| The naiveté on HN is staggering sometimes. Imagine your parents give you a 10 dollar loan to start a lemonade stand. It costs you $3 to buy the lemons, sugar, water, and cups to make 10 cups of lemonade, that you sell for ten cents each. In the first day you spend $3 and make $1. In the second day you spend 3 more dollars and make one dollar. In the third day you spend $3 and make another $1. In the fourth day you again spend $3 and make $1. At this point you now have $2 remaining. On the fifth day a miracle happens and your mom gives you another 10 dollars, so you make and sell more lemonade. But you're concerned now so you ask all of your customers why they're buying your lemonade. They tell you that the only reason is the price, it's such cheap lemonade! If it were 2x more expensive they might still buy it, but certainly not at 3x. And then what happens 4 days later? Uber doesn't have a business model, they have a house of cards. They can't make money continuing to operate the way they do now, fares don't cover their operating costs, even if you factor out costs of "building" or "expansion". Their paths to success are either forcing everyone out of business by undercutting them and causing everyone else to go bankrupt, after which they can raise their prices back to the old market rates; or, somehow managing to get self-driving taxis on the market in the next 5 years so they can take driver compensation out of the equation. |
I was demonstrating to OP that even if he is concerned by the losses Uber is making, and doesn't consider $3bn of losses on $6bn of revenue to be "healthy", it doesn't matter if the plan and the numbers are headed in the right way as far as investors are concerned.
> On the fifth day a miracle happens and your mom gives you another 10 dollars
This is precisely my point. This does not happen (except at huge economic cost to the company and its founders) unless you are demonstrating a plan which you are executing on.
> Uber doesn't have a business model.
Yes, it does. You may not like it, and you may think it's stupid and you know better than the people who put $15bn into it, but it does have a business model.
> They can't make money continuing to operate the way they do now, fares don't cover their operating costs, even if you factor out costs of "building" or "expansion".
Really? A 15% price increase = Uber is profitable[1], and you don't think they could generate a commensurate margin shift from losing central cost? Get rid of the team working on driverless and it's a profitable business.
> Their paths to success are either forcing everyone out of business by undercutting them
Yep.
> somehow managing to get self-driving taxis on the market
Yep
> or simply continuing to build huge volume, as they have been, and then cutting their central costs back to achieve profitability
Oh, you didn't suggest that much easier path to profitability which they could execute on tomorrow. Weird.
[1] https://twitter.com/naval/status/853033099101323264