to give you and will "keep the tip". I believe that's the last time I took a cab anywhere.
Just tell them to fuck off. When you hand them money tell them how much you want back.
I assume they know I’m from here so I dont see that side but I’ve had them try some shit and you just need to do battle. In the end you’ll always win.
They have change. Their credit card machine works. If they claim neither then give them below fare and walk out. They will suddenly have change and a working credit card machine.
That’s my entire point - I decline it and use another service. I didn’t do this before when they only used surge pricing and were upfront about it. This is, IMO, a very short sighted business practice. And my disuse of Uber is possibly widespread hence the massive growth shrink.
Everyone I know says Via is much better than Pool. I don’t really use either but my wife takes Via to work as it’s only $2.50 more than the Subway and often gets the front seat.
I don’t know if I could though. I have a certain love for getting on the crowded morning subway. It gives you something to legitimately hate anyways.
There are a handful of corridors where you can pretty reliably do it: Market St. and Valencia St. for sure, along with a handful of others. But yeah, doesn't work in many/most parts of the city.
This plus the news that Waymo is starting its autonomous ride-share service next month is a one-two punch for Uber this week. Might be one of the largest unicorns to die in our generation.
You don't get to the size they do and simply die. They'll be acquired and vertically integrated in a way that lets them be competitive on price. You can break even on the ride if you make it up in harvesting data, showing in car advertisements, having sample products placed in cars, and a million other "fremium" style revenue harvesting techniques.
Assuming 300-400mln out of 1B is R&D and we cut it completely, they need to make ~600mln per quarter -- which is, as comparison, in the same ballpark as the quarterly revenue of Twitter.
Yes, but then the "growth story" ends aburptly, and their 120B valuation they aim to get on IPO stop making sense. As the "value stock" their price is probably closer to 12B than 120B.
I honestly think they will eventually license and lease their platform and technology to others and just rake in money (every cab company would pay for this type of access to customers, Uber Eats is an indication other delivery services could likely license it too for a reasonable price). That is where their true value is at.
Being acquired is still a long ways off when they still have this insanely high imaginary valuation.
Really? I didnt know this. Personally I switched to Lyft years ago when I heard about how scummy the company was. (Lyft will have the same problems as Uber with yesterday's Waymo announcement)
> You can break even on the ride if you make it up in harvesting data, showing in car advertisements, having sample products placed in cars
From what I recall, Uber is profitable in New York and San Francisco. Uber failing would probably involve them being bought by a private equity firm and cut back to servicing those cities.
Oh don't you know they want to IPO to cash out on gullible public investors based on hype. With accelerating losses as revenue grows means each dollar of revenue has negative return. More revenue means more negative return.
They only way to win is if they monopolize a segment enough that they can jack up prices to make up for the sustained losses. Other ways this looks like Groupon. The more they sell, the more they lose. It is like some kind of pyramid scheme.
i dono about Groupon. with 'their more they sell more they lose' balance sheet, I thought they would go out of business in 2012 but they are still here, so maybe I was wrong about them?
A few weeks back I booked an Uber after a concert, then the Uber driver called me saying to come to him (he was way out + the GPS location of the taxis seems terribly inaccurate whenever I've used it, so who knows where he really was), we were by the official Uber pickup location. He said he didn't know how to get to where we were... Obviously some bad planning by someone. He said he could try, and not to cancel the trip. Then he cancelled it a few minutes later.
Then Uber connected us to a new Uber driver, we found the car in the official Uber road queue, but there were people already in the car. This was about a min after we were connected with this new driver, we asked if he could cancel as we can't wait for him to drop off his current passengers, but he didn't seem to know how to (or unwilling to). My question is, are Uber drivers just accepting people while they have people in the car, while stuck in concert traffic and obviously won't be done with there current fair for ages, then forcing the new passengers to cancel and get a MUCH higher rate.
Anyway, since we then had to force the cancel, we now had a HUGE uber fare quoted, like 3-4x our last price to try get a new cab. We tried it, but the guy was miles away, so we ended up giving up on Uber and taking public transport way out, then taking an Uber.
In hindsight, probably should have gone with public transport option first. Lesson learnt I guess.
I just assumed, since there was an official Uber tent setup and people with official looking Uber vests on that they'd have a system set up to get people to there Uber's fast... or some system to just link up each person with the first uber car in the queue. Was nothing like that, it was chaos.
I am a pretty loyal Uber user, and probably spend around $400 a month with them.
But... I was stuck out in the cold in the boonies of long island recently, and Uber kept bugging out and not finding rides since I was fairly rural. I downloaded Lyft for the first time and it found me a ride instantly. I'm going to have to use them more often.
In addition to the lease, you also have to add in the cost of insurance and fuel, and potentially parking (depending on where precisely in the region you live). Also, you almost always have to carry (expensive) full coverage for leased vehicles, further increasing the price.
what the fuck is going on when a company can lose over $1 billion a quarter with no profit in sight and still receive further investment? Would they be hugely profitable if not for reinvestment in expansion and R&D?
These investors aren't investing their money, but someone else's money. If Uber folds now, these investors are to blame. But if Uber folds when the great crash (a-la 2001 and 2008), then, well, it's the entire economy - not the individual investor's fault.
So they do whatever is needed to keep Uber with high book value until the big crash. What's $20B of other people's money to maintain your sterling reputation as a smart investor?
Social Capital's Chamath Palihapitiya had an interesting theory of VC overvaluation in his recent letter:
> [VCs] get paid to allocate other people’s (LPs) money, and they are smart
enough to transfer the risk. For example, VCs habitually invest in one another’s companies
during later rounds, bidding up rounds to valuations that allow for generous markups on their
funds' performance. These markups, and the paper returns that they suggest, allow VCs to raise
subsequent, larger funds, and to enjoy the management fees that those funds generate.
How much do you think is being spent on Eats, Freight, Elevate and ATG? If that figure is more than $1 billion a quarter, the answer is yes.
How much does Cruise or Waymo burn per quarter? That might give us an idea of the ATG part. How much does Convoy burn? That might give us the Freight parts. No clue how we might estimate Elevate and Eats.
That said, it's worth looking at how Amazon is doing overseas these days:
It's been a theory of mine for some time that the current pattern of VC investment in unprofitable startups is part of a clever scheme to turn illegal money into legal money - even at a loss.
How can they incur that huge a loss? According to Crunchbase they have 5000-10000 employees. They have a backend to manage. They have limited sales and marketing expense.Where is their money going? R&D or just employee pay?
Right now honestly I don't see much of a difference between Uber and Moviepass when you (realistically) rule them out of winning the self-driving race. They are offering a service for less than it costs but have no way to stop customers from switching if they raise prices. And to boot Moviepass has a better corporate reputation than Uber somehow. I feel like this has been obvious for a year now, but as others said, I guess it has to be too big to fail now?
The only thing that looks like it could ever be profitable is Uber Eats, but there's no way that keeps the company afloat.
Their shit reputation has paved the ground for all the other apps that showed up afterwards. I dont think people appreciate how the ride-share revolution would not have happened without Uber's aggresive brand.
Look at lyft, stuck in markets where uber is already there. Meanwhile, Uber fought legal battles and city governments all around the world: their staff often jailed and persecuted. What brand do you want to have when governments send your employees to jail? Quirky funny, or ruthless?
Not least surprised. In a country like India, these people are now facing infinite competition. Their original strategy of bankrupting their competition by offering deep discounts just isn't working, because in a country like India you kill one set, and give the overall scale of competition/population the next comes like up weeds.
The same problem is being faced by amazon/flipkart/walmart. Everytime you think that you are going to eliminate competition by offering discounts in say two years. Come two years and you see there is a whole new set of competition and you face a new task to burning $3 - $4 billions to the ground without the hope of seeing a dollar worth profit in return.
The fact that customer loyalty is totally absent and largely shifts based on prices isn't helping either.
Drivers have become worse. They used to have clean cars and were of all ethnicity. There also used to be a lot of women drivers. Now it's basically taxi drivers with their mate's cars. Cars are now often dirty, greasy interiors, dirty outside and bad smell.
And as soon as you have a 'usual' route, or you use the app a lot, you get charged more!! It's so disgusting.
I tried to book a trip to the airport for my inlaws using both my account and my wife's account. She rarely uses Uber, and hers showed a 10-15% cheaper rate. Do they think we're stupid? They targetted 'smart' people for using ride sharing as opposed to taxis, and now they try to play us.
Let's not even get started about dark UX patterns. It's hard to see peak rates now, and unless you get a bad gut feeling, you wouldn't know you're currently paying more than a cab rate.
What about that '3 mins away'? They're always 3 mins away for 10 minutes. Unless they fly close to a black hole it's just lies and horrific UX.
The same ride I used to pay $8 for is sometimes $25-32 now. Let's be honest, if anything better came along, I wouldn't look back.
At best now, my Uber rides always seem to be just about 10% cheaper than a cab.
I must be at "max milking rate".
(update: I went from +10 to -1 in 15 mins... I guess I touched a secret society)
> What about that '3 mins away'? They're always 3 mins away for 10 minutes. Unless they fly close to a black hole it's just lies and horrific UX.
This is my personal peeve with Uber that drives me nuts. When Uber first came out, the wait was typically a bit longer, but they were honest and upfront about the wait. I had no problem with that. If the wait was 15 minutes, I might order a beer and enjoy the wait at the bar. Or if I am leaving from home, enjoy my couch as opposed to standing outside my building's lobby.
I feel like they bait you now by always saying a car is 2-3 minutes away. Then that wait turns to 8, which turns into 8 minutes where the car just sits at an intersection, then it starts counting down. It infuriates me, but hearing about the rest of their business practices, I guess its not surprising. I have adjusted my behavior by not cutting whatever I was doing short until they are a block or two away, but it just makes for such a worse experience- my original pitch to my friends when Uber was new was "now you can have a beer inside the bar and let the cab come to you instead of going outside and fighting for a cab." Its definitely better, but I now feel like I am fighting with the app/algorithm...
I don't know if I'd call it disgusting, price discrimination is a well established business practice, and your comment suggests that you continue to use Uber's service despite those practices — validating the discriminatory pricing they're giving you.
It is your prerogative as a consumer to check multiple car hailing apps and pick the one that suits you best.
I'd sooner just catch a cab than have to open up multiple different apps and compare prices all the time. I always know exactly what I'm paying with a cab, and it's no hassle.
Thanks for the ancedata, my personal ancedata for many years of living in NYC is:
Cabs:
* Cars regulated by state.
* Usually cheaper than Uber rides (in my experience always).
* Know the city like the back of their hand.
* Can file a complaint directly with the state or cab company.
* Accountable through a taxi license.
* Won't defraud you with bogus cleaning fees.
Uber:
* Been in two minor car accidents due to driver switching between Waze and GMaps to find the route or just constantly fiddling with their phone.
* Had an Uber driver show up in a car that looked nearly totaled. Passenger side door was nonfunctional due to damage.
* Poorly maintained cars operated around the clock by operators than get virtually no sleep due to an unlivable wage.
* Had a driver travel at high speeds in poor conditions while talking about how they only get a couple of hours a sleep a night and manipulating their phone.
* Many drivers clearly living in their car, undergarments and clothes on front passenger seat.
* Uncomfortably hit on my girlfriend 100% of the time if she is alone.
* Driver complaints often ignored / go into the corporate void.
For all the issues you had with Uber or Lyft. You can contact them and they'll refund you your ride. They've refunded my ride every time something bad has happened.
Cab driver hits on your girlfriend? Good luck doing anything about it.
Same situation happens in a Lyft or Uber? You get your money back and the driver's rating gets lowered or they get kicked off the platform and you get unmatched permanently from that driver in the marketplace.
Cab driver takes a selfish route? Good luck proving it.
Uber driver takes a bad route? It's logged, and easily reportable. You'll get your money back.
Uber/Lyft drivers also commonly have chargers, water bottles, and other amenities and are generally accommodating because they know their rating matters. Cab drivers don't care at all.
I've even had cab dispatchers promise a cab will be at my house at X time, and I've had several drivers just not show up with no notice, no warning, nothing. Uber driver cancels? I know immediately.
As a customer, it's a far superior experience in nearly every way - even in cases when things go wrong. I'll pay more every time to take Uber/Lyft over a Cab, and so will my 20s/30s friend group - we'll do it happily because the world is changing and Uber/Lyft are more in line with what we expect from a car service in 2018.
Not only that - it's a similar experience I can get in LA as in NYC as in SF as in my small hometown. They all have Uber/Lyft and I can call the services from any curb at any time right through my smartphone and it works reliably with similar systems of accountability and trip reporting. It makes business travel and expensing dead easy.
Funny, I live in Chicago, so maybe things are different here, but I view cabs as nearly a luxury now. The rates are similar to uber/lyft, still slightly higher, but not much.
The service is very different though:
1. The driver often knows the best way to get to my place and all I have to do is give my address.
2. The driver knows how to drive in the city.
3. I'm rarely if ever forced into a conversation I don't want to have.
The one time I remember that I didn't tip a cab, he swore at me, wadded up the receipt and threw it at me. This made my expense report somewhat more difficult.
Honestly what do you expect, them to keep losing money on every ride? The pricing has been a lie to kill off the competition, but they can't keep it up forever.
Same for me. A heavy user of Uber. Lyft has always been more expensive for me in the past, but I guess they categorize me as "captive user". Lyft has been cheaper for me of late, so Uber lost me as a customer. At least for now.
You're just seeing why metered taxi rates came to be a thing in the first place. Rather than individual drivers it's the platform getting creative about distance and price.
> And as soon as you have a 'usual' route, or you use the app a lot, you get charged more!! It's so disgusting.
> I tried to book a trip to the airport for my inlaws using both my account and my wife's account. She rarely uses Uber, and hers showed a 10-15% cheaper rate. Do they think we're stupid? They targetted 'smart' people for using ride sharing as opposed to taxis, and now they try to play us.
> Let's not even get started about dark UX patterns. It's hard to see peak rates now, and unless you get a bad gut feeling, you wouldn't know you're currently paying more than a cab rate.
> ...
> The same ride I used to pay $8 for is sometimes $25-32 now. Let's be honest, if anything better came along, I wouldn't look back.
The world now is rediscovering the valid motivations for the old taxicab regulations that so many were claiming were holding "innovation" back.
Uber's prices were so low mainly because they were using VC money to try bankrupt traditional taxi companies. Once the subsidies run out, Uber will probably at least as expensive as traditional cabs, if not more so, but with consumer-hostile pricing tricks that were once illegal.
I hate to say I called it but... I called this years ago. Earlier in the decade, even on HN, people were raving about how much better Uber was than taxis because “the cars are so clean!”, and I kept saying, “You know this is temporary, right? And that Uber is only better in this regard because the drivers and cars are new?”
Ride-hailing takes an incredible toll on cars, and with Uber pushing more costs into drivers that might otherwise be borne by the taxi company, there was no way the original standards of cleanliness would last forever. It all regresses eventually to “minimum amount of maintenance that people will still accept” and so Uber and taxis will be basically indistinguishable given a few more years. Hired cars are a commodity, after all, and this is what always happens to commodities.
So long as I don't ever have to deal with a cabbie lying to me that his credit card machine doesn't work or they won't drive a short distance I will happily continue using the apps, even if the vehicles have gotten worse (most of my rides lately have been Minivans obviously bought to cab in).
That still gives me a much better experience than dealing with their bullshit.
Cabbie drivers lying about their credit card machine is a moot point if your jurisdiction has a decent regulatory body. In DC if they pull that shit, I just get out with out paying as they're not abiding by the law and the dept of for hire vehicles will have my back.
Last time I had this happen (probably happened 50+ times in my life) it was in Miami and the guy didn't tell me till he got me to the mall, maybe a 5-10 min drive. I told him if he expected cash only he should've told me when I got in at the hotel and not after I pulled out my card. I hopped out and the guy left his car parked in the valet and started following and shouting at me that I need to pay him for his service through the mall.
No idea how strict Miami is on this stuff but I didn't really have time to dig into regulations and make phone calls 2 hours before a wedding while I've got some asshole shouting at me and being aggressive. I remember joking to myself "great, my phones dead so I can't Lyft, bet I'll have a great cab experience."
Right. But, people like me hate dealing with confrontation and govt offices. I would just pay with cash and go to a competing service next time (Uber, Lyft, mass transit.) If only there were startup mass transit providers in cities.
Just out of curiosity, does DC limit the number of cab drivers?
...and some of the current "App X is better" is because App X isn't as far along as Uber. They likely started later, and are still subsidizing drivers more.
At some point, they'll all wean drivers out of subsidies, and cheap fares will see cheap cars on average.
Yes, it seems routine and unremarkable at this point to note that Uber continues to have a frightening contempt for its users and that this has not changed in a meaningful way after the CEO swap.
One of the things I am noticing, at least in India, is that there are now lesser number of rides available at any given point in time. So, either the ridesharing demand has risen to match the supply or that the supply is dwindling. I think it is the former. But on routinely talking to driver they think it's the latter. Less and less people are now getting into the ridesharing game.
So, it seems drivers might be wary of driving for ridehsaring companies. What kind of knock-on effect will this have on Uber's profitability.
Uber’s sales are dramatically slowing even as the ride-hailing company is spending more to fuel global growth, particularly in its food delivery business. Revenue growth of 38 percent in the third quarter was almost half of what the growth rate was six months earlier, when the company was negotiating a $9.3 billion investment led by SoftBank Group Corp.
It's a strange world we live in when people speak poorly of 38% revenue growth. To me, that seems like a staggeringly huge growth rate. I looked up the numbers independently to double check, and yep.
63% revenue growth between Q2'17/Q2'18, 38% between Q3'17/Q3'18.
If my own 9 year old company was growing 38% YOY I think I'd be very very happy.
"Highly valued companies typically grow quickly or generate big profits -- and great ones do both. In the fourth quarter of 2005, Amazon.com Inc. had about the same revenue as Uber’s today -- just under $3 billion, not adjusted for inflation. Yet, Amazon earned $199 million in profit and was worth about a fourth of Uber’s $76 billion valuation."
I think this graph neatly summarizes the concern at this point. There are few signs that the business can live up to its existing hefty valuation, not-to-mention the even-loftier IPO expectations.
Amazon was also famously unprofitable as a public company for a long, long time. But they still had revenue growth rates worth investing in and potentially more defensible businesses.
I do wonder if the ride-sharing business will wind up like the airlines business: valuable, booming but very, very tough to consistently make large profits.
> I do wonder if the ride-sharing business will wind up like the airlines business: valuable, booming but very, very tough to consistently make large profits.
Rather, how the airline business used to be, before it consolidated down enough (in the US). Now it's a goldmine of consistent profit compared to what it used to be.
Delta - the world's most profitable airline - generated $24 billion in operating income over the prior four fiscal years; $3.3b in the last two quarters. Not impressive compared to certain tech giants, however still excellent operating profitability given the history of airlines. The major US airlines are of course domestic focused, so the corporate tax cut took them all from ~35-40% rates down to closer to 20%, further bolstering their bonanza.
It's why Warren Buffett bought ~10% of all of them (Berkshire owns 9.2% of Delta, 9.7% of American, 9.8% of Southwest, 9.8% of United). He perceived that the market had permanently shifted due to consolidation. The airlines have become more like the modern railroads, going from brutal competition to stable oligopoly and consistent profit machines.
I may be totally wrong, but I think the point is that just about any company can grow 38% for a long time if you throw enough money at it. So far, lots of people have thrown lots of money at Uber, and some days it looks like they're not going to get profitable before they burn their runway.
Exactly. If 38% is bad then I would like to know what Uber would need.
On the other hand, they are operating at a loss so increasing revenue just means they spend more money paying costumers to ride with them or eat with them. Only founding would limit the revenue growth when you are giving away stuff.
Part of that is probably that the uber apps and website are so ridiculously bare bones that I can’t imagine a company burning 1B cash per 3 months is behind them.
Anecdotally, among my friends I also see Lyft becoming the default, and sometimes price-checking with Uber. If Waymo or whoever came out tomorrow with a cheaper/safer driverless car, I'd just as likely drop Lyft in a heartbeat.