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by leptons 293 days ago
It's the Uber business plan - losing money until the competition loses more and goes out of business. So far Lyft seems to be doing okay, which proves the business plan doesn't really work.
3 comments

Uber market cap makes places it in the top100 in the world, whereas Lyft is around 1/25th of Uber in market cap, and not even top1000. I would consider that a success... That is basically as much winner-takes-it-all one can realistically get in a global market. Cases where the top is just 5x the runner up would still be very winner oriented.
And in Europe Bolt is winning in many markets.

Taxi apps are a commodity today.

There are endless examples of that business model working...
Are there? Which ones? I'm especially interested in companies that weren't built to be sold.
Uber is profitable so why do you think it doesn't work?
Because the competition hasn't gone out of business (at least outside the US where tons of other ride hailing apps are available in most major locales) and because 16 (SIXTEEN!!!) years after founding Uber is still net profit negative: over its lifetime it has lost more money than it made.

The only people that really benefited from Uber are:

- Uber executives

- early investors that saw the share price go up

- early customers that got VC subsidized rides

Are you predicting that they can't be net profitable?
No, I'm predicting that:

1. opportunity costs are a thing.

2. if you add Uber's financial numbers since creation, the crazy amount of VC that was invested Uber would have provided better returns by investing it in the S&P 500.

3. Uber will settle in as a boring, profitable company that's going to be a side note in both the history of tech and also of transportation and will primarily be remembered for eroding worker rights.

I don't get your point. You would have still made more money investing in Uber than in S&P.
No, you wouldn't have, unless you were one of handful VCs or Uber execs (ok, and a bunch of pre-IPO Uber employees).

Uber IPO May 2019: market cap $82bn. Uber now: $193bn. 2.35x multiplier.

S&P 500 May 2019: $2750. S&P 500 now: $6460. 2.35x multiplier.

So the much, much riskier Uber investment has barely matched a passive S&P 500 investment over the same time frame. And the business itself has lost money, more money was put into it than has been gotten back so far.

I'm not even sure why I'm in this conversation as it seems ideological. I bring up facts and you bring up... vibes?