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0 pointsethanbond3y ago0 comments

> I think the important question to ask here is if people continue to want to pay & hail taxis from their phone? If the answer to that is yes then Uber will be fine so long as they're one of the apps that people continue to use to hail taxis [and they figure out how to get their unit economics to work]

If they don’t get their unit economics figured out, not only will they not be Google/FB/etc., they will be nothing at all.

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chii3y ago

uber's unit economics will easily work out if they stop expanding (which is where the expenses are).

Their backend services have a "fixed cost", if you assume they've designed it to be scalable, such that the marginal cost of a new user doesn't add more cost to hosting and compute. Then fire most engineers, and keep some skeleton crew maintaining the services.

The other cost is obviously the payment to drivers. I believe the unit economics will work here, since uber is not making capital investments into equipment, and is paid per-ride. Competition would drive the margins down, but thin margin is still a positive unit economics. Right now, the cost is subsidized by uber, but only as a marketing tactic to obtain marketshare and drive out competitors (unsuccessfully i might add). Uber can choose to stop the subsidizing, which can then make the unit economics positive.

rocqua3y ago

> Uber can choose to stop the subsidizing, which can then make the unit economics positive.

How much will their market share fall when they do this though? And will uber be able to survive the corresponding reduction in revenue?

chii3y ago

> How much will their market share fall when they do this though?

who knows? But if their competitor is going to subsidize, but uber doesn't then they'd lose most of their marketshare. But the same story would be true for their competitors.

So the subsidy would drop slowly for every player in this market, until they reach an equilibrium, where the final margins for every player is as thin as possible but still pay the bills.

bombcar3y ago

The name, maybe even the company "Uber" can and probably will continue; the question is if it goes through a bankruptcy/restructuring first.

j / k navigate · click thread line to collapse

0 pointsethanbond3y ago0 comments

If they don’t get their unit economics figured out, not only will they not be Google/FB/etc., they will be nothing at all.

0 comments

chii3y ago

uber's unit economics will easily work out if they stop expanding (which is where the expenses are).

rocqua3y ago

> Uber can choose to stop the subsidizing, which can then make the unit economics positive.

How much will their market share fall when they do this though? And will uber be able to survive the corresponding reduction in revenue?

chii3y ago

> How much will their market share fall when they do this though?

who knows? But if their competitor is going to subsidize, but uber doesn't then they'd lose most of their marketshare. But the same story would be true for their competitors.

So the subsidy would drop slowly for every player in this market, until they reach an equilibrium, where the final margins for every player is as thin as possible but still pay the bills.

bombcar3y ago

The name, maybe even the company "Uber" can and probably will continue; the question is if it goes through a bankruptcy/restructuring first.

j / k navigate · click thread line to collapse