really interesting: intel buys Mobileye in $15.3B deal

https://techcrunch.com/2017/03/13/re...-driving-tech/


solid first post by romeo btw.

Beware of smart people who are idealists. They LOVE their models and cannot learn as their model is confronted by reality.

One (old) rule of business is that you shouldn't offer commodity pricing for a premium service. Getting a personal ride within 5-10 minutes of clicking a button on a phone is clearly a premium service to any other available service. It seems to me that they should have been able to crush top and bottom lines with higher prices. Obviously, top line would have had less impressive growth, but the efficiency offered to business travelers would make for a massively profitable endeavor.

It is clearly a commodity service and not premium. I can't possibly think of how it is a premium to literally any other substitute.

5 minutes to get picked up on demand is a huge premium. No other service is even close to offering that.

Lyft (and every other ride sharing app)
Every app that interfaces to taxi dispatch (dozens of major regional players)
Actual taxis

Those are all literally on demand unknown people with unknown car waiting to pick you up. Some even have more premium features where you can select uniquely priced vehicles (someone with a new S class can charge more than someone with an older one!)

Honestly the idea that it isn't a commodity is absurd. You have essentially three tiers of cars and the potential for someone to ride with you. Time/driver/car/etc are all unknown. It is literally the most fungible experience imaginable and there are virtually no switching costs.

But all the cool kids use Uber. That's got to be worth something, right?

They have by far the most valuable userbase, so ya.

The userbase is so "valuable" that they have to pay them (and lose vast sums of money) to keep them.

Imagine Nike had a userbase so valuable they had to net pay all their customers to buy their shoes.

Imagine Coke had a userbase so valuable they had to net pay people to drink their Coke.

Good times! One can only wish for such a userbase.

Guess since none are profitable there is literally no money in ride sharing users. Guess those people who're investing tens of billions of dollars are all just cucks world over.

We have VRX collapsing right this very minute. The best and most respected funds in the world were buying in the $200s (it's now $10) and buying more when it dropped to $100 and then $50, when it was OBVIOUS it was dead. Yours truly was calling it dead a year ago.

Yes, these people are cucks. The venture capital space is desperate to throw many at anything with a whiff of a promise, and Uber has more than a whiff of a promise to people with abstraction ability and no sense.

At best - if I'm being generous - it's a 50:1 long shot. I would say some of the people investing are betting on that longshot, knowing it's a longshot.

They pretty much have to stick with it now since they staked their future on it, I still think they should focus on becoming profitable now as they have the user base to be, they just need to stop subsidizing everything just like DFS over-subsidized everything as well. I do think it was incorrect for them to make that their focus from the start instead of just revolutionizing the industry with drivers like they have already done. They have zero excuse for not being extremely profitable already, other than the desire to burn as much venture capital as possible in the name of unlimited growth forever.

Their engineers are very smart, their management has yet to prove themselves to be.

Agreed, however, it is clearly a premium service now and has been for some time. They have/had a huge edge that no one else will catch them on soon, including Lyft who has trouble gaining traction. Having a huger user base (of both drivers and customers) is still a moat in itself.

The user base is extremely valuable, that doesn't mean they are not also paying too much right now trying to continue to expand it indefinitely. Their user base of both drivers and customers is a moat as another service cannot just pop up and have the same success. Lyft has been trying, some cities have another service that gets a few users, but no one else has been able to gain nearly as much traction. Just like anyone could make another website as good as facebook, nothing is going to replace facebook anytime soon.

Uber is in a sweet spot where they have a premium service and huge market share at the same time, they should be capitalizing on that right now. If they are banking on self-driving cars to become profitable they are not being realistic. We still don't know when self-driving cars will be a reasonable option (many cities/states will ban them even if they prove themselves viable) or if consumers will even prefer them over having a driver.

You keep claiming it is a premium service without any concept of what that means. What is premium? The prior definition that was put forth was clearly absurd. (We've had the ability to have someone show up in a car in 5 minute for 20-30+ years.) Switching costs are virtually nil and loyalty is super low. (Similar to Coke/Pepsi actually.) They fit every basic definition of a commodity service. (Moreso than oil or money even.) There is literally not a more fungible service. I would imagine even something like dry cleaning to have more loyalty than an unknown person in an unknown car giving me a ride.

Could you put forth some theory on why driver's make more money when the per cost ride drops? The Uber argument seems very compelling and I can't think of a single counter example of why this wouldn't be the case.

Yes.

No. Not even close.

Hahahahaha!

I'm pretty sure taxi companies thought they had a moat.

Most markets do not have good cab service. In most cities you can get an Uber, even in the suburbs, within about 5 minutes and you know exactly how far away they are and when they are going to arrive. With cab companies, often you are on hold for awhile and it can take 20+ minutes (more during peak times) for a cab to arrive and you have no idea how close they are to arriving. Yes cab companies should improve their technology, they are being forced to now.

Claiming that is a premium service might be the wrong wording, but Uber has a huge edge in the vast majority of the country right now while everyone else is playing catch up. Most markets still have terrible cab service, at least in America, outside of a couple cities or downtownot hot spots.

Uber did not become wildly popular because they are slightly cheaper than cabs, it is because their service is so much better and being able to get a ride in a reasonable amount of time.

They did. They didn't expect a global criminal syndicate with wild public support to undermine it. (Same for hotels.)

Lotta weird exogenous threats to business that seems super entrenched.

Thinking all markets as equally valuable is the first problem of many.

And the technology for most cab companies is already being disseminated globally. Most of these companies are scaling and at the growth stage. The technology doesn't need to be "improved" it just needs a quick implementation.

I agree with that. Do you know if cab companies are each rolling out their own app or if there is a universal one that works with multiple cab companies in the same city? I'm guessing they are going to start with the former but need to end up with the latter.

There are dozens of the latter that have been around for years. The issue is whether its economically viable for a company in a city where there is an artificial lack of cabs to pay any money for this. Obviously if the driver can stay busy without paying an intermediary that is great, but as they face increasing competition, then providing a frictionless experience that may be cheaper becomes a necessary feature to the UX.

I personally switch back and forth frequently. I'm imagine many users have a primary service that is cheaper on a regular basis, but switch to whatever else is cheaper if there is surge pricing. It is literally just clicking a few buttons.

A large percentage of taxi customers are tourists, as locals tend to have own transportation and know public transit. Tourists tend to visit many different places and switching between services has a time cost for tourists. Thus most tourists prefer to just use one service.

For myself, I have had Uber, Lyft, Summon, Grab and Go-jek on my phone for a while and have only used Uber(like 50-100times) and never the other services. I don't know if the other are better, I am lazy to find out. Clearly Uber has a great advantage of being "first" and the largest.

Lol, precisely.

Lyft's installed user base is MUCH smaller. Even if all of Lyft users are also Uber users, most Uber users are still only user Uber.

The medium-term end game is probably going to be something like what is happening in the airline industry with everyone raising prices simultaneously once they settle on a market distribution and credibly deter new entrants by threatening a new price war.

So is this GoogleIP thing going to pull the plug?

http://www.recode.net/2017/3/19/1497...ff-jones-quits
Uber president Jeff Jones is quitting, citing differences over ‘beliefs and approach to leadership’

VRX is not dead. I believe that Gilead (Gild) has enough cash to buy it and make its assets profitable.