[oli5679]

Can you articulate:

(a) your beliefs that Uber's fleet shifts to driverless at various points over the next 20 years.

(b) Their change in costs and revenues following this scenario (and in cases when this doesn't happen).

I can only justify Uber's recent valuations if I entirely discount regulatory risk, assume huge GDP growth in the developing economies + Uber establishing dominance there and that Uber goes completely driverless in the next 10 years, without any legal/licencing costs.

The alternative would be a 30% fare hike, which would cause customers to go banannas.

[georgespencer]

You're forgetting Uber's intent to be a major player in on-demand delivery, local shipping/haulage, and long distance shipping.

My point as ever remains this: people are looking at Uber's current model (where it loses 15% on each fare), its revenue, and its losses, and shitting themselves. They are correctly observing that to raise fares they would have to suffer a loss of customers. Those people are missing several points:

1. The bet on autonomous cars reducing Uber's fares further whilst simultaneously driving them to profitability

2. Uber's intent to spread beyond just passenger carrying

3. The fact that Uber could cut its expensive R&D and autonomous car team today and likely be profitable.

4. The fact that these numbers are simply the same numbers as most/many/all startups raising venture capital, simply orders of magnitude higher. They raised $15bn at a $100bn valuation? Great. There are companies who have raised $15m at $100m.

> I can only justify Uber's recent valuations if I entirely discount regulatory risk, assume huge GDP growth in the developing economies + Uber establishing dominance there and that Uber goes completely driverless in the next 10 years, without any legal/licencing costs.

A more interesting discussion (although irrelevant to my argument), and one we'd struggle to make without, y'know, actually having the data we need to value the business. Which is to say that we're sitting on the sidelines trying to guess the strategy and numbers. Parts of it are clear but I'd expect that a VC investor in Uber probably knows a bit more about what they want to do than us.

[oli5679]

Ok great. Thanks for going into so much detail.

How likely do you think 1 is in the next 15 years (surely less than 100%)? To me, 50% seems generous.

How much can Uber's revenue grow with/without 1 (bare in mind they already represent approx 1/4 to 1/5 of global taxi bookings, although I admit this could be undercounted and grow)?

Based on this, what happens to Uber's net margin with/without (1). Bare in mind it's currently > -100% and the sector average has been low-mid single digits for years. I can't see it rising much above $3 -$4 billion with and can't get it anywhere near this without.

Its true that smaller companies raise money at high multiples of revenue, but that is when they represent a much smaller proportion of the potential market.

It's also true that they COULD successfully expand into other markets and this COULD one day become profitable. However, in my mind this roughly cancels out with the significant competitive and regulatory risk that they face in doubling their share of the taxi market,and they could end up repeating their trick of selling dollar bills for 85 cents in the markets too.

Happy to hear where you disagree!

[georgespencer]

> How likely do you think 1 is in the next 15 years (surely less than 100%)? To me, 50% seems generous.

Tesla has the hardware deployed already and announced that the software to enable Tesla Network (which is essentially Uber, without drivers) will be enabled by the end of this calendar year. You think there are 50% odds that one of the other companies ploughing billions of dollars into autonomous driving R&D is going to take another 15 years to execute on this? I can't think of many examples where that level of first mover advantage has existed outside of the development of viably deployable nuclear weapons.

> Based on this

I don't accept the premise, I'm afraid. But Uber could be profitable if it increased its fare price by 15%. So why is it difficult to believe that they could achieve profitability by cutting central costs?

[narrowrail]

I agree with everything you wrote except the 'level-5-autonomous-car-ubiquity. I don't think Uber's success depends upon it; Uber is the next iteration in the domestic logistics industry (USPS>UPS>FedEx). One way for Uber to communicate this to the market would be to have all its functionality available in a single application (of course, some of their products are limited availability because they haven't figured out how to scale them). Amazon had/has similar financial metrics over many quarters. Amazon is also a potential acquirer.

[georgespencer]

Agree that it's not the only end game for Uber, and have discussed elsewhere. There are lots of ways for Uber to hit profitability.

[xiphias]

I don't think Tesla can be L5 this year..it would be awesome, and I'd love them to be the first, and I believe that after some time they will have it, but they are just too far behind right now (just look at videos/stats). Waymo still has the best statistics, though their equipment may be more expensive than Tesla's.

In return Tesla will have much more data in a few years.

[georgespencer]

> I don't think Tesla can be L5 this year..

Very happy to concede that it's possible they won't be! But look at the context as I think you're missing the point a little: OP is stating there's a 50% chance that they won't be L5 in the next _fifteen_ years. They're currently forecasting L5 in Q4 17. He's saying that they're going to be 14 years late.