[scarface74]

I wouldn't say uber is blowing up but there business model has a lot of unknowns.

Right now, Uber is subsidizing each ride and their marginal cost is high compared to their marginal profit. The only way they can become profitable is either cut drivers pay, increase the cost per ride or both.

If they cut driver's pay, will the drivers stay with Uber? The other side of the coin is how elastic is the demand?

[tedmiston]

The third option is to automate drivers. I don't really see what the unknowns are. Uber has always seemed to approach it as a long game a la Amazon.

[rspeer]

The unknown there is their automation arm being sued by Google.

[wapz]

And it looks really bad if you read the deposition by the WayMo (staff/manager?) employee.

[tedmiston]

Thanks. Somehow I hadn't heard about this yet.

[brandon272]

Right, but that's always been the case with Uber and the employee in this case knew that going in. Uber's overall business model doesn't seem to be his or her concern, but rather recent bad press.

[scarface74]

I agree. That reply was more in context of worrying about "3000 Uber employees" in the market at the same time.

Unless he is a high level executive, I don't see why anyone would tar him with the ethical lapses of Uber

On the other hand, someone mentioned Yahoo. I would definitely ask someone technical why they stick with Yahoo.

[hsod]

> Right now, Uber is subsidizing each ride

How can this be true? I thought Uber takes a cut on each ride. Are you suggesting that they actually pay the driver extra money on top of what the riders are paying?

[wapz]

It's based on total operating costs--not the cost of the driver only. If you include how much they have to pay for everything else (developers, management, advertising, etc), the "cut" they get from each fare is less than how much they spent in other areas. (I could be wrong so please do correct me if so but I believe this is the case here).

[scarface74]

Scale only helps if you have high fixed costs, the ones you mentioned, and the marginal revenue - marginal costs is large. But if your marginal profit is small, scale doesn't really help.

People like to compare Uber to Amazon and how long it took Amazon to become profitable. The differences are:

That Amazon was putting money into expansion and could turn a profit anytime it needed to.

AWS is their most profitable division - a category with high fixed costs and high marginal profit.

They are already using a lot of automation for their warehouses. It will be decades before driverless cars are ubiquitous.

[alasdair_]

In many markets, Uber will pay bonuses based on hitting a particular number of rides.