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Uber Founder Travis Kalanick Resigns as C.E.O. (nytimes.com)
2119 points by java_script 8 months ago | hide | past | web | favorite | 1291 comments



This may kill Uber. Kalanick is a jerk, but he created that insane valuation. Uber has less than a year of runway left at their current burn rate. Unless they can find a bigger sucker than the sovereign wealth fund of Saudi Arabia,[1] they're going broke in 2018. (That "undisclosed amount" in 2017 isn't a significant investment on Uber's scale.)

IPO? No way. They'd have to publish audited numbers. What's leaked out is bad enough. The real numbers have to be worse. Notice that leveraged loan in 2016.[2] All the details of that have to be disclosed in the prospectus for an IPO.

[1] https://www.crunchbase.com/organization/uber/funding-rounds [2] https://techcrunch.com/2016/07/07/new-reports-confirm-1-15b-...


You're right, but I think that's exactly how/why Uber's investors were able to convince Kalanick to step down.

Uber may or may not take over the world at some point, but Uber needs another round of investment in the next 18 months just to survive. If the existing investors refused to play ball, they could kill the next round, which really would kill Uber.

And here's another important moral of this story for founders: Kalanick has a controlling interest in Uber, so on paper, nobody could have removed him as CEO by shareholder vote. But despite complete control over the vote, you don't really own your company if you're dependent on future investment.

No matter what the cap table says, if you're not profitable, it's not really yours yet.


I dunno, my guess is that he was too set in his ways to make the leap from "CEO of a growth startup" to "CEO of a mature company".

If you look at founder/CEOs who have made that leap, they all tend to be very young (Jobs, Gates, Zuck, etc) and had very strong teams behind them.

Someone like Kalanick - who has run multiple startups to various exits - has been running startups all his professional life. His management style likely works very well at a startup, where failure is assumed so risk tolerance is high. At a startup, you need a field general leading the troops into battle.

But at a large, maturing company, you need a different skill set. Risk tolerance becomes a negative attribute once the company grows so large you can't control the risk anymore. Rather than a field general, you need a therapist capable of massaging the egos of the executive team and the board of directors. The job becomes more strategic and political -- execution is assumed, and failure is no longer an option.

I don't think Kalanick is that guy, and I think the board finally convinced him of that. But if I was an investor, I'd still be happy to listen to his next startup pitch...


> I dunno, my guess is that he was too set in his ways to make the leap from "CEO of a growth startup" to "CEO of a mature company". If you look at founder/CEOs who have made that leap, they all tend to be very young (Jobs, Gates, Zuck, etc) and had very strong teams behind them.

And in Jobs' case, it took an absence from the company of more than 10 years…


Jobs got fired from apple.

Edit: Downvotes for simply stating a fact?


Precisely. And then he was brought back, and in retrospect, many of his skills the second time around (charisma, design instinct, product focus) were the same that he had brought to Apple originally, but in the meantime, he had learned to temper his worst personal flaws (largely by learning to trust and listen to a small group of people who could counteract them).


I saw Ed Catmull (Pixar) give a post-Jobs death talk on youtube about how Jobs had completely changed during his 10 year hiatus and was far more empathic.


so empathetic he didnt want to give Pixar employees even a cent of equity before the IPO.


Any chance there is a recording of this available online?


Very interested in this as well. Parent says it was on Youtube?

Edit: I imagine it's this interview at AllThingsD[1]. Ed jumps into this topic right off the bat.

1. https://youtu.be/U8kH5eZdIqA


In his book "Creativity, Inc" there is also a chapter "The Steve we knew" talking about this.


I'd say down votes because it wasn't clear whether Apple would have fallen if Jobs remained. He pushed the same vision when he came back as when he was fired.


Yeah but he was less of an asshole when he came back.


Was he?

He was an asshole of monumental proportions before and after. I am so far removed that I am a poor judge, what would be a good place to look into this.


That is why he was absent.


And then got rehired because Apple needed him


Apple is an electronics company.


Uber isn't a mature company. They're not profitable and are burning cash like crazy.

More like "CEO of a growth startup" to "fixer who can pull an over-valued startup out of a nose dive." That's a much tougher leap.


Melissa Mayer is looking for a job. ;)


I think you mean Marissa Mayer, no?


Melissa, whoever she is, probably has a better track record turning around nose dives of high profile firms.


So Uber is walking down the Twitter path you think?


Uber's valuation is still based on its growth. Therefore, it still needs to be a startup to justify this valuation and burn.

I'd argue that a "mature CEO" is not a fit for Uber which needs to keep growing or die.


Uber's valuation is based on a formula that looks something like (raw brand value in an autonomous car world) - (burn rate)^(number of years until autonomous cars are widespread).

The valuation can be quite high if you assume that the value in the exponent is low.

But I personally think that the "autonomous vehicle revolution" is not going to pay off as well for Uber as they had hoped. It's becoming more clear that the market for autonomous vehicles isn't going to look like the market for human-driven ones -- and vehicle manufacturers are going to be looking to build their own self-driving auto services rather than sell self-driving vehicles directly to consumers.

Uber's biggest innovation was their app. Even complex apps like Uber are not hard to clone if you have any sort of budget. There's an assumption a lot of investors make about their brand value: it assumes that another, already strong brand does not enter the same market. Seeing as Tesla has made no secret of their intentions to compete directly with Uber in the ride-hailing space, I don't think that's a fair assumption. Would you rather call an Uber or a Tesla at this point?

And what does buying a Tesla in that scenario even look like? Do you buy a car and rent it out a la Airbnb when you're not using it? How much money do you get for that, and how much of a cut does Tesla get since it's their algorithms actually driving the car?

Don't get me wrong; the brand value is actually really high because hundreds of millions of wealthy customers worldwide know Uber. Even if the company fails spectacularly, someone will buy them for a few billion in a fire sale just for the brand.


Tesla's taking a very long view. They are thinking about what the world will look like when autonomous cars are ubiquitous, and then working backwards from some of the pretty gnarly realizations that sink in when you do that sort of thinking.

You realize that nobody will care as much about most of the things they currently care about when buying a car. Performance? Mileage? Handling? Horsepower? Fucking irrelevant if I'm chilling in the back seat and my car is just getting me to where I need to go.

So what still matters? Price. Comfort. Amenities. The upsell becomes the main sell. At a certain point, Tesla isn't even selling "cars" so much as it's selling mobile offices to one segment, and mobile living rooms to another segment. I could also see Tesla finding a way to place the burden of price elsewhere and offer effectively "free" cars to consumers. For instance, leasing or selling fleets to employers. Or to cities. Or to Uber. Or to Amazon.

Uber, on the other hand, sees a world in which nobody owns a car, nobody drives a car, and everyone hails an automated car whenever and wherever. Like that scene in Minority Report.

Both of their strategies are banking on the idea that cars, as we currently understand and experience them, will eventually become pure commodities. The difference is that Tesla is seeking margin and Uber is seeking volume. The cliche that Tesla is Apple and Uber is Amazon is sort of true in that respect.


I think Tesla also understands that once autonomous cars are ubiquitous, you won't own one: you'll just rent one for whatever needs you have in that moment. I think the best analog for the market dynamics that this will create is the airline industry -- a fleet of vehicles will be a massive investment, and ongoing maintenance, government oversight, etc. will be similarly cumbersome. But the job of the airline (actually operating the plane) is being done by the company creating the algorithms. That's a market control point that can be leveraged.

That's why ultimately, I feel Uber will end up being the Expedia/Priceline of the self-driving car industry. If you don't control the means of value production, you become a middleman. There's a reason they were working on their own self-driving tech rather than licensing from someone else -- everyone who is actually building this tech likely told them "go shove it, we can recreate what you do far easier than you can recreate what we do".


I keep hearing this, but why wouldn't you own one? Part of the reason to own a car is the immediacy of use. I don't want to have to do the equivalent of waiting for a lyft/uber every time I want to run to the grocery store.

Sure in large walkable cities with constantly circulating fleets car ownership might go away. For those of us in the suburbs who HAVE to drive everywhere, not so much. Even waiting 5 extra minutes for every errand (optimistic, given that my most recent lyft took 10-15 minutes to arrive) adds up fast. Let alone going out into the rural areas where Uber/Lyft scarcely exist and the nearest human structure can be miles away.

I could, however easily see a model where people rent their self-driving car out to Uber/Lyft when they're not using it. Driver fees would be gone, and they could take a greater cut that might even put them towards profitability.


1) Cost

2) Configurability

Anyone who is price sensitive won't want to pay the hourly rate to have a car sit in their garage all day/night doing nothing. Nor will they want to pay the up front cost and/or interest to hold a controlling share in the vehicle.

And configurability means you can take a 2-seater when you are going to work, take a 4-seater to lunch with you coworkers, take a hatchback to the farmers market to pick up your groceries, and then an SUV to the mountains, preconfigured with a roof rack with your ski rentals already on it, sharpened and waxed, and then take a mobile office for the drive home so you can get some work done, and a mobile bedroom for your trip down to LA so you can catch up to sleep.

But yes, the wealthy will still own private cars because they can have it waiting, just like private planes. Also, cooties.


Plane travel isn't a day-to-day event, even for those wealthy enough to afford private jets. You still have to pack, travel to an airport, get on the plane, crew has to be made ready, flight plan has to be filed, etc. It's a high-impact event that occurs at most every few days, even for frequent flyers.

Driving is a day-to-day task. My time's already short, if I have to add an extra 5 minutes waiting for pickup every time I want to go anywhere (once again an optimistic estimate, it would likely be closer to 10), on a busy day that's a minimum extra hour a day of time I've lost just standing on the sidewalk. Margin matters, even an extra 15 minutes a day adds up to over 90 hours a year.

Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car.

But in this scenario I'm losing a minimum 90 hours per year on the margin. If those were work hours, then at my current take-home rate I can decrease that number down to around $1065/year going forward. Given that I'm likely going to make more money as the years go by, these continuous rental services are going to have to be awfully cheap to be worth it for my situation, and I don't think I'm too far from the average.

Now sure, if you're buying a new car every 4 years like some people do then it might be worth it. Or if the cost of insurance is prohibitively high in your given location. Or if your job sucks and you just can't afford a car. Or if you actually need a broad variety of vehicles on a regular basis. There are lots of factors that go into it, but for anyone who's middle class or better I don't think it'll supplant ownership entirely. Or maybe it will and I'll just be with the sour-grapes number-crunchers in the corner ranting about margin to anyone who'll listen. :)


> Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car.

Nope, but they will be commoditized. If you have a car that all you have to do is pass it an API key and a location, there's not much value a ride sharing service can add to that -- which means there will probably be a bunch of them. Which means that the price to the consumer should be something close to [ (marginal cost of ride) + (depreciation cost of ride) ] * 1.03. And the cost side of that will benefit from scale for the business, but not the consumer.

Basically, once it's commoditized, it will cost you more to do it yourself than to pay someone to do it for you. Just like with currently commoditized services like AWS, there can still be good reasons to do it yourself -- but those tend to be special cases rather than the norm.

> But in this scenario I'm losing a minimum 90 hours per year on the margin.

Err, I'll play along. If you were in an autonomous car (or even a current ride-share), you could just work while en route rather than drive. I'm willing to bet you spend more hours sitting in traffic today than you ever would waiting on a car to arrive.


Well hey if it somehow costs less than then I spend on car ownership in a year, then sure! All just depends on how much my time's worth/how much these services charge if/when they come around. But right now the sum total of rides per year, whatever the cost model, would basically have to be sub $1000 per year to make sense for me. Cheaper if I end up making more money as time goes on. If scale and commoditization can accomplish that then I'll happily embrace a new golden age of transportation.

As for the rest, keep in mind we're comparing renting an autonomous car vs owning an autonomous car, not renting an autonomous car vs driving. So the actual rides are equivalent. The time difference is me getting in my car and telling it where to go vs me hailing a car, waiting 5-10 minutes for it to arrive (where my capacity to do any meaningful work is basically nil) and then tell it where to go, a minimum of 3 times a day. Maybe up to 12 times a day on a busy day. That's not an insignificant time loss over the medium/long term.

Granted it's all hypothetical and the actual value of the time lost would be highly situational, but it would be one of those small daily time-sucking inefficiencies, like walking into the other room to get paper towels as opposed to just putting a roll in the kitchen. When you do them every day, those add up.


I suspect Tesla will be the next major story of burn rate fueled firms confronting reality...


Tesla is a different story entirely. Uber is burning cash by subsidizing operations (aka buying customers); Tesla is spending it on capital assets and R&D. Money spent on operations generally won't benefit you beyond the current quarter; but capital assets (including intellectual property as the result of R&D) retain value over time and often pay for themselves in a relatively short period of time.

You'll notice a common thread throughout Elon Musk's "big bets" (Tesla, SpaceX, etc.) He is extremely conservative with operational spending, and all of these companies are very capital-intensive. Just look at the difference between a "Tesla Store" (small, maybe 3 or 4 employees, cars can be stored offsite wherever is cheap) and a normal auto dealership (huge, dozens of employees, majority of expensive real estate is used for parking cars). The Tesla store is very efficient compared to the auto dealer.

When you have high capex, it makes it easier to fund your company through debt rather than equity since those loans/bonds are backed by capital assets with a non-zero liquidation value.


That's what many said about Facebook when they had their crazy valuation. The same was said of Google before they figured out ads.

Tesla has a brand value higher than any other car. It's not an app that can be easily replicated. The dynamics are not the same as Uber.


Owning a car and the freedom to travel whenever wherever for whatever reason is a fundamental American value that won't go away.


Sure it will, when cars are available on demand anytime you want one for however long you want it at the press of a button. Convenience changes values, and ownership sucks when that kind of convenience exists.


I don't think so. I'd much rather pay the cost of ownership than rental every time I wanted to move about.

By definition rental is going to be more expensive than ownership.

I don't doubt that companies will have fleets of cars for their employees, etc, but personal vehicles are not going to go away.


That's short sighted and incorrect. Rental is only going to cost more than ownership if multiple people aren't sharing the cost, but the whole point of autonomous cars defeats that idea, renting will be vastly cheaper than buying.

> but personal vehicles are not going to go away.

For the vast majority of the population, yes, they will go away.


If that was true everyone would live in hotels. Renting rides only makes sense in cities where the cost and inconvenience of parking are high.

Look at the quality of the interior of the average cab and you will see why a lot of people would prefer to own.


That's not good analogy (living in hotels), better would be to compare how many people own their flat/house and how many rent it. Which would imply that a lot of people will still own their car ...


Why should rental be more expensive by definition? A fleet of autonomous vehicles can operate 24/7. Your own personal car gets a trip to work and a trip back home every day and maybe another round trip to an activity or chore.


That depends on how much do you need to use a car. If you dont need it that frequently, renting is cheaper.


who in the world doesn't need a car that frequently?

young people, old people, and homeless people.

Everyone else needs a car frequently.


Those who live in Europe. Or anywhere with decent infrastructure.


> You realize that nobody will care as much about most of the things they currently care about when buying a car. Performance? Mileage? Handling? Horsepower? Fucking irrelevant if I'm chilling in the back seat and my car is just getting me to where I need to go.

Mileage is a critical component of cost of operation, and of range without stopping, which are pretty much (along with capacity and comfort) the things that matter most if you aren't driving and the car is just taking you from A to B.

That's even true if you don't own it (even the cost factor, since that—assuming an efficient market—still controls what you'll pay to use it.)


Maybe something like Will Smith's car in I,Robot movie is what I imagined while reading this. Faster than a bullet train and automated.


I don't think Uber's valuation is based on autonomous cars. That would be a really stupid bet for investors.

Autonomous cars are a side bet. A few hundred millions in R&D that would also attract good talent and nice PR for Uber.

But I don't think investors were stupid enough to invest billions into Uber based on that bet. Specially considering the fact that anyone who gets that technology first can make it big and Google had a few years of head start.


Uber's valuation has to be based on an anticipation of autonomous vehicles. Otherwise, whether self-driving cars arrive in 5 years or 10, investors are putting money into a horse-and-buggy company.


Not necessarily. If your projection is that widespread autonomous vehicles don't arrive for 30 years, there is a lot of money in the meantime to be made being a horse-and-buggy company.


Some business models are fundamentally broken, then the growth is eventually no longer effective in selling the story that one day the company will be profitable.


> who has run multiple startups to various exits

What has he done besides Red Swoosh? btw, Red Swoosh was sold to Akamai and then later disassembled when they realized there was no "there" there.


That's one probable story.

Another is that the board could have threatened to sue Kalanick for violating the loyalty and duty obligations that corporate officers have to shareholders - e.g. for suppressing systemic sexual harassment, withholding details about the Otto acquisition, etc.


This would never have happened.


How do you know that?


Have you ever seen a Board sue a CEO in a similar situation?

I also don't think the examples he cited are violations of those duties.


He may not, but I have seen a board threaten a CEO in a situation like that. It never came to a lawsuit, the CEO stepped down but this sort of thing definitely can happen depending on how bad the situation is.


Investors sue all the officers all the time. United Airlines, Ebay/Craigslist, Skype, non-profits, etc.

Suppressing systemic sexual harassment violates his duty to report management problems to the board. Same with any meetings with Otto's founder a week prior to them leaving Google and founding Otto.


Indeed. The CEO of Sears was recently sued by investors:

http://www.businessinsider.com/sears-ceo-will-pay-40-million...


Can you explain how these large companies operate, explained like I'm a golden retriever?

How does a company so big not make a profit/could possibly go bankrupt?

My current understanding is companies either focus on growth (at a loss) or choose to focus on profit (with the risk of competition overtaking them or decay over time).

But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"?

If there is no "profit mode" ... then why are people investing in the first place?


Companies in burgeoning industries at this scale are concerned with longevity, specifically outlasting their competitors. Not short term profits.

They are thinking more along the lines of "how can we make 10 billion dollars per year, for the next 150 years." Think General Electric.

That's why they require huge amounts of money from investors, so they can aggressively grow to a size where other companies can't touch them.

The huge amount of capital is sort of like a moat.

When you're larger, you have something called economy of scale. Which means you have enough resources to do stuff the smaller guys can't do.

When you're larger, you also have something called a data advantage. Which means you know so much more about your customers, you can predict things and make decisions the smaller guys can't.


As best I understand it, Uber's play was for dominance.

Consider Facebook and Google. Together they're worth over a trillion dollars. Now ask yourself: what's the combined net worth of the second-biggest search engine and the second-biggest social network? Nothing close.

In a business where being second or third place is pretty good, you can switch to profit mode as you please. But Uber's valuation only makes sense to me if it lets them dominate a market like Google or Facebook does, setting prices and terms for the industry. I think that if they switch to profit mode, people will start to value them like a normal business, which would mean a giant drop in valuation.

I presume that's why board members supported an aggressive jerk for so long: Kalanick has been undeniably good at seizing territory, and if one sets aside little things like morals and externalities and long-term consequences, one could argue that aggressive jerkiness is exactly what Uber has needed.

Honestly, this market never struck me as one where dominance was even possible, so the investors' theories never made sense to me. But that's my best guess as to why they've been allowed to keep burning money like this.


>But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"?

Well that they might have to try and do now. But usually it is hard to move to 'profit mode' - you upset your customers when you start to charge double. The idea is that before you do that you have either killed of the competition or your competition 'moat' is so big that everyone wants to keep using you because of $reason and so you can charge what you like.

>If there is no "profit mode" ... then why are people investing in the first place?

Nobody is ever sure if any startup will get to 'profit mode' you simply look at their market / numbers etc and if you decide to invest then you hope the startup can figure it out. This is the investing gamble.


Here boy! Sit. Siiit. Sit!

Stay. Wait... wait.... go fetch!


You guys are talking about Uber dying, but I cannot fathom how this is possible from just the user's perspective. Uber seems to be everywhere, people take Ubers or driver for Ubers every day. How could a company this big fail?

Stop growing maybe, but going bankrupt and shutting down?


It's easy to grow when you sell dollars for 70c each. But, when you suddenly need to sell them for 1.01+$ nobody wants to buy.

Uber's problem is taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level. Which means their either taxi prices are lower and people stop using Uber or they pay drivers more and drivers mostly stop working for Uber.


Uber is profitable in certain cities, e.g. New York City [1]. They could turn cash-flow positive if they just gave up useless market share.

[1] http://www.businessinsider.com/ubers-revenue-profit-and-loss...


"Uber is profitable in certain cities, e.g. New York City [1]. They could turn cash-flow positive if they just gave up useless market share."

I would assume that would also depend on how much of their fixed costs they can shed in conjunction with that. Uber may not die quickly but it could still die slowly if they lose the ability to move forward because they had to cut too much of their R&D and sales infrastructure to get to that positive number.

Plus such a massive layoff would be a big red flag to customers too. By Uber's nature, a particular ride isn't a long-term commitment, but I think people would start looking for a stronger-looking horse even so. One of those differences between homo economus, who every time they need a ride rationally examines all their options regardless of the future and realizes that as long as Uber can complete this ride the internal state of Uber doesn't matter, and homo sapiens, who will take into account the fact that Uber doesn't seem to be doing well even if doesn't rationally matter at this particular point.


Their valuation is based upon the assumption that they can maintain market share and raise profitability in those other markets. We all know this isn't going to happen though, so eventually someone is going to eat the valuation hit but the game of musical chairs to decide that question is still being played.


I don't think their valuation makes sense. I'm more replying to the gist of this thread, which seems to be saying they're dead because they aren't profitable. They could be if they needed to prioritise that.

> someone is going to eat the valuation hit

Liquidation preferences mean earlier investors (and employees holding Common Stock) take the hit of a down round.


I thought liquidation preference mostly served VCs which could be earlier "earlier" investors no?


Disclaimer: this is not investment advice. Do not make investment decisions based off my Internet comments.

Let's say Company X has 9,000 shares of common stock outstanding. It raises $1 million at a $10 million post-money valuation with a 1x non-participating liquidation preference. Its cap table is thus 1,000 shares of Series A preferred stock on top of 9,000 shares of common.

It then raises $10 million at a $50 million valuation with similar preference terms. Its cap table is now 2,500 shares of Series B preferred stock on top of 1,000 shares of Series A preferred stock on top of 9,000 shares of common.

Let's contemplate a $100 million exit. Everyone converts to common at $100 million / 12,500 shares, or $8,000 per share. Series A bought at $1,000 and thus sees an 8x return; Series B bought at $4,000 and thus sees 2x.

Let's contemplate a $50 million exit. Everyone converts at $50 million / 12,500 shares, or $4,000 per share. Series A gets 4x; B comes out flat.

Let's contemplate a $25 million exit. Series B does not convert. Instead, it demands its 1x liquidation preference and gets $10 million. This leaves $15 million on the table, or $1,500 per share. Series A converts and sees its 1.5x return; B comes out flat.

Let's contemplate a $15 million exit. Series B does not convert and gets its $10 million. This leaves $5 million on the table, or $500 per share. Series A does not convert and demands its $1 million. Series A and B come out flat; common gets $4 million / 9,000 shares, or about $444.

Let's contemplate a $10 million exit. Series B gets its $10 million and comes out flat; everyone else gets screwed.

Let's contemplate a Theranos exit. Everyone gets screwed. Turtleneck doesn't go to jail.

TL; DR Later stages are least volatile. They get screwed last, but also see upside last. Lower rungs' returns pay for this safety.


Responding to Bogomipz:

> Can you walk me through the math. How does one arrive at 1K of Series A preferred from 9K of common stock? How is that being derived? I'm not following.

At time t=0 (probably at founding and when hiring its first few employees) Company X issued 9,000 shares of common stock. At time t=1 it decides to issue 1,000 shares in a series A offering (most likely to VCs and outside investors). They are separate events.

1000 shares x $1000/share = $1m raised for the company in the series A.

> Also what is meant by "post-money" valuation? I'm assuming there is a corresponding "pre-money"?

https://en.wikipedia.org/wiki/Pre-money_valuation

In this case, pre-money valuation of Company X = $10m - $1m = $9m

> Lastly by "coming out flat" you mean made whole again i.e recouped their initial investment? Thanks.

Yes.


Thanks, the t=0 and t=1 and these being discrete events cleared this up for me. Cheers.


Thanks for your detailed explanation. I had a couple questions if you don't mind. You stated:

>"Let's say Company X has 9,000 shares of common stock outstanding. It raises $1 million at a $10 million post-money valuation with a 1x non-participating liquidation preference. Its cap table is thus 1,000 shares of Series A preferred stock on top of 9,000 shares of common."

Can you walk me through the math. How does one arrive at 1K of Series A preferred from 9K of common stock? How is that being derived? I'm not following.

Also what is meant by "post-money" valuation? I'm assuming there is a corresponding "pre-money"?

Lastly by "coming out flat" you mean made whole again i.e recouped their initial investment?

Thanks.


What is there to liquidate? Some espresso machines and office furniture? The software isn't worth much; it's been copied by several others already.


Is the profitability in NYC before or after we discovered they were cheating their drivers out of money?

And there aren't too many NYCs in the world.


In NYC, the Yellow cabs have a huge, huge overhead because of Taxi Medallions that used to cost $1.2 million each which effectively added $125 or so for a 12 hour shift. The value of the medallions are now < $700K, but I don't know if the $125 overhead is still in force.

Uber is far more expensive in NYC than other cities such as Chicago.

Now that Uber has allowed tipping and since there is a rating system, everyone must now tip otherwise risk getting low ratings which effectively makes NYC rides even more expensive than they had been.

Most people don't own cars in Manhattan so that they either have to take mass transit or use Uber/Lyft/Taxi. There are many elderly on fixed incomes that have trouble ambulating (moving around) where lower cost taxi service is important.

In NYC at least, Uber doesn't need all of that corporate overhead and perhaps they should spin it off into some low-overhead operation.


Tipping with rating basically equates to a shakedown. You have to now guess at the subjective price that the driver "feels" is deserved instead of what was agreed upon.


It's not like it was impossible to tip before. Now you just don't need to carry cash.


I don't use Uber myself, but doesn't the driver not find out what tip you gave them until after they've rated you?


On Lyft, the driver doesn't know that you tipped or how much. I fail to see why this would be any different.


It has been assumed that the rating system will be blind, meaning the drivers will not be able to see tips before leaving their rating. There is still the social pressure to leave a tip, but it likely will not be quite as rude as not tipping a traditional cab driver.


Can you elaborate on what you mean when you say, "It has been assumed that the rating system will be blind"...

- There is already a rating system for drivers, and riders, so this isn't a "will be" thing, right?

- The rating system is not currently blind, as far as I know. Certainly riders can see drivers rating, and I believe drivers can see riders rating as well.


Blind was not the best term to use. I meant the rating will have to be made by the driver before he can see the tip given by the passenger, so they cannot leave a lower rating because of what they deem to be not enough of a tip.


Ahh ok, that makes sense. Hopefully they will do it that way.


I'm guessing tipping is only available in NYC for Uber. I didn't see that option here in the Washington DC area.


I received an email from Uber yesterday. They're slowly rolling out the tipping service, starting in a few cities at first to test it out. It will eventually be everywhere.


Isn't part of the reason end users use Uber is for its ubiquity? If it was only available in a handful of cities that I won't be visiting, I wouldn't bother with it.


I mean, running a livery service in NYC is a fine business and there's no reason you couldn't make money at it. But it is certainly not the scale of ambition Uber was pitching.


If Uber was successful only in NYC, London, and Tokyo, someone would make the business work in every other city on earth.


Yes, but that would tell the investors to forget about any pay day justifying the valuation.


I travel a lot for work. Uber works in a lot of places where mass transit sucks and taxi service is nonexistent.

Even if they cost more I have no idea how I'm going to get around when I travel. The other options are so disgusting I'm not going back to that.

I would use them even if prices went up 30%.


To be profitable the prices would need to go up for more than 30% on average, because 30% only get's them to break even if you assume zero changes in ridership.

There are a few costs like background checks that may go down when they stop expanding, but fewer than you might think.


And I used uber or lyft to ride back and forth to work every single day because it's so cheap. ~9 bucks compared to a 3 dollar metro ride (and I typically save 20 minutes). If it's 15 dollars I'd ride less often and I'd probably try to hail a cab first.

Uber demand is definitely elastic.


Oh it's definitely elastic. I used to take Uber everywhere, until they (apparently) removed the restriction on driver's to use nice/current cars. Once drivers starting showing up in 10 year old beat down cars, my riding plummeted.


me too


> taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level

I don't understand why that would decrease overhead?

I also don't understand why the other aspects of overhead (dispatcher, offices, taxi lots) don't add up to more than Uber (whose only cost is servers and support)


Of course they can be profitable. Uber doesn't have overhead. There are no Uber factories or millions of rotting vehicles in a warehouse. At the core it is a iOS/Android app (4 guys could maintain this), a call center (India), and a law firm (outsource it). They would have to cut their staff, remove the ping pong tables and get real but profitability is there. They are on a land grab.


You really don't know what you're talking about. There's more to Uber than just an app. There is a large set of backend services responsible for everything from authorization to billing, promotions, logging, road directions, ETA forecasts, driver portals and so much more. I've never worked there but ventures like this tend to be very complicated with lots of moving pieces.

More than a team of four can manage certainly.


Maybe but this still seems like something that could be run out of one well maintained data center. Certainly fewer than 6,700 could manage it?


Scale, payment processing, and customer service all take manpower.


OK customer service I get, but why the first two? I mean yeah you'd need an IT staff obviously but certainly not that many.


Just dealing with the different laws about taxi services in different countries/cities itself would require a staff that size or more. And there's a lot more than that behind the scenes, like security checks on drivers, managers for each city to decide incentive plans for drivers etc. It's a very massive endeavour, and the size of the company is justified.


It takes a constant number of engineers to push a single feature, no matter the number of users.

It does not, however, take a constant number of engineers to maintain the infrastructure that lets a single engineer push a feature to millions of users. (P/I)AAS can help, but you still need people to monitor performance, find regressions and bugs, and track them down.


Call center in India ? But but but ... you guys said Indians are taking jobs away from the US. Why cant business be profitable with call center in the US itself. Greedy corps wants profits, outsource it and then innocent Indian employees gets the flak for it. Just wow !


it's also a massive recruiting and advertising campaign, since they have no product without hiring huge numbers of drivers


That's the point. Their technology costs are pennies per ride, revenues dollars per ride. They are only spewing cash trying to grow faster by buying more drivers in more countries. They could hire organically for much less.


They could hire organically for much less.

Uber only works if there are enough drivers so that I can always get a ride. If I get told that I have to wait 30 minutes for a ride more than a tiny handful of times I'm uninstalling the app. Growing organically in region would be very tough since it would take too long to get enough drivers in place that users could rely on the service and conversely drivers would be unwilling to sign up because not enough users where bothering to use the service.


Especially when there are competitors. Its what seemed to happen with Lyft in my area. A lot of people I know preferred using Lyft, because of the morally shady nature of Uber, but Lyft would take 15-20 minutes for a ride, and Uber would have one in 5. Pretty quickly everyone (myself included) just started checking Uber first.


Sure, which is why Uber has invested so much in driver acquisition in expanding it's territories. But once those territories are established they should be able to spend far less. If driver times start to become longer, it means existing drivers have a higher utilization and will make more money, drawing more drivers to drive for uber, and solving the problem in a virtuous circle.


> iOS/Android app (4 guys could maintain this)

Those 4 can handle everything backend related too?


> Uber's problem is taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level.

There is always demand for Uber/Lyft just because there isn't a taxi cab nearby 24/7. How is that difficult to understand?


> There is always demand for Uber/Lyft just because there isn't a taxi cab nearby 24/7.

There's certainly a market for app/phone jailable cabs because there isn't one within street hail range at all times, but regular cabs have been phone hailable forever (it's the only way to get one outside of a few major urban cores) and are increasingly app hailable. Aside from regulatory supply restrictions (flouting which may not be sustainable) there's no real basis for a market for alt-taxis as anything but interchangeable competitors supplying the same substitutable commodity as regular taxis.


>regular cabs have been phone hailable forever

For me, this wasn't particularly true, especially in San Francisco. The dispatch was unreliable and slow.

Other areas, sure!

Now that the idea of phone-trackable dispatch has become commonplace, regular taxi companies are starting to do this too.


> but regular cabs have been phone hailable forever

With Uber you also get know the fare upfront, the time of arrival, no need to tell them your address, there is a driver reputation filter, passenger insurance and it's safer than normal cabs in many countries.

Not the same thing as a phone call.


Well, Uber, Lyft, or some other livery service.


Uber doesn't make enough from fares to be profitable, they use investors' money to heavily subsidize them. Once the investor money runs out, Uber won't be able to pay drivers unless they jack up prices considerably. Once they are no longer price competitive, customers will move to other services.

Turns out the car service business isn't very sticky at all (even the drivers work for multiple companies...). Drivers start to leave and the downward spiral begins. They just couldn't get to self driving vehicles fast enough - which may be why they were trying to borrow technology from Google.


Come on, self driving cars was never a solution for Uber in the medium term. Cabs are in the midst of normal traffic, not even highway or anything. No way this will work good enough within the next 15 years


"Uber is a play on self-driving cars" is a misleading but often repeated story.

When Uber started and raised its first investment rounds, self-driving cars were too far away to be part of a business plan. I doubt the latest investors take that view either - spending billions per year until self-driving cars happen is a way too expensive way to build up a fickle user base who will switch the moment a competitor offers 10% lower rates.

And when self-driving cars do arrive, there is no reason to believe that Uber will have exclusive access to them. Google and other software companies will be licensing the technology to anyone who pays for it, car manufacturers will be selling cars to anyone who pays for it.

It may kill taxi driver as a career, but there is no defensible advantage to Uber compared to Lyft, Hailo, Taxify, and so on.


Yeah. The whole driverless car thing with Uber is such a load of crap. It wasn't even in the plan until they started hemoraging money and had to come up with some excuse to keep investors on board. And by that point they were late to the game.

Uber as a play on driverless cars is a smokescreen to distract people from the fact they have little advantage over other companies and can't for the life of them turn a profit.


> they have little advantage over other companies and can't for the life of them turn a profit.

At this point why doesn't Uber just lay off a HUGE portion of their staff and kill the R&D. It's hard to imagine if they downsized significantly and quit investing in self driving cars, that they couldn't tip the needle into profitability.

Isn't that a fairly common move for a startup? Burn money to get off the runway, then downsize to stabilize?


not in the medium term, but maybe some investment thought they were going to have it in the long term and now - given legal issues - nobody is going to think that.


Ha, nice use of "borrow".


> Once the investor money runs out

And when will that be exactly? This entire thread is overflowing with nothing but fantasies of Uber dying - basically raw emotional hatred - and little else.

Eight years on, they've never had a serious problem with raising capital and there's no evidence to suggest they'll struggle to do so now. The absolute last problem that Uber has right now, is money.


>"This entire thread is overflowing with nothing but fantasies of Uber dying - basically raw emotional hatred - and little else."

Except that there are no shortage of people who have maintained this view long before Uber's CEO was asked to resign and before Susan Fowler's blog post. Also there are also plenty of people who have commented here that believe Uber's prospect without Travis Kalanick as CEO are not good and also believe he should not have been removed.

>"Eight years on, they've never had a serious problem with raising capital and there's no evidence to suggest they'll struggle to do so now."

You might want to look up the term "irrational exuberance":

http://www.investopedia.com/terms/i/irrationalexuberance.asp


Uber has been a fantastic means to lose billions, so far. It's not clear that they have a way to profitability. Are you going to invest in them? Do you trust their numbers? If so you might want to explain why.


"no longer price competitive" to who?

"drivers start to leave" where are they leaving to?


Borrow or steal, it is all the same, until the courts rule otherwise...


Anecdotally, I've personally taken Lyft almost exclusively lately. Among my peers, I've noticed similar trends. I've even heard shifting in language -- rather than say "call an Uber", I've heard "call a Lyft"., Plural of anecdote is obviously not data, but those are my data points.


This conversation was had in a thread a week or two ago. The consensus was that the Lyft or other alternative anecdotes are far and few between. Like saying call a Lyft has to be rare and probably just in certain small circle. Most people are on Uber.

The thread link is: https://news.ycombinator.com/item?id=14456973


We've made the shift in NYC to Lyft or JUNO.

Not even sure if I installed Uber last month when I got a new iPhone.


Same. Juno in NYC, RideAustin in Austin, and Lyft everywhere else if there's not another local(ish) tnc


My data points are that I've been taking Uber exclusively, because Lyft can't seem to figure out how to operate outside of the US. :-)


The reason it's so big is they're burning VC cash to subsidize rides.

So yea when billionaires are paying your taxi fair to try and drive the local taxi firms out of business naturally they're everywhere.

But when that cash runs out the necessary price hike could just as easily drive them out of business. It's not like the drivers have any great loyalty.

We really need pro-competition legislation to stop this sort of predatory capitalism.


People keep saying Uber is burning cash, but their core business model is sound:

$5 per hour per driver goes to Uber

Assume 80,000 drivers (half of # U.S. Uber drivers) drive 8 hours a day, 7 days a week

52 weeks in a year

5x8x80000x7x52=$1,164,800,000

So about $1.1 billion just in the US. The only expenses are at headquarters (engineering, operations, design, legal, marketing, support) and the tiny field support offices they have in each city (local, entry-level employees).


As far as I know, Uber loses money on driver incentives and stuff like pool/share options, where they pay the driver the amount over the discount granted to the customer. I'm assuming a lot of such tricks are how they keep their drivers, and this is what they spend money on.


billionairs can get burned too


Yes, but the ill effects are wildly out of proportion.


> We really need pro-competition legislation to stop this sort of predatory capitalism.

That's a non-sequitur


>"We really need pro-competition legislation to stop this sort of predatory capitalism."

This conclusion refers to the idea of VCs(billionaires) subsidizing rides in order to remove the entrenched player(taxis.) How is that a non-sequitur?


It sounds like the parent poster is saying that "pro-competition legislation" would prevent a new company (funded by VCs) from competing with an entrenched industry (taxis).

I think the confusion stems from saying pro-competition legislation will prevent competition.


What's bad about VC billionaires giving cheap rides to other people?


It wasn't my comment. I was just commenting on it not being a non-sequitur.


If the unit economics don't stack up, then the bigger it is, the faster it'll go out of business without external investment. Pervasiveness doesn't mean it's profitable, it means it's popular. If I had a network of people giving away $1 for $0.90 it'd be super popular.

As it is, Uber doesn't need to do too much to hit break even. Some central costs cut, and a slight rise on price.


I agree, but investors don't want to break even. The fundamental tension here is high operating margins -- 60% not being uncommon operating margins for a software company -- are incompatible with a highly competitive industry. But it's those fat margins that justify massive R&D investment. Although software companies have enormous operating margins, they generally are not more profitable, because of huge fixed investment.

That creates a bit of a puzzle for industries with very thin operating margins that want to make significant investments in R&D. Generally they don't do it. That is why innovation at the Grocery store or in Long Haul trucking is so slow. From an engineering point of view, they are ripe for disruption, until you bring in an accountant to tell you that the disruption doesn't pencil out. Uber, like everything else, said to hell with it we're going ahead anyway. So how can they make things pencil out?

One option is to raise unit revenue in the future, which in an industry that's currently competitive means driving out the competition. IMO Uber was originally targeting this. But it turns out -- and really anyone could have told you -- that what Uber is doing isn't technically difficult. The heavy lifting is smartphones, GPS and Maps, whose availability made Uber/Lyft possible. Uber doesn't own any of the key technologies that make Uber possible, nor do they have a track record of being able to tackle really hard technology problems. They've had huge problems scaling and when Uber started using its own maps, it was a disaster. Bad maps is the #1 problem with Uber. Lots of new competitors have sprung up already that give basically an equivalent user experience, so Uber is not going to get real pricing power.

The next option would be "Lower unit costs in the future", But so far, that means spinning tales about self-driving cars, which is way beyond their technical ability as well as decades out even for those that have the chops to pull it off. IMO this only works because the latter round investors are naive about technology and the current investment climate is conducive to reaching for yield.

So while it's perfectly possible for Uber to continue existing as a concern, I don't think it's possible to satisfy their investors, and this means, unfortunately, that Uber may not make it. Many companies engage in a lot of self-destructive acts to meet unrealistic profit or growth goals set by investors, but in this case, Uber has only themselves to blame for setting these expectations. This is a shame, because I prefer Uber to Lyft and think they've created enormous value for both riders and drivers.


There is nothing that differentiates Uber from lyft, or another ride hail company. Drivers could easily switch between the companies. Driverless tech will be the differentiation. Whoever gets there first, even in limited urban centers will win the taxi industry


> Whoever gets there first, even in limited urban centers will win the taxi industry

Why "win"? There's no moat. I suppose there will be patents, but those expire or can be worked around.

More likely is that whoever gets there first will make all the mistakes that others can learn from. Every major car company has a self-drive effort now. Apparently Tesla, GM, Ford, and BMW are pretty far along. Lyft has a few partnerships here. It's only a matter of time before most cars drive themselves to some degree.


yeah expiring patents, and effective partnerships, give enough cushion for one company to get far ahead enough to dominate the business.

self driving hardware+software is much more complex than just writing some software... a non player can't trivially get into the game just because someone else have higher advancement


Competitors won't have to develop this stuff on their own. They just need to buy a self driving car that has an API. Trying to vertical integrate the self driving software is a moonshot.


guarantee you that for the initial years, self driving car will take the form of proprietary units, used for specific purpose, in isolated locations. Akin to self driving rail transportation.

No mass produced self driving appliances that any dumb human can use improperly. The industry won't take that chance of a poor impression and destroy public's confidence all together.

In urban/high density locations, a ride hail company leveraging driverless vehicles can make a killing.


I think you meant "exclusive" partnerships, similar to how the iPhone was exclusive to the at&t network on launch and for a few years thereafter.


It's a relished fantasy that Uber is dying or is going to die, because so many people in tech circles hate Uber and Kalanick.

It's not actually dying and it's not going to die.

Routinely skeptics here will point out that Uber is selling a $1 service for $0.75 (or a similar invented sum). Said skeptics then intentionally, comically ignore that Lyft is and has been doing the exact same thing and has radically less capital & valuation to play that game with. The name of the game is: last company standing; that's going to be Uber because they can afford to be and Lyft can't. It's that simple.


Lyft seems to be a fundamentally different company in two ways that gives them an advantage over Uber. First of all they are much happier to partner with local players and don't feel a need to 'own' the entire world in the way Uber does. Secondly Lyft seems happy being a ride dispatching service and don't see it as a temporary stepping stone towards much grander transportation ambitions.

The downside of this approach is that Lyft doesn't have anywhere near the upside potential that Uber has. If Uber pulls off all of its ambitions it will be larger than Lyft could ever dream of being. The upside for Lyft's more humble goals is that it's chance of reaching them are much larger.

Unless Uber is willing to change its DNA and scale back its ambition, give up on its long term goals, and stay just a basic ride dispatching service then your analysis is incomplete. However perhaps this scaling back is what the CEO change is fundamentally about.


Regardless of what you're saying, Lyft lost $600M on $700M in revenue in 2016. Those numbers are awful. And worse than Uber. Lyft isn't in any better shape than Uber in terms of needing more funding almost every year to sustain the company.


True. However I personally don't think either company can do too much about revenues at this point and it's all about controlling costs. From an outsider point of view it seems that Lyft is in a better position, culturally if nothing else, to do this. At least when compared to a Kalanick run Uber. It will be very interesting to see what priorities the next CEO will have.


Internal culture or external? The vast majority of people have little idea of Uber's issues and if they do have some idea, they don't care. I'm not saying that's how everyone is. Just most people. Especially outside of circles like HN.

If internal, I gusss that's true. But we don't hear much about Lyft's internal workings. We don't know the morale of workers or how productive the company is.

About controlling costs - that's why I mentioned losses. Lyft is only in the US yet its losses are worse than Uber. It makes Lyft looks worse to me. Has Lyft said it is profitable anywhere or even break even?

But then Uber's insane valuation is not helping itself. I guess both companies are in bad positions, hard to say which is worse. And I agree it will be interesting to see how Uber does over the next year with new top executives.


By culture I meant how they think internally about growth vs profitability. Uber under Kalanick feels like they wanted to dominate every market or die trying and Kalanick didn't strike me as the sort of person who would be happy running fairly successful company making modest profits. Lyft however seems like they'd be content with being number 2 as long as they're profitable. This is of course pure conjecture on my part.

Has Lyft said it is profitable anywhere or even break even?

The CEO said in a recent Forbes interview that their losses are currently coming in "under budget" and that they have a definite path to profitability. Make of that what you will.


I've seen Lyft saying those sorts of things for some time now when I skimmed around while replying to you. It seems like Lyft has been saying this sort of thing since around 2015/2016. For now I don't believe them. But I'll take that back if they do show what the CEO said when financial info is revealed for this year.

And yeah agree with Kalanick and Uber by extension seem to be only content with winning everything. They only gave up on China after spending a ton of money and clearly not being able to win. Luckily they were able to get a decent stake in Didi from the merger and leaving China.


> The vast majority of people have little idea of Uber's issues and if they do have some idea, they don't care. I'm not saying that's how everyone is. Just most people. Especially outside of circles like HN.

The drivers certainly care.


Agreed, but they'll get more funding. the big thing is, keep the support of your constituents and you'll keep getting funding.

Travis offended and insulted the drivers, while Lyft is chugging along quietly. As long as people have brand loyalty to them (which they sure do), they'll win the ridesharing battle as it's looking like Uber is teetering


> Secondly Lyft seems happy being a ride dispatching service and don't see it as a temporary stepping stone towards much grander transportation ambitions.

Yeah... that's why they have so much investment from car companies... ;-)


> Said skeptics then intentionally, comically ignore that Lyft is and has been doing the exact same thing and has radically less capital & valuation to play that game with.

I'm blown away that you have to read more than half way down all the comments to get to this observation. It should be an automatic reply every time someone echoes the fantasy that Uber runs out of money and Lyft is magically left to take over. I don't understand the mental gymnastics and contortions one needs to make to arrive at this absurd idea.


Correct, if Lyft and Uber IPO tomorrow. Most of these people are going to put money on Uber. Lyft is a lifestyle business its. Uber is a public utility.


> Lyft is a lifestyle business its.

Not sure what "its" is, but characterizing Lyft as a lifestyle business seems absurd. It's not as highly leveraged s Uber is, but that's one of the few companies I can think of that one might consider more aggressive.


Public utility? That's funny.


> going bankrupt and shutting down?

Well, if you're spending more than your revenue, that is the eventual outcome if money stream from investors dries up.

Uber doesn't really have many physical assets that could be liquidated. Their value is entirely based on profitability. Which is currently negative.


The drivers don't suddenly cease to exist when Uber shuts down.


You don't have a company yet if you're dependent on future investment.


This is an unpopular sentiment around here, but needs to be said more. You're still a child playing with other people's money until you're actually self sufficient.

In some cases this lack of maturity is particularly striking.


Eh, I think that's taking it a bit too far.

I think it's far to say you don't have a sustainable business model yet if you're dependent on future investment.


Yes yes, clearly there are points in time where there is a real entity that exists as a company. But in the context of "can I lose all this?" where you are a founder building something, you don't just not have control, you don't have anything when you are dependent on future investment.


I would argue that _every_ company needs to be worried about the question "can I lose all this?"

Even a company that is fully owned, with a sustainable and profitable business model, needs to ask the question "can I lose all this?" every day.

If the metric for "you don't have a real company" is you could potentially lose it, then nobody has a real company.


Given K ruthless record I'd say he bailed before the crack more than stepped down to see it flourish.

Would wait to see what'll happen to his equity before take a bet, but gonna guess will be sold high and eventually rebought after the crack when K will try to step back in at a better condition, with less stakes and more hard cash.


If the existing investors refused to play ball, they could kill the next round, which really would kill Uber.

If there's a next round, it will probably involve a big haircut for the early-stage investors.


I think you mean a big haircut for the later stage investors. Even if Uber has a down round, the earliest investors will probably still have positive returns (at least on paper).


> Even if Uber has a down round, the earliest investors will probably still have positive returns

No, they could be crammed out by later investors' liquidation preferences. Depends on how down the down is.


You are confusing a down round with a small exit event (here and in other places in this thread). Liquidation preferences don't come into effect until a sale of the company - so no one is "crammed out" by them in a down round.

Though these two types of events are obviously correlated (a down round makes a smaller exit more likely) they are not the same and should not be confused. A financing at a valuation that is a billion dollars less than the last round would be a down round, but a sale of the company at that same valuation would still far exceed the liquidation overhang.


Haircut does not imply that they will have negative returns. It could mean that instead of a 50x ROI, they end up with a 5x ROI.


How much interest does he actually control right now?


“He who can destroy a thing has the real control of it.”

Dune, Frank Herbert


"The machines themselves condition the users to employ each other the way they employ machines."

- God Emperor of Dune, Frank Herbert (a prescient book on social feedback loops, my favourite in the series)


> Our main way of relating ourselves to others is like things relate themselves to things on the market. We want to exchange our own personality, or as one says sometimes, our "personality package", for something.

-- Erich Fromm ( https://www.youtube.com/watch?v=Cu-7UDT0Xe4&t=1m34s )

> The danger of computers becoming like humans is not as great as the danger of humans becoming like computers.

-- Konrad Zuse

And when Picasso said that computers are useless because they only provide answers, was he just being witty, or pointing at an abyss, knowingly or not?


Ironically applies to both Kalanick & the investors!


Any of us could inflict real damage or destruction on our surroundings especially while driving but that doesn't mean we have "control" over them.


Insofar none of us would want to suffer the consequences of such acts we cannot truly say we are capable of carrying them out.

It is what we mean when we claim someone is "incapable of <x>" such as murder. It does not mean they do not physically possess the means, but rather that they lack the psychological impetus to do so.


So a person who is psychologically capable of murdering has more control over me than one who isn't, and both are less in control than, say, a tsunami? Maybe, but neither can get at things I give freely to a friend? Control is the incapability of either friendship or self-defense, in my opinion, so yes, in a way always it requires numbing or killing something or someone. Leashes transform those on both ends.


"So a person who is psychologically capable of murdering has more control over me than one who isn't,"

More relevantly, a person who is both capable and willing to restrict your freedoms, potentially even unto death, has more control over you than a person who doesn't.

This isn't abstract theory. This is a description of "government". Would you pay any attention to the people claiming to be "the government" if they didn't have credible mechanisms for backing up their demands?

It is preferable that government not be solely founded on this power relation. It shouldn't be considered "sufficient" for good government. But it is certainly "necessary".


Relevant wikipedia article on the subject:

https://en.wikipedia.org/wiki/Monopoly_on_violence

It's why "non-coercive government" is an oxymoron.


Note: downvotes are not a rebuttal. Not that I think that it's possible to dispute that statement by means other than "I'd like the world to work differently", but if someone were prepared to offer an argument, that would redound far more to their credit. And if you think I'm wrong, don't let me dangle in ignorance, otherwise I'm liable to keep saying such things.


The original quote does fall apart, as most quotes do, upon closer inspection.

Say you can kill a man, but irregardless of the threat to their life said man would refuse any and all of your orders, who can then be said to have 'control'?

In the end control means the ability to influence outcomes. There are many metrics, and for some choice of metric the capability of destruction is control.


The original Dune quote makes perfect sense in context. Paul was talking about destroying the spice supply by making Arrakis barren of sandworms. "Control" in this context is control of the spice, specifically being able to control there being none at all.


He's "Amazon profitable", Uber has profits if you neglict investments for market dominance.


The investors would have had to pay up given size of previous investments. The VCs just timed it "well" with Traviss personal tragedy. /smh

They could smell the liquidity ...


Are you implying he's being strong armed into selling some of his shares?


That's insanity. Why would existing investors refuse to play ball? They're basically locked into it. Uber's massive valuation is built on its potential and to anything they do that hurts Uber's access to capital hurts them.

I think they made a huge mistake in pushing Kalanick out, but I'm an outsider. There is surely something dark at play here, that we don't know about.


Liquidation preferences, senior equity, and debt-like terms, perhaps? If Uber is valuable enough in liquidation, it'd be a great opportunity to zero out the common stockholders and go home with a pile of cash.


you are absolutely right depending on liquidation preferences terms cascade it could be a great deal to force an IPO or another type of exit for later investors.



> Uber has less than a year of runway left at their current burn rate.

If true, this seems far more likely to be a cause of Uber's death than Kalanick resigning. That, and the valuation being as insane as it is, which is also Kalanick's fault, which as you point out, makes it hard to find greater and greater suckers.

Perhaps they'll be better off all around without Kalanick, assuming they can get the business side on track and get the burn rate under control, and perhaps make their business sustainable rather than a gigantic handout of VC money.


Uber bought market share by subsidizing rides. That can't go on forever. Or much longer, without more capital. They're already borrowing heavily, having run out of equity sources. The business model hype is supposed to be that they push taxis out of business, then raise rates. Or self-driving cars will somehow save them. Both are unlikely.

[1] http://knowledge.wharton.upenn.edu/article/growth-vs-profits...


Completely ridiculous. The model was not to raise rates in the future. The whole reason they could raise so much money was that they showed as they reduced rates, they induced more demand. They also had data showing increasing lifetime customer value. I recommend reading Brad Stone's The Upstarts. If they can have higher profits/customer while having lower rates than other companies, then they actually have a moat. I don't think they got to the moat, though.


> they showed as they reduced rates, they induced more demand.

Also known as losing money on every ride but making it up in volume.


If you have costs that scale sublinearly with volume, such as software development or idle driver time, then margins really do improve with volume. Many successful businesses use economies of scale as an sustainable competitive advantage against competitors.

In fact, the central concept of venture capital is premised on the idea that businesses start out unprofitable but become profitable as volumes scale.

To what extent any of this is the case for Uber is worth debating. So feel free to have that debate, and bring forth new information or new arguments that support your thesis.


> If you have costs that scale sublinearly with volume, such as software development or idle driver time, then margins really do improve with volume

And if you're subsidising rides below cost because you're trying to grow your market and you have piles of VC cash so you don't care that you're burning through money, then eventually you're going to run out of that money and will be in trouble if you can't raise any more.

Time will tell whether Uber was building a sustainable business or just burning through VC cash.


Uber was just burning through VC cash based on the idea that 'if you're the biggest jerk on the block in every possible sense, capital will decide you're going to be the winner because you're meaner than everybody else'.

Winners don't quit, so Uber is dead to capital now: it was always based on maximum evilness and all the stuff about disrupting and ridesharing was mere window dressing.

Note to capital, wherever it is: this is what you get when you go by personality rather than studying the fundamentals of a business. You can't simply pick the most toxic individual or company, claim they're going to kill everybody else, and then prop them up with valuation. The valuation didn't fail but your pet Dr. Evil did, and that was your proxy for maintaining the 'killer' behavior. Unless or until capital can be personified as evil AIs that cannot die, this was never really an optimal strategy for capital.


Considering that Lyft is viewed as the "nicer" company, do you think its fundamentals are more sound? Will it reach profitability?


Here is what Uber has built, save your car EMI's.


When you're #1 and losing money on every transaction, that didn't work.


Only if you are in #1 in a pie that isn't getting bigger. Ridesharing is most definitely not a developed market globally. There is a lot of room to increase the size of the pie.


Ridesharing is definitely not a developed market globally because in most of the rest of the world the margins on organising transport around cities are already measured in cents rather than dollars. These markets are not going to be more profitable for Uber than the ones they started in.

Particularly not if you can't set up an operation in an Western city with expensive taxi services without losing money on every ride you operate even before centralised overheads are taken into account.


Is there evidence that Uber is has negative gross margins in developed Western cities? (Not a rhetorical question - I'm open-minded and very curious.)

From their 2015 financials, it looks like revenues have been consistently higher than cost of sales.

Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...


Is there evidence that Uber loses money on every transaction?

According to financials from 2015, they have higher revenues than cost of sales:

www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html

This suggests to me that marginal rides are profitable, even if they aren't profitable enough to cover fixed costs of software development or investments into new geographic markets.


When you're giving drivers more cash than the customer is paying you, there's no way to 'scale' out of that.


Is there evidence that this is the case? And if so, could you share it?

From their 2015 financials, it looks like revenues have been consistently higher than cost of sales.

Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...


Granted, it was only promos in certain cities to drive growth of both drivers and riders.

Quick Forbes link I found https://www.forbes.com/sites/ellenhuet/2014/07/02/ubers-newe...


Thanks for the source and the reply. It's good to know that in 2014 they had promos in developed city markets that dropped their gross margins into negative territory.

Nonetheless, my impression is that this is more the exception than the rule, based on the financials I linked to earlier.


But not Uber.


If you're losing money on every ride, then your aggregate profit on all rides will be in the negatives. More volume just makes the total loss bigger, because that's more money you've been giving away.


That's the point, it's an ironic phrase.


But are they losing money on every ride? I thought the whole point of subsidizing rides was(as OP comments pointed out) to raise demand, both for drivers and riders, they first entice both ways with the promise of lower rates and higher payoffs, then slowly increase their cut of the pie against the driver's payoff and increase the rates on riders.

I'm not saying this will ever offset their increasing losses, but that is what always seemed the long term goal of monopoly.


Yes.

> I thought the whole point of subsidizing rides was(as OP comments pointed out) to raise demand, both for drivers and riders, they first entice both ways with the promise of lower rates and higher payoffs, then slowly increase their cut of the pie against the driver's payoff and increase the rates on riders.

Right, and by the logic that decreasing prices raises demand, increasing prices will decrease demand.

That's my point, and the point of critics that are often ignored. Their customers will bail the moment they start getting charged the $25 their $10 ride actually costs. And that increase will be to break even. Not make any money. Just break even.

Uber will never achieve a monopoly. There are buses, bicycles, and used cars for $1500. People aren't going to pay $600 per month on a ride hailing service. I've already ditched Uber, and so have many of my peers, in favor of alternatives that save money. And that's without significant price hikes yet.

The fundamental economics of having a private driver have not changed. An app doesn't change what it costs to pay someone to drive you everywhere. I hate being critical because it's often a waste of time, but Uber is sincerely one of the worst investments that Silicon Valley has ever produced.


> More volume just makes the total loss bigger, because that's more money you've been giving away.

Yup, that sounds about right.


> The whole reason they could raise so much money was that they showed as they reduced rates, they induced more demand

This is true for almost any good.


> Completely ridiculous. The model was not to raise rates in the future.

I'm not sure if you're disputing OP's idea that Uber subsidizing rides is (at least in part) of an effort to kill the taxi industry, but my logic is, if you don't have any competition, why wouldn't you raise rates?


One possibility, because increased rates could result in your user base using your service less often?

While transportation is something everyone needs, I'm (as priviledged as I am in my salary) not going to pay $20 for an uber if it's $2 on the bus.

I'll take uber when it's $10, compared to $2.

They could possibly raise their rates some, but to answer your question specifically: because there are other factors involved in their price/demand/profit/market share equation, besides just competition.


You're exactly right though, and that's the problem.

People won't pay to use the service if Uber charges what it actually costs to deliver it. They're heavily subsidizing each ride. When you pay for an Uber, they're basically giving investor money to the driver to cover your fare for you. Investors have been paying for your transportation over the past few years.

At some point, they have to actually make money, and the only way to do that is to raise prices. The issue is no one will stick with the app at higher prices. I've already abandoned Uber/Lyft/others for a $300 bike and a bus pass, because it's much cheaper and much healthier. If they double or triple their prices, which is about what they'd have to do just to break even, lots of people will be following suit.

The self-driving car game was supposed to save them, but I don't think they're guaranteed to win that fight. Tesla seems further along than anyone, and I have far more faith in Musk's ability and track record of executing than I do in Travis (or whatever committee is replacing him). Not to mention every automaker is working on self-driving cars right now to boot.

Uber has no guarantee they'll dominate that market, and considering they can't even break even in their current market, I see them as a ticking time bomb.


>The self-driving car game was supposed to save them, but I don't think they're guaranteed to win that fight

Agreed. I'd argue that existing car-sharing companies like Car2Go are better positioned to dominate the "self-driving taxi" market. They've already solved the challenges of owning and maintaining a shared car fleet profitably. The day self-driving technology is ready, they'll already be miles ahead of Uber.


You got green name, so I'm gonna reply here too. You already pay for the bus, does not matter if you use it or not (okay there's a surcharge, cause we ain't no commies). Uber has to compete with that! If you thought VC's are good at throwing away capital...

edit: I forgot what green name means... green btw...


> edit: I forgot what green name means... green btw...

Newly created HN accounts are colored green so members can recalibrate before responding to troll-like contributions from new accounts (I think).


The bus does not cost you $2 (generally, in the USA, you voted for it) fare != cost

I think we need more of it though...


> The whole reason they could raise so much money was that they showed as they reduced rates, they induced more demand.

I've yet to see an Uber driver who started rolling in cash after the rates were dropped. 100% of my anecdotal conversations (and that's not 99.9% rounded up, but a straight up 100%) reminisce about the good ole days.


Rider demand, not driver supply. There is plenty of driver supply in most cities.


They don't have any kind of advantage apart from being first mover in the states so no guarantee they will take all the market share in the short term and in the long term if and when AI driven cars come they will be out muscled by car manufacturers who can put millions of cars on the road in a year when they go all in.


They do. They have huge mind share, they are in more locations, and they offer a better service than Taxi's already.


If I'm not mistaken, they were losing money on every ride. If they did not intend to raise the rates in the future, they're basically planning to go bankrupt.

And I have a really hard time believing companies plan to fail.

It's a very clear case of dumping, or whatever it's called in English. Unsustainable low prices, suffocate your competitors, raise prices.


At some point, though, every company that wants a sustainable business model needs to make money "on average" on the sum of all items (units of service, e.g. rides) sold. Uber being a local business should be able to do this progressively as its business matures in each city. However, if it is true that they are not profitable in their mature US market where by some accounts they enjoy >80% market share, that implies some substantial flaws in their model. Subsidizing rides in Asia or some smaller city in Europe is ok to gain growth, subsidizing rides in New York or San Francisco is worrying. And autonomous driving implies a completely different business model and economics (driven by the "who owns the car fleet" discussion).


That was never going to work. With self-driving cars on the horizon they will soon be forgotten about as car manufacturers start rolling out their own apps. The switching cost is too low. If Uber thought they could rely on brand recognition to dominate the market it's because they misjudged what market they were in and who the players were. Regardless of what Uber could do in the next 10 years Mercedes and BMW will still be more recognisable names and as soon as they roll out their self driving fleets and ride hailing apps Uber are history. No one will buy Uber if they can build the same thing for what is, in the grand scheme, essentially free.


That is exactly my point for a while now [1]. The investors could have easily picked on taxi company handed them several billions, but they chose Uber. Mainly because of the hype created by the senior leadership team. They seem to have overplayed there hand.

[1]https://medium.com/@thisTenqyuLife/nobody-will-talk-about-ub...


"Uber is an example of what happens when central banks attempt to ‘stimulate’ the economy through misguided central planning. By forcing down market prices and essentially moving spending from the future into the present, they’re hoping to stimulate investment in general. But what they forget (or more likely, choose to ignore) is that these ‘investments’ are likely just bad investments."

Such a great quote


There's a likelihood to increase economy's output with spending though. If that's the goal then it's a good measure.


I agree with the general dynamic there, but the connection to Uber specifically is tenuous. Risk free interest rates of 0.1 vs 0.5% don't lead VCs to be more or less aggressive with creating and capturing new markets.


very late stage investors are more sensible to interrest rates.


> Uber bought market share by subsidizing rides.

Sounds like a '90s startup. Companies acting like this en masse was what caused the 2000 crash. Uber isn't going to make it out of this alive, and they're going to take the rest of the industry with them. I think the whole culture of VCs looking for "unicorn startups" is going to go away when the unicorns all die.


It is working about as well as the Saudi plan to tank oil prices to push indy frackers out of business.


But that's nothing new, Uber has been on that shaky ground for months now. "If Kalanick can turn this around" (and his banking on automated to make them viable) were basically the only hail marys the diehard bulls clung to. (Name recognition/network effect being useless for obvious reasons that've been covered here in the past) with this, all their eggs are in automated.


For an embattled company like this in a fiercely competitive industry, you need committed leadership and not a rotating cast of hired guns looking to make a quick buck.

Kalanick has serious issues but he's demonstrated unquestionably forceful (and polarizing) leadership that mere "managers" will never be able to replace.

I've been bullish on Uber despite all their mistakes and internal issues because at the end of the day, the guy at the top was irrationally emotionally committed to _winning_. Now I am a bear on Uber.


Please don't further this narrative that sexually harassing women and his general brohaviour are good for business.

They are not. There are ways in which being an asshole ay be good for founders (cf Steve Jobs). Kalanick is just an asshole, and even take-no-prisoner ask-forgiveness-later businesses run much better with a bit of attention to human decency.


> even take-no-prisoner ask-forgiveness-later businesses run much better with a bit of attention to human decency

I'm sort of baffled by seeing someone say this in a comment that's supportive of Steve Jobs. Are there tons of "the human decency of Steve Jobs" stories I've missed? Because I would have said that I've never heard of Jobs showing even a scrap of that, and it worked out pretty well for him.

The things happening under Jobs were different than the things happening under Kalanick, sure. But I don't see where that's a function of anything like decency - it just looks like a cultural difference in what kind of inhumane hostility was happening. Jobs was a perfectionist, but he was also manipulative, cruel, and dishonest in ways totally distinct from that.


People like Steve Jobs weren't successful because they were assholes, they were successful in spite of it. Being manipulative, cruel, and dishonest do not help your business in the long run.


Yes, I agree. But the comment I was replying to seemed to suggest that somehow Kalanick is an asshole in a business-damaging way, while Jobs was an asshole in a necessary, visionary way. It's an idea that's some combination of cultural animus and the Jobs cult of personality - neither of them benefitted from being unpleasant.


You're right. However, the many other worse things Uber did than that sexual harassment case actualy do seem to be good for business - that's why for many years now I was hoping the governments will kill Uber. Unfortunately that did not happen, and it is this fact - not some narrative - that is dangerous, because there will be others willing to try out the "move fast and break laws" business model.


has Kalanick himself ever harassed women? I'm genuinely asking, I haven't followed the Uber story closely but I thought the harassment accusations weren't aimed at the CEO.

I don't think anyone's suggesting that sexually harassing women is good for business.


When another executive (probably illegally) obtained medical records of a woman who was raped by a driver in India, Travis viewed the records and repeatedly aired his belief internally that the whole thing was a setup by a rival company and no rape had occurred.

https://www.recode.net/2017/6/7/15754316/uber-executive-indi...


This is not sexual harassment.


Agreed, much more in the asshole (this is a good thing?) category.


There are some stories documenting what seems to be a somewhat strange relationship to women, but that's not quite the point. He has, and this seems to be almost undisputed at this point, certainly let far too many serious incidents including sexual harassment and assault go by without taking action.

I've commented all over this thread (as a sister comment points out) because it appears there is a narrative that his attitude towards his employees misbehaviour is at least closely linked to the personality traits that allowed him to be successful. That can be seen, I believe, by the many comparisons to Steve Jobs, for whom it's accepted more widely that it was often hard to work for him because of his perfectionism, but that this was a necessary trait for his success.

The danger here is that people (mis)understand the situation and start excusing inexcusable behaviour, or even imitate it, because they think it's linked to success. It is not. You have to separate the strip-club-going bravado from the other law-breaking, which could at least in theory explain Uber's success.


> it was often hard to work for him because of his perfectionism

Honestly, this feels like a white-wash. Jobs was exceedingly demanding, but that's hardly unique. Jobs was also dishonest, secretive, and simply cruel to the people around him. This comes up over and over, even in his non-business interactions.

I agree that it's an error to lionize Kalanick's behavior. But it's also wrong to say that Jobs' behavior was radically different, or that Kalanick's party-boy bravado is clearly separable from his disregard for the law. Realistically, I think we'd be better off admitting that an urge to ignore boundaries usually applies across many topics.

If Jobs was more capable Kalanick, I don't think that was a function of his nastiness somehow being more noble. He seems to have simply brought a lot more skill to his task.


I don't think he has been accused of doing it personally.

It also is weird that matt4077 repeatedly contrasts Kalanick with Steve Jobs in this thread, despite Apple having been accused many times of mean culture, sexism, harassment and cover-ups too.



No, he oversaw the harassment and managed HR's nonresponse to it.

Like any good late-stage US capitalist, he outsourced it.


> he oversaw the harassment

so he was standing over watching with approval as his employees were accosted? I doubt it. I think what's more likely is he didn't know about the extent of harassment (or didn't care, if you want to be cynical) and the initial HR non-response was likely just a really poor quality HR department designed to manage PR rather than solve employee problems. Organisations are more than just their CEO and while you can lay plenty of blame on him for allowing such a poor quality workplace culture to evolve, that doesn't necessarily mean that he's a big fan of sexual harassment in the workplace.


> I doubt it.

I bet you do, because nobody in their right mind believes that, and you are obviously attempting to cast the notion that a CEO might know what happens in their company as absurd.

Or do you also think that others believe oversight committees on BoDs literally stand over the managers and nod or grimace?

If he didn't know what HR was up to, he was incompetent.

> that doesn't necessarily mean that he's a big fan of sexual harassment

And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.


I don't think a CEO knows what happens in such a large company at the level of individual employees.

If he didn't know what HR was up to, perhaps he wasn't the director in charge of HR? You can't expect a CEO to know 100% of what's happening in a larger company.

> And... exactly nobody I've read here or anywhere else has asserted that. If you want to argue, do so in good faith.

> ... managed HR's nonresponse to it.

your quote seems to imply that he went out of his way to make sure HR did nothing about the harassment. I'd be inclined to argue incompetence (or just a lack of ground-level micromanagement) over malice.


This seems like a pretty fruitless discussion. I have no idea why you're so focused on finding claims of malice to argue about. I certainly have said nothing about it. I don't know what's in dude's heart, and frankly don't care. This is about observed behavior.

Unless the facts on the ground are very different than what we've heard, Uber HR had a policy of protecting some people accused of harassment because they were highly valued. In other words, a decision somewhere was made that policy was to prefer key-player retention over the risk of lawsuits, because, obviously, that sort of policy is pretty much guaranteed to lead to lawsuits[1].

I have a great deal of difficulty imagining the HR exec who doesn't realize that - that would be beyond incompetent, well in to senility[2]. I also have difficulty imagining the HR exec who will personally take on the risk of mandating policy about balancing disparate business risks (slowing down by losing productive harassers vs. lawsuits and bad press). That can end careers, and anyone capable of landing a management job at an Uber is exceedingly unlikely to take that risk without taking it up the food chain.

Finally, I find it remarkable that so many people are willing to credit the man with extraordinary genius in business execution while simultaneously arguing his incompetence when it happens to absolve him of shitty behavior.

And with this, I'm done with discussing things I didn't say.

[1] Moving on to speculation, making that choice makes perfect sense in an environment with a value system emphasizing winning at any cost and burning down anything in the way. If they thought first-mover advantage was literally everything and they thought they had enough money to weather any resulting legal problems, that's the rational choice. And especially if you think you're the smartest guy in the room and can get away with it. Not unlike hypothetically deciding to gaslight regulators or steal IP from competitors or invade medical privacy to discredit opponents. For example.

[2] I don't know about other states, but in California, HR for firms over some number of employees are legally required to ensure employees have been trained on sexual harassment law. I'm sure it takes other forms, but generally we get to watch these awful law-firm Flash videos of cartoons being either awkward with or awful to each other, and then have to answer questions about which actions are harassment in order to make sure we paid attention.


> sexually harassing women and his general brohaviour are good for business

Nowhere has he said this. You're conflating two very different issues. No one is disputing that he is an asshole, etc. OP was making a different point.


But does winning have to come at the cost of basic human dignity and law?


It probably doesn't have to come at that cost, it's just not unusual for it to.

If you peal back the layers, probably most rapid growth, hard driving large companies have left a wake of upset and screwed over people behind it. Nobody "gives" you a hundred billion dollar company.. Uber's leadership was just particularly inept at pivoting from "scorched earth" to a slightly less savage strategy.

This will be an interesting pivot to watch, I've been kind of betting with myself when will the first week come with no news or good news for uber. I thought they'd have spun up the pr machine months ago, talking about co2 saved by carpooling or something. Giant company, currently fixed runway, all eyes on it and damaged culture. If uber doesn't die, the next CEO is a superstar.


Being an asshole (in some senses of the word) is necessary, it's just incredibly difficult to compartmentalize the good aspects of being an asshole (holding people to tough promises and standards, being unflinching in stating the truth to people's faces no matter how impolitic or uncomfortable) from the bad aspects of being an asshole (bullying, abuse of power).


It often does, really.


Not for ride calling apps.

For human rights issues, yes, I tend to agree.


Sadly


Correct. This is why you see almost no billion dollar "tech" companies coming out of Scandinavia or Europe in the past 10 years. The places with so called, work life balance.


That is a spurious relationship at best. Actually you couldn't possibly have chosen a worse example. Scandinavia actually has the highest share of billion-dollar exits compared to the rest of the world (7% of such exits compared to 2% of global GDP and 3% of total European population) http://nordic.businessinsider.com/the-nordics-are-the-best-f...

Anecdotally, famous Nordic startups include Spotify, Skype, Mojang (behind Minecraft), King (behind Candy Crush, Farm Heroes), Rovio and Supercell.


Where in the world is it easiest to get rich?

https://youtu.be/A9UmdY0E8hU


This guy makes claims with 0 evidence. Points he makes:

1. Nordic countries have more über wealthy per capita.

2. Nordic countries are social democracies.

Then he draws the conclusion, with no corroborating evidence, that these two things are inextricably linked. No data to link these two points at all. Nordic countries in general have a high GDP PPP, and that is probably not solely (or at all) due to being social democracies. Scandinavian systems need to be efficient due the nature of their environment, e.g. they have a lot of land and not a lot of population, and fairly harsh climate (e.g. poor farming conditions). I would almost argue that "being cold" is probably a better indicator of national wealth per capita than "being a social democracy" (though admittedly, I haven't done thorough research either). I mean, look at Canada. Look at the non-farming bits of the US vs. the farming bits. Look at North versus South Italy. etc. Industrialization is more efficient and effective in regions where alternative methods of production weren't great in the first place.

For reference, here is the population density of the nations he was comparing (in people per km^2):

Iceland - 3; Norway - 16; Sweden - 22; US - 33; https://en.wikipedia.org/wiki/List_of_countries_and_territor...

The US has 11x the population density of Iceland. Easier to have shared wealth when each person in your country can have 11x the land they could have in another country (with the caveat, of course, that this only applies if you are an industrialized nation).

I mean, just look at one of his "indicators" - billionaires per million people. By that metric, iceland is at that top. But there is only a single billionaire in iceland. Statistically, then, it's easier to be a billionaire in iceland. In practice, however, that is not the case. Things like population subsets need to be considered. In the US, you have a very large population, which is obviously going to impact per capita stats. However, you need to ask what proportion of those people are actually pursuing wealth in a way that could ever result in becoming a billionaire. e.g. a grocery bagger, probably never to be a billionaire. A plumber? Same. A hippy in a commune? Same. No data has been shown to adjust for lack of competition. At the end of the day, you have to look not at the total population, but at how many people are actually competing to become uber wealthy. Because, while attaining wealth isn't a zero-sum game, it certainly isn't an "everyone wins" game either.

Scandinavian countries have a very high proportion of jobs that don't really have a cap on upper income, such as software/game development, banking, music production, etc. because they have exceedingly efficient economies (as he actually touches on).

However, there is not clear reason to believe that they are efficient because they have social democracies. In fact, the converse (they became social democracies because they already had efficient economies) is just as likely, if not more so.


> The US has 11x the population density of Iceland. Easier to have shared wealth when each person in your country can have 11x the land they could have in another country (with the caveat, of course, that this only applies if you are an industrialized nation).

Can you elaborate on this supposed link between population density and shared wealth in developed nations? I don't understand the logical underpinnings of your argument. Developed countries almost by definition are less reliant on local geography.

Moreover, I don't see how space metrics are even relevant here. Iceland may technically have a lot of available "land" - but more than half the country lives in Reykjavik. A similarly lopsided urban / rural population distribution holds true in other Nordic countries.


You are exactly right. I did a poor job of explaining my thinking.

My point about geography and population density needs to be related to my point about industrialization to make any sense.

It is this: Nordic countries have modern economies weighed very heavily towards industrialization/mechanization, but most importantly, they are efficient. As you say, they also have a "lopsided urban / rural population distribution", which is a much better way of saying (thank you) what I was trying to say: Nordic countries have land, but it's not good for the classic wealth generator - farming. This is why the population is focused in urban areas and is not spread out. However, luckily for places like Iceland, modern cities don't really care how good the land is for farming. An oil refinery doesn't care about the health of the soil. A modern factory doesn't care if the terrain is a bit rocky. Solar panels don't care. Mines don't care. etc., etc. Basically all modern industry is fine in a place like Iceland.

This an unexpected and immense boon to making a modern industrialized nation efficient, because on the one hand, you have major population centres with not much in-between (due to the lack of farming), which is in itself efficient, because areas you need to service with public services are greatly reduced. But on the other hand, you have plenty of space to put modern things like factories or new cities or what have you.

Compare this to the US, the country with more arable farmland than any other country on earth. Sure, the US has big population centres, but they are spread out, and many of them are still driven by rural economies. This greatly reduces efficiency, and is generally why the spread out states seem to be further behind the small / densely populated ones.

I've included the percentage of population that is urban below for comparison, according to The World Bank, from 2015. Also, I think it is slightly different when the rural population is doing something like fishing (Nordic) vs farming, but I won't go into that here.

US - 81%

Sweden - 86%

Iceland - 94%

Comparing anything to the US is a little bit silly though, because the US is comprised of 50 states, all of which are quite a bit different from each other. For instance, I bet the uber wealthy per capita in say California or New York is much, much higher than the Nordic countries. So the obvious answer to this video is probably "move to New York or California if you want to make a lot of money". I will say that would probably require more initial capital than a nordic country, but if you have the initial capital, then your chances are probably better. SO THE ACTUAL ANSWER IS: Get a great education and livelihood in Norseland while you're young, get some seed capital, and move to Cali/NYC/etc to really start making bank.

Obviously if you want to become a billionaire, you're not going to move to Plano, TX. Yet Plano is affecting the per capita stats.


That is a bad example - Scandinavia is punching way above it's weight and reputation in terms of number of unicorn startups[1] produced on a per capita basis.

Sweden has a population of 9.8 million yet it has produced Skype, Mojang, Spotify, King, Klarna [0]

Australia has 2.5x the population but only two unicorns. The UK and London market themselves as the capital of unicorns in Europe yet with 6.5x the population they have either the same number of unicorns or just four more (depending how you count them).

That is remarkable for a country like Sweden, especially when considering the strength and size of the Swedish expatriate community in tech around the world (many tend to leave).

In terms of similar results, I think only Singapore is in similar or better unicorn per capita territory.

[0] http://www.technologist.eu/sweden-the-land-of-unicorns/

[1] "unicorn" isn't the best measure since it is a private valuation and you can get different answers depending on who you ask, but most people would recognize those Swedish startups as being successful.


>Sweden has a population of 9.8 million yet it has produced Skype

Skype is Estonian.

https://www.microsoft.com/en-us/stories/skype/skype-chapter-...


Skype was a started in Sweden, by a Swede and a Dane. They then however set up a dev office in Estonia where the initial client was developed and set up their headquarters in Luxembourg, I'm assuming for tax reasons. They have however always had offices in Stockholm. That being said Microsoft has announced that they're closing the Stockholm Skype office to consolidate the development to Estonia.


Remind me again what unicorns Australia has? Atlassian is not one of them, having left due to AusGov being so anti-startup.


Depends on what you mean by "left".

We are technically a UK incorporated company, headquartered and half our staff in Sydney and many of our staff and customers in the USA.

I still consider us Australian though.


Thanks for your comment! My apologies, no disrespect intended - I should have clarified I meant "left" for the purpose of your IPO. It was and is fantastic to see Australian talent prosper to such heights.

I see many clever companies where I live in Melbourne - however I am saddened by what I perceive as the neglect the government is showing for the tech sector, especially startups; I'm looking e.g. at how share options are taxed. I believe there's a lot of lost opportunity here.


Per-capita is meaningless in this context without frequency also calculated.


> The places with so called, work life balance.

I'd rather have a real work life balance (it's not so called, it's very real) than any amount of abuse working for a US style startup would throw at me.

Most of my colleague would as well.

To have the disdain for life you seem to display you must live in a very distant place from a sane version of reality.


Consider the possibility that the disdain may be ironic :)


There was a great scene in a Clive Owen movie - Shoot Em Up - where he goes on a bit of a rant about the correlation between fancy cars, driving like an asshole, and success. I think there's a small level of vague relevance here.

"Mr. Smith: I move my finger one inch to use my turn signal. Why are these assholes so lazy they can't move their finger one fucking measly inch to drive more safely? You wanna know why?

DQ: Not particularly.

Mr. Smith: Because these rich bastards have to be callous and inconsiderate in the first place to make all that money, so when they get on the road, they can't help themselves. They've gotta be callous and inconsiderate drivers too. It's in their nature."

https://www.youtube.com/watch?v=ov4JvTiQWUU


Europe has plenty of passionate "asshole" founders and other workaholic types. The lower avg valuation of the tech scene has more to do with investors and general aversion to risk, dependency on public sector financing (really awesome but limiting in maneuverability), stronger status quo legislation, reduced VC scene and a more limited early-adopter audience for your products.


Spotify?

Edit: you did say 'almost'.


Mojang, Skype, Klarna, King and couple others. Sweden produces probably more unicorns per capita than any other country.


Don't forget Supercell and Nokia (which are Finnish). And it might not be a startup, but Ikea too.


Skype is Estonian.


Skype (the company) was founded by Niklas Zennström, a swede. Skype (the software) was originally developed by estonians.

The company is what is pertinent to the discussion :)


It was founded by Niklas Zennström and Janus Friis (Danish) in equal measure. The software was based on Janus Friis' earlier work (the Kazaa p2p network). It was developed by an outsourced team in Estonia.


As a Dane I'm a bit embarrassed to forget Janus Friis. Thank you for the correction and elaboration.


I don't know, during the last decade we've had billion dollar tech companies such as Spotify, King and Klarna come out of Stockholm which isn't the largest hub in Europe.


So what? Even at Uber, 90% of their employees, the ones who actually made the company as valuable as it is, won't see much in terms of reward for it, and they'll have sacrificed that work-life balance to do so.


"Behind every great fortune is a great crime" - Balzac (kind of[1].)

[1] http://quoteinvestigator.com/2013/09/09/fortune-crime/


What even is this question? Nothing "have" to come at the cost of anything. It's a matter of choices and people will make different choices.

Morals are relative.


That's a hyper generalization. Some morals like no tolerance against sexual harassment are not relative.


I can't think of a way to take this statement that makes it true.

I don't know how old you are, but public morality towards sexual harassment just in the U.S. has changed in my lifetime. (For the better, although it is currently ugly and messy, as these changes always are.)

Even attitudes about what constitute harassment vary by culture between similar cultures. Compare Italy and Germany.


You mean legally? I'm pretty sure there are people on this universe that differ from you (and many of them act on it)


And that's because morals are not policed. People will always abuse power. Hence Laizze free is impractical and we all need oversight.


I think you mean policing "law" better. Policing "morals" is not possible since as I mentioned morals are relative. It is a dangerous thing if Police or state actors act on moral rather than law.


Of course not, but there isn't another option for Uber. Second place isn't good enough, not with their burn rate. You need Ghengis Khan if you want to slaughter and conquer.


It's this slaughter and conquer mentality that has caused them so many problems. I mean Lyft's main selling point to consumers has been 'Uber without all the attitude.' If Uber had been a little more customer-focused and emollient a few years back, they'd have held onto a much larger slice of the ride-sharing market.

Look at Google; they're firmly business-minded and have often butted heads with regulators and so forth, but most people like google, not least because of that 'don't be evil' branding and and their habit of giving people Nice Things.


That mentality itself hasn't caused Uber's problems. It's just their inability to successfully conceal it, as other big companies do. Kalanick was likely too idealistic and didn't place adequate weight on appearing soft, which allowed the press to rake him over the coals.


You make it sound like its an option. Its not.

If your margins are razor thin. You have to be ruthless. That permeates to your culture.

Do you things are any better at Amazon, Foxconn or other warehouse places?


> If your margins are razor thin. You have to be ruthless.

That has nothing to do with sexual harassment. And to imply that the two must be linked is false.


Neither did I mention that. Why did you associate those two things?

Does 'highly demanding environment' == 'Harassment' to you? If yes then you have far bigger problems. Any demanding mission ever might be out of reach to you per your value system.

Work conditions, overall demands of productivity et al will be brutal. And that ultimately gets to cause all sorts of other problems. People who just can't catch up with all the rush ultimately feel discriminated.


> People who just can't catch up with all the rush ultimately feel discriminated.

Non sequitur. You're also generally espousing some pretty reprehensible ideas. We as a society do not take the view that business success overrides all soft concerns, especially with regard to their employees. If ruthlessness and discrimination is the grist that your mill requires, find another mill.

Also please avoid working in management.


>>We as a society do not take the view that business success overrides all soft concerns, especially with regard to their employees.

This is obviously wrong. Have you ever bought a iPhone? Or any other Apple product. Have you ever ordered anything from Amazon.

How do you think Walmarts and Targets of the world can sell you things for so cheap? Behind all this there is some guy being sent through some real hard ships.

As a consumer you have already made that choice.


Third world labor conditions suck, whether or not Apple or Amazon is involved. We were talking about working conditions in this country, however.

The reader will note that this is a classic example of the 'tu quoque' fallacy[0].

[0] https://en.wikipedia.org/wiki/Tu_quoque


If I can reach back to your earlier comment, it seems that your premise is that when margins are razor-thin, 'Work conditions, overall demands of productivity et al will be brutal.'

My answer to that is then there is something fundamentally wrong with your business model. Basically, what is the point in running a business under which such conditions are the norm?

Any demanding mission ever might be out of reach to you per your value system.

This is fallacious. Of course there are times when struggle is necessary. A rewarding life (however you define reward) certainly requires an investment of effort, and at time that effort will be very difficult. Sometimes we are faced with very trying circumstances such as natural disaster or war or serious economic insecurity, and we have to work very ahrd to survive.

But a key word here is sometimes. If you deliberately construct such an environment where survival and advancement are only possible through 'brutal' work conditions and demands of productivity, then you are actively making the world a worse place, because you are establishing such brutal conditions as a norm and implicitly telling people that their life choices boil down to slavery or death. Why would any sane person want to create the conditions of slavery? Slavery is a condition of life that people rationally wish to escape.

There seems to be this attitude that if people are not constantly driven by necessity then they'll get too comfortable and lazy and never do anything. This is not borne out by the evidence. Some people would, not least because they're constantly bombarded with messages to consume, consume, consume whenever they can as a relief from their economic anxiety. But few people are fundamentally motivated by gluttony. Given the opportunity most people opt to develop their capabilities and contribute or create rather than merely consume.

Choosing to promulgate brutal working conditions is essentially promoting brutality as your preferred model of social organization. That's basically a displacement of sadistic and/or masochistic impulses into the economic sphere. You may very well feel that nothing of value happens except under harsh compulsion, but that seems to both ignore all the evidence to the contrary (an irrational bias) and abdicate responsibility for the consequences (since brutality is well-understood to result in wholly avoidable injuries).

It seems to me that your value system rests on some rather extreme assumptions that are not justified by the available evidence, and insofar as it imposes compulsion on others rather than being used to motivate yourself, it's intolerable. Put another way, if you only feel alive and productive under conditions of harsh necessity, that's your business. But as soon as you insist that this is the way of the world and that others must get with it or be cast aside, you're infringing upon the freedom of others. And at a social level, through regulatory process, experience of litigation and so on, we've agreed that the creation of such conditions is not an acceptable means to pursue arbitrary ends.


>>Basically, what is the point in running a business under which such conditions are the norm?

As usual : 'Value'. All these affordable iPhones and seamless Amazon deliveries happen because they have a work culture that optimizes for every single $. I agree with your premise that these are not for everyone. But this is precisely why we have freedom. Nobody should sign up for a job they think is too hard for them.

As we talk there are doctors who are training by the clock, sleeplessly working towards becoming surgeons. This is necessary for various reasons. If it were any easy, people would become bad doctors with less training. This is bad for society. The fact that work conditions are harsh- that isn't wrong or discrimination or even harassment. The very demands of the job are such.

The top percentage of any profession are this way. That comes with the job. You just don't go and say why don't they make it easy to me to be the next Zakir Hussain. Mr Hussain has set pretty high practice benchmarks practicing his instrument pretty much his whole life. Was it worth for his to have undergone all that pain and punishment to get there? May be that fits into his value system.

If you want to beat Jeff Bezos you have to at least perform at his level or higher. You just have to chose your mission based on the mileage you think you have.


It apparently did mean that to Uber, which is the topic at hand.


Making decisions at the cost of their employees' well-being didn't keep them in first place. Having a toxic work environment for women didn't put them in first place.


> Having a toxic work environment for women didn't put them in first place.

No, but that's not the point. How quickly we forget that we don't need dude bros to create a hostile environment for women. That GitHub situation was created by a woman, one who wasn't even an employee. We really don't give women enough credit.

Toxic work environment is everywhere. Remember the spreadsheet that Googlers started to compare salaries? I'd argue the Apple-Google-X pact to not poach one another is worse than anything Travis could imagine.

If there was crass behavior at Uber, I'm inclined to be more lenient because I think it is at a more primitive level than a well thought out plan to increase shareholder value by illegal collaboration to push down worker cost. If these people who criticize Uber really care about their employees, they will start publishing all details about how much salary and benefits and whatever money each employee makes.

Talk is cheap. Actions speak louder than words.


Yeah, but winning meant becoming big while loosing money and saddling company with long term problems. Investors likely care about the money thing more.


There is no easy way for these people to make money. Not unless they start charging their customers some multiples of price higher than they are doing currently.

Here in India, I go by the office cab to home everyday. I generally chat with the drivers as to why they don't drive for Uber/Ola etc. The answer is they need to make a good 1300 rupees on a round trip to be profitable, at a minimum of 6 trips per day. A trip with Uber/Ola etc costs 300 rupees(With pool). But even then!

So that's like these people need to start charging a minimum of 5x extra to make profits. At that price these people are no longer a viable means of transport.

To be profitable you need to back to the yellow taxi medallion thingy all over again.

EDIT: Fix a mistake.


That's less than one order of magnitude (10x), but of course the point stands.


Another definition of 1 oom is anything between sqrt(10) and sqrt(10)*10. Basically 3 to 30. 2 oom, 30 to 300, and so on.

So if the (now edited) original intent was exponential, "more like 10x than 1x (or 100x)", then calling 5x an oom is fine. If the intent was linear, then yes, rounding 5x to 10x is 100 percent error (difference/actual). :)


Huh, interesting. Wasn't aware of that :)


> Now I am a bear on Uber.

I'm headed in the opposite direction and reinstalling the Uber app tonight. This is a very convincing capstone to a 180 degree course correction away from everything I disliked about Uber. I also hope Travis can learn and come back and lead the company again in the future.


They currently have no CEO, CFO or COO among other unfilled positions. Even once they bring on new people, it will take them time to become acquainted with Uber's massive worldwide operation... All taking place within a rapidly changing industry.

I'll grab my popcorn, this will be fun to watch.


> Notice that leveraged loan in 2016.[2]

Traditional firms will generally prefer debt to equity as you will generally get a better shareholder return on debt. VC backed firms do not usually raise debt -- even if it is preferred -- because they are viewed as too risky by banks. When VC-backed firms raise debt it is because they are transitioning out of high risk to the stability of a established and predictable firm.

In some Nobel-winning economic theories the best capital structure is all debt: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo... https://en.wikipedia.org/wiki/Capital_structure

If the only thing about this loan that makes it "leveraged" is its interest rate of 5% then that is probably preferable to equity and not a red flag.


That only applies if the company is profitable. For a money-loser like Uber, taxes are not an issue.


Alternate take (not originally mine): the bad state of Uber's financials is the cause of Kalanick's ousting. If the company had a longer runway, or wasn't facing the prospect of a down-round, he could have gotten away with anything.


This seems like the obvious rebuttal. Kalanick could have resisted any simple vote to remove, so this isn't a case of liking the results but not the methods. If Uber had strong financial footing, Kalanick would have been able to stay (and there would have been less interest in removing him).


I'm curious how much Kalanick has already taken off the table. That may be a motivating factor in his decision. If he has already pocketed hundreds of millions, he may understand that this could well be the death of the company, but just isn't motivated enough to fight these investors and is willing to let them burn the company to the ground. I wouldn't go as far as to say he doesn't care anymore, but being forced out of your job and the potential evaporation of billions in paper wealth isn't such a catastrophe if you already have enough money for several lifetimes in the bank.


Kalanick has stated publicly that he has not sold a single share - so he has actually taken no money off the table whatsoever.


Surely a company with billions of valuation will pay a decent CEO salary even if said CEO happens to be the founder / main shareholder?


Perhaps he pledged a small fraction of his shares to collateralize a non-recourse loan. This is one way to monetize equity without selling it.

The lender takes the risks as to share value and liquidity. If presented early in Uber's climbing valuation curve, it probably would have looked like a good opportunity to lenders.


I hadn't heard that. When did he state this, and is it still accurate as of today? It's possible he sold shares in the last few weeks during the run-up to this decision. Or maybe he hasn't sold shares, but there are other ways that he could have profited handsomely from Uber already. Cash bonuses, private sale of options (has he said he hasn't sold an option?) etc. I'm just saying if he has enough in the bank, he may have decided it wasn't worth it to fight his investors, the media, and basically everyone else that has jumped on the anti-Kalanik bandwagon.


http://video.vanityfair.com/watch/the-new-establishment-summ... 33:45

It's actually would be a major news point I think. Whether or not Travis sells his shares is what's gonna be decisive of his position in the company and possible future ambitions.


PROTIP: Shareholder loan


Exactly what I think!


> Uber has less than a year of runway left at their current burn rate.

Do you have a source for this?


Though not yet proven, wasn't a similar logic used by HR (or higher management) to justify not taking action against "star performers" for their transgressions?


Almost exactly the same, came to mind when I read that also.

I suppose there's some tipping point of "very valuable" and "not that badly behaved" where the argument is actually valid (see: all the Steve Jobs references in this thread). But at that point I guess the ethical solution is to make it very clear what new hires are in for, and pay a healthy "dealing with this person" bonus (see: Steve Jobs, again).


So Travis created an insane valuation but the business isn't viable? That sounds like bad management to me. They may do much better without him.


Keep in mind a company can be said to be valued at 100B today and 100M tomorrow yet everyone involved can still turn a profit.

What matter are: Cash In Bank, Cash Coming In, Burn Rate.


Agreed. My point is that the fundamentals don't live up to the valuation.


They were run in a way that assumed funding and burning money to get there. If they suddenly need to turn profitable, they can still downsize a lot. Consider their 2000 engineers... That's on an established service. Sure, they would slow down new features and expansion, but they've have expenses they can cut. And prices they can raise.


> This may kill Uber.

Counterpoint: businesses in good shape don't just drop CEOs. This move might just help it die slower.


Not every round has to be an up round. They could decrease their valuation significantly and still survive. Surely there's plenty of value left in Uber.


This may kill Uber.

Highly unlikely. Why? Investors who stomach multi-billion dollar annual losses will probably just shrug off the recent bit of trouble. If the choice is to either write off $15 billion or to give another couple to help the company go through a rough patch (what a buying opportunity!) I think I know what investors are going to do.

Kalanick's head has now rolled (not that it really hurts him much personally though, it's probably even a relief for him) but seriously a whole nother level of crap would have to happen with Uber before investors start getting comfortable with the thought of letting go those $15 billion.


Your comment is predicated on the fallacy that Uber's success is merely a function of runway / the ability to find new investors.

Bear in mind that the company's growth has been driven by its ability to run a very, very highly-performant backend -- and that's in turn a matter of getting the very best engineering talent on board.

Some, perhaps most of that talent is already pissed off about the fratty work environment and questionable leadership decisions. Recently, their options exercise window changed from 30 days to 7 years[0].

Angry employees + management turnover/uncertainty + limited runway + new rule that basically you don't lose your options when you quit = I'm officially an U-Bear.

On a related topic, I think people's schadenfreude for Travis is getting out of control and he's becoming a bit of a totem for everything that's wrong with SV....while his issues are largely self-inflicted ("boob-er" / treating drivers like crap on camera / etc), all the hatred directed toward him seems excessive in context. The guy just lost his mother, maybe cut him some slack?

[0]: http://www.bizjournals.com/sanfrancisco/news/2017/05/16/uber...


How increased exercise window would hurt the company? I think it's something which pleases and reduces employees' anxiousness.


It practically eliminates the opportunity-cost of leaving. Having seven years to be able to come up with the liquidity to pay the strike/taxes -- plus, critically, being able to wait several years to get a better understanding of whether the options have value before striking -- completely changes the calculus of whether to depart a company, whether because you're unhappy or because you've found something better elsewhere.

Agree this is good for Uber employees and I'm happy they have significantly less of an impediment to leaving than most other workers at pre-exit startups.


Uber is evil. They always have been. I've been trying to talk my friends into boycotting them for years because of their corrupt practices, and the various scams they've run on their drivers. Their highly-performant backend was used to place "ghost cars" and avoid government officials. The timing on this is, yes, frustratingly arbitrary, but this really is the whirlwind they have sown.


Also known as the Gambler's Fallacy.


i think it's sunk-cost fallacy rather than gambler's fallacy.


LOL you're right. Absolutely. I wrote that at like, 7 am as I read HN to help me wake up in the morning. That gave me a chuckle.


Haha I also read HN to wake up in the morning and have made my share of mistakes early on.


There is a lot of vested interest in this company - it will for sure never go down. Plenty of investors around the world who will buy in. Valuation is a different topic - but this company is here for the long haul.


Does anyone think that Amazon could be eying Uber but waiting for them to lose value? Seems like it would be a natural fit for their delivery network especially considering their recent purchase of Whole Foods.


Amazon already has Flex. Source: I'm a software engineer in that team. Uber is way too expensive at this point.


There's no doubt that Amazon has much more established delivery logistics than Uber at this point, but I wonder if the real value would come from another angle:

Uber has been pushing hard on self-driving cars (I mean, in the long term, it strikes me as their only viable business model, so it makes sense). By my best estimates, salary for delivery drivers for Amazon packages run somewhere between $6B and $10B per year (for comparison, if I remember correctly, Amazon's revenue is somewhere around $35B/yr). Automating delivery could be a HUGE deal for them, and an opportunity to scoop up a major player in the autonomous driving space might look very appealing.

Then again, with Washington State throwing the doors open for autonomous testing, Amazon could likely develop their own system on their own turf for less, even if Uber's valuation goes WAY down.


Minor point-- Amazon does about $35B per quarter.


Wasn't a bunch of Uber's self-driver 'expertise' just stolen IP from Google?


I think we'll have to wait on the courts to find that one out


At this point, sure. In all likelihood, the actual operating business is more fairly priced in a fire sale. Free up overhead by trimming down the "eat the world" grandiose plans, cut growth-for-the-sake-of-fundraising subsidies, add some haircuts on bondholders, and you've got something that will reasonably work.


From a tech perspective, we have developed systems that actually work much better than what Uber has to offer for our use-cases. Their systems have been developed to solve for the "real-time" dispatching scenarios. That's not what we're optimizing for with Flex. Hint: it's the opposite.


unless uber's logistics is better than amazon's (spoiler: they're not) uber is only valuable as a brand to amazon. brand probably doesn't move the needle for delivering groceries


I'd prefer Apple to buy Uber as a $AAPL shareholder... Nevermind this is all nonsense.


But why? Is there any synergy between Apple and Uber?


> Kalanick is a jerk, but he created that insane valuation.

I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.

I'm very optimistic about this change. To me, Kalanick, and the culture he bread, were toxic to Uber.

I'm reminded of how Microsoft's share price jumped by 12% the day Steve Ballmer's retirement plans were announced. Microsoft has been on a major run ever since. Let's hope that we see something similar here.


> I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.

Nope, This is wrong. Kalanick stood in front in the fight against the City officials and Taxi unions across the globe. Uber could've been done and dusted had it been left as a product to be sold by itself. Kalanick pushed Uber up high against the current of water, which is not exactly similar to running a Social Media Company.


> Nope, This is wrong. Kalanick stood in front in the fight against the City officials and Taxi unions across the globe.

Don't kid yourself, this fight was fought by lawyers and lobbyists.

Uber financed one side of this fight, but seeing as the outcome of this fight was critical to Uber's business model, that wasn't some genius insight, that was self-preservation.


That might be a big deal in America, but it has not been part of Uber's appeal in Australia. Uber here is absolutely focused on the product experience.

If anything, there's a proportion of people who supported local government rules and existing taxi services over the American interloper, a counter-balance to the anti-union and anti-municipal crowd.

Please be mindful that the American experience does not translate globally, even to other english-speaking western countries!


I think you're really just reinforcing the point. He's been willing to do whatever it takes. In the US that meant testing how far he could push and how many regulations he could bend and break before people called him on it. In Australia, apparently, that means first pushing the product experience as far as possible to convince people Uber is much more desirable than taxis.

And regardless of that, it doesn't matter: by the time Uber started operating in Australia (or any non-US country, for that matter), they already had a history of pushing hard against existing norms. Uber would have never even gotten to the point where expanding outside the US would have been possible if it hadn't been for Kalanick.

Sure, he's a jerk, but to claim that he had nothing to do with Uber's expansion after launch is just absurd.


As an Australian - I thought Uber's main appeal here was price. The taxi product experience, from everything I've heard, is far worse in the US than here.


Uber's appeal in most markets is exactly that, product and pricing. Speaking from a place where taxi service was terrible, inefficient, expensive, often corrupt and dangerous, Uber came in like a savior, when the government went after Uber people came to Uber's defense because now we can't go back to the way it was. To be fair I think that is the same as most places Uber has been to.


But this was done globally though.

'Software company, Not a taxi company' argument was used extensively to circumvent license and medallion regulations. On top of it they used VC money to drive down the prices by 4x-5x.

Several tens of thousands of drivers in every state in every country they went to got shafted because of these moves.

So yes he was very brutal and ruthless upfront. You can't replace that kind of human quality easily.


Drivers didn't get shafted. Medallion owners did.


Drivers did get shafted. Imagine if tomorrow somebody comes with some model which flushes 10x the current number of programmers into the market.

Your wages will dilute to a point it will be hard for you to make a decent living.


Medallion owners charged huge amounts of rent from drivers. The barrier to entry wasn't on the driver side.


> it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.

Haha don't know where to start. Facebook could have gone to shit in so many ways just like all the predecessors like Myspace and Friendster, but they made all the right decisions and won. Same goes for Uber.


Ok, what is Facebook's Lyft then?


Uber and Lyft operate in a space where there's a huge barrier to entry capital-wise.

This is not the case for 100% Internet based businesses like Facebook.

So they're really completely different models and therefore the competitive landscape can't resemble each other. It's more fair to compare the Uber-Lyft dynamic to rental car businesses like Enterprise-Hertz.


There doesn't have to be a single global monopolist. There probably won't be.

People do move, and the convenience of one app to hail taxis everywhere is appealing. But then again, people don't move that often that installing the local taxi app is too much of an assle.


No no, you've got it a little bit backwards. Right now, the biggest profits for capital are in being bearish about Uber and shorting Uber. This is in the nature of amoral capitalist investment: all the right decisions are 'supporting and enabling Uber' right up to the point where the bubble of valuation pops and then the only right decisions are 'bailing and running away from Uber'.

Kalanick's right decisions are now based on how much he was lying when he said he hadn't divested the slightest bit from Uber. I'm guessing that everyone read his character well, and that he was in fact lying on a massive scale and has many lifetimes worth of stashed-away wealth. Right now, winning for him means avoiding prosecution and jail (probably easy to do) and Uber is over, already.

So Uber lost, and anyone still clinging to Uber has lost (but there will be amazingly few of those). It's the frog and scorpion fable, really. Travis isn't the scorpion, and Uber isn't the frog. Uber is the scorpion and Wall Street is the frog.


What do i have a little bit backwards? You are free to talk about your opinion but it's kinda confusing when you just reply randomly to an unrelated thread.

I am talking about how execution matters, because parent said Uber just worked on its own to get where they have, just like Facebook worked on its own to get where they have. None of these are true.

My comment has nothing to do with wall street or shorting or whatever concepts you bring up.


You've said 'Uber and Facebook made all the right decisions and won'. I think you've got that backwards (and was indeed replying to you): I think it only looked like they made right decisions because Wall Street looked at those decisions and went 'hot damn, one of us!'.

Facebook may have won. I think you'll find Uber didn't win, because Wall Street needed Uber to remain the Travis Uber, in spite of any laws or limitations, and that's clearly no longer true.


Wouldn't investors be able to look at ownership information to see if Travis's shares decreased? I doubt all of the investors would take him at face value, especially the ones who publicly criticized him.


You can't really short/long the stock before it goes public. I'm not sure if there is a derivatives market that speculates on pre-ipoed companies.


It's essentially the same mechanism: the terminology is immediately understood. The market is public opinion, in a rather special public. If these people all 'short' Uber, it might not even go public. I guess the equivalent would be trying to take all the VC money back? And obviously the equivalent to a long position would be investing more VC money in Uber.

Nobody would seriously argue that there's no difference between the two because Uber doesn't exist yet in 'stock' terms. They need to translate the initial investor enthusiasm into an IPO, so short/long spells out the likely climate for said IPO.


Are you shorting Uber or wall street?


Microsoft had a storied past with decades of profitability behind it. They were shedding an operational CEO who failed to succeed in Mobile and made expensive mistakes in tablets (Windows RT) along with the Windows Vista debacle happening under his watch.

Uber has lived in Unicorn land thus far. The potential to turn a profit has buoyed them but that cash bubble seems to be running out of fumes. They could sell for 1/10th of what they raised money at. Time will tell.

It's a bad time for Travis to be handing over the reigns because he clearly hasn't built a command team to takeover and the fraternity atmosphere is toxic enough that as these new leaders step in I'm afraid the middle management will view them as "illegitimate" leaders.

Time will tell. I hope for the sake of all the people who hold Uber stock as part of their compensation that they get a pay day but it's a gamble.


Facebook did many things right. How many people really thought Facebook would be a $450B company in 2017, good for top 5 most valuable company, and pulling in over a billion in profit a month. Yes most of the money is being made on mobile which likely wasn't the master plan of Zuckerberg or others. But things had to go right up to 2013/2014 to allow Facebook to become huge in revenue and profits with its mobile business.

We don't know exactly how much influence Zuckerberg had in all the decisions. For example the common theme for years was for there to be uproar after any major feature or change.

Like the news feed that is now ubiquitous. A worse company might have feared the backlash and slowed down on features and growing the news feed.

I assume Zuckerberg was also fundamental in acquiring Instagram and Whatsapp. Instagram is worth tens of billions now. Whatsapp has 1.2B or so monthly users. There were many comments on how overpriced and silly the Whatsapp purchase was. But most of it was in stocks and the cash at the time may have been a lot ($4B), but Facebook gets that much per month now. Whatsapp tripled its users since its acquisition.

A lot of tech people disliked the Messenger split off. But that seems to be working out for the business too. It is becoming its own platform now and can also boast 1B+ users per month.

Maybe anyone would've done all this. I don't know. But I do know it was Zuckerberg in charge when all this occurred.


Facebook had a major ace in the hole by starting at Harvard. That's the network pretty much everyone wants to be a part of.

The irony is that in growing, FB traded down that cachet -- but managed to transition from cohort value to network value fairly successfully.

This is an argument I've made for years, I'm happy to see that I'm not the only one -- danah boyd has mentioned it several times as well.

I'm not saying Zuck didn't execute well -- the advantage still could have been blown (and I've only just learnt of a similar network started IIRC at Columbia University which didn't go as well). But for all the things Zuck can claim, building Harvard's social appeal is not one of them.


>but it pretty much sold by itself

It's called execution...


... an execution that Uber's investors apparently could no longer tolerate.


My comment that Kalanick didn't have much to do with it seems to be generating a lot of downvotes. This is surprising to me.

The reason I compared Uber's success to Facebook was because demand for the product was so great, it was viral. It's hard to mess up a product that is so incredibly popular.

Perhaps Instagram would have been a better example to communicate my point. Its initial success was clearly not anticipated even by its founders, and its success continued despite numerous hiccups and screwups in its early days. I posit that its founders ability, which was clearly limited (by their own accounts), had much to do with its success.

https://www.slideshare.net/iammutex/scaling-instagram


Kalanick had everything to do with the valuation. This, however, is a problem: what you might think of as premature optimization. Yes, Kalanick is why Uber got an impossibly high valuation from the collective fantasy known as Wall Street: they were operating based on personalities and primitive ideas of conflict, rather than a real understanding of how systems work.

But it was a premature optimization because those responsible for turning 'viciously competitive evil guy' into raw capital failed to acknowledge that he'd screw them in turn as soon as he needed an exit strategy. You simply cannot turn to childish human dominance battles as a model for what will work in large systems and interdependent markets.Even propping up your 'pet winner' with near-infinite capital won't save you forever.


I think its wrong that facebook sold by itself, in the beginning there was lots of competitors and I dont think it was by chance facebook won.


Overnight success, years in making.


I agree ... but I wonder if the only reason Uber has grown is the way that it's bullied its drivers and the communities it "serves". I'd say that his personality and drive has caused both the companies successes and its problems. I wish there was a convenient way to short Uber via my discount broker.


Especially interesting is that Uber may already have been essentially doomed, and now it is will be very easy to make the case what killed Uber was "do the right thing" forced-resignation of the founder by 5 of his investors. That seems like lose/lose for them.


can't they just cut their burn rate? I mean it's not like they own a fleet of cars they need to make car payments on and fill with gas to keep operating.... in theory there's no minimum spend to keep operating, is there? if (hypotehtically) they cut spend to approx. nil, and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur?

Yahoo for example is coasting along at a market cap of 53.40B down from its high of over $125 billion[1]. In 1999 dollars. Is it "dead"?

[1] http://www.businessinsider.com/yahoo-market-cap-over-time-20...


Yes, they can cut their burn rate.

But if they cut it too much, they'll stop growing.

The problem is they need to sustain their 70 billion dollar valuation for investors to be happy.

To be worth 70 billion they have to be either:

Growing at a very fast rate (which requires a very large burn rate to sustain)

Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.


Keep in mind that if their leaked financials are to be believed, they made $6.5 billion in net revenue for 2016. Unfortunately total costs exceed revenue, so they are far from profitable, but that's not exactly chump change.


What are they counting in net revenue? As they bill themselves as a brokerage service (to avoid those pesky employment laws...), I would imagine they only count their commission in net revenue? 6.5 billion is pretty impressive then!


They included all of the revenue (i.e. gross revenue) from Uber Pool in that figure.


> and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur?

People will stop using Uber if the wait times get really long, which they will if most of the drivers leave.


If 95% of their customers left, then 5% of their customers would remain and... Well, if they shut off 95% of their servers... Are we profitable yet?


It's probably eminently practical for a company of this type to cherry pick the most profitable core areas of the most profitable urban areas. Which is effectively what services like Instacart do. But it's not scalable and won't command a high valuation.


Just making a profit isn't enough; they need to make a big profit. Kalanick could probably turn a profit if he fired the whole company and drove a cab himself, but that's not gonna placate the investors who sunk hundreds of millions into it.


Nope. They're subsidizing most trips in order to keep prices low.

Their profitability problem isn't just one of opex. They don't have margin, either.


obviously the least price-sensitive 5% would remain. it's not like they're running currency exchange or something - people don't have a super set demand curve. maybe 95% of their customers do, but not 100% of their customers... (unlike a currency exchange, for example, which would drop to precisely 0 users worldwide if it increased prices by just 10%, since 100% of any such users are super price-sensitive. likewise if a currency exchange subsidized exchanges by 10% it would have more users the next day - by far - than people on Earth. easily a trillion "users", or whatever the rate limit is for signing up and performing exchanges. try to visualize these two different demand curves and you will see that Uber should still have some users if they raise their prices, because not all of them are completely price sensitive and only use it because it subsidizes rides, and not for any brand or convenience reasons. unlike a commodity currency exchange which exists under ironclad demand curves that drop to 0 if you move along it even slightly. picture these curves.)


Can you provide a source for this? I'm honestly very curious. I've seen this claim bandied about for years, but I've never seen a source that verifies it. Is Uber really losing money on a marginal basis in developed markets?


Here's an article with citations from November of last year. Note that it does use data from 2015, since at the time that was the most recent publicly-available published data.

http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...


Thanks, this is terrific.

My main takeway: revenues are higher than their cost of sales. In other words, they are earning money on marginal rides served. Not losing money.

To me, this suggests that profitability is plausibly achievable if they end subsidies into small markets and drastically cut development costs.


The writing has been on the wall for years. Never believed Uber would transition to profitability.


Ever rising valuations can't save the company, so I don't see how Kalanick's departure threatens its prospects for survival. "More of the same" isn't a winning strategy for a company that's not on the right track.


I may be simplistic or naïve, but if your business isn't profitable, that's what kills it. Travis or no Travis, it doesn't seem like Uber has found a way to cut a profit yet and at some point, profit becomes a requirement.


Uber can probably be profitable tomorrow if it wanted to be, but then it would have its long-term opportunities gobbled up by others


I hear all this doom & gloom, but could Uber not just... raise prices? Sure, they would lose a lot of customers, but they would stay alive.

How could Uber, barring wholly incompetent leadership, completely implode?


Uber needs the network effect. Lower usage means fewer uber drivers, which means it's harder for me to get a lift, which makes me use something else. So a relatively small dip can cause a collapse un usage.


Raising prices could include raising (by not as much) payouts to drivers, which could make them more attractive to drive than Lyft. Then again, if too many customers leave, then you have a surplus of drivers who get frustrated because they can't get fares. But perhaps there's a balancing point somewhere in the middle.

And many/most Uber drivers also drive for Lyft. There's no harm in leaving both apps on and grabbing a more-elusive (but higher) Uber fare when one comes along.


As a customer I can tell you Uber is underpriced by at least by 50% in my city.


Transportation is a very substitutable good. Uber doubles prices, they lose more than half their business, total effect on revenue is negative.


They're spending a lot. If they throttle back to the core business they might be able to squeak by. I do wonder how feasible that is given how bizzare their cap table is.


Seriously, it's mind-boggling what they're burning cash on. Driverless cars. Drone helicopters. Ubereats. Who knows what other pie in the sky tech that is decades away. Why would you burn cash on such things when the core business is not profitable?


Is there another company in history with the valuation that Uber has that went broke because of a CEO change?

My gut tells me that Uber's financial performance won't change


It's not clear they'd survive regardless.


This is probably great news for Tesla, or other auto makers and technology companies who would love to acquire the Uber brand and software.


What software? Their self-driving tech is tainted by Waymo's claim they stole it, so it would have to be very, very good for some company taking the risk of using it. I doubt it is _that_ good, so I don't expect to many buyers for it.


So does Kalanick still walk away a rich man at this point?


why can't they just stop the burn rate, most drivers won't jump ship and they can have a skeleton crew? or does this prevent them paying back investors?


You'd need to know what the burn rate is composed of: their engineering organisation might be less expensive than the marketing budget in a single major market.

If they cut ad spend and raise costs, then their growth story stops and other competitors have a window to move.

The go-to reading (at least a few years ago) for handling the difficulties of burn rate at a high-growth company is 'Mastering the Rockefeller Habits' by Verne Harnish, the chapter on cashflow. I think 'The hard thing about hard things' also talks about how this situation can kill your company if you're unlucky or unprepared


Being a glorified taxi dispatcher probably isn't Uber's idea of a successful endgame. They desperately want to be a big player in the future of autonomous transportation and are clearly willing to bet the success of their taxi dispatching company to do so. Cutting their burn rate to a skeleton crew means giving up on that ambition and spending the rest of their 'life' as a reasonably successful company, with perhaps some modest profits, dispatching taxis via a phone app, and neither they nor their investors seem to want that.


Isn't this a little like Madoff being vital to Madoff Securities? Uber's insane market cap is a direct consequence of a whole bunch of unethical, illegal, and barely legal activities.


"If you want a higher building, you should build strong columns"

They will change the company's current culture. Slow down the pace of growth to try to adjust what is wrong. Probably focus on where they have margin to operate. This is clear in Gary ( Uber Co founder) text on Medium.

"In a highly competitive market it is easy to become obsessed with growth, instead of taking the time to ensure you’re on the right path. Now is that time… to pause"[0]

[0]https://medium.com/@gc/ubers-path-forward-b59ec9bd4ef6


Their valuation is entirely and utterly founded on the idea of growth, and that there is no other path. They have absolutely no chance of turning around and telling Wall Street, of all people, that it's time to pause. Wall Street only loved them when they moved fast and broke everything there was to break.

This is death. I mean, it's sensible talk, in another context it would be seen as enlightened, in a larger sense it's the right answer.

Uber aren't IN another context. They depend completely on Wall Street continuing to think they are the biggest shark that ever sharked, and now that's ruined and the only big investment opportunities are in betting AGAINST Uber. Most likely the smartest money is already out.

This is death. Shouldn't be, in a more sensible context, but it absolutely is. You can't tell Wall Street 'it is time to think sustainability' when they bet on you eating the goddamn world for them.


Wall street?


I concur. This is a very poor decision all of which stems from the snowballing and mob mentality of the outraged.

Companies at this stage in an ultra competitive market (not talking about ride sharing, but self-driving) need their founders to lead and grow. It is just too early and critical to bring in a professional CEO. See Apple.


Uber hasn't been able to show a single GAAP-profitable market anywhere, including cities in the US. Rates would have to be more than 100% higher just to archive break even. Scale economics of that magnitude are unheard of with physical products. Self-driving is essentially just a media stunt for them, just like amazons drone delivery news that pop up every year just before christmas.

Just look at the numbers in this article[1] - they need scale economics of two times the cost of the driver of the cab to archive GAAP profitability, which, obviously, is impossible even with self-driving.

[1] http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...


GAAP profit? Who can show that??


he could have cleaned ship years ago with all the previous scandals but he was either too stubborn or too arrogant to think any bad news would pull his company down. he was representative of uber's toxic culture and it seems like he should have stepped down right after he was caught bad mouthing a driver FROM HIS OWN COMPANY.


Is that the video where he explains how there wasn't huge demand for upmarket cabs to angry upmarket cab driver? There wasn't much scandal there.


Correct. It's the video where the Uber driver blames Travis personally for him buying cars and his small transportation business failing. I mean, how could an incredibly high interest and high upfront capital car loan into a very speculative and low margin business be risky? It must be Uber and Travis screwing him.


Much of the resistance to Uber (such as laws that were broken, protests) were from entrenched interests. At least where I live in NYC, Uber was dramatically improving customer value while providing innovations that reduced greenhouse gas. It provided completion for the entrenched Yellow Cab monopoly with its very high rates. Sometimes Uber would have higher rates but then you could take a Yellow Cab instead.

The Yellow Cab special interests paid off politicians so that there was a limit of 13,000 Yellow Cab medallions for 8.5 million people. The price of the taxi medallion was $1.2 million. While people in Manhattan could get a taxi, there were no taxis in Brooklyn, Queens, Bronx, ... Because of the artificial limit on medallions which only benefited medallion owner but not New Yorkers, a driver leasing a cab for a 12 hour shift could pay $125 just to lease the car.

When Uber and Lyft came, the rates were lower, one could use Uber Pool to have even lower rates and save on greenhouse gas. Now taxi services have some availability outside of Manhattan. Now many Yellow Cabs are idle and the value of the medallions went for $1.2 million to about $700,000 or less.

In NYC, the Yellow Cab medallion owners tried to get the mayor to put restrictions on the growth of Uber/Lyft, but New Yorkers protested.

Uber/Lyft have increased customer value, lowered greenhouse gasses while not forcing drivers to pay excessing leasing fees for vehicles.


So why Lyft get none of the protests? I think you are mixing unrelated subjects.

Uber final product is good for society. And other companies can provide the same product (in my city, São Paulo, there are other 3 good companies in the same space).

Uber practices as a company are toxic for its employees and some of the toxicity leak to society.

If such calculation was possible, I believe it would show a net positive impact in society. But a company with good practices and the same product would have an even larger net positive impact.

As a society, I believe we should not settle for bad companies making good products, that's why I believe all the protests are legit.


Once upon a time I heard a concept in motorcycling of the sacrificial jerk. This was when you deliberately rode behind someone who rode like an asshole. In turn they provided the upper boundary of your willingness to break the speed limit and for you to ride like an asshole, in hopes that they'd attract the ire of the police instead of you.

Leaving any motorcycle safety conversations aside, I think Uber has been the sacrificial jerk of the rideshare industry. Lyft probably would have attracted some of the same issues if there hadn't been someone more brash and more willing to flout their law breaking ahead of them.

Now Uber's explosive expansion and the resultant "they're gonna do it anyway, may as well accommodate 'em" reaction of the regulators has more or less normalized the good parts of the rideshare industry. Lyft and perhaps other competitors-to-be can benefit without taking nearly as much flak. Hopefully you're right in terms of the ability to provide a much bigger net positive in that situation.


I call this the "pace car" when driving. You can do anything the pace car does because he'll get caught first - he sets the pace.

Uber is the pace car and the police pulled him over, Lyft saw this and applied their brakes.


I've always heard it called a 'rabbit' [1], but I like 'sacrifficial jerk' and will probably use that from now on.

1. http://radartest.com/Top-5-Tips.asp


My term for this is "minesweeper"


We call this guy "lightning rod". Interesting how we've all identified this actor with different but essentially synonymous terms.


We always called this guy the 'red herring', to throw off cops.


We call it a horse in Lithuanian, because it's always in front of the carriage.

And no, we don't use horses anymore.


We called them designated decoys where I grew up.


One thing to remember is many cops will grab the car nearest to them instead. It happened to me when I was matching pace of traffic while speedometer went out. I was in the back. Cop pulled me over instead of the speeding leader.


Exactly... or they can direct you to pull off the road and then get the others and you just have to wait there.


I think you're right. The whole thing is complex, with labour law/norm implications, entrenched and concentrate interests in dozens of jurisdictions. Also uncynically ideological objectors. It was inevitably going to draw a lot of fire. I'm personally shocked at how far and wide uber have managed to spread.

Leaving aside broader questions, I think we can take a guess at what happens after Uber gets pulled over. Someone will take their place. What soneca said above makes reasonable sense.

OTOH, I'm not sure how useful this culture of rebuke and scolding really is. I think it's a bit extreme to wish for regular corporate collapse because of scandal. Reform needs to be an option here. Then again, maybe an occasional sacrificial lamb is good for making the other lambs ride slower. If it doesn't really matter who it is, may as well be the jerk.


I will say that their management of internal culture isn't something I have any sympathy for, and I hope that doesn't end up being where boundaries are pushed. There is certainly a tendency for armchair kneejerking in today's culture wars, but Uber's personnel issues go beyond the gray area in my opinion.


I've heard the term "bear bait."

*Smokey (as in the bear) being CB slang for highway police due to the hats.


We call such vehicle "a sponsor", because it would get fine instead of those driving behind.


Actually such a calculation is possible (of consumer surplus), though perhaps some would argue against one or another part of the methodology.

See: http://freakonomics.com/podcast/uber-economists-dream/ or http://www.nber.org/papers/w22627.

> So we found that in 2015, if you extrapolate to the whole U.S., we found that the overall consumer surplus added up to almost $7 billion. So people spent about $4 billion on Ubers, but they actually would have been willing to spend about $11 billion. So for every dollar people spent on Uber, they got about $1.50 worth of extra joy that they would have been willing to pay on average above and beyond what they did pay. And to put it in a context just how big this consumer surplus is, the total amount of money that went to what Uber calls the driver partners, the people who are driving the cars, was something like $2.5 billion. So the consumers got more than twice the benefit of all the money that went to the drivers. And Uber itself only got to keep about $1 billion.

Of course, none of this makes Uber immune to criticism for the way they operate as a company. And there are sufficiently many alternatives that, even without Uber, society is likely to continue reaping benefits from ride-sharing as a technology.


I believe most consumer industries have consumer surplus, since different customers are willing to pay different prices but the companies can only charge one price. This includes the taxi companies that Uber displaced. From reading the abstract, this paper does not calculate the additional consumer surplus generated by Uber beyond taxis.

Note that it doesn't follow that Uber would make more money simply by raising prices -- consumer surplus measures the amount Uber could make by charging each user their "true" value, but if Uber simply raised prices, then they would lose demand.

However, Uber is actually starting to use price discrimination (i.e., charge different users different prices based on their characteristics), which would eliminate consumer surplus [1].

[1] http://www.business-standard.com/article/companies/uber-s-ne...


Tl;dr: Uber needs to raise its prices.


They probably felt comfortable taking a loss while they expanded more on these subsidized prices. As long as they don't get involved in harassment claims and theft of a competitors IP they should be in a strong position to start raising prices....


Oh, wait!


I would conclude that Uber is spending extra money to expand the market just as Amazon took losses to expand their market. They don't need to raise prices, but eventually reduce overhead per ride.


They really don't. Uber represents itself as profitable for Uber drivers, but this is only true in the short-term. When you factor in car maintenance and depreciation etc, the "profits" that Uber shows you essentially go out the window. It's equivalent to selling a tiny bit of your car's value.

If Uber raised their prices, the average real value would drop from its current real value of $2/hr, to...

Hell if I know, but it could well be negative.


Uber is the largest player by far, so they are an easy target for frustrations and for incumbents. "Uber" is almost a generic term for a iPhone hailable vehicle. Generally, there is market competition for drivers. For example, Lyft for those drivers who are unhappy with Uber. You have stated that in your city, São Paulo, there are 3 good companies. If one company mistreats drivers, they would go to a competing firm and the firm would lose revenue.


Uber is the largest in the US, not across the world. Didi provides way more rides than Uber any single day.


I found it hard to find good numbers, so hopefully this research will be of use to other people:

Yesterday, Uber co-founder Garrett Camp wrote "Uber has become a global service providing roughly 15 million rides per day across 500 cities" at https://medium.com/@gc/ubers-path-forward-b59ec9bd4ef6

The most recent estimate I could find on Didi Chuxing is 20 million rides per day as of October, 2016 as stated at https://www.techinasia.com/china-didi-chuxing-20-million-dai...

It's reasonable to assume that Didi has noticeably grown since October 2016, but none of these numbers are easily verifiable externally to these companies.

(Lyft's market share is unclear to me, but perhaps 2 million rides per day, more or less?)


Kind of unfair to compare Didi (or any Chinese company) with the free market alternatives. If you're given state sponsorship from one of the largest countries, then you should easily be able to do more rides than Uber.


I don't think that UberChina's failure to win against Didi was due to state sponsorship. Didi had a better product tailored to the Chinese market, better operations people who conducted local campaigns in more cities, and only one market to compete in, as opposed to Uber's worldwide competition.

It was apparent that Didi had achieved the network effects necessary to overcome Uber in volume. Both companies wanted to focus on revenue so it was savvy of Didi to purchase UberChina so they could reduce ride subsidies.

I think that the success of UberChina, along with Yum! and Wal-Mart, demonstrate that it is possible to prevail in the difficult Chinese market.


> a better product tailored to the Chinese market

What were the differences?


According to HN commenters in China, Didi understood that government employees needed a standard voucher so Didi made its generation automatic in the app. UberChina apparently never did.

It was used as an example to illustrate that Didi did the little things that remove friction for its customers. Didi also recruited drivers in smaller cities; its coverage was superior to UberChina's.


and MUJI, also very successful in China


I think there's a case to be made that the tax policies that apply to investor organizations and participants qualifies as a form of state sponsorship.


Do they nearly guarantee people will buy the app despite foreign competition? This sort of thing happens in China more than over here. U.S. consumers use or buy products from many places with significant percentage coming from China at some point. Something just being American sponsored doesn't usually cut it.


There's also Per Capita to consider. Obviously an anything in China will have more actual humans using it - there's a billion of them there.


Aside: is there anything to be said for doing well in lots of countries vs a monopoly in one?

It seems to me that to be successful in certain countries requires skills that don't translate internationally - for example, understanding the quirks of one big country, or negotiating the political situation.


Well, largest by revenue :-)


That's why I trust capitalism. Its dynamics allowed Uber to create a market, but also keep it in check for bad practices.


Do you think the same about telecom monopolies and the negative externalities of fossil fuel companies?


telecom monopolies are government enshrined, so not capitalism. Negative externalities of burning fossil fuels (plastics are a fossil fuel product) are allowed because government allows people to pollute "some"... not capitalism.


Perhaps the defenders of capitalism should have to account for the effect their economic system has on the government and its ability to properly regulate the economy given the immense private wealth that the owners can use to influence policy and politicians. It is an economic and political system, not purely an economic system.


You're conflating free markets with capitalism. And once laws are influenced by capitalists, the market is no longer free.

And this is again a failure of government, not capitalism. As an analogue, you cannot say that socialism is a flawed system purely because of what happened in russia-you must not mix up economic and political philosophies.


The free market determined that that was the fair price for government policies to be bent towards industries' or actor's will. You'll forgive people critiquing the economic system if it freely and naturally leads to the ills we find objectionable.

And on the contrary, I absolutely do hold the failure of the Soviet system against central planning and command economies, even socialist ones. Given that, I find democratically-executed socialism using markets for prices (some consider this market socialism) much preferable.


You can if your complaint (as above) is that the economic system has adverse effects on the political system or vice versa. Would you claim you shouldn't attribute the resulting explosion to water when you pour it on sodium because one is a liquid and the other is a metal?


telecom monopolies are government enshrined

Telecom monopolies are not by government intent by rather by regulatory capture.

As a capitalist, I hella want to exclude others from the market. If I can get the government to do this for me, then I'm willing to pay the lobbyist fees to make that happen. In the IP space the only reason I'm willing to slave away at invention is the possibility of a patent, a right to exclude, a limited monopoly.

As a capitalist, the absolute last thing I want is a free market. Thiel puts it this way: competition is for losers.


On the one hand, patents give companies a reward for innovation and result in them doing research they might not have otherwise done.

On the other hand, software patents.


I don't understand your second sentence. Government currently allows some pollution. Should government disallow all pollution?


OP is saying that government allow a certain amount of pollution. A government could decide to forbid pollution altogether (whatever that means) and still maintain a capitalistic economic system.

We have generally forbidden dumping barrels of spent oil in rivers, for example.

Likewise, a non-capitalistic system can forbid or not pollution.


To the extent it owns land, yes.


Telecom monopolies were created because of this:

http://www.sandman.com/images/oldpolewires1sm.jpg

They were government regulated until that didn't work, then broken up. After the subsequent deregulation, the monopoly is in the process of re-creating itself now.


I think that may be a picture of phone lines when they were point to point i.e. each connection had a dedicated line rather than going through a switch. I don't think it had anything to do with thousands of telecom companies.


"Under Theodore N. Vail from 1907, AT&T had [...] acquired many of the independents, and bought control of Western Union, giving it a monopolistic position in both telephone and telegraph communication. A key strategy was to refuse to connect its long distance network — technologically, by far the finest and most extensive in the land — with local independent carriers. Without the prospect of long distance services, the market position of many independents became untenable. Vail stated that there should be "one policy, one system [AT&T's] and universal service, no collection of separate companies could give the public the service that [the] Bell... system could give.""

https://en.wikipedia.org/wiki/Kingsbury_Commitment


Hahaha holy crap!


Societal norms forced him to resign. In other parts of this world with more patriarchal and authoritarian governments the leadership style might have been accepted.


You're catching a lot of flak for this, but as long as there is diverse competition, you're right. I used to bounce back and forth between Uber and Lyft based purely on price, but now I almost exclusively use Lyft because I'm not a fan of some of Uber's practices.


Capitalism didn't force Kalanick to resign.


Well, technically it did. Investors, i.e. the capital, pressured him out.


capitalism -- an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

So you are saying that the investors, i.e. the capital, pressured Kalanick out for reasons of profit rather than due to pressure by the state in the form of multiple lawsuits. You are mistaken.

In particular, there is no evidence that Uber's naughty bro culture is any less profitable than a mature egalitarian culture. Lack of profit wasn't why Kalanick was shown the door.


I would imagine they've seen a revenue decline from all the bad press. Furthermore, there's no way he wasn't directly involved in the Otto lawsuit, which isn't the governments doing.


According to recent reporting in Bloomberg, there was a temporary dip in market share due to the #deleteuber campaign, which has since recovered. Both companies have grown considerably over that time period. Lyft's ridesharing growth in the U.S. has been much higher than Uber's.

The Waymo lawsuit is still very much up in the air. Kalanick's involvement is already public: he collaborated with Levandowski to acquire a team of self-driving-car engineers and their work over 8 months. The key demands of the Waymo legal team were rejected in their injunction. Judge Alsop did not see a clear nexus between the Waymo designs and the Uber lidar, referring the matter to trial.


>According to recent reporting in Bloomberg, there was a temporary dip in market share due to the #deleteuber campaign, which has since recovered.

Based on what? Uber isn't public, they aren't forced to release any information on their ride sharing, and what info they do release isn't subjected to any real verification.

The only article I see is based on "number of app downloads" - that has literally no relevance in the number of rides they're servicing. I've got Uber on my phone and I haven't used it in 3 months and I don't see that changing anytime soon. They didn't lose me outright as a user, but they, for all intents and purposes, lost my business.


The article had some numbers leaked from Uber. It should surprise you when some information isn't public these days, considering the volume of leaks from that company.


I have not been keeping up with the news surrounding Kalanick or Uber, so this is an honest questions.

Did the courts say that Kalanick is barred from being the CEO of Uber? Or, is it the case that Kalanick's actions have put Uber at risk fines and further litagation?

My (admittedly uninformed) take on the situation is that Uber's investors weighed the costs and benefits and determined that Kalanick needed to go. While the regulatory environment probably influenced the decision, it wasn't the government calling the shots.


I think you're conflating the issue. When Capitalism is practiced you can still have laws... The industry is still controlled by private owners.


I'm actually separating the issues rather than conflating them.

Capitalism by itself looks at profit. In the United States capitalism is held in check by a legal+political+free speech system. A company (Uber) is not held in check by more capitalism; it is not held in check by competition. As an aside, this breaks down with regulatory capture.

When VW cheated on its emissions testing it was not checked by a more efficient and competitive Tesla. It was held to account by a legal system external of capitalism.


> It was held to account by a legal system external of capitalism.

And Travis was not held accountable by a legal system - his investors (i.e. capital) asked him to step down.

I think we're all saying the same thing, it's just your conclusion is incorrect.


We are not saying the same thing. His investors asked him to step down for a reason and that reason was not profit or rather lack thereof; they've had ample profit reason to fire him for years. The reason the Uber board asked him to leave was not a capitalist reason.


I'm not sure why you seem to deny the possibility that capitalists are concerned with future profits as well as past ones. You say their reason was not lack of profit, based I guess on the fact that they haven't suffered any major setback beyond their normal lack of profitability in the past couple of quarters. That's an oddly restrictive definition.

Capitalism is about future profits, by definition. I can't invest money in Apple in 1997. I have to invest it today, and my only concern is what happens after that investment. The Uber boarding kicking him out is entirely a capitalist reason. They've invested money, and his presence will (they believe at least) negatively affect the return on that investment going forward.


It's just a blatant fact that Kalanick wasn't axed because of his inability to turn a profit. That card has been left on the table for quite some time by board inertia in the vain hope that this unicorn would grow wings. Instead, Uber lost $2.8B last year. That isn't rational.

Your only concern may be what happens after an investment but you'd be foolhardy not to take past performance into account. Undervalued (Apple in 1997, return of Steve) is one thing. Throwing good money after bad is another.

$2.8B is just a ton of money to lose and for a startup it's insane (thinking of Amazon but Uber's losses dwarf Amazon's early losses). Frankly, I think the board is using this as an excuse to do now what they should have done a couple of years back. Boards are human. They aren't homo economicus incarnate. Ascribing rationality to the outcome of a board meeting because capitalism makes no sense. Really, they lost $2.8B last year.


> It's just a blatant fact that Kalanick wasn't axed because of his inability to turn a profit.

No one is suggesting that. When people say "this is capitalist of the board to do" they're talking about the individual board member profiting from a successful exit. Put more simply - investor puts $1 in Uber on day 0 and expects to make $100 on day 1,000 and makes a $99 profit. They're axing TK because they want to make their $99 return on investment.


> His investors asked him to step down for a reason

Which reason would that be? Which reason is there for a investor to ask a CEO to step other than to protect his/her investment?


Capitalism did indeed force Kalanick to resign.


"Keep it in check"

By allowing it to willfully break laws in dozens of countries, contributing to lowering standards of living and high stress at work, tracking users at all times, having a hostile workplace, then becoming the most important provider of such services in the world?

Yeah, that's totally capitalism doing its work, and not the painfully obvious "throw VC money at it until it works" scheme, right


Lowering standards of living? Lolwhat?

As a previous comment pointed out, Uber created a consumer surplus of almost $7 billion in 2015 alone.


The same pushy, aggressive culture that made their some of their employees' lives awful also made it possible to get excellent service that reduces tons of drunk driving and generally improves people's lives.

I really don't think they could've broke into the market by asking politely; it took some fire in the belly. However, the side effects are pretty devastating as well.


> The same pushy, aggressive culture that made their some of their employees' lives awful also made it possible to get excellent service that reduces tons of drunk driving and generally improves people's lives.

So you're basically saying that stuff like treating women like shit was NECESSARY to provide a good "taxi" service?


Necessary is a loaded word....

None the less, let's not pretend yellow cab other taxi livery companies never mistreated any of their employees (male, female, lgbtq, etc.)

Mistreatment is not an uber only specialty.


How does that excuse how Uber acted in any way?


It's not excusing it. Just putting things into perspective. As bad as Uber might be, they might be less bad than the alternative. In those terms, one may not want to champion the legacy system as better.

Users got a better experience from Uber, but it's not clear it was at the expense of the service side of the population being treated worse than they were treated by the incumbents, therefore all other things being equal Uber would still be a net positive.


> As bad as Uber might be, they might be less bad than the alternative. In those terms, one may not want to champion the legacy system as better.

The alternative isn't the legacy system, which nobody's saying is better. The alternative is an Uber with decency (even if still bold to break into regulated markets). Or an Uber competitor.


Necessary is the wrong way to look at it, it was a consequence of the growth above all strategy.

They broke into markets with disregard for the law, often it backfired, often it didn't.

Allegedly(as it is being investigated) they also "stole" IP from Alphabet in an attempt to get ahead in the self-driving gold rush.

They repeatedly ignored several sexual harassment reports in order to protect someone who they referred to as a "high performer", in the name of growth, they could not afford to lose a high performer.

In the startup/VC/unicorn hype world growth is king, it comes before profit, revenue, employee wellbeing, customer satisfaction, business and work ethics.

Uber is not the first guilty of this, it's just the extreme case.


Cornelius Vanderbilt got his start by breaking a monopoly given to ??? to offer ferry service between New York and New Jersey underbidding holder of the monopoly. He broke the law to do it and was sued. It actually was judged by the Supreme Court and the monopoly was thrown out because of Interstate Commerce (I think it decided this entire area of law, IIRC).

There are many entrenched, incumbent interests that try to make money not through healthy wealth creation but by trying to appropriate wealth through politics (e.g., granted monopolies) which to some degree the taxi industry was.

Uber and its competitors did a great service to many people and ultimately really angered monopolistic incumbents.


The sexism isn't the only problem within the company. It's the easiest to criticize, because it's obvious how stupid and absurd it is--and how there is no excusing it, but I Uber has done a bunch of other things that reflect this same mindset.


> stuff like treating women like shit was NECESSARY to provide a good "taxi" service?

No, but its possible they were two facets of the same quality. While the aggressive, see-what-we-can-get-away-with attitude is useful (and probably necessary) in fighting the entrenched local monopolists who have local government protecting their vested interests, it turns out to be a serious liability with respect to workplace norms and stealing of trade secrets.


im not here to scold you, but this comment is kind of revealing. it shows a need to explain a bad thing by saying that a good thing caused it. while i wont deal with the substance of the argument (which i personally reject), its my experience that this argument's format shows up an awful lot when there is a bias that someone has to bend reality to preserve.

its also revealing that you would even bother entertaining this idea. why not just say "yea. they shouldn't do that."? im pretty sure there are companies that have "disrupted" industries that were not filled with toxic culture.


> im not here to scold you, but ...

In other words you're here to scold me.

> it shows a need to explain a bad thing by saying that a good thing caused it.

It does no such thing. It explains the nuance of someone else's argument which I thought was being misconstrued. That is, a thing can have positive and negative aspects.

> while i wont deal with the substance of the argument (which i personally reject), its my experience that this argument's format shows up an awful lot when there is a bias that someone has to bend reality to preserve.

Huh? That is to say "I will ignore your argument (but dismiss it) and jump ahead and make value judgements about your motivation and biases."

> its also revealing that you would even bother entertaining this idea. why not just say "yea. they shouldn't do that."? im pretty sure there are companies that have "disrupted" industries that were not filled with toxic culture.

What I find revealing (and amusing) is that you admit you are ignoring the plain meaning of my post, but prefer to look for thoughtcrimes in the subtext.


i mean, your not wrong to get annoyed at someone for kind of guessing whats going on in your head. it just struck me as odd that someone would even bother to make the point at all.


Not caring about what other people think is necessary for doing pioneering work.


That's completely wrong headed. What people think is entirely the reason that something is "pioneering" or not. How businesses comport themselves and treat their various constituencies is part and parcel of their ongoing success.


"i have to be an asshole to succeed!" - people who are assholes who are making excuses for themselves.


if that's the case, you'd have to protest lots of start ups and companies in silicon valley. There's no shortage of toxic workplaces.

I think it's a good think to break down monopolies and open up competition.


> if that's the case, you'd have to protest lots of start ups and companies in silicon valley. There's no shortage of toxic workplaces.

What's even the point here? You're aware that no one has to protest a company they don't know or use. And that "you can't protest one if you don't protest all of them" is a fallacy.


This is factually incorrect. You're drawing a direct parallel between medallion taxis and Uber/Lyft rides, when they are not in fact the same at all.

The outer boroughs, and every neighborhood in the city, has had car service options for decades, where you call a phone number (or often walk to a local storefront stand) to get a ride.

This is the exact market segment that Uber has entered. Literally. There wasn't and still isn't a restriction on the number of TLC car service cars on the streets.

This idea that there "were no taxis" in the boroughs and now there are is ridiculous. There weren't many yellow cabs before and there still aren't. There used to be thousands of TLC cars before and there still are. Except now people use an app instead of calling Arecibo or Carmel.

Street hailing was and still is prohibited, both for Uber and for phone style car services.

The massive innovation, of course, is the use of a smartphone app for hailing, which made it technically possible to create the market that we see today. Uber, Lyft, and the other companies that built internet enabled hailing solutions certainly do deserve credit for building out that innovation, but that change was just an obvious outgrowth of the technological change to everyone having a handheld always connected small computer. It was inevitable.

The dynamic you're describing for NYC just doesn't really fit the facts. Nor does the idea that a lot more people taking a lot more rides in cars is reducing greenhouse emissions, but that's another matter.


I'll attest to the original comment by davidf18. Uber/Lyft have radically changed NYC for the better. Ride sharing services are significantly cheaper on the order of multiples, easier to use (eg. no more hailing, paying), and a hell of a lot more pleasant to ride in than taxis.

Taxis were notoriously bad. They'd intentionally take slower routes to run up the meter, refuse passengers trying to go to locations the drivers don't want to go (despite this being illegal), etc. Not to mention this is all made more attractive due to our failing decrepit subway system.

The smartphone app innovation you speak of was not inevitable. Taxis indeed had a monopoly, and thus had absolutely zero incentive to developing an app. The competition induced by the ride sharing services destroying them is what incentivized them to finally launch an app, but I don't have it on my phone nor do I know anyone who has, and it's probably inferior to that of its competition.


Counterexample: Taxi companies in Stockholm developed hailing apps before Uber. Most of them already had location services for mobile phones so you could call their voice system, and there was an option to get a cab to your current location if you were calling from mobile. I presume there was a cooperation between the mobile carriers and the taxi systems so they could pull that info.

Their first hailing apps was simply an extension of this, but it used the phone's gps, and you would press a button in the app for "a taxi, now, here", but the underlying systems were at least already there.

After Uber entered the market, they made their apps better, and you can now attach a payment method to pay through the app, and there's gps tracking of the car you're waiting on, same as Uber and similar.

But Stockholm never had a medallion system or other caps, and there's no monopoly, but there is some sort of oligopoly where some companies get better access to major taxi destinations such as airports and train stations. As usual, healthy competition is the key. :)


My point, which both of you appear to have missed, is that we're not actually talking about taxis at all. Taxis are things you hail by flagging them down on the street. They're still there, driving around in circles looking for you, just like before. You're just not using them any more.

We're talking about something called livery cars which have existed forever and were also very widely used before Uber as well. You used to arrange for pickup using your phone. You still arrange for pickup using your phone.

The car, the driver, and the laws surrounding both are essentially the same as they were before. What's actually changed is your phone.

This distinction is quite different in cities that aren't New York, where there were taxis and nothing else, and Uber has in fact created a new category of private car transportation service. But here in NYC the non-taxi car service market segment existed already and was vibrant, the parent comment claiming they broke some kind of monopoly is just incorrect.


> Taxis are things you hail by flagging them down on the street. They're still there, driving around in circles looking for you, just like before. You're just not using them any more.

> the parent comment claiming they broke some kind of monopoly is just incorrect.

Are you saying taxis are not a monopoly? Or are you saying ride sharing apps did not break the taxi monopoly? If taxis were a monopoly, and if we are not using taxis now because of ride sharing apps, then it would seem ride sharing apps broke a monopoly.


It's not just that, ride sharing apps allow anyone to turn their own personal vehicle into a taxi, and work their own hours. This massively increased supply, rendering the fixed medallion taxi monopoly irrelevant. Uber Pool and Lyft Line further increased supply and drove down prices.

Add to that the incentives induced by the rating system and fares determined before you hail the ride, and you also get a far superior riding experience.

So no, the innovation here wasn't just that the hailing is done via an app. This alone would not have spurred the dramatic improvements we've seen.


carmel didn't quite have the saturation of drivers as uber and so you don't have to "think ahead" to hitch a ride. Certainly the smart phone allowed animated maps to pacify the client but, also, for foreign travelers, didn't really need to speak a different language to convey source and destination (as well as credit card info). Plus all the tracking of the driver for peace of mind from a safety pov.


Your reply doesn't address anything CPLX said. There were already non-yellow cab options in NYC for car service, and there still are. That's the point they were making.


> our failing decrepit subway system

Decrepit I'll give you, and even a low grade, but failing?

From Wikipedia:

2016 subway ridership: 1.76 billion = 147 million per month

2016 global Uber ridership in October: 40 million

Not the same league.

The subways could improve, but I prefer them (and walking) by far to taxis and cars. I guess I just don't have experience since I take maybe one or two taxi rides a year and have never used car services. You seem to take them much more.


I've lived here for the past 5 years (including a summer before), and the subway has gotten significantly worse every year. Commuting to/from work in the outer boroughs in particular is a nightmare. The month I lived in Astoria for example, it seemed that on over 50% of my rides, the train would stop at some point for an extended period of time due to signal failures, and I'd often have to wait for numerous packed trains to pass before new ones would arrive.

I actively avoid the subways as much as possible, especially in the summer when the stations are uncomfortably hot/humid. I mostly walk, ride Citibike, or take Uber/Lyft. Luckily I'm able to do this because I live reasonably close to my office in Manhattan.

Uber Pool has been a godsend because it's so cheap. I can often Uber to/from the office for about $.50 more than the price of a subway side. Granted traffic in the city is horrible so it's not all sunshine and rainbows - my Uber Pool today from midtown east to west of Penn Station took absurdly long due to standstill traffic, but at $2.03 I'm not complaining, and I'll take any excuse to avoid the subways.

https://www.nytimes.com/2017/02/12/nyregion/subway-complaint...

https://www.nytimes.com/2017/06/05/nyregion/subway-delays.ht...

https://www.nytimes.com/2017/05/31/nyregion/why-is-subway-se...

https://www.governor.ny.gov/news/governor-cuomo-challenges-m...


Your reply is likely attached to the wrong comment, as you did not address the main thrust of what CPLX is saying.


> This idea that there "were no taxis" in the boroughs and now there are is ridiculous.

The few times I tried to take those services the service was horrible, horrible.

Now, thankfully, Uber is available and they have much better service and they have a single identifiable reliable brand and they take credit cards.

Uber pool where unrelated riders ride in the same car are going to have less greenhouse gas than riders taking separate cars. This is logical.


> I actually live there and there are no Yellow Cabs in the outer boroughs.

I am writing this from Brooklyn, where I have lived for about 20 years.

> Before Uber there was no hailable service.

There still isn't. Street hails are only from medallion cabs, plus the green outer borough cabs which came just a little bit before Uber showed up and are still around.

There wasn't street hailing before and there isn't now. This isn't complicated. You used to use a phone to get car services before and you still do now. The laws and the dynamics of that aspect really didn't change much.

The innovation is that now your phone has a computer in it and GPS so you press a button and use an app instead of talking into the thing to a dispatcher guy in an office. It's a technological change that happened.

> I don't take these services much in the outer boroughs

As mentioned, I live in the outer boroughs, Brooklyn specifically. You should come check it out sometime, there are about three million of us here. We got along pretty well before Uber, we just called Arecibo. They were fine, and still are, I use them to get to the airport now since the drivers are way better.

Pricing is honestly pretty similar now to what it was five years ago, with very short trips being a little cheaper on Uber/Lyft than they were in the old system. Plus all the promos and so on.

It's way better now to just press a button on the phone, and have your payment info stored, and all that. No question about that. But those are technical innovations.

Your argument is that their innovation had to do with changing the dynamics of supply and demand in a restricted market. But that didn't really happen, and to the extent it did it was because smartphones made it possible. Steve Jobs probably has more to do with the declining price of medallions than Travis Kalanick.

> Uber pool reduces greenhouse gases because multiple unrelated parties can ride in the same taxi instead of using two different vehicles. Elementary.

Unless they were previously taking the subway, of course. The world isn't quite so facile.


I used to use Arecibo all the time, it was pretty much as easy to get a car as with Uber: they answered immediately and a car was typically at your door in 5 minutes.

Things I miss about those pre-Uber days:

- The drivers knew exactly where to go just off of an intersection. If you told them you were going to Tompkins and Hancock, they'd get you there often without needing to ask any clarifying questions. Now drivers have no idea where anything is.

- Music in cars from the driver's collection. Hearing random cumbia or ghazals or hip hop. It made you feel like you were in New York. Now drivers are catering to a generic millennial audience and all I hear is bad top 40.

- Overall just how human the interactions with drivers felt. I once had a driver come up into a house party with us, and ended up having a very weird/memorable night. Now everything is sanitized and rarely do I get a driver from Uber or Lyft that is willing to even have much of a real conversation for fear of getting a bad rating.

I don't miss the need to negotiate price or the need to pay in cash. The apps are also cheaper for the most part. I do miss the gritty New York.


Arecibo! I remember them from my time around Park Slope. My personal go-to was Evelyn Car Service from Prospect Heights.

That said, even Manhattan has had phones for black cars. I've routinely called Dial 7, Carmel, and Skyline on different occasions on demand (primarily when it's raining, when it's really hard to get a yellow cab), and had no issues. I still do so when Uber surge pricing is ridiculous for my tastes.

In the LES where yellow cabs can be scarce, you had Allen Car Service and Delancey Car Service (who I'd call for airport runs).

The reliability of these car services was pretty good. They'd call you if they were delayed or were otherwise late. (Drastically different from San Francisco, where the taxis were pretty much a terrible crapshoot experience)

When Uber started to take off in NYC, some of the feedback I heard was "I get to look like a bigwig", when in reality, anyone can get a black car, and if you think it makes you look more important... it doesn't.

My point is, there's a lot of talk of "Uber was revolutionary" and "before Uber there was nothing!", when the sad truth is these folks never bothered to look?

I mean, anyone who's lived in NYC for some time can tell you the numbers for Carmel or Dial 7 in a heartbeat, and some may even be able to recite the jingles from their ads.

Uber was just yet another dispatch car service, but with an app.


My point is, there's a lot of talk of "Uber was revolutionary" and "before Uber there was nothing!", when the sad truth is these folks never bothered to look?

I mean, anyone who's lived in NYC for some time can tell you the numbers for Carmel or Dial 7 in a heartbeat, and some may even be able to recite the jingles from their ads.

I do think you're understating the importance of discoverability.

I lived in Morningside for three years. (This is in Manhattan, by Columbia University, for you non-New Yorkers.) I'd never heard of the car services you mentioned. Even though I could easily access yellow cabs, after a few awful cab rides to / from the airport, I would have been pretty eager to try out something different.

My point is, maybe I was ignorant, lazy, should have asked around, whatever. Clearly you are a savvier New Yorker than I was. But Uber/Lyft makes the process of getting a reliable, enjoyable experience way easier as a newb, or tourist, or lazy person who doesn't bother to find a Real New Yorker, or whatever. That would have provided real value to me.


Arecibo is awful. They would always tell me "five minutes!" regardless of how long it would take for the car to arrive. Their attitude and customer service were not good.

I am so happy to never have to call Arecibo again. And now that Lyft service is good out here, happy not to use Uber either.


You just didn't know the code. Five minutes meant there was someone pretty close to you and it would be fine. Seven minutes meant there was someone that would head your way but he was a little further away so don't trip out about it. Ten minutes meant we're fucking busy but a guy will pick you up sooner or later. Fifteen minutes meant hopefully we'll be hiring some new drivers soon and when we do we'll definitely send one your way. And a busy signal meant it's time to consider public transit.


Cute but false, in each of those scenarios they would tell me "five minutes" and then when I'd call back 15 minutes later to ask & complain, they'd say "oh there was traffic, now he's five minutes away" and then one time I called back again 20 minutes later and the guy yelled at me and hung up on me.


> The innovation is that now your phone has a computer in it and GPS...

And a map confirming your pickup & destination, and a payment system. Yeah, not much different than talking to a dispatcher with your phone /s


And real time tracking of the car, a feedback system, an invoice that shows the route taken, etc...

Nope. No innovation here... /s


Things have changed. What was "street hailing" is now pretty much equivalent to "app hailing" because it's so frictionless.


I think this really depends on which city you are in.

When Uber started in SF, the experience of getting a taxi was very frustrating. There weren't enough cabs, the cab drivers were over the top rude, they refused to take credit cards and were aggressive about tips, if you called a cab they would never show up, and they were (and still are) expensive. It was not necessarily about the app, it was just that it was reliable -- you could get a car when and where you needed it and not having to pay in the car made the experience far superior.

At the very same time, there were all these black cars rolling around the city and picking up passengers somewhat illegally. That experience was not great because you often had to negotiate a high rate, but this was mostly because there were no taxis available. In other words, there was a bunch of supply that could be utilized.

I think those conditions made Uber particularly ripe to work in SF and once it did, that proved that it could work elsewhere as well.

The app was also a huge benefit, but in context, I actually think it could have been just as useful in the beginning if you could have texted your address.

It goes to show that for something to be great, you have to get a lot of things right at once. :-)


I live in Harlem and even in Harlem it is hard to get a Taxi in Harlem. Cab drivers regularly would discriminate against minorities who needed cabs. Uber changed all of that. Now cabs are happy to see me when I flag one down. Car Service is usually pretty horrible. The cars are dirty on the inside and they will typically overcharge you for a trip. I made the mistake of paying 20 bucks for a trip that would've been a $7 cab fare and maybe an even cheaper with an Uber/Lyft.


Are you really comparing car service in the outer boroughs to Uber? I mean I guess I agree with the TLC comparison but experience to the consumer is absolutely different.


Uber entered both markets. I live in Manhattan(UWS) and treat taxis or Ubers as interchangable. When you can pull up an app on your phone and have a car in 2 minutes, that is effectively similar to a street hail. Heck, because I work near Chelsea market(big tourist destination), using Uber gets me a car 5-10 mins quicker than trying to hail a cab and constantly getting sniped by people who appear upstream.


Technically, on paper, you may be right. Uber is categorised alongside dial cabs.

In practice, it has replaced lots of Yellow cab journeys too.

Straightforward evidence: the large drop in the value of a medallion in NYC.

But just talk to New Yorkers. Lots of people use Uber instead of Yellow Cabs.


Dial 7 ftw.


The quasi-firing of TK isn't an indictment of Uber as a product, or an overall social good (although both have been intensely debated). It is an indictment of Uber as a business.

Even if we grant that Uber is a huge overall social good, it is clearly not sustainable at its current pace. Uber's burn rate is the highest in history, and the C-suite is barren. The board clearly felt that TK couldn't get Uber out of this mess. And the board, at the end of the day, only cares about long-term share price.


I downvoted you because this has nothing to do with the article. Whether or not Uber is a good thing is not relevant to Kalanick stepping down or the rotten culture he cultivated.


Uber under TK was criticized for breaking laws, but those laws were in place to protect incumbents from market entry. In NYC, were AirBnB does break NYC and NY State laws, Uber does not. It follows the rules of the NYC Taxi & Limousine Commission. Except for the Mayor that tried to restrict Uber/Lyft for political reasons to help the incumbents, we New Yorkers welcome Uber/Lyft.


That's simply not true. Very few people have criticized Uber for breaking absurd incumbent-protecting laws.

The vast majority of people have been criticizing Uber for breaking laws related to fraud, stalking and harassment, and a generally toxic workplace culture.

The product that Uber offers is good (and no one other than taxi medallion owners is really arguing that). But they've gone about delivering it in an unnecessarily bad way.


That was only one of the many things they were criticized for.


They made a big deal about an illegal app that was only necessary because unlike NYC, the other city(s) were trying to restrict the market competition. Uber never used that app in NYC because we welcome technology and competition and the special interests did not dominate the politicians.


> When Uber and Lyft came, the rates were lower, one could use Uber Pool to have even lower rates

> not forcing drivers to pay excessing leasing fees for vehicles.

Err, the cheaper rates were due to uber subsidising rides with VC money, which was unsustainable. Uber also did start a leasing program for drivers.


> Err, the cheaper rates were due to uber subsidising rides with VC money, which was unsustainable. Uber also did start a leasing program for drivers.

The cheaper rates in NYC which are extremely high compared with the rest of the USA were because there was no $125 / 12 hour lease fee because there were no medallions.

Medallion owners would get mortgages (like houses) for the $1.2 million medallions and the high lease fee paid for the medallion mortgage. In fact the other special interests besides Yellow Cab medallion owners were credit unions who financed these mortgages.

A $125 / 12 hour lease fee comes to over $90,000 per year.

By not having to pay these excessive expensive leases, drivers could be paid less money and still make a profit. Drivers who leased the Yellow Cabs still have to pay for gas. Lower costs for taxi service means more time with customers in cabs. Everyone wins except medallion owners and credit unions with the mortgages and politicians bought off by these special interests.


> A $125 / 12 hour lease fee comes to over $90,000 per year

This comes out as 8640 hours per year, which is 360 days.

So we're talking about the income a taxi owner can get from a medallion.

What an individual taxi driver had to pay to work is a much lower number. Typically a full time job is around 2000h/year.


> The cheaper rates in NYC which are extremely high compared with the rest of the USA were because there was no $125 / 12 hour lease fee because there were no medallions.

As explained elsewhere in the thread, Uber does not and has not ever competed with medallion taxis for their main product (Uber X/Uber Black) in New York City. Uber's direct counterpart would be the for-hire cabs which are also regulated by the TLC, and are not required to have medallions.

Uber is already subject to the exact same requirements of the TLC that their predecessors were - Uber drivers in NYC have to have a valid TLC license. So there is literally no difference in supply-side regulatory cost there.


You clearly don't live in NYC. Uber absolutely changed how people in NYC get around.

Whether or not they fill the same requirements, they made it so easy to get a car that it was easier than standing on a street corner and hailing a yellow cab.

And aside from that, they added accountability. Yellow cab drivers were rude, the cars were moderately clean at best, and generally took opportunities to rip people off. I remember leaving my phone in a cab around 2008, I immediately called it and the dude picked up, said he was around the corner and to meet him outside. He was more than willing to give me my phone back- for $60 and had a shit eating grin on his face. I had the same thing happen in an Uber about 5 years later- the guy dropped the phone off at my house free of charge with a smile.

There is a reason that NYC taxi medallions have pretty much halved in cost since Uber started here- because they are directly competing with yellow cabs!


> You clearly don't live in NYC.

I very clearly do.

Rather than respond to the anecdotes, I'll point out that I was rebutting the original claim: that Uber was cheaper because it (unlike medallion cabs) does not have to pay for licensing fees. Uber does pay for licensing fees, just under a different classification. More importantly, that's exactly who Uber's competition is on the drivers' side, which is exactly what OP was talking about. Uber drivers are generally people who have driven livery cabs for years and either split their time between Uber and other livery cab services, or have switched over to Uber for livery cab driving.

When talking about the price, it's more accurate to compare Uber to other livery cabs, and to say that Uber has caused the share of livery cabs in the overall cab market in NYC to increase, rather than to look narrowly at the medallion market, and ignore the regulatory field that they are in, ignore the costs of that regulation, and ignore all of the direct competition on the supplier side.


> Rather than respond to the anecdotes, I'll point out that I was rebutting the original claim: that Uber was cheaper because it (unlike medallion cabs) does not have to pay for licensing fees.

It is not about licensing fees, it is about that because of the medallions, taxi drivers had to pay $125 / 12 hours for the lease. Before Uber/Lyft those medallions which were restricted to 13,000 for a city of 8.5 million (as well as many visiting tourists, business people, and in a city where many don't own cars), the price of a medallion was $1.2 million. After Uber/Lyft the price decreased to $700,000 and many Yellow Cabs are idle. Prices are lower, service is far better.


If your point is 'Taxis can't compete with Uber because of the medallion system', then you're probably right.

But if your point is 'Uber was primarily successful because they found a way to get around the medallion system', then I don't think so.

The reason being, livery cars were around long before Uber, are much more comparable, and they also did not have to deal with medallions. So, why didn't livery cars put the taxis out of business a long time ago?

I think the real reasons for Uber's success are:

1. Livery cars were a hassle to arrange. Uber solved this by using smartphones with GPS.

2. Livery cars were slower to pick you up. Probably because there weren't enough drivers on the road. Which is probably because there weren't enough riders. Uber solved that catch-22 by subsidizing the rides to jumpstart a positive network effect.


Also- Clear transparent pricing. No getting to the destination and the dude suddenly asking for $30 more than you previously agreed to or arguing over a tip (I live outside Manhattan- nearly every time I took a trip home in a cab, there would be some kind of hassle- the guy wanted cash-often claiming his credit card machine was broken, more $ because traffic was heavier than expected, was just pissed about a $20 tip not being enough... there was something nearly every time.

Accountability and a feedback loop- if the guy did try to rip you off somehow, prior to Uber, you really had very little recourse. There is a process to lodge a complaint in NYC, but it involved paperwork, showing up to a hearing (which you will have to take time off of work for), and then maybe something might be done.

You kind of touched on it, but also just some kind of visibility into when exactly your car will arrive. When Uber was new in NYC, wait times were much longer, generally 10-15 minutes, which I didn't mind much because that's probably about how long it would have taken me to find a cab, and I could finish my drink inside the bar/restaurant and finish as the driver pulled up. This has actually gone downhill a bit over time- So many times I pull up the app to see a half dozen cars within 4 blocks of me, and then when I actually try to reserve, its a 7-8 minute wait. Or they accept the trip but then I guess got a better offer on Lyft or something and is just heading in the wrong direction- meaning you have to cancel and then fight with Uber over being charged a cancellation fee, which usually isn't too hard to do, but its just a hassle and a way drivers can currently beat the system.


The share of taxi rides in Manhattan has decreased by almost the same amount Lyft and Uber rides have increased [1]. The overall number of rides has increased in the other boroughs due to Lyft and Uber ridership.

1. http://toddwschneider.com/posts/analyzing-1-1-billion-nyc-ta...


Interesting, thanks. It justifies Uber spending more money on marketing to expand market share.


Maybe, it is very likely that NYC rides need to be propped up with incentives by ridesharing companies. We won't know the economics until somebody tries to IPO or shutters their company.


Actually, the normal Yellow Cab rates are so high in NYC that Uber can still charge rates twice that of Chicago Uber and come out ahead (NYC $1.75 per mile, Chicago $0.90 -- twice the amount).


i don't follow your math. can you expand on the increase. $125 / 12 hour means it is around 12 bucks an hour. if you have 3 rides an hour (don't know if doable), it would increase a single ride by 4 bucks. that doesn't seem the end of the world


I would estimate my typical cab fare in NYC to be around $17-$25. $4 for a single ride is 16% - 23%. That's a big difference.


At least in downtown San Francisco, many shared rides cost $4 total.


Not being from SF, how long is that ride and how many share the ride?


~10 minutes avg ride time in SF. You also need to take into account the extra 4-5 avg minutes it takes for a driver to pick up the person. So I would assume a driver in SF can make 4 rides an hour.


People keep saying that, and yet prices still haven't risen.

I feel like a decade from now people are going to still be repeating this same old line.

It also seems awesome. Why wouldn't I want VCs to give away a bunch of money to its customers?

No, it is not going to run taxis permanently out of business. All you need is a car to do that. If this is really true, as soon as prices rise, another taxi company can start back up again and take market share.


> People keep saying that, and yet prices still haven't risen.

Uber is still losing money hand over fist. It has to come to an end at some point, either when they finally raise prices or they just go bankrupt.

> It also seems awesome. Why wouldn't I want VCs to give away a bunch of money to its customers?

A couple reasons:

1. VCs don't "give away money". They invest, with the expectation that their investment will be returned many times over. Given that it is explicitly Uber's goal to have a monopoly on transportation, you can extrapolate what that means for their intended pricing strategy if they ever manage to take over.

2. While taxis may or may not be an example of this, it's important to realize that VC-backed dumpi^H^H^H^H^Hpromotional pricing can destroy existing businesses even if those businesses were competitive and sustainable. For example: wash.io, which I commented about here: https://news.ycombinator.com/item?id=13608376#13608798. They shuttered a whole bunch of laundromats in SF, which was all for nothing since they went out of business anyway. That's not a healthy dynamic.


A lot of that money is going toward Uber/Lyft growing market share. But a lot of the overhead could disappear because so much of it is run by computers.


The previous market making mechanism for this industry was for a buyer to stand on a street corner, hold their hand up, and hope that a vendor who sold that service drove by.

That's insane.


Also, hope that you are white.


I'm black and never had an issue with hailing a cab for the right years I lived there


I'm going to wager that wearing a suit and/or other indicators of being of a higher social class are far more important than race. I've never seen a rich minority person discriminated against...


Do you believe that the fact that you, personally, have never "seen a rich minority person discriminated against" effectively support your argument? Do you think there are any studies that have been done to try and see if there is racial discrimination in the taxi business? If you haven't tried to look for such studies, why not? Or if you did, why don't you cite them instead of your own personal experience in not seeing rich minorities being discriminated against?



If I wear shorts, flip-flops and a t-shirt I get passed by all the time by cabs. If I wear a suit, almost never. Also, both those articles suggest something more to the story than outright racism. Most cabbies aren't comfortable with me riding in the front seat, and I wouldn't really blame them either.


Factually untrue. There are studies proving otherwise.


And I've never seen a black hole. Therefore, they don't exist.


A rich enough person has a car, sometimes even a private driver.


It's not like people sign a contract agreeing to never use taxis when they buy a car.


You could call for a cab, which worked fine. The app-based experience is undoubtedly better though.


I disagree. When I was in college (09-12 in Baltimore) it was impossible to get a cab unless it was a weekend night (in which case they’d all line up outside the dorms). I remember calling cab companies, being told “we put out a call on the radio, someone will probably be there in the next half hour.” And then nobody showing up. The ability to rate drivers and the ability of the system to punish drivers who won’t pick up mildly inconvenient fares has vastly improved this industry (at least from my POV).


You must not live in SF. In SF you would call a cab, and then hope that the cab would come. After 30 mins you would call again asking where the cab was, and they would send another cab. After another 30 mins you gave up and drove.

Same goes for trying to hail a cab from the streets. Empty cabs would drive past you because they wanted to only drive passengers to the airport. I'm glad they are all going out of business.


In theory you could call for a cab. In practice, you couldn't.


Do taxi companies in the US really not have apps or, you know, phones?


They do now in San Francisco. But only because they lost so much business to Uber. This was an industry that was effectively a monopoly -- not one company, but one type of provider. And none of the players was improving the experience for the customer.

Calling for a cab was extremely unreliable here. You could easily wait for an hour (because any driver coming to pick you up could, without ill effect for him/herself, stop to pick somebody up on the street). Some cabs took credit cards, some didn't. Some claimed to take credit cards but then "the machine was broken" so you had to pay cash.

Uber improved on every single aspect of the customer experience. And they did it while offering lower prices for the consumer.

However: to me, they haven't proven it's a viable, long term model. I highly doubt that they are paying their drivers enough to cover the cost of wear and tear on the cars (many/most of the drivers I see with Uber and Lyft are doing it full time, so they are crazy if they aren't factoring in the cost of the car and maintenance as part of their cost). And AFAIK neither company has proven they can make money.

So: this industry was due for a shakeup.

But it needs to be done by a company without rampant management problems, and it still needs to prove that there is a viable, long term business model that works for the company, the drivers and the consumers.

[edit: and, yes -- long term, there won't be drivers in these cars. But Uber has to find a way to survive until then, and I don't believe they can burn cash that long]


> Some cabs took credit cards, some didn't. Some claimed to take credit cards but then "the machine was broken" so you had to pay cash.

This type of thing sounds like the usual American "let the market sort it out" that other western countries don't have. Taxis are already government controlled (via taxi licensing) so why aren't they required to accept credit cards, as they are in Australia?


America has that regulation; that doesn't and didn't stop cabbies from taking advantage of those who lack the gumption or encyclopedic knowledge of regs to challenge the driver on the spot.

Paris also probably has laws against longhauling, doesn't mean Parisian cabbies don't do it to naive tourists.

Edit: And yes, some people (including me) do take the position that the market should be left to decide which payment mechanisms to accept (just like most people do in every other context -- who wants a law saying bakers have to accept credit cards?), so long as they're declared before the transaction, and there's (legally) free entry/exit into the profession. It's a strawman to characterize someone as being okay with changing the accepted payment methods after the fact.


Bakers and taxis are inherently different - no one gets stuck in a location they don't want to be because of a lack of wholewheat.

I'm not saying peopl are ok with changing it after the fact: I'm saying the government should do what government is supposed to do and serve its citizens, in this case forcing taxi companies to accept credit cards.

Market/self regulation generally trends to work in two ways: the well off get to crow about how government regulation isn't needed, and the less fortunate don't get to use that service because they're never the prime market for business, but they don't have a soap box so the other side keeps barking on about how good it all is.


>Bakers and taxis are inherently different - no one gets stuck in a location they don't want to be because of a lack of wholewheat.

And no one gets stuck in an unfamiliar area while low on blood sugar?

>I'm not saying peopl are ok with changing it after the fact

Yes, you were! You brought it up specifically in the context of cabbies who refused CC after taking on a fare with signs and machine saying they could pay that way. If your point was just that "being able to pay with CC is nice so it should be mandated", then you shouldn't have pointed to the after-the-fact case as a danger.

>I'm saying the government should do what government is supposed to do and serve its citizens, in this case forcing taxi companies to accept credit cards.

And you're failing to ground it in any way that doesn't generalize to forcing arbitrary merchants to accept arbitrary payments, while focusing the majority of your rhetoric on grandstanding about "hey, I just think governments should help the people" instead of a concrete justification for how this helps the people, or any recognition of any downside of such a mandate (which you were able to see in the case of bakers and CCs).

>Market/self regulation generally trends to work in two ways: the well off get to crow about how government regulation isn't needed, and the less fortunate don't get to use that service because they're never the prime market for business, but they don't have a soap box so the other side keeps barking on about how good it all is.

Again, you're assuming your policy helps the poor and anyone who opposes it just doesn't understand it, instead of actually elaborating on the substantive mechanisms. Tomorrow you'll be right back lecturing us that credit card acceptance hurts the poor because merchants have to distribute the fees over all customers, including the poor unbanked who can't get one, and I'm just too privileged to see that.

How about confining your remarks to the pros and cons of various policies without dragging motives and demagoguery into it?


[flagged]


Even if you find yourself in a tedious back-and-forth (which we don't need on HN to begin with), we can't respond like this.


Was in England last week. Many cabs still don't take CC. I used one cab, for the experience and then went back to Uber. Cabs just aren't that great, and the experience is not reliable, predictable, or easy.


Indeed. Often the CC machines in black cabs are "broken", forcing you to pay in cash.


> This type of thing sounds like the usual American "let the market sort it out" that other western countries don't have.

Well, to be fair, it's "let the market sort it out while severely restricting the market through regulation" which while I wouldn't say is the usual, isn't as uncommon as it should be. Either one has it's place, but together they generally don't work well...


Because any taxi could have told you before "if you dont like it, go to the competition"


At least in Chicago, they are required to accept credit cards. If they can't accept a card, you don't have to pay.


> I highly doubt that they are paying their drivers enough to cover the cost of wear and tear on the cars

Since Uber/Lyft has no problem attracting drivers at the rates they pay, this argument rests on drivers being financially ignorant enough that they don't notice they're losing money doing it.


Maybe they are not losing money, but perhaps many might be surprised how much less they are really making after factoring in cost and upkeep of a vehicle.


until Uber and Lyft rose in popularity, taxi companies were resistant to apps


In the Chicago suburbs, calling the dispatch center was and still is how it's done. There are a few "posts" scattered here and there where cabs will queue up, but in general, you have to contact dispatch.

Though they also have apps now.


They didn't before faced with an existential crisis.


In Canada, none had an apps until Uber arrived.


In NYC, there is one app called Arro that responded to the competition of Uber/Lyft, but was not available beforehand. I believe there is a 2nd app now as well.


In Pittsburgh they upgraded the taxi system with new vehicles and app/gps integration right around the time Uber showed up to pilot driverless cars.


This mechanism actually works pretty well in Chicago.


It didn't work when I wanted to take a cab from Logan Square to work. Called the dispatcher. The cab showed up somewhere between 15 and 60 minutes later.


"Pretty well". We just tried to get an Uber in the French Quarter and had to cancel 2 different drivers because they couldn't figure out how to route around the barricades.


In a couple urban cores where both customers and providers were extremely dense so that that simple method could work, surez that a mechanism in play; everywhere else (and often also available on those same areas) it was “customer calls dispatch agency on the phone, dispatch agency routes to service provider via radio (or mobile phone)”; Uber replaces the dispatch agency and changes the communication mechanism on both sides from a phone to an app on the phone.


And the third step after dispatch, cab finds another rider on the way and dispatch doesn't call back to tell you your cab isn't coming.


> Uber was dramatically improving customer value while providing innovations that reduced greenhouse gas.

Reducing greenhouse? Relative to what?

This is all one needs to read http://nyc.streetsblog.org/2017/02/27/its-settled-uber-is-ma...


"Most of the upsurge is occurring outside the city’s Central Business District (Manhattan below 60th Street), Schaller reports."

Also, the overall increase was 3 to 4% according to the report. In NYC we keep hearing how subway ridership has been increasing every year. At any rate, a decrease of 10 million trips per year out of 1.7 billion is hardly significant.

Also, this simply states that perhaps we should be regulating private vehicular traffic in these areas, not restrict traffic that helps the public (and provides employment for low-skilled people).


why change the equation that drastically? self driving is right around the corner.. the drivers should find something else to do.

The uber/lyft traffic increase issue is throughout the world.. not just in a specific part of NYC.


Say what you want about Uber, but I've never had them refuse to take me to Brooklyn...


Uber might improve "customer value", but as someone that takes a cab once every three months or so, cars with TLC license plates constantly failing to yield to my attempts to use a crosswalk have not improved my experience.

I've decided to solve this by 1-starring and no-tipping any driver that fails to yield to a pedestrian, drives in a bike lane, or exceeds the 25mph speed limit at any point in the ride (so, like, all of them), but of course, I take a cab once every three months, so that won't do much.

If we really want to reduce greenhouse gases, a better approach might be:

1. Properly funding the MTA (congestion charging)

2. Widening sidewalks, especially in Midtown

3. Grade-separated and camera-enforced BRT lanes and/or surface rail with signal priority.

4. Proliferation of bike lanes.

5. Charging market rate for all street parking.

Uber and Lyft have have increased car traffic in New York: http://nyc.streetsblog.org/2017/02/27/its-settled-uber-is-ma...


"driver that fails to yield to a pedestrian, drives in a bike lane"

At least in Uber/Lyft you can rate a driver, there are many taxi drivers in NYC who drive rashly and don't do those things you listed and yet if you don't tip they will explicitly ask you to.

To me, the following are the most important things to use a ridesharing app:

Not paying any tip (In Yellow cab, many drivers demand for tip if you don't tip them)

Rating the drivers (It's a positive thing depending on how you view it)

Booking when you are drunk (While there are some apps that let you book yellow cabs we all know how bad those apps are)

Uber as a company or Lyft as a company may be disliked for some of the things they do, but ride sharing is a positive outcome. If the above three points are there for yellow cab, I will happily use them anytime. The way a driver drives is not something specific to uber or lyft.


Uber provides certain value to customers. It would not exist in the first place if it does not. Riders get cheaper and faster rides than old taxi cabs. Drivers get jobs which would be harder otherwise. However, does that justify Uber's unethical behaviors? Does that justify sexually harassing female employees? Does that justify evading regulations with a Greyball tool? Does that justify stealing your competitor's technologies (think of Waymo here)?


yeah, real shame that the unmitigated sexual harassment got in the way of their complete avoidance of regulations


The regulations by and large were simply there to protect incumbents that wanted to keep out competition which offered higher customer value (by offering lower cost, more responsive, less greenhouse gas) service.

Unlike AirBnB which does break NY City and NY State laws, Uber has been following regulations that are imposed by the NYC Taxi & Limousine commission (e.g., screening drivers, etc.).


I see this "incumbents" narrative touted a lot, but it just ain't so. Non-medallion livery companies (black cabs) have been in NYC for a looooong time.


But because of stupid laws protecting Yellow Cab monopoly, it is against the law to street hail them, having to call instead. Also, not a reliable single brand, also they don't take credit cards, unlike Yellow Cabs.


And street-hailing is so important that you're willing to defend a service that doesn't use it?


iPhone hailing to me and many others at least, is effectively street hailing. Not certain what your beef is with Uber. Service and costs have dramatically improved since they and Uber/Via/Gett/Juno came, even in Manhattan.


It's against the law to street hail an Uber as well. Uber works because hailing one with your phone is legally equivalent to calling a cab company, not sticking out your hand.


> less greenhouse gas

An estimated 160.000 cars driving for Uber in the US, many of which doing so as a full time job will pollute less. Right. Riiiiight.


Uber Pool has 2 or more unrelated passengers using the same car for transit hence less greenhouse gas compared with using separate vehicles. Elementary!


Genuinely lmao at the narrative that the taxi unions all got together and conspired against greener rides


What were those regulations doing for us as consumers, exactly?


> At least where I live in NYC, Uber was dramatically improving customer value while providing innovations that reduced greenhouse gas.

There is a lot of potential for such reductions to happen in urban areas. Shameless plug - the potential for pooling using Uber data is shown in Figure 8 (https://arxiv.org/abs/1701.06635)


Don't imagine for one second that Uber wouldn't jack up prices in a heartbeat if they were the sole monopoly in NYC just like Yellow Cab was.

Uber's great in that they give competition to an entrenched monopoly of Yellow Cab.

But put Uber in a monopoly position anywhere and you'll see the rates skyrocket.

There needs to be a number of forces in the ride sharing market to keep prices down.


I completely agree and as things are, Uber's prices are far higher in NYC than say, compared with Chicago because the Yellow Cabs here are so expensive compared with those from Chicago.


And this actually gave Uber cover to do a lot of stupid stuff.

For one thing, because cabs were so bad, Uber was able to do a lot of stupid and scummy things yet still be way better than cabs.

Also, it had an interesting effect PR-wise. For a long time, whenever I heard something negative about Uber, I just assumed it was taxi industry shills making up ridiculous lies. Because there definitely were taxi industry shills going around (online, newspapers, etc.) and making up ridiculous lies about Uber. Later I understood that some of the negative stuff I was hearing about Uber was a huge lie and some of it was totally true.


So? They disrupted a bad system and drove some innovation into it, what does that justify?

Let's look at the flip side here. They "disrupted" an industry by repeatedly violating the law and undercutting the competition by subsidizing nearly 2/3 of the cost of fares using investment funds. Is that innovative? I'd argue that nearly anyone could disrupt any industry with such a model, regardless of the actual merits of anything else they'd built.

Add on to that their horrible corporate culture, their seeming support of industrial espionage, and the underhand tactics they use to take advantage of their drivers.

It was smart of them to take on a corrupt, broken, and outdated system, because it allowed people, like you, to whitewash so many of their flaws and transgressions.


>Uber/Lyft have lowered greenhouse gasses

Citation required.


Citation doubly required because if the net miles driven actually increases due to increased use of cars over public transit (very likely), and increased availability of transportation services overall, the greenhouse gas emissions would go _up_ if anything.

There are situations where ride services would encourage public transit utilization (last mile services), but I'd guess those are far from the dominant use case.


There's plenty of people, myself included, who don't have a car but would otherwise probably get one if effortless car services on-demand like Uber didn't exist. You need to take that into account.

According to some estimates I've seen just constructing a car is equivalent to 3-4 years of carbon footprint of driving it[1][2].

You might say "buy used!". I would, but over the entire economy it would add up to the same amount, the net demand for new cars would increase.

1. https://www.epa.gov/greenvehicles/greenhouse-gas-emissions-t...

2. https://www.theguardian.com/environment/green-living-blog/20...


That EPA link says nothing about the embodied carbon footprint of manufacturing vehicles.

The Guardian article is very deceptive:

"... the emissions from the manufacture of a top-of-the-range Land Rover Discovery ... may be as much as four times higher than the tailpipe emissions of a Citroen C1."

Did you see the trick they pulled there?

They took carbon emissions from manufacture of a large vehicle (Land Rover Discovery), and divided it by the tailpipe emissions of a very efficient small vehicle (Citroen C1) in order to concoct a large-sounding, but ultimately meaningless comparison "4 times higher". You may as well compare the manufacturing emissions of the Land Rover to the tailpipe emissions of a cow.

But even assuming your point about manufacturing emissions, while you don't buy a new vehicle yourself because of your use of ride services, the cars used for ride services will be replaced more often, because they are more heavily utilized, and hence will have to be replaced more often.


On second look, yes that Guardian source is pretty shitty. I couldn't find some authoritative source for the CO^2 emissions required to produce a new car. My point was that you had to consider it.

    > cars used for ride services will be replaced
    > more often.
It's not meaningful to consider how often they're replaced, but what mileage they tend to get if we're going to look at how the CO^2 cost of producing the car is amortized over its lifetime.

According to EPA statistics a typical car gets used for 100-200K miles[1], for taxis that number seems to be easily 2x or 3x larger[2]. So for the same amount of moving people from A to B taxis are mor CO^2 efficient.

Of course there are all sorts of secondary effects you're not taking into account. Once people don't own a car because they have something like Uber available to them, they're more likely to use a bike or public transport for a trip they'd otherwise take by car. Just compare somewhere like NYC to LA in terms of how much CO^2 a typical person emits while going about their day.

I don't know what the exact numbers are, but this is a lot more complex than what you're making it out to be.

1. https://en.wikipedia.org/wiki/Car_longevity#Statistics

2. https://www.quora.com/How-many-miles-does-a-NYC-taxi-do-in-i...


Have you ever used Uber pool? Two different customers sharing the same vehicle, lowering greenhouse gas.

There is absolutely no proof whatsoever, that people sharing a vehicle increases greenhouse gas. Citation is required that it would.


This is too short-sighted. In my city a lot of people use Uber INSTEAD of readily available public transit (anecdotal observation). That's kind of a bad deal if it's a widespread truth. This would continue to hurt public transportation funding over time.


Ummm...are you arguing against better customer value? Because taxi-like services are now more affordable for more people that is a bad thing?


Uh. Please decide whether you're arguing for increased customer value or decreased emissions.


With Uber Pool you can have both. People can choose to use Uber pool and in exchange for a bit of additional time for transit, save both money and save the environment. Win Win (lose as far as time).


Still a net loss against public transportation, the current savings are also largely driven by artificially low fares that Uber subsidizes with driver bonuses (to undercut the market).


Capitalism isn't the best way to solve public infrastructure problems.

Public transportation better serves: the poor, those without smartphones, people with small children, people in trafficked areas, the handicapped...

Uber/Lyft fails on all of the above in most areas it serves, and potentially decreases overall public transit use (which hurts funding overall).


Buses and trains carry a lot more people per trip so the use of Uber pool does not negate the greenhouse gas argument. Uber pool will pollute more than other forms of mass transportation. Uber pool is only a subset of Uber users too.


Uber pool takes two or more unrelated passengers and puts them in the same vehicle. This is clearly less greenhouse gas generated than if all passengers take independent cars. Therefore, Uber pool reduces greenhouse gasses.

By your argument, because Uber/Lyft provides better customer service overall compared with Taxi service which is why they are commanding such a large market share, that is a bad thing because people are taking more cars over mass transit as a result.


You're missing the point. The comparison isn't everyone taking a single car vs using Uber pool, the comparison is people using Uber (pool or not) vs using public transit.

Uber pool might lower the amount of greenhouse gases compared to everyone using individual Ubers, but that is a drop in the bucket compared to the increase from people using Uber instead of public transit


I have to flag you because you are not discussing this in good faith. You are constantly dodging questions, and trying to put words in people's mouths.


What I have said is logical and true: Uber Pool saves greenhouse greenhouse gas because instead of having separate vehicles people are sharing the same vehicle. What people seem to be arguing is that because taxi (or taxi equivalent rates) are more affordable for low-income people and are no longer taking inconvenient mass transit, then that is some sort of negative, which is terribly elitist.

Why not argue for doubling taxi fares and banning Uber, equivalents altogether and force anyone without a private vehicle (which is the majority of people in Manhattan and perhaps even NYC) to take mass transit? It is a silly argument. Because Uber is provider better customer service at a lower cost, that is a bad thing? Really?


Not only is what you’ve said not logical or true, you keep putting your irrelevant Uber love in threads where we’re discussing Uber’s toxic office culture. Whatever you feel about the NYC taxi industry is irrelevant when discussing a culture that fosters sexual harassment.

And even more in bad faith is your constant assertion that people who are not fans of Uber are somehow against poor people. Your entire second paragraph is filled with this. Based on that, I could easily say that, because of your comments of Uber love, you’re a huge fan of the kind of office culture that Susan Fowler wrote about. Would it be accurate? Probably as accurate as your assertion that those who are against Uber is against poor people.


> This is clearly less greenhouse gas generated than if all passengers take independent cars

But it's MORE greenhouse gas generated than if all passengers took the subway.


Where I've used Uber, buses, subways, and trains have simply not been an option most of the time. You can't throw a subway at every transportation problem.


Have you ever used Uber pool? Two different customers sharing the same vehicle, lowering greenhouse gas.


I read that Uber/Lyft usage corresponds with lower drunk driving fatalities. This sounds like a more effective and humane method than the ever-more-draconian penalties imposed on drunk drivers.


Absolutely true, but does this justify Uber's workspace culture, Waymo secrets, or sidestepping law enforcement (main reasons for Kalanick's resignation according to article)?


The law enforcement cited was mostly to keep Uber out of the market to protect incumbents from competition.

Unlike AirBnB which breaks NY City and NY State regulations, Uber does follow NYC Taxi & Limousine Commission rules imposed on them and Lyft and other services. But in NYC, the Mayor's unsuccessful efforts withstanding, we aren't trying to restrict market entry and basically asking that Uber drivers undergo the same screening as Yellow Taxi drivers.


Did you read the linked article? The law enforcement thing (at https://www.nytimes.com/2017/05/04/technology/uber-federal-i... ) was started by Portland, Oregon. What does it have to do with NYC?


It doesn't. That is the point. Uber follows the law.

Read this part of the article:

"Uber made a particular effort to deploy the tool in cities where it faced opposition from local regulators or rival taxi and transportation companies. One of those cities was Portland."

NYC did not bow to pressure from rival taxi companies and they did follow the law cooperating with NYC Taxi & Limousine Commission (again, unlike AirBnB which directly broke NY City and NY State laws and was sued by the NY State Attorney General). Uber was never in trouble with the law in NYC nor NYS and the only time it has trouble are with entities that try to block competition from the regulated monopoly.


Uber/Lyft have NOT reduced greenhouse gas. Not a bit. Those rides are still being taken, and inbetween rides, those cars are driving around.

"while not forcing drivers to pay excessing leasing fees for vehicles."

In the same way someone who owed money to the company store didn't have to start doing that, but due to predatory terms, once they did, things get pretty out of hand. And since Uber/Lyft are the ones who dictate those terms, they are to blame.


I've taken several rides in Uber cars, and, as it happens, always as one of 2 or 3 passengers. Some of them have been Priuses. I wouldn't doubt that, for those specific rides, emissions have been less than other options I had. I'd be curious to see the actual data before jumping to conclusions one way or another.


Exactly the same scenario in Hong Kong. And Government still dont realize what is wrong with the current Taxi system. It is not fair to the consumers, because they are not getting any decent services out of it. It is not fair to the taxi drivers, because their earning only barely manage to lease the car. And it is only what called the Medallions owner that actually profits.


Pretty much the same here in Paris, France.



Everyone already knows what the upsides are, that's why people supported the growth of Uber in the first place when it was just a San Francisco startup. Nobody has ever argued in good faith that the firm wasn't solving a problem, of course they were.

But focusing only on the benefits and avoiding discussion of the costs or new problems that something creates is sales talk; internalizing sales talk leads to cognitive bias.


Oh please you are going to tell me sexual abuse employees faced was "from entrenched interests". Get real...


I am opposed to the taxi industry collusion entirely, but Uber/Lyft are creating customer value by subsidizing their transportation costs via investor dollars. While I would love to see the taxi companies forced to reform, Uber will never make a penny.


As deplorable as much of Uber's behavior was, the Yellow Cab drivers are much worse.


I'm with you 100% on the point, but I'm pretty sure the outer borough green taxis started showing up before Uber did.


don't really care, Uber's behavior as a company is such that I'd rather see lyft succeed.

Those positives will be brought about regardless of who it is, so lets make sure it isn't a company who acts as egregiously bad as Uber.


Uber has better quality service from my experience. I still remember, Sat AM in NYC, and Lyft wanted to charge surge pricing when the city is far quieter than during a weekday. Uber did not charge surge pricing on a Saturday morning!


Not certain why downvoted and no explanation provided for providing a fact. I think most would agree that Lyft charging surge pricing during a non-surge time is ridiculous. Uber to their credit did not try to rip me and other customers off.


because some things are more important than you a few bucks on a car ride.


A few weeks ago, I posted on HN about my experience in Hamburg (no Uber in Germany. The local taxi authority has its own app which works equally well, if not better).

Last weekend, I was in Budapest. There is no Uber in Hungary (anymore), but the main taxi company (Fötaxi) has its own app which works brilliantly.

I honestly see no "moat" around Uber in markets where (large) taxi dispatchers have the insight to build a ride-hailing app.

It's only a matter of time before we are back to square 1, or rather, square 2.0:

* licensed, regulated taxis, either independent or through dispatcher * all connected to an (api-)interconnected ecosystem of ride hailing apps * payment to driver directly (cash or card), tipping discretionary * receipts emailed to rider afterwards, with annotated map and start- and end time

This will weed out dishonest drivers, and will benefit honest drivers.

Uber's only differentiator in well-organised urban markets is its app.

The turning point for Uber's decline will be when NY and London mirror Uber's functionality in their own apps, with the benefit (in London) of cabs being allowed to use the cab lanes (or, in Amsterdam, the bus lanes).


First, I hate having to have multiple apps to do the same thing. That would drive me crazy for every city. I would pay a premium not to do that.

Second, none of these apps I have seen thus far even attempts to make it easier for the user to add payment methods. Each time I need to put in my credit card information? Twice if I am on business? Nobody has taken advantage of Apple or Android pay integration.

I don't consider myself a heavy cab user, but I probably take at least ~200 rides a year, and unless the city is regulated (credit cards) I am using Lyft.


> That would drive me crazy for every city

Most people only go to another city once or twice a year, so it's not a significant issue for them.


But is that true for most people who use Uber, or even taxis? I wouldn't be surprised if a large portion of Uber/taxi users were in fact people traveling to a different city.


I would be surprised. At least in New York, people use taxis very often, and thus use Uber very often. I'd wager the vast majority of Uber usage is in people's home towns/cities.

Personally, I use other apps when in NYC, but fall back to Uber when I'm somewhere else and can't find a local app.


I'd definitely like to see some numbers on this. A lot of the people I know don't travel and use Uber frequently.


This is exactly what got me to use Uber initially. I can show up in San Francisco, or London, or my tiny hometown where cabs take 45 minutes to arrive, and Uber will work the same way for about the same price. Having a robust, universal way of getting places really does matter to a lot of people.


> Most people only go to another city once or twice a year

Is that so? I'm not aware of anybody that never goes to another city multiple times per year and that includes infants and the elderly.


Where I grew up, the vast majority of people I knew very rarely left the county they lived in - even though it was only a couple of hours to New York, Philadelphia, Baltimore, Washington DC. By the time I moved to Philadelphia, my social circle was much more likely to travel - but on the whole, the greater population of the city tends to stay within the city ("I have everything I need here, why would I bother with the hassle of going somewhere else?")

There, now we've both shared our experiences!


Hm, ok. We'll here in Europe things are a bit different. Most people travel, it is pretty easy to do so and even the 'poor' (students, people that only have bikes) move from city to city regularly.

I've got acquaintances from all over the planet though, and even there most people travel with some regularity to other cities. Holidays, family visits and so on, and then of course there is business travel which I would assume is one of the larger customer groups for Uber/taxis.


You must have only well-to-do acquaintances then... Or I'm misreading all the negatives in your statement.


No, it's a small country and relatives usually live in other towns.


The first point is key, especially when you're not familiar with the city. I rarely use either Uber or Lyft in my home city, but now Lyft is the first thing I launch when landing in a new place, and that's all domestic US travel, forgetting international. It can't really be discounted how important the multi-city, single app feature is to these services for travelers.


My first ever use of Uber was in another country, after about 40 hours awake and traveling. Even with the hurdles of setting up an account, it was vastly easier than getting local transit for my route. (As checked later when I was functional.) That's a huge benefit that none of the proposed alternatives (bar Lyft) can offer.


>First, I hate having to have multiple apps to do the same thing

Don't worry, once there are enough apps someone will figure out how to scrape and aggregate the info. The same thing happened when airlines and hotels started putting booking info online except at the time it was websites instead of apps.


Scraping and aggregating airline info is not really comparable. Airline data is based on predetermined schedules and is relatively static.

Ride hailing is extremely fluid. Must be real-time. Must be able to provide GPS coordinates of the user to the service in question.

I don't think you'll see an aggregation app until there is some ride hailing standard that is adopted by the various providers.


Google Maps is already starting down this road a bit (admittedly only with the big companies). That's the likeliest path in terms of companies that have the leverage as well as the existing technology to make this happen.


You don't need a standard, the taxi companies just all need some API. Apps like "Transit App" will just integrate them all.


> You don't need a standard, the taxi companies just all need some API

But what does that API look like? What are the MVP operations required to make a successful ride hailing API? Will that API provide realtime location info of the driver, or allow payment, or <insert myriad of questions here>.

Without a standard, the Taxi API landscape will be a mess.

> Apps like "Transit App" will just integrate them all

This is a pretty major oversimplifications of this issue. Sure, this is technically possible, but it sounds like a horrible solution.

Bringing in the considerations about the actual API design, this also means that user experience may vary wildly depending on which service they're interacting with.

Can != should. If aggregating many systems is the future, we should push for a technical solution that doesn't suck.


You're overcomplicating the issue - a lot. The important thing is that the ride sharing systems provide APIs that show the time and the price, to allow users to compare. The next step is that the service providers and apps can work together on payment, which is really the complicated part. Following the booked cars in real time is simple in comparison.

Not having some API standard is usually how it's done with many services nowadays, and the market/comparison apps have to integrate multiple APIs. Big deal.


Guess we just have to agree to disagree. API design matters. A lot. "As long as they provide some API" doesn't really cut it if you want a system that functions well. Having spent close to 10 years of my career gluing systems together through APIs, I've encountered too many "Oh we have an API!" vendors only to find out how horrible that API is. The consumer facing product is often a direct reflection of the underlying APIs powering it. If you have many APIs powering it, the app will take on all of the negatives of the sum of those APIs. Good app design can help smooth over the rough edges, but that only goes so far.

Again, I should reiterate: I'm not arguing that it can't be done or that it's not possible. I'm arguing that the result will be subpar. Let's remember that the parent discussion is about the creation of a system that rivals the Uber/Lyft experience. If you want to do that, someone (probably someone big like Google as suggested in another comment) is going to have to influence the design of these APIs so the end user experience is a consistent/good one.


So? Then there will be a standard of sorts.


Perhaps so. The point was: scraping/aggregating/etc for car services is not comparable with what sites like Kayak do for the airline industry.

There very well may be one ride hailing app to rule them all, but implementing it will be an entirely different beast.


That's exactly what I predict the market will move to


I agree with the multiple apps and not knowing which ones to use where.

However, as an example, when Uber and Lyft left Austin, one of the companies created locally (RideAustin) to replace the gap does allow payments via Apple Pay. Very convenient, and they also give you the option of rounding up to donate to a charity of your choice.

I guess it's just up to all the other options to realize what people want.


Except... The negative reviews on RideAustin are pretty much all about people having horrible payment-method issues.

Apple Pay is great if you're immersed enough in that ecosystem, but otherwise? Uber and Lyft store CC info, allow for easy deletion, and take PayPal. I'm glad Ride Austin exists, but they still seem to be several laps behind on letting you give them money.


Ah, I was in Austin last year, but ended up renting a car for autonomy. I vaguely remember seeing signs for RideAustin - is that the only app?


Paying the driver directly still sucks. In the US you constantly deal with the "I don't take cards" bullshit and lack of simple feedback for when they take you on a scenic tour.

I would be fine with taxis if I didn't have to interact with the driver at all when it came to payment and could provide feedback right in the app.


>In the US you constantly deal with the "I don't take cards" bullshit

Sounds like a free ride, to me. In my city cabs have to accept credit cards by law. This means if the machine is broken, the cab is unfit for service. If a driver refuses to take a credit card, you don't have to pay them. If they're rude about it, you can call 911, there's a whole division of the PD dedicated to dealing with cabs. The threat of having an officer show up and a possible fine or suspension is probably enough to "fix" their machine.


Personally I prefer a simple feedback system that kicks out bad drivers to confrontation and a need to call 911. Not to mention that there's quite a gap between good service and service that complied with the law. If a driver is rude, swears at me, drives dangerously, what can I do about that? Spend part of my day calling a hackney division that probably doesn't care?

A rating system is actually superior to getting the government involved.


You might be right but I'm js you do have some recourse. You can file a complaint and your leisure. It only takes a couple complaints to trigger a fine.


Not exactly appealing... The last time I went through that, I ended up with a cabbie following me down the street in his car, making threats and watching where I was going, in a town with police response times of 20+ minutes.

A ride experience where I don't have someone threaten me while I call 911 is worth some money to me.


For me the main advantage of using Uber in Europe is payment. It doesn't even matter whether it's card or cash - once I'm at the destination I just want to get out of the car. And having to think about tipping is even worse. And I don't mind paying a fair price.


"I don't take cards" or "It's broken" results in me walking out of the cab. Irregardless of if it's the beginning or end of the trip. All but one time did they change their tune.


In Germany and Budapest, and certainly Sweden, drivers are required by their dispatchers to accept credit cards. "Cash only" drivers will be a thing of the past soon. Look at what happened with the London black cabs: they all accept credit cards these days.


Not everywhere in Germany and even in places where they are required to, for many drivers the card reader is somehow always "broken" when you try to use it. I now use taxi-calling apps with built-in payment as those are really convenient.


This is true in some US markets, not true in others. In NYC it's very easy to pay by CC and requires no interaction with the driver, because they installed CC readers in the back seat of every cab years ago. And if the reader is broken, they're required to tell you before the ride starts.


This is definitely already starting to happen. Uber was banned for a long time here in Madrid which allowed other apps to gain a lot of traction. I'd say the most popular is myTaxi, which allows you to hail the standard local public taxis. I believe it works the same in most major European cities. No need for private taxis.


myTaxi seems to be emerging as a big European one. It's in every major German city (where it started), and also just recently acquired Hailo, which was the dominant London taxi-hailing app.


Ubers other differentiator is the fact that I can go to just about any city in the world and use it. I guess I could research and install fotaxi but as a 21th century consumer, I'm extremely lazy.


I don't think it comes down to just being lazy. Regardless of whether you've had good or bad experiences with Uber, you've had experiences, may have chatted to their support team, etc, and you know what to expect from the service and the company. The local alternative might be better, but it's an unknown.


So are the local restaurants when compared to McDonald's - I guess it all depends on what you want to get out of travel.


For me that's Uber (well, Lyft), but a local restaurant - I don't think it's a fair comparison. Getting somewhere in a cheap and timely way is often an instrumental issue, rather than "part of the travel experience". When it isn't, I'll happily walk, take the subway, etc.

This sort of reminds me of Usain Bolt in Beijing, actually. He lived on McDonald's chicken nuggets, not because he's averse to trying new things but because he couldn't risk anything upsetting his stomach during competition. For him, eating was instrumental, so he wanted predictability.

Even if you immersive travel, there are times when it's really useful to know what you'll get.


I read the GP as saying there'll be a unified UI to various local taxis ("interconnected ecosystem"). I could see this emerging from EU regulation, in a similar way they mandate banks to open up their APIs (which is much bigger than taxis).


I don't know how big that really is. While there are a few business people/tourists that travel a lot, a lot of execs are likely to either take a taxi straight from the airport taxi queue, as it's quite a lot of hassle to use uber at a lot of airports.

The small journeys around town aren't as likely to be as valuable, it's usually the longer airport fares which will make up the majority of taxi spending for people away.


That's why these local taxi companies usually have billboards at train stations and airports that inform travellers of their app.

EDIT: Alternatively, convince the taxi companies to open up their API. Then you can have one app that selects the correct API based on your current location.


> That's why these local taxi companies usually have billboards

What year is this? $YEAR_OF_BILLBOARD_INVENTION + 2?

> Alternatively, convince the taxi companies to open up their API.

I still feel like one company will take over. You cannot build a good product by federating APIs across different municipalities, governments, continents, (planets?).


I don't use a taxi app in Budapest -- the good old phone dispatchers still work just fine and I almost never wait more than 10 minutes for a cab -- but in Berlin I use the "MyTaxi" app all the time[0].

The thing I find interesting is that MyTaxi is loosely coupled with the drivers. There is no obligation to pick up MyTaxi fares, you can go about your business as a cabbie and take MyTaxi fares when business is slow. Seems to work quite well for the drivers.

This morning I had to wait probably 15 minutes before a driver took my MyTaxi order, but considering how bad the phone-dispatch service is in Berlin I call that a win.

Everything else is very Uber-like: electronic receipt, pay in app if you like, tracking of the car on its way to you (more or less).

Oh, and two very neat features: you see your cabbie's full name (this feels safer to me) and you can save them, after rating, to a "favorite drivers" list, which I assume the service will use to help improve customer satisfaction.

[0]: https://de.mytaxi.com/index.html


I had the same in Madrid. Tried to get a taxi for 15 minutes. After that time I had already walked to the next taxi rank and got in the first taxi there. Mytaxi always showed cabs close by but wasn't successful. Wasn't even a busy day, the taxi rank was more than full.

As much as I don't like uber, surge pricing can be a really helpful feature that I would like to have with cabs as well.


Or even just let cab companies compete on price, maybe with some limits. When they could compete on price in Budapest it's true that a lot of tourists got ripped off, but it was awesome if you could afford one of the more expensive companies. Once they introduced uniform pricing the better companies got flooded with calls and availability dropped... and tourists still get ripped off, but probably less often and usually when coming from the airport.


    > cabs being allowed to use the cab lanes
    > (or, in Amsterdam, the bus lanes).
I have not been in an Uber in Amsterdam in the last couple of years that didn't have a full Taxi license (posted in the dashboard) and where the driver was legally permitted to take the bus/tram lanes.

From talking to a few drivers (just asking them about Uber) my understanding is that at some point in Amsterdam Uber was just hiring pretty much anyone with a car as a driver, but then The Netherlands cracked down on it, and now they're all as legit taxi drivers as any other taxi.

So I believe you're posting on the basis of out-of-date information when it comes to Amsterdam.

Uber's decline in Amsterdam will be not only when the local market provides apps of equal caliber, but when they match Uber in prices, it's way cheaper than taking a taxi over here.


>London mirror Uber's functionality

London black cabs have been available by app for a while (Hailo). The main reason people use Uber is that it's about 30% cheaper.


London Black cabs are more expensive than regular taxis because of the huge amount of knowledge those drivers have. The ability to know the city well, along with all road works, detours, construction, and places of interest, is amazing. Even now Google is only approaching this level of knowledge and it still has to improve its interface.


The same almost everywhere, here in Stockholm people used to use Uber when it was about 30% cheaper but nowadays it's been so common to have surge prices that I've not missed uninstalling Uber after the sexist reports came out, sometimes taxis have been cheaper than what friend's Uber app were estimating for a ride.

Common users aren't also aware that Uber is cheaper mostly because of their own subsidies. If this is gone soon feels like it'll only hasten Uber's demise.


If you let the taxi authorities control this you are going to go back to artificial scarcity. That is going to create artificial price hikes.


NYC has the Arro[0] app for yellow cabs, although I haven't ever used it - every other vehicle on the road is a cab.

I suppose it might be useful during shift change?

[0]https://www.goarro.com/


> Uber's only differentiator in well-organised urban markets is its app.

Lower cost is also a factor, relative to local taxis.


Lower cost, at least in Hungary, was artificial, as Uber was able to undercut local fares given its capital.


[edit] replace "turning point" with "catalyst"