[kapilkale]

Pretty sure this is not a Webvan scenario. The question at hand should be "if Uber ran out of funding, would they die"

For Webvan, it was yes.

The answer for Uber is no, at least in the short term.

a) Uber would stop subsidizing drivers, and then would overnight be cash flow positive

b) The driver subsidies probably wouldn't matter anymore, because if Uber's funding ran out, so would that of their competitors. Lyft is already on the brink (source: http://www.nytimes.com/2016/08/20/technology/lyft-is-said-to...)

c) they'd exit markets where they were burning cash (e.g. China, which already happened)

Long term, no idea.

[rtpg]

They might be cash flow positive but would they have enough to pay back all the leveraged debt they've taken on?

If they pulled out of a bunch of markets (why is Uber wasting its time in places like Japan where taxis are basically fine?), then they could no longer justify their valuation.

Their prices are going to go pretty high up, meaning they'll only survive in places where taxis are super awful (so, basically the US).

All that stock they've handed out would start dropping like a rock in the private valuations of the institutional holders, I bet some loan conditions will trigger, and they're going to suffer quite a bit. Not to mention the talent exodus.

It's like austerity. If your company is suffering due to a lack of growth to meet ambitions, is cutting costs going to make growth go faster or slower?

That said, I think Uber will figure something out, even if it ends up not hitting its goals.

[lliiffee]

Taxis are craaaazily expensive in Japan. (The quality of service is high though, which perhaps you were referring to.)

[new299]

Quality is fine?!? Cars are clean, polite, don't try and screw you. But they often don't have detailed knowledge of the town in which they operate (no test like the knowledge in London). And rather than falling back on GPS will regularly dig out a dirty old A to Z.

Granted that might be less common in central Tokyo but it's happen to me several times. Taxis often have a really poor idea of where they're going.

[culturestate]

I've experienced this too, and these days I almost always ask them to use the GPS as soon as I get in the taxi. I've only been refused once, and that guy physically did not have a navi in the car.

[dajohnson89]

That's somewhat surprising to hear, given the high-tech reputation that Japan has....

[komali2]

It's reputational hangover from I would say maybe the 80s. My experience in Japan was totally the opposite. Most people's emails are something like [e-mail] because that's the email their phone provider gave them, and they don't know how to check their email if they lose their mobile phone. Internet access is sparse - not even the starbucks at the famous shinjuku intersection had wifi when I was there in 2014. If you want internet, you need to go to an internet cafe - those places that people sometimes just move into as cheap apartments. To do that, you need to register for a card... with a Japanese phone number and a Japanese bank.

You want any paperwork done, it'll involve a fax. No, scanning and emailing will not work, sorry. No, you can't just bring the paper in, it must arrive via the fax machine.

Japanese websites: https://randomwire.com/why-japanese-web-design-is-so-differe...

Etc.

[jrockway]

I get unlimited LTE when I'm in Japan:

http://www.bmobile.ne.jp/english/

[swampthinker]

Japan has been struggling to keep up in a software-first world. Hardware has been pretty close to top-notch, software not so much.

[magic_beans]

This might be a naive question, but how do non-English-speaking people use programming languages, which are seemingly all in English?

[bemmu]

Rest of the world: "Please take me to such and such address"

Japan: "Please start driving towards <famous landmark>. You know that convenience store near there? Yeah that's the one, can you take me there for starters. OK, now still continue a bit forward. Now turn right in the next intersection. Yes, right here, next take a left..."

[yladiz]

To be fair, while it's common for western (US/Canada) taxis to bring you to somewhere based on address (or intersection), it's not common in much of the rest of the world and they rely on landmarks much more often. Any Latin American country and many Asian countries are the same, in that you tell them a landmark and go from there.

For example, did you know that it wasn't until sometime in the last couple years that South Korea implemented a standardized address system? You can't tell a taxi driver to go to an "address" cuz the address of your hotel didn't exist a couple years ago, even if the hotel did, so you have to tell them the closest landmark.

[masklinn]

Most japanese GPS will take landline numbers as that's more reliable (and much, much easier to input) than addresses. The alternative is a proprietary location system (Denso's MAPCODE).

[rtpg]

All taxis I've gotten into had a GPS and I could just give the address.

[dilemma]

No, taxis are not very expensive. They're about what you'd expect in an industrialized country.

[dtien]

Personally, I don't think Uber's strategy is to run out the clock against it's competitor Lyft (B). But to run out the clock against the technical and policy headwinds for self-driving cars.

Clearly that's the profitable long term strategy. A lot of people are flabbergasted that Uber seems to be burning cash for a no-expense, non-capital intensive operation. But if you look at it as them using the funding to:

1) own the market, mindshare -- driver subsidies

2) technology investment on logistics infrastructure to support a fleet of driverless cars

3) driverless car tech

4) lobbying for policy change ( on current taxi model, as well as future self driving model )

well then... the amount of funding and cash burning can somewhat be reasonable.

NOW, having said all of that. each one of those can are HUGE impediments to deal with for any new company, and yet they're trying to fight them almost simultaneously with huge question marks for policy and technology.

They might have a good strategy, but I feel like they might have been 5(10?) years too early. Time will tell...

[kamaal]

>> But to run out the clock against the technical and policy headwinds for self-driving cars.

That would take a few decades at the current pace. They are currently burning $2.4 billion/year. Lets say it takes 20 years for self driving cars to take over.

In that case it would take $40.8 billion in losses. All the best finding an investor who can give $40 billion and expect nothing in return for 20 years and have hope of recovering any of that even after 20 years.

[erichurkman]

5) Gathering tons of data on where riders start/end their trips across time. Lots of rides requested at 6:30pm at the Palo Alto cal train station? Start moving cars that direction before 6:30.

[wpietri]

What's your data on A? I'm not sure it's true.

The article says net revenue was $1.1 billion in Q2. Losses were "significantly" more than $750m. So we're talking a scenario where either they lose a lot of drivers or raise prices drastically. I'd expect a fair bit of damage either way, meaning still-lower revenues.

And they have very large fixed costs. Because they've already shifted most of their operating expenses to drivers, they have relatively little room to cut costs. They have a lot of expensive staff. They have a whole robot car research operation, which can't be cheap; Toyota has committed a billion dollars to figuring that out. So it's not clear to me that they'd be able to get to break-even.

I also think C is risky for them. Their valuation is "astronomical" by Bloomberg's standards; they're supposedly worth well more than, say, Ford. That's been based on a hard charge for global dominance, not just getting by in a few markets. And getting into the black might require big cuts in their marketing budget. If their growth numbers tank, their stock will lose the "dominate the market" premium.

So even if they could somehow get into the black, I'm not sure they would still be Uber at the end of it. They might not be the next Webvan, but they certainly could be the next Groupon.

[legulere]

> a) Uber would stop subsidizing drivers, and then would overnight be cash flow positive

Raising prices also means loosing costumers though. It seems like 25% is the targeted commission for uber. Probably even traditional taxis can stay under that.

[LordHumungous]

>Uber would stop subsidizing drivers

But would the drivers still drive for Uber? If not, ruh roh.

[serge2k]

> a) Uber would stop subsidizing drivers, and then would overnight be cash flow positive

and those drivers would walk to lyft.