[JOnAgain]

I'm surprised that Bloomberg failed to account for inflation in their comparisons. Amazon's 1.4 Billion loss in 2000 is almost exactly 2 Billion in today's dollars (1,956,479,674.80 according to http://www.usinflationcalculator.com/). So this loss is not unprecedented.

[GCA10]

I just fished out Amazon's 2000 financial statements ... and even with the inflation adjustment, Uber's results are in a class by themselves. Here's why:

It turns out that Amazon's bottom-line loss of $1.4 billion in 2000 included a host of non-cash items, all of which are conveniently being left out of Uber's EBITDA summation. These include: - $304 million of write-downs on other dot-com equity investments that weren't working out (Webvan, etc.) - $321 million amortization of goodwill (for full-fledged acquisitions that weren't looking so hot) - $25 million of stock-option expense - $200 million of impairment-related and other. (Jeff? Jeff ... what was that all about?)

Anyway, on an operating basis comparable to what Uber is reporting, Amazon's basic business probably ran a more modest deficit of about $400 million in 2000. In fact, Amazon made a point of saying that its book/music/video business was cash flow positive in 2000, though obviously not much else was.

This link (see p. 35) provides Amazon's full 2000 financials: http://media.corporate-ir.net/media_files/irol/97/97664/repo...

Uber may still bring everything into profitability, and its commitment to build market share no matter what is quite gutsy. But there's still a lot of work to be done.

[mikeryan]

The interesting symmetry between the two right now is that in 2000 Amazon was regarded as a book/music/video business while under the hood they were building the worlds premier shopping fulfillment platform (and cloud services).

Right now Uber is the "taxi service" but is building a world class transportation logistics platform. Noting the Otto acquisition and the self driving car investments you can track their path forward. If Uber can become for transportation what Amazon became for online sales then they have a pretty clear path to success. That being said I think Uber has savvier competition (Google, Apple even GM) who recognize them as a real threat where I think brick and mortar didn't realize Amazon's potential until it was too late.

[GCA10]

Well said.

What's striking about the Amazon/brick&mortar comparison is that retailers' senior management did recognize Amazon early as a fundamental threat. (For example, Walmart.com came to life in 2000 and was set up in the Bay Area with plenty of love from the Walton family.) But on an operating level, few retailers' managers wanted to change the business rapidly enough to deal with it.

They fell into the Kodak trap of sticking with the old ways for a few more years of higher margins ... and thus building out online versions that were way too timid and deferential to make it big.

For example: limited supply of hot items? Put them in the physical stores, not the online one. Price war online? Can't compete, because it might mean undercutting the retail-store price and hurting high-margin sales.

It will be interesting to see if the car companies are able to build out new transport platforms that succeed by making life much worse for their existing dealerships. If so, they can give Uber a run for its money. If not, they will compete in slow motion.

[dragonwriter]

> What's striking about the Amazon/brick&mortar comparison is that retailers' senior management did recognize Amazon early as a fundamental threat.

Some did, many didn't. A number of retailers outsourced their branded online presence to Amazon until fairly late in the game instead of building their own capacity, even in the market Amazon was by others earliest recognized as a threat in (e.g., Borders did so until 2007. Target, IIRC, did as well for quite a while.)

[serge2k]

> Right now Uber is the "taxi service" but is building a world class transportation logistics platform

But they are losing money because they are selling their product for less than it costs them.

[roymurdock]

Although your overall point is valid - some companies need to lose (read: invest) a lot of money now before they can make a lot of money in the future - I'm not sure the comparison between Uber and Amazon is valid or meaningful as 2000 Amazon and 2016 Uber are completely different companies targeting completely different markets in completely different macroeconomic climates.

[oceanofsolaris]

If a company is investing in production facilities, building up a supply chain or R&D, I can completely understand how losing money is a solid strategy. It is basically taking a loan to invest in being a better company in the future.

On the other hand, losing money by handing out free stuff (cheap rides in this case) only makes sense if you want to either bankrupt your competitors or increase the awareness of your brand. Since Uber is at least not a complete unknown anymore at this point, all signs point towards the "driving out competitors" strategy. This might still be a viable business plan for Uber (though I don't see how to be honest), but certainly not one that should be cheered.

[tdaltonc]

Would you call trying to drown didi in driver subsidies an 'investment'?

[alttab]

An important difference about Amazon in 2000 was it was a public company by then.

[hyperbovine]

Another difference: I'm not sure that Amazon ever lost money on the margin. Their losses were always attributed to reinvesting whatever profits they made back into the business (and then same). Uber by contrast appears to be losing money on every ride. People will say that they can just jack up the price once they have annihilated Lyft or whatever, but I'm not so sure that is going to work. A big appeal of Uber for a lot of people is that it's currently only slightly more than public transit. Raise the price and your back to being a taxi service, and we've seen how that goes.

[aetherson]

People tend to think of this in black-and-white terms. The actual deal is that if Uber jacks up its prices significantly, on the margin people will ride with Uber less.

Will their number of rides go to 0? No, of course not. But even if there is no other ride service available, there's still taking public transit, driving yourself, or, you know, not going out to whatever you're going to.

Remember also that even if Uber fully defeats Lyft and Lyft's service shuts down, there are plenty of companies out there better capitalized than Uber itself is. Those companies have so far decided to stay out of a "lose $2b per year" business, but if Uber can demonstrate that this is a "gain $2b per year" business, then Google, Amazon, one of the car companies, maaaaybe Apple, and probably a bunch of other companies can at that point launch their own service.

[microtherion]

But even if there is no other ride service available, there's still taking public transit […]

No worries, Uber is working on that:

http://www.bloomberg.com/news/articles/2016-08-15/uber-and-l...

[Applejinx]

Indeed. If Apple decides 'getting and offering rides is part of Apple Pay and iOS' and does to ride-sharing what they did to the music industry, Uber is not ever going to become a 'gain $2b a year' business because there will be no such business.

The idea of ridesharing being a profitable activity is an assumption.

[imron]

> Uber by contrast appears to be losing money on every ride.

Don't worry, they'll make it up in volume!

[FT_intern]

Amazon wasn't losing money on margin even with $25 free shipping back then?

[tedunangst]

Maybe, but I doubt they were losing $25 on each order. For at least some promotions/cities, Uber's losses seem to exceed revenue.

[agumonkey]

I don't know how they manage to lose money on their ride considering how crazy multipliers are at night. First and last uber ride had a 4x. Even without this, some articles said Uber was more expensive than Taxi rides .. weird.