RIDEGURU
Interesting read. How long can Uber survive hemorrhaging money?
Uber’s investors have been buying your satisfaction in the form of massive subsidies of services. What has made Uber a good deal for users makes it a lousy investment proposition.
Comparisons of Uber to other storied tech wunderkinder show Uber is not on the same trajectory. No ultimately successful major technology company has been as deeply unprofitable for anywhere remotely as long as Uber has been. After nine years, Uber isn’t within hailing distance of making money and continues to bleed more red ink than any start-up in history.
http://nymag.com/intelligencer/2018/12/will-uber-survive-the-next-decade.html
Comments
So don't buy the IPO then? It's ok, I wasn't going to anyways 😁
This guy is savage... he has some good points, but I think he's also wrong in some ways. He says "having more Uber users does not improve the service", but that's not true. Why do peop…
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This guy is savage... he has some good points, but I think he's also wrong in some ways. He says "having more Uber users does not improve the service", but that's not true. Why do people use Uber over Lyft? Because it's more available, because more people use it, therefore more drivers driver for it. Simple as that. There is definitely a critical mass element to rideshare services.
"The app is not technically daunting". I'm gonna call BS on that too. He's comparing it to Facebook and Amazon. If Uber is not technically daunting, then neither are they. The truth is, all three of these services are conceptually simple, but have the same massive challenge: scale. They're not sending people to Mars, but making a rideshare work (or a social network for that matter) on a scale of millions of users per day -- in real time -- is a formidable technical challenge. Uber spends a lot on R+D.
But he's right when he says it doesn't create a competitive barrier. They can only compete on price, and there isn't much room left there.
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Another thing.
I don't buy that. Uber has eliminated the traditional structure of a taxi company -- dispatchers, leased cars, etc. Not to mention regulation!! He seems to want to imply that Uber is not an innovation, and I can't agree with that.
I think the price argument is really the crux of this article. Uber is engaged in a race to the bottom with Lyft and other competitors, and it might win -- but if it were to then raise prices, new competitors would simply come in and undercut them. While you are right that the technical challenges are not insignificant, there is nothing novel about scaling services. Yes it takes a talented technical team but there are plenty of talented engineers out there -- for the right price.
If Uber were to raise their pricing, the others would follow because their drivers will instantly support the company that pays the best rates. If Uber starts taking a larger share of the cut (which they have very sneakily through their "up front pricing" scheme, the other companies will follow (and they have).
IMO the long term solution will be to increase the rates, probably double where they are now which will double income and profits to everyone involved. Second, reduce the surge. Seriously folks charing $40-$50 dollars during a ride that is normally $10 is obscene. S…
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If Uber were to raise their pricing, the others would follow because their drivers will instantly support the company that pays the best rates. If Uber starts taking a larger share of the cut (which they have very sneakily through their "up front pricing" scheme, the other companies will follow (and they have).
IMO the long term solution will be to increase the rates, probably double where they are now which will double income and profits to everyone involved. Second, reduce the surge. Seriously folks charing $40-$50 dollars during a ride that is normally $10 is obscene. Surge should be capped at 2X but on the NEW rates that would now be doubled.
This will drastically reduce the driver church which hugely lowers operating costs, and brings rates a little closer to cab rates. Will riders ride less? Possibly, BUT, the trips you DO have will be more profitable. All businesses are there to make a profit. Thus far Uber has yet to prove they are capable of doing this.
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They are locked in a never ending battle to the bottom with Lyft, and Didi and Ola are on the horizon as well. It's hard to see how they become profitable any time soon. It's really just a matter of who can hang on the longest, but with investors continuing to shovel money into the black holes of these companies, who knows. Could be a long while.
How can Uber not be making money? Where is all the money going? They take plenty from each ride from thousands and thousands of drivers... They sure aren't giving it all to tech support!
They are building their people-killing driving robots and Uber Airplanes.
One of the great mysteries... They're not paying for gas, or mileage, or maintenance on vehicles. They take a healthy cut of every ride... where does it go?
"The transportation company appears to have hit the limit of how much it can squeeze drivers, since churn has increased."
...Yay for us? I guess?
Yeah I don't put a lot of stock in this article from a segment called the "Intelligencer". Uber isn't going anywhere. They will eventually turn a profit, once the industry consolidates a bit, which I expect to happen in the next few years. Then they will be riding the gravy train.