
New Leadership Has Not Changed Uber - ExcelSaga
https://www.nytimes.com/2018/03/26/opinion/leadership-uber-business-model.html
======
GCA10
There's a painful math error in this piece. Uber's financial losses currently
amount to about 10% of gross bookings. Details are here:
[http://www.businessinsider.com/ubers-losses-grow-
in-q3-but-b...](http://www.businessinsider.com/ubers-losses-grow-in-q3-but-
bookings-rise-2017-12) Ergo, Uber could operate at breakeven by raising prices
slightly more than 10%. (Not every dollar of extra revenue would benefit
parent Uber, but let's assume that most of it would.) Uber could be highly
profitable by raising prices 20%.

Author Stephen Hill, a "journalist in residence," makes a rhetorical point by
implying that today's $5 Uber fare really ought to be $10 if Uber weren't
subsidizing passengers, and that today's customers are "only paying half the
cost of the ride."

Uber's willingness to incur losses in the name of growth is still quite
astonishing, and a measured analysis of its growth strategy would be worth
reading. But the gap between 10% and a rhetorical 2x is huge. Many other
journalists are taking time to do the math. I'm not sure why this math-
impaired version found itself a big headline.

~~~
crdb
> Uber could operate at breakeven by raising prices slightly more than 10%.
> [...] Uber could be highly profitable by raising prices 20%.

No, because the demand would be different at those price points, and lower
demand might not compensate for high fixed costs.

I got a timely reminder yesterday in (newly Grab-monopoly) Singapore, taking a
Grab for $15 that used to cost me $3-6 on Uber.

I took public transport back. One ride was enough to shake me out of my years-
trained habit of taking Uber/Grab everywhere when it cost only twice the MRT
or bus ride, never really looking at the price.

Travis Kalanick's apparent vision was to create an enormous amount of demand
for private drivers by dropping the price to the floor, thus creating the
volume needed to make the numbers work, in the same way that Standard Oil's
massive facilities dropped the price low enough for Rockefeller to bankrupt
all his competitors.

~~~
uptown
"Travis Kalanick's apparent vision was to create an enormous amount of demand
for private drivers by dropping the price to the floor, thus creating the
volume needed to make the numbers work"

The WSJ summarized it nicely in print:

[https://twitter.com/neilanalien/status/627873374505562112?la...](https://twitter.com/neilanalien/status/627873374505562112?lang=en)

------
vtail
Author’s vision for Uber: regulated, price-controlled (“can’t charge less than
a true cost of the trip”), number of cars not to exceed government mandate,
with unionized and minimum-wage-guaranteed drivers.

~~~
dpeters
That sounds like a good solution that would benefit drivers. Hopefully this
can be realized

~~~
rayvd
Sounds good for the taxi cartels... not good for the drivers who would now
have fewer job options and less control over accepting work on their terms.

And of course a huge blow to consumers which is the whole point of Uber's
existence anyway.

~~~
s73v3r_
Drivers don't have that now. They have extremely little control over what
rides they can turn down, and most drivers barely break even.

As for consumers, yes, it's generally felt as a blow when they have to start
paying the actual costs of things, instead of coasting by on VC subsidized
things.

------
raiyu
Very clickbait headline. The leadership change was done because of a toxic
culture that led to a lot of bad behavior, which is why new leadership was
brought on board.

The title would imply that this leadership change hasn't changed the bad
culture, but instead it goes into discuss how Uber and other companies are
congesting cities which is what the problem was with Uber all along.

However, that wasn't what the leadership change was about.

In terms of congestion, that's relatively simply, just limit the number of TLC
licenses that are available and you will solve congestion. Then go get that
passed without having voters revolt.

------
randomname2
Interestingly despite years of negative pieces on Uber from journalists who
have never liked Uber, its net favorability is still very close to Apple's:

[https://www.axios.com/exclusive-poll-facebook-
favorability-p...](https://www.axios.com/exclusive-poll-facebook-favorability-
plunges-1522057235-b1fa31db-e646-4413-a273-95d3387da4f2.html)

------
TheSpiceIsLife
Why are we still calling Uber and it’s ilk “ridesharing”?

The word implies sharing a ride but the driver is there to drive, they don’t
get out at the destination.

~~~
rdlecler1
I’m often using UberPool. Some drivers use Uber to carpool.

~~~
icebraining
_Some drivers use Uber to carpool._

How can they do that? Does the driver app allow you to set your own
destination and exclude riders not going the same way?

~~~
modwilliam
Yes, though there's a daily limit to the number of destinations you can target
(around 2 a day?)

------
kyleblarson
Completely reasonable to expect a new CEO to fundamentally change the culture
and practices of an 8 year old, multi-thousand employee, multi-billion dollar
company in 8 or so months.

------
kevinkimball
This is ridiculous, he calls for a limit on Ubers on the road to limit
congestion. But there is no such limit on private cars.

~~~
JoeAltmaier
Further, he uses the statistic that there may be 5X as many Uber on the road
as taxis. That's not a problem! That's a solution. Taxis were clearly not
addressing the full transportation need, not nearly! Only 20% of potential
customers were being served.

~~~
s73v3r_
It very much is a problem, especially if people are taking Ubers rather than
public transit.

~~~
zeveb
Public transit isn't a solution: it's slow, filthy, relatively expensive (for
the value received) and _public_ (I'd rather not sit next to someone who
hasn't bathed this week). Uber, OTOH, is fast, clean, cheap-for-the-value &
private.

Am I really stoked on Uber-the-company? Not really. But I love Uber-the-
service. It's far better than taxis _and_ buses.

~~~
s73v3r_
You're wrong. Public Transit very much is a solution, and is so everywhere
else in the world where they actually value it.

------
frgtpsswrdlame
I've gotta be honest, I feel a bit clickbaited. This piece just provides the
standard resolutions to a misbehaving company with a few specifics about Uber
but doesn't mull too long on it's title. Why is it that we _even expect_ a
leadership change to substantially alter a company? We've created a system
where there is no real accountability for the direction of a company, even
it's leaders are bound to shareholders[1] and it's shareholders are dispersed
with their demands either hidden from the public eye in the case of VC/PE or
mostly abdicated in the case of the public. In our system a corporation with
shareholders is just an automaton marching towards profit and nothing else,
leadership won't make much of a difference.

[1] they aren't really but the popular idea provides cover for them to
maximize their own gains via the portion of their pay that is comprised of
stock

~~~
kolbe
Agreed. When they make a title like that, people assume they're talking about
Uber employee culture, not their business model. And the NYT knows what they
are implying, and they know it will get more clicks.

------
tribune
The market had already set the cost of a private ride long before Uber: cabs.
Uber has taken a huge market share by subsidizing their passengers with
investor money, undercutting the cost of traditional cabs. One could argue
that Uber is more efficient, higher quality, has a better UX, etc., but in the
long run the cost passengers have to pay for a private ride with a _human_
driver will return to yellow cab levels. Drivers need to eat.

The key phrase there is human driver. It's no secret that Uber is betting on
autonomous rides in the near future, which completely changes the economics of
ride hailing. It looks likely that they will be able to limp across that
finish line with their dismal human driver financials, into the world of real
automation profitability.

------
dlandis
> a business model that harms drivers and the environment, and drains away
> passengers and revenue from public transportation.

It's disingenuous to complain about how public transportation is being
undermined and to propose regulations that would force more people to use it
without even mentioning the sorry and stagnate state of public transportation
in many cities. It is simply unfit and unsafe to use in many places (including
parts of NYC and SF) due to congestion, cleanliness, delays, discomfort and
many other reasons. No surprise that many people have given up on it.

------
malvosenior
"Most customers who love Uber don’t realize that the company subsidizes the
cost of many rides"

Amazon used this technique for over a decade and is now one of the largest
companies in the world. I think it's also telling that the author admits that
users love Uber, but he doesn't, so things need to change. Guess what, people
are happy with the service. If you're not, stop using it (and I guess publish
negative articles in mass media publications).

As a massive Uber customer I'm really glad that nothing changed with the new
leadership. The service does what I want and doesn't need massive tweaking.
I'd also happily pay more for Uber when the subsidies end. The user experience
and value for me is far too great to switch.

~~~
delecti
> Amazon used this technique for over a decade

There's a bit of a difference between those two examples. Amazon was making a
per unit profit but taking losses overall due to fixed costs, Uber is taking a
per unit loss. Amazon was able to eventually overcome those fixed costs with
volume, but by taking a per-ride loss, Uber can't ever outgrow that subsidy
without raising prices or lowering per-ride costs (and drivers are already not
exactly flush with cash).

~~~
malvosenior
Good point. As a consumer, I'd be willing to pay higher prices so I could see
how once you get "hooked" this strategy works. I also would love to see the
self-driving dream come to fruition which would presumably lower costs.

You're correct that both those strategies differ from Amazon though.

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endlessvoid94
You've gotta give change time to happen.

~~~
decacorn
if there's a will there's a way.

there's no will to change at uber, very clearly.

~~~
endlessvoid94
I suggest you revisit this post in 12 months time and determine if your
instinct is accurate on this one.

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cryptoz
The CEO tweets that people he disagress with are "incompetent". Of course new
leasership hasn't changed Uber, they hired selfish, hateful, spiteful people
as leaders again.

