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Comment by Animats | Hacker News Reader

I've been saying that for a while. Uber is losing $800 million per quarter. They run out of cash in 2018 unless they can find a bigger sucker than Saudi Arabia's sovereign wealth fund. Uber is cheap only because investor capital subsidizes every ride. (And because they keep squeezing the drivers harder.)

IPO? They'd have to publish audited financial statements with GAAP numbers, which are almost certain to be worse than the leaked numbers. They'd take a big haircut on valuation, which the existing investors would not like. (Who has voting rights in Uber, anyway?)

Uber will probably run out of money and be picked up cheaply by some buyer of distressed companies, which will raise rates and cut it back to a profitable operation.

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Lyft and Uber have wasted so much time and money. This is the problem with VC money focused on growth. There's no pressure to build anything sustainable, no pressure to build competitive advantages. Arbitrary point to point level 5 self driving is decades away. And even if it came tomorrow, what competitive advantage do these apps have? They are a single Google Maps update from being wiped out. They should've spent past few years using network effects in the same way as Facebook to protect themselves. They should've built loyalty programs like frequent miles. But they completely wasted their opportunity.

Would you happen to be Douglas Rushkoff? He wrote a fantastic book about this.

http://www.rushkoff.com/books/throwing-rocks-at-the-google-b...

Lyft and Juno will run out of cash by the end of this year and be forced to sell to companies that won't run them at a loss, that Lyft $500 million round they are trying to shop around won't happen (that leak is a bad sign, early Lyft investors are dumping their shares on the secondary market as well) and Uber currently has billions in the bank while Lyft is down to under 1 billion, Uber will raise prices and no new competitors will be able to find any funding at this point

I'm curious what do you think will happen with Lyft? It sounds like GM wanted to buy them, but they weren't interested in a $5+ billion valuation. Maybe when they run out of money GM will purchase them for a much lower price.

GM will purchase them for around $1-$3 billion and drastically raise prices and fire most of the employees as their public investors will be skeptical and the stock price will take a hit, Uber will be able to raise prices enough to get better economics and atleast IPO at a haircut of their current private valuation

> Uber will raise prices and no new competitors will be able to find any funding at this point

Until Uber has self-driving cars, there's nothing to prevent local competitors from running a few subway ads and getting enough iOS installs to keep prices down. And unlike national competitors, which require hundreds of millions of dollars, local competitors can be run on the cheap. So even if Lyft goes bankrupt, I doubt that will have much impact on prices.

Juno is burning 10's of millions trying to compete on low prices and they are still in NY area only, unlikely local competitors will be able to compete at low prices unless they have a huge war chest which will come from rich founders (Juno) or investors (Uber/Lyft/etc.)

Well low is relative. I think GPs point was that Uber can never have a real monopoly because eventually they have to operate profitably. Once the base price of a ride settles competitors can still come eat their lunch. Heck I took a taxi in Seattle for the same price as an Uber but the driver actually knew where I was going and how to navigate in traffic.

Driverless cars would throw a big wench into this however.

And only if Uber is the only one coming up with it. If VW/Mercedes/GM/Ford develop driverless vehicles, anybody can build a service based on it (most likely the manufacturers themselves).

The only chance for Uber to survive is to be the first one in that space. I don't see how that can happen with so many companies in advanced development stages.

Is Juno trying to set themselves up to be a national competitor though, or are they trying to stay local? Given that making a basic app to put dots on a map is basically free, I don't see what stops someone from investing a couple million bucks in hopes of getting a small but good return.

yes they are saying they are going to expand nationally for the last 6 months but you can't expand nationally if you are running out of money (check ride sharing forum's where drivers are starting to report sporadic payments from Juno)

I had no idea Lyft was operating at a loss. My Lift rides are consistently 10% to 20% higher than Uber rides of the same distance and time and they even encourage tipping.

I'm not looking forward to what these companies charge when (or if) they're ever profitable. I already find them expensive, especially Lyft.

they operated at a $600 million loss in 2016

http://www.businessinsider.com/lyft-lost-600-million-in-2016...

the number will be higher in 2017 as they are expanding internationally (http://www.cnbc.com/2017/01/13/lyft-to-go-global-take-on-ube...), they are primarily still US only while Uber is in most of the world

>I already find them expensive, especially Lyft.

Expensive compared to what exactly?

Not the person you are replying to, but if I used Uber/Lyft for everything I normally do with a car, it would be more expensive than owning a car for my own exclusive use. Even reasonable cutbacks of trips I don't really need to make if I'm paying per-mile still only get it down to about parity. Uber/Lyft has the extra cost of paying the driver, but also the supposed cost savings of sharing vehicle cost across multiple riders. I would expect it to be slightly cheaper, if it were a sustainable model.

The driver's pay is really what makes it more expensive. These ride sharing companies will only really become sustainable once self driving cars become prevalent. Even if it just allows the car to get to you, and then have you drive it where you need to go.

I'm not sure what other costs they can cut easily.

Unfortunately for them, second and third players entering the market has a huge advantage in terms of less spent on development and exploration, because they had an example to follow. Uber made the way for them, by building the app first, and testing regulators and authorities.

And there is nothing keeping Uber's user base from using competitors instead. They should probably have thought about some kind of reward system. Or anything to make their users invest and want to stay more.

I think they've got big problems. Problems that will be overcome better by their competitors.

lyft financials

https://mattermark.com/lyft-financials/‬

Hmmm...there are plenty of assertions here without factual back up. 1) If Lyft has $1B in cash and their board has capped burn at $600M per year, how will they be out of money this year? (http://www.recode.net/2017/1/13/14267926/lyft-growth-revenue...) 2) what source states that the $500M round won't be subscribed? I read they opened it up b/c of inbound demand since they don't need the cash (see point 1)

> Uber is cheap only because investor capital subsidizes every ride.

Is that actually legal, in light of [1]?

[1] https://en.wikipedia.org/wiki/Predatory_pricing

I've been wondering the same as I'm reading this thread. I like the idea with a new model, especially one that get rids of the concept of taxi medallions, but I have an issue with what is essentially unfair competition.

The bar for predatory pricing is very high, and Uber doesn't hit it: https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

The main issue, as others have pointed out, is that the network effects and barriers to entry with Uber are quite low, so even if they beat Lyft they won't be able to jack up prices well above cost. In Austin, Uber and Lyft left after city voters passed driver fingerprinting requirements, and a flood of new companies entered the market. These new apps and companies had problems at first, but I currently use RideAustin (a non-profit, mind you) frequently, and despite being slightly more expensive than Uber is currently, the experience is pretty much indistinguishable.

Such a reactionary comment. I don't think things will be quite as drastic as you claim. Much more interested in how self driving cars play out because that's the real goal they are all chasing. Finding markets and places to apply self driving cars or transportation to reinvent how transportation works globally.

And they don't care if a few dozen or more people die at the hands of their self driving car because all they care about is winning the self car driving war at all and any cost!

Some hacker or a hacker group plz teach uber a lesson in humility and make sure they pay for their sins! This is not how you win and or change the world via deaths of dozens of innocent drivers killed by your self driving unproven cars which you stole from Google.

Their lack of humility.. morals .. ethics is Unbelievable!!!

I believe they are profitable in many city venues, their cash outlays have to do with targeting new markets, and moon-shot style projects.

If they want to be profitable, they can pull back on aggressive expansion, and dump the more expensive, less fruitful projects.

Didn't make much sense to me they would put money into self driving cars. It works be much more sensible to await a viable commercial solution and then buy it in bulk.

Presumably they want to at least hold a portfolio of strategic patents.

Why? If you can buy driverless cars from, say, GM, what do the strategic patents get you? If GM, Toyota, Ford, et al all sell them, there's pressure to reduce prices anyway. Lyft's core competence is in hooking people up with drivers, not in building advanced new automation tech. The smart thing to do is double down on it since there's a market and presumably a path to profitability.

> Why? If you can buy driverless cars from, say, GM, what do the strategic patents get you?

Royalties, most likely. Discounts on cars in exchange for licenses. Maybe something to auction off during the bankruptcy process so that investors get a fraction of their money back.

Patents can be the most valuable thing a company has. Google pretty much wound up scooping the patents out of Motorola and selling the rest (you know, the thousands of smart people and hardware and history) for a discount.

Are you assuming these automakers won't compete with Uber directly? I think some automakers are looking to enter the "transportation services" market.

http://www.wsj.com/articles/ford-says-it-will-focus-more-on-...

My assumption is that it was merely to juice their valuation.

No, it makes a lot more sense for Uber to be involved in self driving than maybe anyone else.

Self-driving is a 'near rality' meaning, the tech has progressed to the point wherein we can feasibly see it working at some point. I think it'll take a little longer, but it's basically going to happen.

It represents an existential issue to Uber, it's a huge competitive issues, as well as a massive opportunity.

Uber would be more readily able to lever the tech, than say Google, who has no fleet, and no ability to build cars.

If GM/Ford get the tech going first, then they'll hold that over Uber in a very heavy hand. Also GM/Ford are slow, big companies and may lag the whole way. Tesla, Google, Uber are the 'big players' who could do it fast and well, smaller innovative shops notwithstanding.

Though self driving might be a little expensive, it's definitely not a moonshot, more of a somewhat risky but highly relevant venture.

If Uber could 'get all the pieces right' - and have driverless cars everywhere before GM/Ford got to market in a material way - Uber would be a multi-trillon dollar company. I mean - not only would it wipe out all their competition, increase market a lot just on the basis of price alone ... but it would fundamentally change how people buy/drive/own and use cars.

As risky as it is - the idea of 'driverless ubers' is just too big to ignore. It's worth 100x the market for iPhones.

Something to remember guys - look at the exports for most countries: #1 is cars. Look at family expenditures. After mortgage/rent - it's cars.

Silicon Valley is used to 0.001 cent CPE's or 25 cent click-throughs. That's peanuts compared to transport.

Disrupting cars is 100x bigger than anything the Valley has done before. The numbers are mind blowing.

Now add in trucking/transportation ... it's basically mind-boggling.

So as long as they can afford to pushing the driverless car front and as long as it's not costing them billions and billions a year in R&D, they should be definitely pushing it as their #1 long term strategic priority.

I guess this is the thinking driving Uber's current valuation. It's a pipe dream. Yes, self-driving is a near reality, and when it becomes feasible, a few quarters later it will be a commodity. It's just software, lots of people working on it, nobody has any secret sauce here. When that happens, what does Uber have? That's right, nothing. Their cars, which aren't equipped for self-driving. And their drivers, who are all going to be out of work. And their customers, who use Uber because it is artificially cheap and have no brand loyalty (widely hated company).

Sure, disrupting transportation is big, but no advantage in sight for Uber there. They only thing they disrupted was traditional taxis on a wave of dumb investor money.

They really can't. Centralized taxi service is a winner-take-all market for at least individual countries.

If uber lays off and decides to get profitable, they risk lyft taking hold because they're the only option in X markets.

On the other hand, up until a few weeks ago it seemed like Uber had enough cash to outlast every competitor, achieve functional monopoly and from there they can charge whatever they want.

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