The Financial Times: Uber is doomed

Not terribly surprised by this, I was hedging my bets cuz I haven’t looked at last year’s numbers.

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If nothing else, once that’s working, they’ll be directly competing with companies like GM that have stated they’ll be moving into a service industry that sells individual rides more than vehicles. Guess who will be able to do it cheaper?

Not quite, from what I’ve read. What they have is substantially worse than what Google has. Apparently their tech, so far, requires a lot more driver intervention. (As in frequent vs. almost none for Google.)


So I suppose the economists over at Naked Capitalism need a refresher then?


New account as well so maybe Uber PR? Coming in to save face for the company?


Seems fishy. Maybe they’re just enthralled with Kalanick’s personality…

When Peter Thiel says you run “the most ethically challenged company in Silicon Valley,” you are most likely a terrible human being.


Can’t fully generalize about ‘mass transit’ (which, around here, is far from dead), but the PE Red Cars weren’t publicly-subsidized.

On the contrary, they were a private business (whose fares and routes were nevertheless publicly regulated :scream:), and they lost money from the time SP bought them from Huntington and made them a public company in 1912 until SP sold them, except for a couple of the early years before autos proliferated, and the boom years of WWII when troop- and freight-transport contracts briefly put PE in the black.

But then, the PE was never created to make money. It was created by land developers, one line at a time, to connect distant suburban parcels of cheap farmland to downtown. As soon as the land parcels were sold, the developers would usually sell the (unprofitable and unsustainable) trolley lines off to… well, whoever was sucker enough to buy them.

The PE was built to make suburban sprawl profitable.

But in LA, Henry Huntington had a plan - he bought them all up, standard-gauged all the track, made them into one interconnected system that could haul standard freight cars, and then sold the whole shebang to SP as (not just!) an unprofitable mass-transit system, but also (!) as an electric ‘last-mile’ freight solution for SP’s long-distance steam freight lines. (More like 'last 20 miles", really, but still…)

The SP-owned Red Cars were subsidized, all right, but they were subsidized by SP freight traffic rather than taxpayer dollars. SP bought them on that basis. They knew the transit operation always lost money.

But with the coming of efficient diesel trucks and improved roadways, the electric rail freight business declined, and SP eventually closed many lines and sold the remainder to LA’s first public transit agency, the (original!) MTA.

Which closed the remainder of the lines.

[Oh, and did you know that the early days of autos saw the widespread rise of “jitney services”, basically a sort of DIY Uber/Lyft system in which private car owners (lacking wireless apps) simply ran fixed routes of their own choosing for half the price of a trolley?

But PE and other transit systems legislated those out of business, by creating the onerous requirements of the taxi systems we have today. Without the anti-jitney legislation the PE would never even have survived the Great Depression.]


Uber hasn’t got a lot of runway left before their VC’s dried up. They’ve been running at operating losses of $2 bil. a year (likely more like $3 bil. in 2016, though as a private co. with closed books they hide full details). That’s not normal. They have ongoing legal fees and legal threats with hundreds of suits filed against them around the globe, some currently going incredibly badly. Some of those suits could wind up being very, very expensive. Those costs aren’t going to disappear, and their business model of openly violating laws then trying to settle or bribe politicians into changing them isn’t a sign of a company with legs. Their business model is shifting the costs of capital depreciation on their employees contractors, and even with that and their cuts to employee compensation, they still aren’t making profits. The fact that they haven’t IPOed suggests their books are not something they want to reveal. And this is not a sign of a company with legs:

So I don’t know they’re doomed, but I don’t see any sign that suggests otherwise and see enough risks from many angles that aren’t being managed well that it’s hard to see how they couldn’t fail.


Ihave been educated. Thank you.


It’s not even that good.


Real Business Men know you do this on the hush-hush.


I do believe they are buying market share like Amazon did. And while Uber does not have the breadth of products like Amazon their overhead and fixed costs have to be minuscule in comparison. Almost no employee salaries, no warehouses, no inventory, no shipping fees, low customer service calls and a 30 - 35% gross margin. Once they get through the expansion and infrastructure phase this should be a cash machine.

OTOH, low fixed costs imply low barriers to entry. So that even when the achieve maximal market penetration, they don’t have the monopoly ability to raise prices significantly above costs. They have been able to undercut taxis in part BECAUSE in many places taxi are heavily regulated and the government limits the supply of taxis. After all the legal battles with local governments I don’t think that they’d have much luck going BACK to those same governments and trying to prevent competition…


Lyft appears to be in it for the long haul, as they are focused more on making sure their drivers are happy. Their prices are a little higher than Uber, BUT they end every ride by prompting the rider for a tip. The tip goes 100% to the driver, I believe.

Uber says “Do not tip.”

Thus, when drivers who drive for both have an option, they prefer Lyft.

The valuation is lower, but that is also likely a good thing as it lets the company focus on its core business, rather than concern itself with vaporware.


Reminds me of the vans that drive up and down Flatbush ave in Brooklyn. I’m not sure what kind of license they are under, but they drive regular routes for a set price, so avoid the taxi/limo conflict. They absolutely fill a need where the buses and subways fall short, and citibike (which looks like it might be subsidized soon, and become more of a true bike share!) hasn’t come below DeKalb ave yet…

They seem to raise additional revenue acting as local advertising for local musicians, DJs and events, based on their sticker-wraps. They are a staple, so much so that a 4 year old at the playground playing with a mounted steering wheel said he was the “dollar van man” and would take me and my daughter to the botanical gardens :slight_smile:


Does Uber actually require drivers to provide firm proof of insurance before they can take a fare?

I think Uber’s business model relies on poor economic prospects causing drivers to prioritize immediate payoff over sustainable income.


That puts me right off. The fare shown on the taximeter or equivalent should be what you pay or a fixed price made clear at the start of the journey.

Sorry, did you…read the articles? The author runs down exactly why, in detail, Uber has lost scads of money year over year, and probably will continue to do so. I know it’s only five well-researched articles, with lots of references and data, but maybe your quick comment here is more accurate. Anything’s possible, I guess. Except Uber’s long-term viability, that is.


Yes, well, in the US, there are certain industries where tipping has become part of the culture. Taxis are one of them, for better or worse.


Before I knew that was their actual logo, I saw one on a flyer at work (“Need a ride? Call me”) and thought someone had snuck in a joke (or not) about “mustache rides.”


That’s why I’m doing Lyft more. I have made good on tips.