[vannevar]

Uber doesn't just need self-driving cars, they need driverless cars. That's ten years away, and there's no way Uber can sustain its losses for that long. It's an investment Ponzi scheme, and it's losing steam. When it collapses, it's going to take a big chunk of the tech private equity market with it.

[alistproducer2]

This is my assessment as well. People at the c-suite level had to be aware that viability of the company is highly reliant on the magical thinking that they could get to market with driver-less tech before the VC money runs out. The (very real) prospect of complete restart of that research program has likely freed them of the fantasy.

I'm not totally discounting the PR issues as a partial cause of the exits. As a c-level employee, you (more than most hires) have to answer for rotten company culture. I also, however, think both issue (lawsuit and PR issues) make it untenable for the current batch of executives to stay on.

[alrs]

I was in an elevator once, and overheard this conversation:

"Yeah, computers don't do that yet. Don't worry, you just wait for awhile, and eventually they do. That's how technology works."

I saw red.

[__abc]

Why did you see red?

[alrs]

Because it shows a complete disregard for what engineers do, and reduces our work to something akin to fermentation.

[chopin]

That shows disregard to what yeast does, though...

[zelias]

Probably because that kind of statement doesn't pass all the tests

[amygdyl]

I have to say, I am so stealing that line.

I know exactly who will repeat it, seriously, deadpan as if Q.E.D. shown, if I just encourage them a little...

There is is something about that which smacks of borrowing the internet for a day, for a show and tell....

[ExactoKnight]

Was this actually said by someone on Uber's C-suite?

[mabbo]

Ponzi schemes pay out large returns in the short-term, making you think it's a good idea to put more money into them. Uber has done one better, and paid no one anything in terms of returns, yet still collected billions in investment.

[nerfhammer]

"Ponzi scheme" apparently is just invective that can refer to any sort of market failure now, not necessarily the actual Ponzi scheme type investment fraud such as that which Charles Ponzi carried out.

In this particular example, remember that Charles Ponzi's books were totally fake; outright fraud. That does not characterize other phenomena such as other things like speculative bubbles or simple investment gambles that don't pay off. In contrast the Bernie Madoff scam is a recent example of an actual Ponzi scheme.

[vannevar]

Well, earlier investors are seeing paper returns. But other than consumers who are getting subsidized rides, yeah, no real payout.

[dopamean]

There were a few funds of funds that saw big paper returns with Madoff as well.

[LaikaF]

The subsidized ride thing is pretty crazy too. Uber offered me the ability to pay them a fee, then get a number of flat rate rides. I got a ten pack, used it to go across my city (a 25 dollar ride normally, even with pool) for 2 bucks. I think they lost a grand total of 200 bucks on me alone, and I haven't touched the app since then. Switched back to Lyft when they offered a saner version of the same thing.

[jedberg]

> they need driverless cars. That's ten years away

Maybe in the US. But Uber is everywhere. Given their penchant for "bending" the law, I wouldn't be surprised if they start deploying driverless cars in places with more lax regulation, which will 1) help their bottom line, 2) give them more training data, and 3) prove it works to make regulatory issues easier in the US.

That's of course if they can keep their tech, which seems less likely given the waymo suit.

[thrillgore]

I guarantee that if the claims have validity Waymo and Uber will settle and a licensing deal will be agreed upon.

[gtirloni]

Is Waymo required to make a licensing deal?

What would it be worth in $ at this point? Does Uber have deep pockets for _that_ much money at this point?

[tedivm]

I don't believe they are required to make a deal. However, their parent company is a big investor in Uber, so they have some incentive not to drive the Uber into the ground.

[gingerbread-man]

This could be the next IBM PC license if Waymo owns the tech that all driverless cars need to operate. They don't need to make much money off Uber, they need to get their tech out there into production so they can refine it before their competitors can get to market.

[gingerbread-man]

It seems more likely that GV would get additional equity in exchange for the license.

[api]

As someone trying to raise right now, I am very concerned that this is going to implode the entire industry. An Uber collapse will set off a panic as people wonder who else is swimming naked. It will also tank the return on any VC fund of which it is a part, leading to a whole round of terrible VC returns.

[tomblomfield]

I think the swing in VC herd-mentality happened about 18-36 months ago.

There was a palpable shift from "prioritise growth above all else" to "let's think about about unit economics".

[vbtemp]

FYI this comment has been quoted by The Atlantic... https://www.theatlantic.com/technology/archive/2017/03/uber/...

[sjg007]

That's amazing.. I also think it is quite funny when reddit posts become news.

[ChuckMcM]

A clear business model that works is the best defense here.

[api]

Yes and no. The problem is that panics affect the entire market and have cascading follow-on effects. Not only does this affect fund raising but it also affects the entire tech economy, and thus the ability to convert new customers if your customers have anything to do with the tech economy.

We are fine if we can't raise more, so I am not panicked... just concerned.

[thearn4]

> they need driverless cars. That's ten years away

Honestly even that seems way overly optimistic in my opinion, if we're talking about R&D + regulatory acceptance & general adoption.

[msabalau]

Is your theory that absent subsidies no one would prefer an Uber over a taxi? Because if not, presumably Uber could just raise prices and hunker down for 10 years. (Assuming they survive lawsuits and assorted revelations) Is their another clock that prevents them not just from not just growing, but existing?

[usefulcat]

Not a clock, but potential competitors. The barrier to entry is simply too low. For example, look how quickly Fasten/Fare/etc appeared in Austin after Uber left.

As a product, ride sharing is not quite a commodity, but it's not far off either. As a consumer, I care more about what the product does (a better taxi service) and how much it costs than exactly what company is providing it. Absent artificial constraints (e.g. taxi licenses) it's never going to be a high margin business.

So yes, they could hunker down and "exist", but that doesn't seem like a viable strategy to the get the kind of projected growth their current valuation depends on.

It's hard to see what inherent long-term advantages they have. Their core business is already a commodity. Even if they somehow get usable driverless tech better/faster/cheaper than anyone else, at some point that will become a commodity too. When that happens, there won't be much left on which to compete beyond price.

[yourexwasteman]

You bring up some good points. But I think it's important to not forget that Uber has been around 2009, and wasn't spending their entire time trying to achieve driverless vehicles.

Don't doubt for a second that there is a ton of engineering that went on in Uber's app that allows it to handle scale. For example, I was in Austin a few weeks ago and used RideAustin. Same experience as Uber. Then I read on the news that the weekend of SXSW, the entire app was basically crushed from the volume of ride requests and couldn't service anybody.

And besides, who wouldn't use Uber if it cost the same amount as a taxi? For me, the advantages of Uber has always been the quality of service. The drivers are nicer, the cars or cleaner, the drivers don't demand tips nor insist at the last minute that their credit card machine doesn't work at the last minute.

And most importantly of all, I would argue that Uber's inherent long-term advantage is their brand. Anywhere in the world that has Uber, I get the same service. I can go to Honolulu and Uber works the same. I just open the app, punch my destination in, look for my driver and go. Same if I was in Mexico City. Same if I was in Delhi.

However, the same is not true for taxis. In certain places (notably South East Asia as a tourist), you agree on a certain fixed fare before getting into the taxi. In the United States they expect tipping, whereas other countries may not. They might insist their credit card machines aren't working in Toronto. There's no accountability of the driver, no GPS trip details in the app...the list goes on.

I think that kind of brand and user experience is highly valuable.

[untog]

> Anywhere in the world tha

In my experience that's not true at all. In NYC it has to be a qualified black car driver. In LA it can be anyone.

[vannevar]

I personally think they could get away with raising prices, but then the drivers would become their customers, and profit margins for Uber as a dispatcher would be driven very thin---it's just not that hard to run a GPS-driven dispatch service. The only thing that makes an Uber an Uber is a window sticker and an app on the driver's phone. How long before there's an uber-Uber that just sends your request to all the dispatch services and the first one that shows up gets your fare?

[ProblemFactory]

> How long before there's an uber-Uber that just sends your request to all the dispatch services and the first one that shows up gets your fare?

There already is an app for this, with over a billion existing users: Google Maps.

If you search for directions in London, there's a "ride hire" tab next to public transport. It gives you price estimates for Uber, London official taxis, and Hailo - all booked with a button from Google Maps, never having to open the Uber/Taxi/Hailo app.

[__jal]

Whether or not humbling themselves into a mere taxi firm with unsubsidized rates would be competitive, I doubt the investors would allow that.

There's an awful lot of other people's money in Uber. There's an Ayn Rand joke here, but I'll skip it.

[sf_rob]

Ya, the cynic in me thinks the subsidy is to bleed Lyft not retain users until driverless cars are a thing.

[mr_luc]

Yeah - I dislike Uber's tactics as much as the next guy, and the Waymo lawsuit is nuclear.

But they're spending money like crazy because they still feel like it's getting them "upwind" in ways that will be lasting. New markets, and market dominance in existing markets.

If they scaled back their immense outflows, and used profitable markets to subsidize less profitable ones, I'd bet they could be profitable.

[ryanmarsh]

Do you have any data to back this up?

[bedhead]

While I wouldn't literally describe Uber as a ponzi scheme, I think you are right in the figurative sense. It usually helps to make that distinction. But yeah, it's hard to not see Uber running into a massive liquidity crisis at some point in the next deaced. The company is only viable to the extent the private capital markets allow it to be. I don't think it has any hope at all of accessing public markets.

[yeukhon]

What's the difference between driverless and self-driving car? The ultimate goal of self-driving car is driverless. Current state of the art does require a driver to be with the car.

[dogecoinbase]

What's the difference between driverless and self-driving car?

Whether you have to pay someone.

[cosmie]

And years of regulatory red tape. Moving from current -> self-driving legal and regulatory framework will be one battle. Moving from that to a driverless model will be much larger.

And those updates have to percolate through federal, state, county, and city level regulations. Making it an inherently slow process.

[yeukhon]

I agree, and I think that's also good for driver and traffic safety. As I mentioned a while back, in case of traffic light going dark, officer has to stepped in to regulate the traffic. Current self-driving car is not capable of handling that without any faults. Among cars, they need to negotiate who to move first on a all-away-stop sign. Self-driving cars need to be able to get data from government relating traffic condition. Currently we all rely on GPS data to determine whether there's congestion or not, as well as user's input (Waze) but that's far from enough to be 100% driverless.

Dataset availability is really really poor today. We can move with great confidence on known conditions, but so many edge cases remain to be solved.

[yeukhon]

But the end goal is that as a driver of my own car, I can just sit in the passenger seat. As a passenger of a taxi, similarly, I expect no driver.

The ultimate goal of self-driving car is to be driverless. But, if you want to produce a car without driver seat & steering wheel, then yes, from that perspective, driverseat-less car is different from self-driving car.

Otherwise, same.

[zild3d]

It's not about the seat, it's about whether or not a driver needs to be in that seat. Lower levels of autonomy need a driver to be able to step in. That is self-driving, but not driverless.

[yeukhon]

As I said three times already, self-driving car ultimately doesn't need a driver to be on the steering wheel. Why is it so hard to understand that? That's the whole idea of self-driving car.

[at-fates-hands]

They said the same thing about Groupon and somehow they're managing to keep their heads above water.

I haven't seen them in the news at all in the last year or so.

[vannevar]

Groupon went public, and their stock went from $26/share to $4. If the same thing happens to Uber in a down round, that's pretty much the definition of collapse.

[danielweber]

Without saying whether I think such a thing is likely, Uber compensates significantly with stock, and they cannot retain talent if the trust in the cashout goes away.

[user5994461]

They give ISO which are worthless and might fire back for a lot of employees.

They won't be able to retain talent when the talent will figure out they can't get the stock that was wrongly promised.