Do you think there's a trade here?

They're paying 13% dividend with a P/E of 6, which makes shorting seem terrible. Their book looks ok. Plus they don't seem pure - they do financing in other areas.

How would you go about shorting taxi medallions, which have run up 700% in ten years in some areas, and have to be vulnerable to things like Uber? And is that a good trade if you could?

Understood. It's hard to find recent financials.

No. So let's see if that's the case by removing all marketing costs and R&D costs from Uber's leaked P&L (http://gawker.com/here-are-the-inter...-mo-1704234157)

You end up with a $53M loss on $57M in net revenues in 14Q2.

Thanks. I've seen these numbers and was looking for something more recent, but of course understand that they're not readily available. I suppose it's fair to speculate that they're likely to still be losing money given the breadth of their expansion.

Is Amazon a reasonable comparison? Spewing VC money in order to grab market share?

If so, in retrospect, was Amazon a good investment early on?

It's an interesting comparison and one that may turn out to be true, but not one that I think holds well at the moment.

Amazon raised less than $10M in venture funding before going public: https://www.quora.com/Who-were-the-o...ceive-in-total

Uber's up in the billions at this point.

Amazon also runs many business units that are profitable and help fund other new ventures (Marketplace, AWS, etc) until they become profitable.

Certainly those Uber number are a year old and you'd hope they're improved at this point, but with what we have it doesn't look like their main service is operationally profitable yet. So additional efforts (self-driving cars, logistics, etc) are all being funded by additional investment.

Now it's almost guaranteed that some big legacy markets are profitable for them (NY, SF, etc) but every company that has city-specific operations will do better in their initial markets than where they expand. The question is can they make Des Moines profitable and/or will they be willing to close operations in cities and tamper down the growth story while becoming a profitable company.

Less obvious growth available. Retail isn't as easily disrupted as logistics.

I would love for you to expand further on that second sentence.

Have you seen Bill Gurley's analysis of Uber's TAM? It boils down to: (1) Uber's superior customer experience will spin up a 3x-6x multiplier on the traditional car-for-hire market; (2) Uber will capture 5-10% of a growing market for car-ownership-alternatives.

Even without self-driving cars, Uber is already creating entirely new car-for-hire markets, e.g. in commuters via UberPool.

If you look at that second link, you'll also see my point that Uber has a scale advantage in their server-side technology:

Uber's highly efficient solutions to these problems indicate a much larger technology moat than your average phone app possesses.

I'd have a hard time believing those features don't already exist in some form on other apps. What kind of patents do they have?

Well, the underlying problems are NP-complete at best (and UberPool is NP-hard), so the challenge is building approximate solutions that scale efficiently.

The best bet is usually some form of machine learning. (AI has been well characterized as, "[T]he study of techniques for solving exponentially hard problems by exploiting knowledge about the problem domain.")

And the performance of machine learning algorithms is very, very dependent on the size of the training data. (See Section 1.2.2 here, for example.) Hence Uber's vastly larger training data sets for these logistics problems almost certainly give them better solutions at scale---and this scale advantage will lead to a virtuous cycle.

The situation is analogous to Google's moat in search/ad targeting. The more users Google has, the better its product gets, and the better its product is, the more users it attracts/keeps.

Thank you for understanding that a dynamic vehicle routing optimization with useful predictions is difficult.

I'm glad there is at least someone else here.

I can. What infrastructure does Amazon need?

What infrastructure does Uber need? Corporate office and a couple dudes in each operating city to process applications.

Uber has spent billions of dollars, is not profitable and has hardly dipped it's toe into the logistics industry which people here apparently think is run by a bunch of billion dollar corporations already running on thin margins who refuse to adapt.

What I want to know is why people think that logistics is so easy to disrupt and why Uber is the company who will do it.

The ONLY case I think someone could possibly make is that they can somehow use their model (offload almost all of the cost of doing business to contractors and ignore or get regulations removed).

Given that ltl already involves contractors bearing the costs, I don't see it.

People are acting like Uber has built a quantum computer (and have now gone beyond quantum computing with extra special 10th dimension magic chips, which Uber technicians discovered) and is now solving NP hard problems that will turn logistics on its head. It's ****ing ridiculous. I would say various scheduling/routing optimizations work just fine, such that the difference between Uber's super duper quantum computer and regular cleverly coded optimizations are negligible to the end consumer in terms of time to pickup and cost savings.

This "logistics algorithms" data and moat that people are seeing is pure fantasy.

Still, some interesting discussion points here. I'm leaning more toward Uber after Subfallen's posts.

Yeah, I mean I've done my fair share of work in the logistics industry. It definitely sucks.

But it sucks in large part because almost everything is outsourced to 3rd party's at the lowest cost with insane penalties for missing KPIs.

UPS just bought Coyote for almost $2B. Coyote's business was built around being the 3rd party matching platform for shippers and independent carriers. This isn't some grand idea that no one has ever implemented before. People are attacking this space and doing it well.

Uber can definitely find a niche here as well, but it's not going to be some magical revolution over what's currently being done.

Wow, my memory is so bad regarding Amazon's early funding. Thanks for the link.


Makes sense. It'll be interesting to see what happens with UberPool, UberEats, etc.


They strike me as a company that would even be willing to take a loss in certain cities to maintain a presence and not cede to the competition.

Yea well that is exactly their problem, they are competition for taxi company's.
And the taxi company's have too pay a lot of money for their licences and have to comply with rules regarding their equipment[taximeters and such] and cars and employees.
And fair or not uber just can't just make a app and virtually do the same job as the taxi company's, and don't have too pay for all the things the taxi company's do have too pay for, it is not fair and therefore illegal and that is the bottom line.
And here in the netherlands there head office in amsterdam is just raided and all the books and computers seized, after they where a few months ago declared illegal by the court, but they appealed and thought they could just go on, well it seems they where wrong.
In the netherlands i don't think they have a chance in this set-up, but time will tell.

And really what do you need to make uber work?, a internet connection/server and a office for the administration, or am i forgetting something, they don't have maintenance bills for cars or have to pay for gas or insurance, don't need a garage, no i do agree with the idea and that at least here in holland the rules for taxi company's and cost for licences are ridiculous, but what uber is doing [a nasty name i think, and not a very popular one here in holland and many other country's i can imagine, for obvious reasons] is just not fair to the other company's, although the prices are way too high for regular taxis.
So great idea, and good for the people's wallet, but not fair.

And i don't think anybody has too worry about the owners finances, don't you think?.

Canberra here in Australia have decided to legalise and regulate Uber and like services whilst at the same time reducing fees for Taxi licences and will allow Taxi drivers to use Uber alongside their regular hailing privileges.It looks like a reasonable regulation option at first glance.

http://www.abc.net.au/news/2015-09-3...ctober/6814804

An Uber like platform for trucking is coming. That being said Uber won't be the company that does it. They're a taxi company not a logistics company. The people who think that those two things are the same aren't in the taxi industry (like Brian is) or in logistics (like I am).

There's already one company trying to do this, they raised $10M in January.

https://www.roadie.com/

Wow. What an absurd appeal to authority!

A person with a background to understand this would be math and tech. You're totally wrong of course, but that isn't anything new.

I love how computer nerds with no business experience think they can understand the incredibly complex shipping business. Starting to see how some of these companies get so absurdly overvalued. It's 2000 all over again.

There's no worthwhile local freight market and there never will be compared to humans
Long hall freight is maximally efficient, not able to be helped by these whiz-bang algorithms, and has the kind of problems that depend mostly on non-tech elements and real world solutions. It's not like picking up people and dropping them off.

Besides, the money is all in moving people and always will be. Freight is utterly irrelevant to Uber.

I have a background in math and tech (I led the build on a new seven figure marketplace type startup over the summer) and have spent a couple hundred hours on logistics projects and I think he's correct.