{"id":10780,"date":"2017-08-06T11:46:21","date_gmt":"2017-08-06T16:46:21","guid":{"rendered":"http:\/\/huewhite.com\/umb\/?p=10780"},"modified":"2017-08-06T11:46:21","modified_gmt":"2017-08-06T16:46:21","slug":"uber-and-business-models","status":"publish","type":"post","link":"https:\/\/huewhite.com\/umb\/2017\/08\/06\/uber-and-business-models\/","title":{"rendered":"Uber And Business Models"},"content":{"rendered":"

Kevin Drum is having trouble<\/a> with Uber<\/strong><\/em>‘s future:<\/p>\n

I\u2019ve always been sort of puzzled by the idolization of Uber. The problem it faces is one of the most common in the tech industry: once you\u2019ve spent a ton of money to buy eyeballs (or riders), how do you then leverage that into something profitable? Facebook did it. Twitter (so far) hasn\u2019t. So will Uber be another Facebook or another Twitter? What\u2019s the story they\u2019re telling investors about why they\u2019ll be one vs. the other?<\/p>\n

In any case, as near as I can tell they\u2019ve basically admitted that their business model is unsustainable. That\u2019s why they\u2019re betting the company on driverless cars. But if you want to run (or invest in) a driverless car company, would Uber really be your first choice? I\u2019m not sure why. Nor am I sure that Uber can keep those subsidies going long enough to get to the promised land. Driverless cars are coming, but they\u2019re still several years away. It\u2019s all very strange.<\/p><\/blockquote>\n

Perhaps Kevin should consider the Netflix<\/strong><\/em> business model. While I’ve never used or invested in Netflix, I did have the benefit of some insights from The Motley Fool<\/strong><\/em>, or more precisely the Gardner brothers, who were (and are) big cheerleaders for Netflix and delineated the Netflix plan to use the Post Office and outside investors to keep the business going while developing the technology, or in some cases waiting for others, that would enable their ultimate goal – replacing the Post Office with Internet-based\u00a0streaming<\/em>. It’s a business model that employed bridging, if you will.<\/p>\n

So Uber<\/strong><\/em> may be trying to bank on that same approach, getting the company into a position to capitalize on cost reduction once\u00a0riderless<\/del> driverless cars (Freudian slip, anyone?) are properly developed. But it’s a harrowing row to hoe. Back in November of 2016, the Naked Capitalism<\/strong><\/em> blog investigated<\/a>, and came up negative:<\/p>\n

By virtue of steamrolling local taxi operations in cities all over the world, combined with cultivating cheerleaders in the business press and among Silicon Valley libertarians, Uber has managed to create an image of inevitability and invincibility. How much is hype and how much is real?<\/p>\n

As transportation industry expert Hubert Horan will demonstrate in his four-part series, Uber has greatly oversold its case. There are no grounds for believing that Uber will ever be profitable, let alone justify its lofty valuation, absent perhaps the widespread implementation of driverless cars. Lambert has started digging into that issue, and his posts on that topic have consistently found that the technology would be vastly more difficult to develop and implement that its boosters acknowledge, would require substantial upgrading in roads, may never be viable in adverse weather conditions (snow and rain) and is least likely to be implemented in cities, which present far more daunting design demands that long-distance transport on highways.<\/p>\n

Tellingly, earlier this month, Bloomberg reported that\u00a0JP Morgan and Deutsche Bank turned down the \u201copportunity\u201d to sell Uber shares to high-net-worth individuals<\/a>. The reason? The taxi ride company provided 290 pages of verbiage, but would not provide its net income or even annual revenues.<\/p><\/blockquote>\n

I’m not sure how much credibility to give to this blog, and I did not read the full entry. But most telling is that last quoted paragraph wherein they report\u00a0JP Morgan<\/strong><\/em> and Deutche Bank<\/strong><\/em> declined involvement.<\/p>\n

BTW, if you click through to Kevin’s post, you’ll notice he talks about Uber<\/strong><\/em> subsidies. I investigated that, and that can be partly put down to the Uber<\/strong><\/em> outside investors, whose money provides subsidies to Uber drivers, and partly down to some cities paying Uber<\/strong><\/em> to help them with last mile passenger delivery, as noted in this Business Insider<\/strong><\/em> report<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Kevin Drum is having trouble with Uber‘s future: I\u2019ve always been sort of puzzled by the idolization of Uber. The problem it faces is one of the most common in the tech industry: once you\u2019ve spent a ton of money to buy eyeballs (or riders), how do you then leverage \u2026 Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-10780","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/10780","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/comments?post=10780"}],"version-history":[{"count":2,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/10780\/revisions"}],"predecessor-version":[{"id":10782,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/10780\/revisions\/10782"}],"wp:attachment":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/media?parent=10780"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/categories?post=10780"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/tags?post=10780"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}