[jfoster]

Like Amazon & Tesla?

Some companies just have a much bigger ramp up than others. Amazon has so many markets to build warehousing & logistics in. Uber has so many markets to establish drivers in.

The subsidising of rides makes complete sense; subsidised rides are loss-leaders aimed towards building habits. I haven't seen their data, but it seems like a good plan.

[tarunm]

Amazon spent capital on building an efficient supply chain based on technology which is a huge entry barrier for any competitor. They did not use VC on exclusively providing any discounts. Uber, on the other hand, is using VC almost entirely on discounts hoping that users will stick around. Their product is essentially an app which has been replicated in every major economy with considerable success.

[jfoster]

Agreed, except that it seems quite likely that users stick around. Where else would they go? The options seem to be an Uber competitor or taxis. Is there anything that will motivate Uber customers toward those?

Uber's service is more than just an app. They have operations teams in every market they operate in to onboard drivers, deal with local issues, etc.

[ufo]

The main attractive of uber is the price. Many people won't think twice about jumping to a competitor if one shows up that is cheaper than Uber.

[jfoster]

How could it be the case that a traditional Uber competitor (eg. Lyft) could be cheaper, though? Only through venture capital. VC aside, Uber have the demand, which gives them the power to squeeze drivers.

Think of it from a driver perspective; if a competitor pays less than Uber and has less demand, why drive with them?

And if you think there will be a competitor capable of out-spending Uber using venture capital, think of it from the perspective of a VC; why pour so much capital into a business so unlikely to succeed against an incumbent when you could put it into the incumbent itself?

I think the primary risk to Uber's business is that of a self-driving competitor being capable of disrupting them; such competitors will have capital already, and will be capable of disruption through all the same ingredients that got Uber to where they are. Those companies would probably work with Uber at least at first, anyway. Uber will be at their mercy every time the contract needs to be renewed.

[greenhatman]

I think it's probably somewhat cheaper for new competitors to get up and running and operate than it is/was for Uber.

Uber had to spend money to test the waters and figure things out. Competitors can just copy.

[ufo]

Sure, no one can compete with Uber now but Uber will eventually run out of VC money to burn and there is no indication that they will be able to maintain their market dominance once they are forced to increase their fares back to a reasonable level.

[MegaButts]

Both Amazon and Tesla build physical infrastructure to lower their costs in the future. Uber is banking on self-driving cars to save them. The ironic thing though is Uber is racing to spend as much as money as possible before that happens, effectively gaining them nothing more than mindshare. As soon as another company pops up with self-driving vehicles, they can compete with Uber and they haven't wasted $10 billion making everybody hate them.

[jfoster]

This seems to be the biggest risk with Uber.

I think they will probably end up working with the first company to have autonomous cars "ready". The big question is what happens next. Will Uber be at the mercy of that supplier every few years as the contact comes up for renewal, or will autonomous cars become so commodity that there will be multiple players competing to be Uber's supplier? Another possibility is an M&A event.