
How Uber Got Lost - braythwayt
https://www.nytimes.com/2019/08/23/business/how-uber-got-lost.html
======
cryptica
Uber didn't get lost. It simply was never the kind of company that could
acquire a monopoly big enough and fast enough to justify a multi-billion
dollar valuation.

I'm starting to think that many of the most successful tech companies of the
past decade are not real monopolies but succeeded purely because the
centralization of capital made it difficult for alternative projects to
compete for a limited period of time. Even projects with strong network
effects are unlikely to last forever.

The reason why all these dominant companies won't last forever is simply
because every new generation of ambitious workers needs a way to legally take
ownership of the capital which was accumulated by the previous generation.
People who inherit free capital from their parents or relatives will never be
as smart, hard working, determined or as capable as those who've had to
struggle all their lives; especially now with an internet where essentially
all knowledge is in the public domain. As monopolies get bigger and stronger,
smart and ambitious people will adapt to the environment in extreme ways and
find legal ways to subvert them.

When you see extremely high valuations which assume that the company will have
a monopoly in 20 years, it's a red flag because in 20 years' time, political
and economic control will have already been passed on to the next generation;
a generation which will have no skin in the game and 0 interest in seeing that
company succeed.

~~~
H8crilA
Billionaire half life is around 20 years. From 1995 till 2015 around 50% of
billionaires dropped out of the league:

[https://www.cnbc.com/2015/12/21/most-billionaires-lost-a-
com...](https://www.cnbc.com/2015/12/21/most-billionaires-lost-a-comma-
over-20-years.html)

Big money doesn't equate smart money.

~~~
kshacker
This is quite a mis-representation. The total number of billionaires in 1995 =
289. Of them, 66 died. 24 of them diluted their holdings to family. This is
31% of them. Of the remaining, 126 are still billionaires. That is 43% of
them. I rounded it down, but if you add them together, you see only 25%
dropped out. Still a big number, but maybe some of them were spiky nasdaq 5000
of the 90s : very temporary wealth due to some reason. It seems like the odds
are 80% or higher of retaining your billion dollar wealth over 2 decades.

But now that the dollar is cheap (by 1995 standards) and the billionaires
aplenty, maybe we should look at 5 or 10-billionaires for our next study.

[ Edited to add: Actually you do not even need to downsize 25% to 20%. Take a
1% erosion per year and you get there anyways. So basically the odds of
someone losing billionaire status were about 1% per year. Quite a low chance
of failure. And quite a high chance of death in comparison.]

~~~
H8crilA
Thank you for the fix!

------
dumbfoundded
I think NYT misses the point. The problem with Uber isn't some cultural issue,
it's that they're in an extremely tough and competitive business. It's really
a race to the bottom.

The logic I kept hearing repeated is ride-sharing is a winner take all market.
Like once you have a network of drivers setup giving people the lowest times
for rides, you can force other competitors out and raise prices.

Time has proven how wrong this thinking was. It's almost impossible to stop
competitors in ride-sharing because the cost of switching for customers is
low, there are no legal or capital ex competitive barriers, and you can be
picked apart city by city. Even drivers are incentivized to download as many
of these apps as possible.

The whole situation seems awfully similar to Living Social and Groupon.

~~~
jfoster
If it's so easy to compete, why aren't there more competitors with a larger
market share? I don't know of any ride share market with more than two major
players.

US: Uber / Lyft

South East Asia: Grab / GoJek

Australia: Mainly just Uber (lots of smaller players but none with very
significant market share)

~~~
freehunter
It's easy to compete with the company, but hard to compete with the VC money
Uber pulls in. Uber's only competitive advantage is the $24b they were given
to keep them alive.

If VCs keep funding Uber, Uber is unstoppable. But as soon as that money runs
out, they're just another taxi company. Except they're a taxi company who
loses $350 million dollars every month. _That 's_ not hard to compete against.

~~~
sokoloff
Or are they a taxi company that makes $100MM/month and spends $450MM on R&D
that they could stop if they aspired to only be a taxi company?

(I think UBER is comically over-valued, but I also think their core business
is probably quite profitable.)

~~~
nosianu
"R&D" sounds grandiose but what meaning does it actually have in this context?
I think that's the bet on autonomous cars? Problem is, they won't be the only
one to have them, and not even among the first and best ones it seems. Nor is
it clear how anything but complete autonomy could solve their problems.
Actually, not even if that actually worked it's clear why _Uber_ 's Über-
ambitious plans would work out. As far as I can tell that "R&D" money is just
wasted - but I'm mainly saying this in order to hear counter-arguments, not
because I know (I don't really)...

~~~
sokoloff
"R&D" typically includes software and application development, so it's
probably not _all_ wasted.

------
_hardwaregeek
I feel deeply uncomfortable taking Ubers, especially in Seattle. The drivers
are inevitably working class folk, just trying to scrape by. They inevitably
mention the increasing rent and cost of living. They inevitably ask what I do
and I have to respond that I'm one of the asshole carpetbagging tech people
who come in and raise the cost of living, raise the rent.

Services like Uber are placing the class barrier front and center. They're
making the differences between the have and the have nots bitterly visible.
Which...I guess is a good thing? If you're into the whole class consciousness
stuff. I'm not so sure myself. Perhaps that's because I'd be a bourgeoisie,
not a proletarian.

~~~
seibelj
Do you do the same complex class calculation every time you interact with a
cashier, talk to a receptionist, or pass a janitor? People do honest work and
earn a living, no shame in that. Your life must be exhausting if you have a
class-based panic attack when you hop in an Uber!

~~~
_hardwaregeek
Uber feels different for some reason. Maybe it's the lack of transparency with
salary. With a regular job, you get paid x dollars an hour. That's it. You may
get paid minimum wage, but at least you know it's minimum wage. With Uber, a
lot of people come in with expectations of a high salary (falsely perpetuated
by Uber), then end up making a whole lot less. Sometimes less than minimum
wage.

Maybe it's the semi-predatory loans program. These drivers take out loans for
cars, thinking they're gonna get paid a good salary, but then they make
minimum wage and get locked into payments.

I can't shake the feeling that Uber is conning its drivers. And that we're
culpable.

~~~
tzs
Another difference is that the cashier, receptionist, and janitor have a good
chance of having an employer provided health insurance plan, and perhaps other
employee benefits.

Since Uber says the drivers aren't employees, it does not provide them with
any of that.

~~~
novok
There are many business that don't do a full 40 hours so they don't have give
benefits. And they demand you comply to a badly planned last minute schedule.
There are also businesses where you don't know if the tips are going to the
employees or to the business owner. You have no idea if your fast food server
lives a 2hr commute away and does 2 or 3 '30 hr' (no benefits) jobs to tread
water.

Also the benefits things is a uniquely American issue, in many other countries
it is not.

In the past the exploitive bigco was walmart. Walmart is still the same, but
we don't really talk about it anymore?

------
jrockway
The infrastructure they've built their business on is crumbling. Every so
often I'm running late and think to myself "I should just drive" (by which I
mean take an Uber). I check the driving times in Google Maps and it's as long
as waiting for the subway and walking. There are just too many people on the
roads for cars to be a competitive mode of transport; people only drive when
there is absolutely no other option.

The product has also gotten worse. People used to be happy driving for Uber,
and you didn't have to pay a fare to both the taxi company and the driver
directly ("tip"). Now Uber is just like taking a taxi; the driver is miserable
(and let you know it), and they don't get paid unless you pay the fare AND
give them extra money. It's a pain. I pretty much never use a taxi or Uber for
this reason; it just seems evil to force someone to do work they don't like
for very little money. That can't be good for Uber's growth.

(I love their open-source contributions, though!)

~~~
cactus2093
Evil is a little extreme. The drivers are still doing it, so they clearly
prefer giving you a ride to not.

To add in some more anecdotal stories — the only times I really take a lot of
Ubers and talk to the drivers are when traveling, and I’ve found the opposite.
In Austin and Portland recently I talked to quite a few drivers that were
happy with the job. And they all mentioned the flexible hours as a perk. One
guy was retired and just liked getting out of the house and meeting people and
making a bit of extra money to spend. A lot of people did it as a second job,
but emphasized that if they don’t feel like it on any given day they can just
stay home, which is very unlike any non-contract second job you could get.
Obviously there are also some miserable drivers, like the ones picketing and
wanting to be employees not contractors. But even though I’m pretty liberal on
a lot of issues it’s hard for me to jump on the progressive bandwagon on this
one because it seems so clear that most people, riders and drivers, are much
better off than if Uber didn’t exist.

I do suspect that the cost of living and housing in these cities I mentioned
has something to do with it. They’re still low enough that driving for Uber
can make you real money, compared to somewhere like SF where everyone who
doesn’t make like $150k or more is screwed.

~~~
jrockway
> The drivers are still doing it, so they clearly prefer giving you a ride to
> not.

I'm not sure they've thought it through all the way. They're not sick today,
so they don't need health insurance. Their car is new and doesn't need any
major work, so the finances of eventually having to replace their car don't
matter. Basically, I fear that we're getting the low prices we get by
mortgaging the future. One day, your driver is going to need surgery and 3
months off to recover. One day, your driver's car is going to need a new
engine. He goes into debt and suffers, all so that we can pay $3 less for a
ride across town after a night of drinking. That does not sit well with me. We
need to understand the true cost of someone's time and materials and make sure
we pay that for the ride.

I'm not saying it's ever been good. Where Uber gets you now, it was people
loaning you money to buy a medallion. Medallions are now worthless and guess
who is left holding the bag? Not the regulators. Not the bank that made the
loan. Just someone who wanted to work for himself now financially ruined; no
way to send the kids to college, no way to afford medical care, no way to buy
food or shelter in retirement.

I think I'll walk.

~~~
goatinaboat
_They 're not sick today, so they don't need health insurance_

In the U.K. they’re not sick today so they don’t need the NHS so they don’t
mind that Uber pays no Employer’s NI.

~~~
tomp
Employer NI is a scam anyways - some government or another needed more money,
but didn't want to piss off the populace by raising taxes, so they increased
taxes "invisibly" \- you still get paid the same (as specified in your
contract), you're just suddenly more expensive to the employer.

Also, if self-employed people pay less tax than employees, that's not their
fault. Again, it's a tax avoidance scam primarily perpetuated by the
government (guess why? so that the lawmakers and/or their proteges can pay
less tax themselves!). People respond to incentives, as they should.

------
Causality1
How they "got lost"? Uber has never been profitable. Ever. They sold their
investors on the idea that if you hemorrhage money to create growth profit
will spontaneously appear like mana from heaven. Recent events are just people
realizing, after ten damn years, that just maybe never ever making any money
is a _bad thing_. 100% market share of nothing is still nothing and it's time
to pay the piper.

------
todd3834
I feel like Uber became a gamble on self driving technology. It will be
interesting to see if they can last long enough to see it happen. I could see
them running out of money before that happens but I kind of hope they make it.

~~~
dumbfoundded
Uber really has no advantage to self-driving. A customer network doesn't mean
much if you cannot finance actually building the cars. They also don't any
training data to give them a tech advantage.

It'd make way more sense for an existing car company to build the features
into the car and let the owner rent out the car when they don't need it.
(Telsa, GM/Cruise).

Another option is to simply build the best technology and use ungodly piles of
money to finance building the cars. Only Google or Apple could really do this.

~~~
ma2rten
I don't think see the point of owning a car, if it's used by other people for
most the day. I think there is going to be a big company that owns most cars.

Uber could raise the capital for it on the stock market. The problem that I
see is that Uber doesn't have the technology.

In a world where self driving cars are a commodity, Uber's brand could be an
advantage. But in reality, by the time Uber gets access to the technology the
market has already been taken by others.

~~~
goatinaboat
This is a key bit of psychology that is often overlooked. People who get Ubers
exclusively think that a car is a metal box on wheels that goes from A to B.
But most people who own cars see them as a self-propelled room of their
apartment or house, a personal space in other words.

Like if you have a kid and drive your kid to places in your car then you
probably leave loads of kid stuff in your car, and if the kid spill something
you probably don’t worry too much about cleaning it to pristine state
immediately. But imagine after every school run or activity or playdate you
had to valet your car immaculate so strangers could use it. No one will do
this.

~~~
Consultant32452
I've thought a lot about this. I think, if the price is right, it could work
for families in lieu of a second car. In a "traditional" family there's two
vehicles. One is a commuter car and the other is a family-mobile (Van/SUV)
which holds all the stuff. In this case, the commuter car could theoretically
be replaced by a car service in many cases.

The other problem is that people would have to stop seeing cars as a status
symbol. A not insignificant portion of women I know think it's hot if a guy
has a cool/fast/whatever car. That will be harder to change.

~~~
mantas
At least in my whereabouts all (solo or both) cars have same role. One for mom
and another for dad. Likely one is coming in later to drop kid off and other
is leaving job early to pick him up. Or maybe multiple kids go to different
institutions. There's no clear separation between kids-ok and no-kids car in
family.

IMO the fantasy of car sharing is naive and I'd even say it's
counterproductive for the supposed goals. Just a few bits to consider:

\- empty cars are going to drive a lot of junk miles. More resources to be
burned, more wear on cars.

\- car-sharing companies will try to keep brand-new fleets. Reliability, image
and whatnot. What are we going to do with used-but-drivable cars?

~~~
ghaff
All of these services and capabilities make a difference at the margins--which
a second household car often is. But I suspect that a lot of the "people won't
own cars" refrain comes from people who either don't own a car or live in a
city and don't use it much.

In a lot of couples, people still own their "own" cars, keep their stuff in
them, customize them for specific uses (am I going to get an Uber with kayak
cradles?), and so forth. Even if the finances worked out, there's no way that
I'm dumping my vehicle for a generic shared car.

------
manbearpiggy
The taxicab industry is a saturated market that is heavily regulated. Uber's
only USP was that it could bypass regulation (and in some cases, tax).

Uber should serve as a warning imo - speculation drove the valuation so high
on what is a very fragile business model. Are we seeing a tech bubble?

------
buboard
The "network effect" lock in is real when your service is free to use. Put a
price tag and suddenly it becomes much harder to keep people from leaving. The
"growth at all cost" strategy is profitable for facebook & G, for other
things, the market will decide what profit margin they can have (if at all)

------
hn_throwaway_99
Curious: How would Uber engineers be able to detect Lyft notifications by just
the accelerometer and gyroscope? I can't even think of how that would work.

~~~
nsuser3
Maybe by detecting the notification vibration?

~~~
hn_throwaway_99
But how would they know it's from Lyft?

~~~
rgovostes
The article says, "But detecting sounds in a driver’s car without permission
was clearly invasive." But it also explicitly says it would use the
accelerometer and gyroscope. Perhaps these are sensitive enough to pick up
vibrations from the speaker.

Different apps have unique vibration patterns, as well. A text message on my
iPhone is two buzzes, but a NYTimes news alert is one. Perhaps if you detected
a single buzz, and then picked up motion because I'm double-clicking the home
button, you could presume that I'm switching apps to respond to the
notification.

Most drivers would have sound on and not purely use vibrations, because the
phone is not in their pocket.

------
kerng
I always wonder how HN does de-deduplication. Sometimes it works
automatically, sometimes it doesn't. This was already submitted yesterday:

[https://news.ycombinator.com/item?id=20778994](https://news.ycombinator.com/item?id=20778994)

~~~
grzm
The earlier submission likely didn't attract enough attention for the later
submission to be rolled in.

~~~
braythwayt
I suspect this is the issue. When you submit shortly after another submission,
it gets turned into an upvote. Or of the other submission makes it to the
front post, it gets all the attention, and nobody will vote for a duplicate or
want to discuss the matter again.

What it takes for this to happen is a second submission some time after the
first, when the first didn’t attract attention. This gives the article a
“second chance,” and HN is actually interested in good articles getting second
chances.

------
devoply
It seems none of this turn people into peon services at behest of capitalists
are really sustainable other than for deceptive tactics to bilk more money
than customers are willing to pay by for instance stealing tips in order to
make them seem like they are sustainable or growth businesses.

~~~
kuzehanka
> It seems none of this turn people into peon services at behest of
> capitalists are really sustainable

Like the entire employment sector?

At the core of it, all Uber/Airtasker/AirBnB etc. are doing is cutting out the
middle man and replacing it with a far more efficient technology. Regulations
will come, but they won't undo the existence of these platforms because
they're more efficient and better for everyone except the middle man.

> stealing tips in order to make them seem like they are sustainable or growth
> businesses

Like the US restaurant industry?

------
buboard
I hope a lot of the lost money goes to the drivers. This is trickle down
economics through another path.

------
inflatableDodo
I don't think they really knew where they were located in the first place,
then headed for somewhere that they were not equipped to get to. They've
always been lost.

------
YeahSureWhyNot
uber is making money from almost all of the rides and they keep around 35% to
themselves. uber has 22000 people (not including drivers) working for it while
facebook has 37000. all of Facebook's apps and underlying tech have been
tremendously evolving and developing for years which can't be said about
uber's app or their tech in general. uber will become profitable when they
shed at least half of their employees at which point they will become just
like Groupon or Zynga.

~~~
adjkant
> uber is making money from almost all of the rides and they keep around 35%
> to themselves

Is this documented anywhere?

~~~
YeahSureWhyNot
yes ask any uber driver will show you a screenshot of Uber's cut. on short
rides its actually pretty close to 50% in US

~~~
malandrew
It's called "take rate" and it was reported in the S-1 and is reported in
quarterly earnings for both companies. While some rides it might be 50%, it is
far from 50% for either.

