My uber bill for 2014 is almost $2000 so far, and it's only June. I know that SF is not the rest of the country, but it has absolutely changed the way I get around.
That said, think about the possibilities that could come if one of their major backers (Google) continues to push forward with self driving vehicles. They will have excellent real time traffic data reported back through each vehicle on Waze, and a super efficient dispatch system. They could run 24/7 with electric driverless vehicles with crazy low operating costs. It could turn the entire industry on its head.
The economics would shift so drastically it wouldn't just be Uber vs taxies, it would be Uber vs does it make sense at all to even own your own vehicle. The automated vehicles could have utilization figures that are unheard of today. Why would you buy your own vehicle when you could have an automated Uber pick you up in 3 minutes for dirt cheap?
I think that time will come, probably sooner than we realize. And when it does, Uber will be positioned as the default dispatch gateway.
If you've spent $2000 in six months on Uber then, IMO, it is more of a damning indictment of SF public transit than it is a demonstration of how great Uber is.
Here in NYC I can't imagine spending that much on taxis. Thankfully, the subway system is serviceable.
I've wondered if Fedex and UPS would just manage the long-haul intercity transportation with either driverless trucks or something else. Then they also still staff tons of warehouses at the city hubs. From there, it could be Google/Uber (Goober?) from the warehouse to the door.
Am I the only one who thinks Uber prices are ridiculous compared to the yellow taxi ? I am fairly well to do, but am shocked by how no one flinches at the fare structure of Uber compared to yellow cab (which might be a tad bit more inconvenient in NYC but not that much to justify paying 2x-3x the price!). I feel I am really missing something here or maybe just underestimate the ability of people to spend vs. save.
If I spent $2000 on cab fare so far, I would probably freak out a bit.
In Boston UberX has wound up being about 75% of Taxis I had taken the same trips with every time I have used UberX. Then again I generally tip 20% in taxis so if I were a non-tipper the prices would be much more comparable.
Admittedly I am only using it between the hours of 12:00 AM and 2:00 AM to get home from bars.
The temperament of drivers has been a welcome change with uberX vs cab, I had a cab ride in Boston which was suspiciously high once (2x what previous identical trips had been), and I questioned how it was calculated and the response was 'It is not my job to know how it is calculated' to which I said 'Actually that is your job', that time I did not tip.
In my experience, UberX is way cheaper than a cab. From my place in the Mission District to 2nd/Mission is usually like $12-13 via UberX. Cab used to cost me like $17.
In LA we took an UberX from Venice to Downtown, it was ~$35, cab was ~$55.
Uber doesn't make it easy to know. Over the weekend I took an NYC taxi one way in my journey, it cost $26. I tried to get a fare estimate for an UberX for the way back and it said "$23 - $37". That's a huge window - and they're not telling me what affects it.
And we haven't even started on surge pricing. Uber sells itself as cheaper than a taxi, but in many ways (in NYC) it is not.
From all the replies it appears to me that
- in SF, either UberX is very cheap or normal taxis are ridiculous.
- At least in NYC, the pricing is still much higher. And the huge variance in the price adds another degree of uncertainty, where you could still end up paying huge amounts.
It would be nice for Uber to publish some comparative data in this regard. But I think that's not their main pitch.
They now have a fare calculator for NYC athttps://www.uber.com/cities/new-york. It is pretty broken as all my addresses end up getting mapped to Brooklyn or Queens for some reason.
But for the prices I saw, UberX is 30-50% higher than yellow cab. So my 2x-3x estimate is certainly out of date.
UberX is significantly (40%-50%?) more than a NYC yellow cab. Its basically $6 base for uberX (versus $2.50 for yellow cab), $.75/minute for in-traffic in uberX (versus $.50 for yellow cab). Also uber's threshold speed for traffic is much higher than NYC's (below 11mph = traffic for uber, vs below 6mph = traffic for yellow cab), which means that more often than not you are in this (more expensive) price tier. Its hard to average over 11mph if you are going cross town in Manhattan.
$24,000 a year is not a bill most Americans can afford.
Where are you getting $24,000 from? The parent to your comment said he has spent $2,000 so far this year, extrapolating that out says he might spend ~$5,000 on Uber by year end. I think the average American easily spends $5,000 on a vehicle annually. I probably spend at least half that amount just on gas.
In fact, that $5k is probably close to what you'd spend just on parking and insurance in a major city like SF (i.e. your costs if you never used the vehicle but already owned it). If you add in car payments, gas, maintenance there is likely a significant savings from using Uber vs owning a car.
Come on guys, think about this critically for just a few minutes.
First of all, what kind of insane person pays $5k for parking and insurance? I have a new car with fairly high rates and pay about $1,100 in insurance. My parking expenditure (yes, I live in SF) is maybe $10 a week -- we'd need to imagine a parking expenditure of about $80 a week to get my total parking plus insurance to come out to $5,000 a year. I'm sure some people pay $5k for parking and insurance -- but those people are self-evidently not cost-sensitive.
As to gas and maintenance, you obviously pay those for an Uber car just like you pay for it for your own car -- in fact, you pay more for these mileage-related costs, since the car has to drive over to you as well as drive you wherever you go. Unless the driver is operating at a loss, your fare obviously more than covers the gas and maintenance fees, ergo you're paying it. Just because you don't personally stand at the pump does not mean you aren't paying for it.
You also, just as obviously, pay the insurance costs for a ride-for-hire vehicle that you're in. Indeed, the insurance costs are probably inherently higher than the ones for your personal vehicle.
> First of all, what kind of insane person pays $5k for parking and insurance?
> My parking expenditure (yes, I live in SF) is maybe $10 a week
"You'd have to be insane to get the unusually low rate I get on parking!"
Please tell me this is a joke. This is as dumb as saying "I can't believe people let themselves get so ripped off on their rent: I pay $900/mo to live downtown under rent control, why don't they just do that?" For some actual data instead of nonsense like what you're saying, look at something like: http://sfbay.craigslist.org/sfc/prk/
You can't really find a parking spot for less than $250 (~$62/wk). I expected this to not be the case in some outlying areas, but it looks like you have to go all the way to Glen Park to find parking for cheaper than that. Parking that comes with rentals is cheaper (about $150/mo generally), but not everyone has that option and I'm sure you agree that it's idiotic to say that you have to be "insane" to happen to live somewhere that doesn't come with a parking spot option. Either way, parking is 3-5x what you seem to think it is.
> As to gas and maintenance, you obviously pay those for an Uber car just like you pay for it for your own car -- in fact, you pay more for these mileage-related costs, since the car has to drive over to you as well as drive you wherever you go.
Your math is wayyyyy off here. You pay a minuscule fraction of the insurance costs for an Uber: largely because you're paying in proportion to your usage, and all the times that the car is parked or picking up other fares is not your responsibility to pay for. By contrast, even if you drive the exact same amount you would've Uber'ed, you don't get to tell the insurance company "I only drove 3 out of every 24 hrs this week, so I'm going to pay you 1/8 the premium". TL;DR for this paragraph: You seem to be completely forgetting the fact that insurance (and maintenance) related costs are driven down by increased utilization, and almost by definition an Uber has infinitely higher utilization than an owned car.
It is trivial to spend much, much, much less money on parking than you seem to imagine is common. You don't need to park downtown, which is well-served by BART, Caltrain, Muni, etc. (and which is a nightmare to drive in anyway). Parking at a BART station is $2 per day.
If you want to spend thousands of dollars a year on unnecessary parking expenses for the dubious convenience of having a car downtown, hey, more power to you. But you clearly are not very driven by cost-consciousness.
No meaningful fraction of your insurance costs for your car cover the time it is parked, because your car is not meaningfully at risk when it is parked. You do, in fact, tell your insurance company how much you drive your car when you pick up your insurance. You don't get to do this on a week-by-week basis because of transactional costs[1], but it's part of the standard form you filled out when you got your insurance. Uber drivers need to carry much more, and more expensive, insurance than you do due to the fact that they drive much more (and routinely have strangers in their cars).
I can't imagine how you think that maintenance costs are driven down by driving more. Is it your contention that driving more makes your car work better?
[1] Actually, I think that some insurance companies are experimenting with monitoring devices in cars that give you a lower rate, so maybe this is becoming more possible. But I'm not at all familiar with the details.
I have multiple vehicles, but I think I pay on average about $700/vehicle/year.
Parking varies widely, the last time I had a parking garage subscription in Cambridge (MA), it was ~$130/month.
Gas, insurance, simple parking and a couple of oil changes gets me very close to $5,000 easily.
The relative insurance and maintenance prices rolled in the Uber price vs. private vehicle costs don't really matter. All that matters is out of pocket dollars. Sure, you might be paying an effective insurance rate on the Uber of 2x your private insurance cost, but unlike private insurance which you pay for 24/7/365 (effectively), you're only paying the insurance cost to Uber when you're actually riding. So, it can very easily work out in your favor even if some of the unit costs seem abnormally high.
In Seattle, over the last 8 years I've averaged 2933$/year on my car (which I own outright). That includes insurance, licensing fees, parking, gas, maintenance, tickets, rental costs, gps, and tolls.
I don't think you can make a compelling case for a taxi service vs car ownership based on cost -- but rather convenience.
Perhaps not in Seattle. I'm pretty sure the costs you mention are higher in SF (just like everything else...) depending on your circumstances, it can start to approach a no-brainer. Recently, I've probably been spending in the neighborhood of 80 to 100 dollars a weekend on Uber (~$2100-$2600/yr), and the guy above mentioned he spends roughly ~5000/yr on Uber. The cost of owning a car ranges from 5000 to 15000 a year[1][2][3], and it's substantially more expensive in San Francisco because this doesn't include parking, tickets, and tolls, so you can tack on another ~3000 for parking alone, minimum. (at ~250/mo, pretty much minimum)[4]. It doesn't take a lot of imagination to see how for people in certain situations (e.g., no long commute), the cost alone could be more than worth it.
Yep, I've spent a ton the past couple years as well, and it's by far the only tech company that I've spent more than a couple grand on. I'm not sure if OP used this but if anyone's curious to know how much they've spent/are spending on Uber rides, I wrote a small Chrome extension for that: https://chrome.google.com/webstore/detail/uber-spender/kmjde...
Say I spent 1 billion dollars paying someone to create a new Uber app and the necessary infrastructure. I'm quite confident that for 1 BILLION DOLLARS that could be recreated.
Then say I spent 16 billion dollars on advertising. With world advertising budget of around 500 billion per year, that means that 3 out of every hundred TV ads would be for my new company. 3 out of every hundred online banners. 3 out of every hundred posters on the side of a bus. And that's world-wide (if I focused just on the US with a market around $150B it would be nearly 10% of all ads everywhere).
It would be the most talked-about company anywhere. I think this company would blow Uber away. And it is still a BILLION dollars cheaper.
That is the trouble with these absurdly high valuations -- to compare fairly you have to consider what ELSE could be done with that money, and multiple billions of dollars could do an awful lot.
Better yet, reduce the margin (Uber has a 20% margin, so e.g. offer 10%), funding the company with the other $16B until it becomes profitable. I assume it would take you a lot less than $16B.
That's what I think is missing with Uber's business plan: network effect. There is literally nothing preventing another company entering the market and undercutting Uber's prices, benefiting both customer and taxi drivers. I.e. there's no way Uber's margins can stay so high.
There are already freemium car sharing apps/websites doing quite well already. They are already winning in some markets. There's plenty that have been going for longer than Uber too.
But Uber has the cash. So you keep hearing about them because of their PR spend. So now Uber has to buy up the competition, or try and beat free.
Which is why I think they need more money. It's more money (not sure how much will be enough), or all the investors lose.
One day when I was feeling mischievous, I was thinking of an app called SubUber where you'd coordinate with your favorite Uber driver(s) directly and call (or one button press) to request from them a ride. Then, your ride fee could be Uber's original fee minus 20% (or whatever you negotiate or some other meter-based fee).
What I'm saying is, if you as a passenger create your own approved driver's list network, you could get the same services much cheaper.
Your experiment fails, I think, because it's not making an apples-to-apples comparison. No one has spent $18 billion on Uber; total investment to date has been ~$1.5 billion. To do what you're describing, someone with $17 billion in liquidity would have to want to spend it on creating an Uber clone, and would have to have the organizational resources and wherewithal to use that cash productively. It's one thing to make an over-valued investment; it's another to spend 17x that amount on a green-field project.
Really? Because I think it's very much the same thing.
I think that a company which wishes to invest should always compare to the price of a green-field investment. If someone were purchasing Uber for $18 billion, they should do so only if it would be more effective then dumping 18 billion into a green-field startup. If someone is investing by purchasing some shares at an $18 billion valuation then the comparison is slightly harder: own 100% of a startup with a much lower investment or x% of the market leader.
The comparison is now always trivial, but I think that anyone looking at these sorts of investments needs to be doing this comparison before spending the money.
A lot of that 18 billion valuation is predicated on Uber expanding beyond the "taxi" market. People are betting on them being able to use what they've learned to become the king of local logistics - see their recent bike messenger expansion. And if they win the driverless car game then they could be looking at replacing much of the auto industry.
Whether it's the stock market or PE or VC, investing is not a bet on what currently exists but what you think the future will hold. The numbers that exist are generally priced in already. Yes, fundraising is frothy right now but you're still talking about tons and tons of money and relatively sophisticated investors. It's not like they haven't run these same numbers.
True. Instead of comparing that valuation against Uber today, I should be comparing it against what Uber today will become now that it has a big pot of cash to spend. (But that pot is 360 million, a paltry 2 or 3 percent of the advertising budget I gave to my hypothetical competitor.)
I think Uber's value comes from the fact that they will eventually expand beyond taxi service. They could leverage their network of UberX drivers to disrupt courier and delivery services. Imagine being able to order food from a grocery or restaurant web site that is tied into Uber's system. Uber would alert a nearby driver to stop and pick up your food and deliver it to your house. They could even smartly aggregate the driving, picking up something for you at one restaurant and picking up something from another nearby restaurant for your neighbor.
Mysteriously, if Uber had to spend $35k+ [or eat a one time capital expenditure of 6-7 figures per driver] more a driver, I suspect people would be thinking the $18 billion valuation was ludicrous. And realistically, since they act as a taxi service, that is what they would be paying in markets like SF, NY, etc.
They clearly would have a competitive advantage in the range of $25k/driver + taxi company like margins, but does that really justify an 18 billion dollar valuation even if you tack on a courier service?
Agreed, although Uber has been able to skirt by regulation because the quality of driver is generally high (and driver performance in terms of road and passenger safety relative to taxis is probably better), as they expand aggressively within individual markets they will exhaust their supply of "competent driver". In the case of Lyft, which in several markets arguably has a culturally-set (i.e. informal) higher standard than Uber, this has already happened.
It's also somewhat rosy to think that Uber will eat the entire market. I'm not sure an 18B valuation makes sense. Maybe a few billion, but not 18.
(I say this as someone who drives for Uber - and Lyft)
Yes, but almost every regulator now has both of them on their radar and they are going to end up eating regulatory costs roughly equal to a taxi company. It is going to happen sooner or later because the cities need the revenue and "regulatory equality between taxi companies and Uber" is not likely to result in the voters getting pissed off. Otherwise, they'd have to raise sales taxes or something which would piss them off.
I think its worth around 10 billion [which is where the original article said VC's started dropping out of the auction en masse].
I guess I don't understand why if those things were possible why UPS wouldn't already be doing it? What is Uber's secret sauce that would make them be able to solve that problem?
Regulations governing licensing, employee welfare, public liability, and other such, which Uber currently works around (but might not be able to indefinitely, people are looking very carefully at the situation).
Even ignoring this difference, UPS might not consider the profit margin worth the risk and the cost of the up-front infrastructure changes.
UPS is a shipping company first and a technology company second. Uber is a technology company first and a (taxi|courier|etc) company second. It's a difference in mentality.
What people fail to take into account is the self-driving car future where Uber takes 100% of the profits (since there is no driver). It will start taking a chunk of the people driving themselves market as well when Uber becomes more convenient and cheaper (removing the human allows them to be more competitive with every day driving).
To get to this point however does require it to start operating its own fleet (unless small regional companies form to manage the fleet and just loan out their self driving cars to uber). Either way Uber is in a good position. If it manages its own fleet, it can better negotiate the price of each car than any individual can. It will also have more data than anyone else on how those vehicles operate and can then buy it's own insurance for its entire fleet, cutting costs there. If the alternative occurs, then Uber will own the buy side of the market and have most of the leverage relative to local companies that manage their own fleet.
There are a lot of ways things can pan out, but being the most tech focused of these companies with the best engineers of any of these types of companies, puts it in the best position to own the self-driving car future. The only company better positioned is probably google.
This doesn't entirely make sense to me. One of the absolutely beautiful things about the more successful "sharing economy" companies is the degree to which they've been able to provide a highly capital intensive product/service (room accommodations, auto transportation) without having the associated capital costs and risks.
The cost of capital acquisition and debt service is a massive barrier to rapid growth and thus multiples/valuation. If a main attribute of Uber is that they run a taxi fleet and its workforce while offloading the expense of owning and maintaining one -- much like Airbnb is a lodging chain that doesn't have to bankroll any real estate -- then that's kind of the point of the model.
The idea that changing that fundamental business advantage is the "real" goal seems unpersuasive to me. People who drive cars are likely to be more efficient economically than a self-driving computer for decades at least, if not longer.
What's preventing another competitor from buying self-driving cars themselves and pushing the margins on automated taxis down to a commodity product?
Anything that you need to pay for has a chink in the network effect armor. All a competitor needs to do is price cheaper and all your users will flock to them.
Tech companies survive on fat margins, but I think this industry is heading the other way.
I have lots of issues with Uber, but as they expand, there's tons of potential. Taxis in many places are lowbrow affairs with business dominated by drunks and Medicaid cab rides.
To me, the prospect of sitting in half-dried vomit in the back of a 10 year old former police cruiser isn't very appealing. Uber makes it approachable for people like me -- I'd rather have a pleasant ride to the airport or train station than deal with parking or inconveniencing my wife for rides.
That said, think about the possibilities that could come if one of their major backers (Google) continues to push forward with self driving vehicles. They will have excellent real time traffic data reported back through each vehicle on Waze, and a super efficient dispatch system. They could run 24/7 with electric driverless vehicles with crazy low operating costs. It could turn the entire industry on its head.
The economics would shift so drastically it wouldn't just be Uber vs taxies, it would be Uber vs does it make sense at all to even own your own vehicle. The automated vehicles could have utilization figures that are unheard of today. Why would you buy your own vehicle when you could have an automated Uber pick you up in 3 minutes for dirt cheap?
I think that time will come, probably sooner than we realize. And when it does, Uber will be positioned as the default dispatch gateway.