Dara foolishly thinks losing money in the short term will return long term values. He wants to become a low operating margin, high volume business - like Amazon. Uber is not a low cost product because of OH leverage, but only bc they heavily subsidize their fares - like PanAm. Amazon has a cash cow bankrolling their low margin business, Uber does not. if Uber doesn’t put up a positive cash flow cow in the next 3 years, Uber will be forced to largely scale down their operations and make it profitable hence most of you in Sf will be laid off in favor for cheaper employees else where. Your RSUs will be worth 20-45% of the value today. Run, run fast, run far, you don’t want to be a part of this when it implodes.
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- The other thing that is going to really hurt Uber’s profitability moving forward is the cost of entry for competition is insanely low so the second Uber starts making serious money they are guaranteed to find themselves in a race to the bottom against new comers.
- Yeah, Uber's core business has network effects but pretty low switching costs for both marketplace participant sides. There is no dopamine feedback reinforcement loop like in our favorite social media plays. And minimal economies of scale once you have sufficent marketplace density on both sides in a given geolocale. Maybe I am missing something but it looks like they are desperate to find a cash cow business to strap onto their scale.
- Yep, it looks the same to me as well. I think their best bet is to somehow leverage their rather global network. Similar to how amazons biggest asset in the product space is there physical FCs and distribution network, if Uber could leverage their driver network on a basis that isn’t 1:1 consumer:driver I think you start to build something that isn’t easily replicated. I just have no idea what that service would be that hasn’t already been perfected by others through other means
- Turned down a very high level offer from Lyft last year because of these business model concerns and worries about how that will impact IPOs for both companies. Still think it was the right call but time will tell. The people in leadership there did not inspire confidence. If they do well it is more out of luck than intentional strategy. Uber is positioned better but is spending more to find the real business model. Don't know what Lyft is doing.
- Yea right now I’m taking Uber over Lyft given the decision; Uber has fixed (or is actively fixing) their leadership issues and seem to realize long term they need to come up with a better more sustainable business model. Lyft seemed to just be capitalizing on Uber’s distinction which has cleared up. I’m not seeing any innovation out of Lyft at all let alone a solution to the business model issues
- New / Design susiedoCompanies like DoorDash are now outselling Uber Eats though, so even that part of the business is now under threat.
- Software is a winner takes all situation. Uber is going to build a huge ecosystem around transportation that nobody will be able to beat. People should think beyond near term tactical issues.
- On the other hand, UberEats has become one of the fastest growing delivery platforms in the world. They have a delivery network in every country (thanks to Uber cab). Granted UE is subsidized by Uber cab, which doesn’t make sense since Uber cab is a shitty margin business.
- Facebook nosoupforuFwiw Over last 4-5 months ubereats has become so expensive that pretty much stopped using it.
- Intel trd_proI love UE and have used it 100 times, but man the raised fees the last couple months have been brutal. Sometimes 10-12$ on certain restaurants or areas of town. Sucks. They are either trying to gouge or losing drivers and have to pay more to get drivers into certain metro areas.
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- Amazon hsysysvsbhIsn't Uber churn net negative? That means that each new customer is worth something over time and possibly infinite source of revenues and profits. Has that changed? Do you have any data to back it up?
- Uber needs to start increasing costs as some point; whether they succeed for fail is almost entirely hinged on whether or not consumers are okay with the increase which I would estimate needs to near 50% if the govt continues down the path of forcing them to actually employ their drivers and provide benefits