Offloading risk and capital costs to ordinary members of the public that already owned underutilized assets. Love them or hate them, it was pretty genius.
Lyft (zimride) started the first carpool site. Sidecar started the first rideshare app. Uber used excess black cars capacity to start. I would say sidecar and lyft were pretty genius but Uber won the game.
How is that winning? Is capitalism dead and profits don't count anymore? Then what are the social benefits of company known for sabotaging unions and fighting against labor protection laws?
The original idea, to share car rides, was really good and worth investment. Now it is just a big bubble waiting to explode.
I don't know if it's a bubble, because nothing depends on the valuation of Airbnb / Uber. It's more like a Ponzi Scheme where investors put money in to establish value, then make the company well known enough to pawn it off to public shareholders before it tanks.
This is a big assumption. There are levels where the economics don't work out for drivers and riders are willing to pay - it remains to be seen whether are not Uber is profitable at these levels.
Sure, we can point to exceptions after the fact. That doesn't mean every company is going to follow those trajectories. In other words, criticism is still valid.
By the same argument you can predict that everything will fail and be right most of the time. That sort of blanket dismissal is intellectually lazy and therefore uninteresting. Let's try to do better than that here.
Neither of those are based on a third party resource of underpaid and upset drivers/renters/city councils.
I have very reserved feelings about both Uber and Airbnb. Any company that makes it their secondary mission to get into fights with as many city governments as possible doesn't have good odds.
Uber needs to hit its timeline esp. with self-driving car very fast, they are for now branching into eats etc to buy some time. I used to think Uber is a slamdunk, but their humbling in China and India, showed that they need to protect Fortress America very bad and get Self-driving cars on the roads by turn of the decade.
I don't see how self-driving cars will be legal, let alone cost-effective for Uber by 2020. A cycle in the auto industry is 5-7 years and no amount of pixie dust will change that :)
> get Self-driving cars on the roads by turn of the decade.
It is not the same to create an app than to purchase and maintain a huge number of cars. That is a completely different business model.
Isn't the article about how "sharing economy" is so good. Then why Uber wants to get rid of it so badly?
AirBnB is more focused in its core business. The equivalent for them will be to create Hotels around the world. Hotel industry is a good one, but AirBnb doesn't has the business experience to work on that. And that's why they experiment on that in a less visible more realistic way (http://www.businessinsider.com/airbnb-builds-hotel-japan-com...).
Also I see no reason to give Uber a high chance of being the first to develop level 4 autonomous cars. Google, Tesla and Volvo all seem ahead. And then why should they give the market to Uber rather than run their own taxis? Tesla are already talking about competing.
CapEx. Amazon eschewed profits, instead investing ungodly amounts in building out the infrastructure for a distribution network that no other company can compete with.
Walmart was (and is) tooled up to distribute to its stores. Amazon tooled up to distribute to your house.
That's a competitive advantage, a moat. It's defensible and 20 years later paying huge dividends.
What is Uber investing in that 20 years from now will prove defensible? They're plowing cash in to subsidizing rides and investing in self-driving cars.
Today, Uber has no moat. There's little friction for a driver or a rider to switch to Lyft or another app. Maybe self-driving pays off. Assuming they get the tech working, what's the business model? There is a lot that is unknown. Economic success the likes that Amazon is seeing today is if far from a foregone conclusion for Uber.
Both of those (Amazon, Facebook), though, built things that weren't a commodity in the end, and highly leveraged a network effect. Such that the barrier to entry for a competitor is just way too high.
There's nothing about Uber's app or self-driving car approach that suggests an insurmountable barrier to entry. Their global presence is a barrier, but there are players who wouldn't be starting at zero if they wanted to catch up. Either auto manufacturers, global tech firms (Google), or some partnership between the two.
The departure of both Uber and Lyft in Austin, TX seemed to be filled by others pretty quickly. I don't sense any driver loyalty...I believe a large portion of them already drive (at the same time) for both Uber and Lyft, some also for taxi services.
Facebook, on the other hand, if I pack up and go to say, Google+...none of my friends and family are there.
Amazon could for over a decade have flipped a switch and started churning out dividends. They made profits and reinvested them into growth.
Uber has been making a loss on each ride and trying to make it up in volume. It's a long-shot bet on self driving cars working out in the next 3 years.
All of that was everyday reality for people outside of the first world countries long before internet was a thing.
1. Flats turned into mini hotels - existed since first highrise appartments started appearing in 3rd world countries
2. Carpooling - old as the world. In smaller Russian cities, people absolutely don't mind driving strangers around for a symbolic sum. In "good ol times" people used to do it for free.
3. Food devilery - phone order pizzas anyone? I remember first internet groceries started at around 1998, and they catered to really rich demographic living in far off suburbs ($30 just for the delivery fee, a daily income of a well off family back in 1998), but later internet only ones started to be displaced by existing grocery chains
4. "Microcommerce" - I don't know why Americans classify just selling anything with an app as such and why it is anything special
5. Regional same day delivery couriers - same story
6. Alibaba thing - classifieds in a newspaper?
All what Americans call the "sharing economy" or "economy 2.0" was what 80% of small business was about outside of the "developed countries"
What kind of social fabric do these countries have? What's the crime rate? The US being a very diverse and relatively high crime country makes such acts difficult.
> What kind of social fabric do these countries have?
In Germany it is quite common for people to carpool between cities with strangers. We even have websites for pairing drivers with passengers (mitfahrgelegenheit). These have existed since long before Uber.
Say you're driving between SFO and LAX to catch a flight. You put your place/time of departure on the website, and other people can request to ride with you.
Usually there is a small cost to the passengers to split the cost of fuel.
Passengers can then rate the driver/car on things like punctuality, comfort, personality, etc.
that, or - they found a heavily regulated market, ignored all the laws, invented a business model that didn't squarely fall into legal precedent and that the people in charge of enforcing the law (city officials) aren't very keen to enforce it.
We applaud them only because we believe (and probably rightly so) that those regulations are there only to prevent competition for entrenched interests.
It's not sharing economy if the majority of the people offering the service do it full-time.
> The FTC claimed that Uber was advertising an annual median income of over $90,000 per year for uberX drivers in New York and more than $74,000 for uberX drivers in San Francisco. But, as the commission found out, less than 10 percent of all drivers in those cities actually make that much. The complaint also alleges that Uber was inflating the hourly earnings on job boards like Craigslist.
> New drivers who financed a new car through Uber's Vehicle Solutions Program found out the company's claims were too good to be true as well. Although Uber told new drivers they would be able to lease a new car for around $119 per week, the actual lease rates never dipped below $200 from late 2013 to April 2015. And, despite it's promise of delivering "the best financing options available," it turns out that Uber's rates were actually worse than consumers with similar credit scores could have gotten elsewhere. Adding insult to overpriced injury, Uber tacked on mileage limits to lease agreements that were advertised with unlimited mileage.
I like “taking an Uber" but if they’re screwing people over by false advetising I’d consider boycotting them. Been in several Ubers where the driver had just bought a high end-ish car specifically to be an Uber driver. It sounded risky to me and I was sad the driver was taking such a big chance although assumed it’s possible his calculations showed it would work out. Now thought it’s apparent that Uber lied about how much he’d make, lied about how much the car would cost, and lied about the lease terms.
Continuing to support Uber seems problematic knowing I’d be helping screw people into more debt and poverty.
Oh yea, and they're a YC company
Oh and don't get me started on AirBnb. I've documented all kinds of issues on my blog. The latest is they removed a negative review. Log in and it says I never submitted it. Not only did it used to be on their site I still have the confirmation email for it.
They're a bunch of scumbags too. Well, senior manatgement definitely - and that probably trickles down to their systems and who they hire but I'll reserve judgement.
I always think about the time when Facebook and Google were bleeding money. They were thought of as terrible businesses.
When you have a shit ton of eye balls, you have a money printing machine: "Ads". Just plaster them in the face of users. Now with machine learning and average user expecting little privacy, you can really target the ads and customize it per person.
It's amazing Wikipedia hasn't gone in the path of ads. I'm grateful for that.
If uber's self driving car gizmo works out, which there is a good chance. They can make zero profit on rides and make them $1/10 mile trip. Make the cream off in car entertainment and services.
They can have average person buy the car and rent it out to Uber network. Airbnb already loans money to home owners to renovate their houses.
If a large user base were the only metric, then shouldn't Twitter have more robust revenue numbers? (Though I think I can see a world where Uber has more relevant tracking data than Twitter)
Also, I hate flying airlines where they'll keto allowing you ads on their in flight screen (I think I had one flight where there was no entertainment and just ads). I'd happily rider on a competitor with higher prices that didn't thrust a bright ad laden display on me during the trip.
> When you have a shit ton of eye balls, you have a money printing machine:
> They can make zero profit on rides and make them $1/10 mile trip
This only works when your incremental costs are next to nothing. The IRS lets you deduct about 40 cents a mile for business expenses when you drive for your job.
That's the baseline for incremental costs for servicing passengers. Do you think you can sell 4 dollars worth of ads during a 10 mile trip, no matter how much data you have on the consumer? Plus the database on customer demographics and buying preferences is very jealously guarded by both FB and Google.
Not to mention the huge amounts of capital tied up in cars, self-driving equipment, and a group of techs that are maintaining and repairing all these cars. That adds even more incremental costs, servicing all the capital.
We're talking about having ads that are a couple of orders of magnitude more profitable than Google and Facebook ads are right now.
Biggest driving cost for driving is humans. Once you have self driving cars, a $50k electric car with 20 year span and a million mile life costs about 5c a mile. Even with servicing and maintenance costs, you still make quite a bit of money on $1/mile.
in defense of Uber, here in Argentina ( where the taxi industry is run by the "mob" ) Uber's ability to instantly provide a safe and steady stream of income to thousands on the verge of middle-class collapse has been a godsend.
in defense of Uber, here in Argentina ( where the taxi industry is run by the "mob" ) Uber's ability to instantly provide a safe and steady stream of income to thousands on the verge of middle-class collapse has been a godsend.
I always wondered what's exactly the value that AirBnB is providing? Why can't a website with reviews by guests and hosts (with money handling) be run at a much smaller cost?
Basically trust and brand, as they said in the article. They had to come up with both supply and demand at the same time. You wouldn't use a service with limited supply, and as a renter, you wouldn't list your property on a service without any people willing to rent your spare room/apartment.
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[ 4.3 ms ] story [ 392 ms ] threadspamming craigslist users to bootstrap your userbase?
using venture capital to undercut existing businesses and get the public on your side, allowing you to dominate local politics?
How is that winning? Is capitalism dead and profits don't count anymore? Then what are the social benefits of company known for sabotaging unions and fighting against labor protection laws?
The original idea, to share car rides, was really good and worth investment. Now it is just a big bubble waiting to explode.
And for 8 years about Facebook http://www.theinquirer.net/inquirer/news/2219503/facebook-gr...
I wish I'd bought stock in both while they were still losing money.
Yes, exactly. It's worth reminding people that for every success there are many unheard of failures.
I find it lazy when people claim "They said that about <example>", as if that's actually a counterpoint (it isn't).
I have very reserved feelings about both Uber and Airbnb. Any company that makes it their secondary mission to get into fights with as many city governments as possible doesn't have good odds.
I am more long on AirBnB than Uber.
It is not the same to create an app than to purchase and maintain a huge number of cars. That is a completely different business model.
Isn't the article about how "sharing economy" is so good. Then why Uber wants to get rid of it so badly?
AirBnB is more focused in its core business. The equivalent for them will be to create Hotels around the world. Hotel industry is a good one, but AirBnb doesn't has the business experience to work on that. And that's why they experiment on that in a less visible more realistic way (http://www.businessinsider.com/airbnb-builds-hotel-japan-com...).
("Tesla says it will roll out Uber-style ride-hailing program "http://europe.autonews.com/article/20161020/COPY/310209846/t...
"No, you can't use your self-driving Tesla to make money through Uber" http://mashable.com/2016/10/20/tesla-ride-sharing-ban/#6Mklf... )
Walmart was (and is) tooled up to distribute to its stores. Amazon tooled up to distribute to your house.
That's a competitive advantage, a moat. It's defensible and 20 years later paying huge dividends.
What is Uber investing in that 20 years from now will prove defensible? They're plowing cash in to subsidizing rides and investing in self-driving cars.
Today, Uber has no moat. There's little friction for a driver or a rider to switch to Lyft or another app. Maybe self-driving pays off. Assuming they get the tech working, what's the business model? There is a lot that is unknown. Economic success the likes that Amazon is seeing today is if far from a foregone conclusion for Uber.
There's nothing about Uber's app or self-driving car approach that suggests an insurmountable barrier to entry. Their global presence is a barrier, but there are players who wouldn't be starting at zero if they wanted to catch up. Either auto manufacturers, global tech firms (Google), or some partnership between the two.
Facebook, on the other hand, if I pack up and go to say, Google+...none of my friends and family are there.
Uber has been making a loss on each ride and trying to make it up in volume. It's a long-shot bet on self driving cars working out in the next 3 years.
Depends on your point of view, right?
Money flows are like a rainbow with the pot of golden truth at the end of it: always "follow the money".
1. Flats turned into mini hotels - existed since first highrise appartments started appearing in 3rd world countries
2. Carpooling - old as the world. In smaller Russian cities, people absolutely don't mind driving strangers around for a symbolic sum. In "good ol times" people used to do it for free.
3. Food devilery - phone order pizzas anyone? I remember first internet groceries started at around 1998, and they catered to really rich demographic living in far off suburbs ($30 just for the delivery fee, a daily income of a well off family back in 1998), but later internet only ones started to be displaced by existing grocery chains
4. "Microcommerce" - I don't know why Americans classify just selling anything with an app as such and why it is anything special
5. Regional same day delivery couriers - same story
6. Alibaba thing - classifieds in a newspaper?
All what Americans call the "sharing economy" or "economy 2.0" was what 80% of small business was about outside of the "developed countries"
An existent one! In Alaska in the 90's, I also used to get rides from random strangers. In fact, I used to commute to work this way!
In Germany it is quite common for people to carpool between cities with strangers. We even have websites for pairing drivers with passengers (mitfahrgelegenheit). These have existed since long before Uber.
Say you're driving between SFO and LAX to catch a flight. You put your place/time of departure on the website, and other people can request to ride with you.
Usually there is a small cost to the passengers to split the cost of fuel.
Passengers can then rate the driver/car on things like punctuality, comfort, personality, etc.
$30/day is $10,950 per year, which in 1998 was only $100 more than the poverty line for a household of 2.[1]
I agree it's a lot of money for a delivery fee, but it's just not true that that's the daily income of a well-off family in 1998.
[1] https://aspe.hhs.gov/1998-hhs-poverty-guidelines
Exactly.
The game never ends. No one wins. They can only be "winning".
Priceline Group, owner of Booking.com, is currently valued at $79 billion.
We applaud them only because we believe (and probably rightly so) that those regulations are there only to prevent competition for entrenched interests.
It's not sharing economy if the majority of the people offering the service do it full-time.
> The FTC claimed that Uber was advertising an annual median income of over $90,000 per year for uberX drivers in New York and more than $74,000 for uberX drivers in San Francisco. But, as the commission found out, less than 10 percent of all drivers in those cities actually make that much. The complaint also alleges that Uber was inflating the hourly earnings on job boards like Craigslist.
> New drivers who financed a new car through Uber's Vehicle Solutions Program found out the company's claims were too good to be true as well. Although Uber told new drivers they would be able to lease a new car for around $119 per week, the actual lease rates never dipped below $200 from late 2013 to April 2015. And, despite it's promise of delivering "the best financing options available," it turns out that Uber's rates were actually worse than consumers with similar credit scores could have gotten elsewhere. Adding insult to overpriced injury, Uber tacked on mileage limits to lease agreements that were advertised with unlimited mileage.
I like “taking an Uber" but if they’re screwing people over by false advetising I’d consider boycotting them. Been in several Ubers where the driver had just bought a high end-ish car specifically to be an Uber driver. It sounded risky to me and I was sad the driver was taking such a big chance although assumed it’s possible his calculations showed it would work out. Now thought it’s apparent that Uber lied about how much he’d make, lied about how much the car would cost, and lied about the lease terms.
Continuing to support Uber seems problematic knowing I’d be helping screw people into more debt and poverty.
Oh yea, and they're a YC company
Oh and don't get me started on AirBnb. I've documented all kinds of issues on my blog. The latest is they removed a negative review. Log in and it says I never submitted it. Not only did it used to be on their site I still have the confirmation email for it.
No, they're not.
I've used them also. It's when things go really wrong when you'll understand the issues with them.
This might not be the majority experience, and I accept that, but I wouldn't touch them with a barge-pole based on my experience.
When you have a shit ton of eye balls, you have a money printing machine: "Ads". Just plaster them in the face of users. Now with machine learning and average user expecting little privacy, you can really target the ads and customize it per person.
It's amazing Wikipedia hasn't gone in the path of ads. I'm grateful for that.
If uber's self driving car gizmo works out, which there is a good chance. They can make zero profit on rides and make them $1/10 mile trip. Make the cream off in car entertainment and services.
They can have average person buy the car and rent it out to Uber network. Airbnb already loans money to home owners to renovate their houses.
Also, I hate flying airlines where they'll keto allowing you ads on their in flight screen (I think I had one flight where there was no entertainment and just ads). I'd happily rider on a competitor with higher prices that didn't thrust a bright ad laden display on me during the trip.
> They can make zero profit on rides and make them $1/10 mile trip
This only works when your incremental costs are next to nothing. The IRS lets you deduct about 40 cents a mile for business expenses when you drive for your job.
That's the baseline for incremental costs for servicing passengers. Do you think you can sell 4 dollars worth of ads during a 10 mile trip, no matter how much data you have on the consumer? Plus the database on customer demographics and buying preferences is very jealously guarded by both FB and Google.
Not to mention the huge amounts of capital tied up in cars, self-driving equipment, and a group of techs that are maintaining and repairing all these cars. That adds even more incremental costs, servicing all the capital.
We're talking about having ads that are a couple of orders of magnitude more profitable than Google and Facebook ads are right now.