Maybe I don't remember it well enough but Amazon's business model seemed a lot more ... tangible than Uber's don't you think?

You don't think selling taxi rides is a tangible business model?

At a loss without any notion of how to make it profitable in the near future? No, I don't.

I see no evidence that they lack a notion of how to make it profitable. Are they doing it in the near future? No, but why do they need to? There are clearly plenty of people happy to fund for the long-term payout.

From what I saw in the S-1, their core platform -- which I assume is ride hailing -- was profitable until Q4 2018. They offer heavy incentives in order to compete, but once they're sufficiently established in a market, looks like they can become profitable on that front by no longer offering promotions in order to fight Lyft/whoever.

They just need to stay solvent longer than the competitors, and being in more markets than the competition should help with that.

Their R&D is also massive, but they could stop most of that if they needed to.

The traditional system did, I don't see Uber doing it.

As a heavy early Amazon and Uber user, I'd say not really. Both are pretty revolutionary and I certainly have been paying Uber a lot more than I was paying Amazon when they just sold books.

I get how Amazon can be seen as revolutionary, but not how Uber (or even Lyft) is. I mean, when I think of catching a taxi back in the day, the only difference is that I made a phonecall instead of using an app to get the service. If it's the "gig economy-ness" of it, we had hacks in my hometown. Maybe there was a license requirement to be a hack, but it always felt like hacks were just regular schmoes who would charge a flat fee to take you somewhere.

I've had very extensive and very negative taxi experiences around the world. Uber is night and day from a UX perspective. Being able to see where the car is when it's on the way, pre-inputting your destination, paying through the app... The gig economy aspect was definitely revolutionary as well. It's essentially changing the nature of work (love it or hate it).

As much as I love Amazon and always have, in the early days it was "just" ordering books online. Yes, that was great and again the UX was great but it didn't seem as revolutionary as Uber.

I don't see how the UX thing is so revolutionary. I live in a city with 120k people, and the app of the local taxi company here does all of those things as well.

But did they do that before Uber?

Not OP, but if they weren't doing it before, and just copied Uber, doesn't that show how weak their moat is? The same could happen with autonomous vehicles as well then.

The topic is revolutionary UX not moats.

Ok, if the UX is revolutionary, then what prevents others from copying it? It still seems like the moat for the UX isn't that great.

That's not been my experience and definitely not before Uber existed and forced people to start copying them.

That's some exemplary public service by Uber, actually. They may actually deserve their status as a non-profit.

Yes you might be paying Uber more, I pay them about $300-$400 a month between our occasional use and my teenage son getting around (still cheaper than a car + insurance), but they lose money on each ride. Amazon has high fixed costs while they were building infrastructure. Uber has negative marginal profits.

Edit: negative marginal costs -> negative marginal profits.

I can't get a clear reading from Uber's most recent financials filing in Feb to determine that they have negative marginal profit. It looks the opposite to me. Given their substantial gross profits, I have to think that they last ride they sell is profitable.

What gross profits?

For FY2018, Uber reported $5.6 billion in gross profits and gross profit margins around 50%.

https://craft.co/uber/metrics

So they made money as long as you ignore stuff like operating expenses..

That’s the definition of gross profit. Within operating expenses, advertising is close to a cost of profits in a way that R&D isn’t.

It’s why we use multiple metrics to evaluate a business, but it’s clear that Uber has large positive gross margins.

When it comes down to it. The only thing that makes a company viable is whether they are making more money than they are spending.

Ignoring all other expenses and saying that a company is a good business is ignoring reality.

I’m not just choosing a method that makes Uber look bad. They are not profitable or successful based on a legal GAAP definition of profitable.

If we just cherry pick numbers, we might as well think that WeWork’s made up metric of “community adjusted EBITDA” is valid.

https://news.crunchbase.com/news/wework-details-run-rate-rev...

Selling a $20 bill for $18 is unsustainable. Selling a $20 bill for $40 and having $15 of advertising expenses and $15 of R&D expense might be sustainable. I think Uber is comically overvalued here, but still is a viable business which is profitable in its core operation.

Marginal profit, rather. Negative marginal costs would be pretty sweet.

In the 1997, Amazon's proposition of "Online retailer" was also pretty far fetched. It wasn't obvious that their model was going to make them one of the largest retailers in the world.

Online retailers wasn't far-fetched at all. It wasn't obvious they were going to become the everything store and dominate the market, but it wasn't like people were perplexed by a business plan of selling books online and sending them to consumers.

If people are perplexed by uber today it's because the unit economics look horrible, and it doesn't seem like they will improve without a major technological advance.

Edit: TBF, I was curious so I checked out AMZN's first year of trading: https://finance.yahoo.com/quote/AMZN/history?period1=8528832...

They dropped 20% on day one. I don't think that reflects investor skepticism re: shopping online, but skepticism re: the myriad risks they faced as one of many money losing online retailers.

Even with a major technical advance it's not obvious that they'll have a moat to defend their margins. All of the ride sharing platforms might just end up competing to the death on price without anything else to differentiate on, and in that future I'd imagine the person with the cheapest supply chain will win, and I don't see why that would be Uber.

It wasn't farfetched, everyone had the same idea, there were dozens of online retailers that IPO'd in those years. Amazon was just better managed so it was one of the few that survived the dotcom crash.

They also started with selling media, which is the perfect industry to get people comfortable with shopping online as quality is nearly assured.

Right. At the time, I thought Sears would dominate that business. They had the big-catalog fulfillment thing down, and had for a century. All they needed to do was take it online. But Sears gave up on general mail order in 1993, when they discontinued their huge print catalog. They thought WalMart and the malls had won.

I duno, buying stuff online seemed like the way of the future at the time IMO. When, how much and etc was just a matter of timing.

The idea of "people won't buy things they can't judge by holding it in their hands" was still strong back then. That's why Amazon was successful selling books where quality was trusted implicitly without that physical judgment being necessary.

TechCrunch did a good job looking back at Amazon's IPO and it's a good read to clarify what Amazon was when it went public (a bookseller, not general retail), how insane its growth was (revenue up about 3,000% YoY from 1996 to 1997, more revenue in the quarter before its IPO than the entire previous year), and how fast the IPO came together (12 days to S-1). Even for all that growth, revenue was still around $15M. It was a minnow but it played all of its cards about as right as it could for an IPO.

https://techcrunch.com/2017/06/28/a-look-back-at-amazons-199...

Doesn't ride sharing seem like the way of the future in your opinion?

Who's doing ride sharing? Certainly not Uber

> Uber Technologies Inc. is a transportation network company (TNC) offering services that include peer-to-peer ridesharing, ride service hailing, food delivery, and a bicycle-sharing system.

https://en.wikipedia.org/wiki/Uber

Not necessarily.

So is gig economy. Jobs will continue to decline.

My feeling though is that Amazon had a much larger moat to build, with distribution networks, warehouses, logistics etc.

With Uber, what's their moat, so that when they raise prices to become profitable users don't just move away?

Lyft/local taxi companies/public transport, all have the infrastructure to provide the service that uber provides.

Lyft has to be in business till then. Local taxi companies are more expensive than Uber and inconvenient. Public transport is barely used. Uber is providing a subsidized public service while employing a lot of people.

The moat is there but the question is one of diversification and sustenance as a public company. In the coming days, there'll be a massive internal push to reduce costs, diversify and become profitable. If the foundation of the company is strong, they'll be able to get through this period. Instead, if most of the early employees jump ship (which I strongly suspect is likely to happen), it's going to meander. For Uber's own sake, having a mature and repentant Travis back might not be a bad thing. They'll need a second wind at some point.

> Local taxi companies are more expensive than Uber and inconvenient

Uber essentially sets money on fire in order to make the rides cheaper than alternatives, but that will eventually end. I've got some bad news for you about what happens to prices when that occurs.

Of course that is the ultimate goal of Uber, and all ride sharing systems: to destroy any and all local public transit and competitors, no matter the cost, by setting obscene amounts of money on fire and then, when it's all said and done, they get to be the only name in town and price however high they want.

(Side note, but it's going to be legitimately hilarious when Uber re-introduces the concept of "buses" and tech nerds here drop their jaws in disbelief at how amazing it is.)

> Public transport is barely used.

I've got some bad news about places outside of the US (and even many places inside the US).

> Uber is providing a subsidized public service while employing a lot of people.

No they don't; they actually do not do either of those things. Uber isn't a "public service", by definition, that is, unless words simply don't mean anything anymore. It's a business designed to make money; the fact that you confuse these two proves Uber's marketing is working on you, not that it's actually true in any meaningful way.

They also don't actually "employ" any of their drivers, the largest part of their "work force", and they have argued that position in court as well in order to avoid paying benefits, etc for their drivers. And of course, their inevitable goal is to just move to autonomous cars as far as possible, meaning those "employees" (who aren't actually legally defined as such) will eventually get kicked out of the whole system, if they can get there. Of course, once that happens, the tune will go from "uber employs a lot of people, and therefore they're good" to "why did you ever expect uber would keep employing you? just get another job" over night, without a hint of self-reflection at all.

> (Side note, but it's going to be legitimately hilarious when Uber re-introduces the concept of "buses" and tech nerds here drop their jaws in disbelief at how amazing it is.)

Lyft already did: http://nymag.com/intelligencer/2017/06/lyft-reinvents-the-bu...

> Uber isn't a "public service", by definition, that is, unless words simply don't mean anything anymore. It's a business designed to make money; the fact that you confuse these two proves Uber's marketing is working on you, not that it's actually true in any meaningful way.

Is Delta Airlines "public transportation"?

Local taxis are perhaps only more expensive due to Uber burning VC cash to compete?

Public transport is barely used in the USA perhaps but that's not the only market Uber needs to compete in to succeed.

And this isn't taking into account Uber's many run-ins with local authorities, which are dragging on , costing money and have the possibility to shut them out of some markets.

From what I understand Uber's main answer to this is "autonomous taxis" but to me that's a long way from being a viable business model.

Here in Melbourne Australia, Uber has caused the government to deregulate the car hire/taxi business. So the cost of entry for car hire is identical for an Uber driver or other limo/car hire services. It's the cost of the car, the cost of the driver, and the cost of access to bookings.

For street hail, the cost is higher because the government sets regulation about the equipment (eg compulsory CCTV, meters etc).

The net result is that the cost of an Uber ride is almost identical to a street hire, identical to using one of the other apps that are around (13 cabs, Ola etc).

Uber has a name/brand advantage, but it has lost the cost advantage over the old taxi model and it has lost the app advantage as the app is easily replaceable.

Many drivers operate on more than one app and street hail cabs (the "original" taxis) operate on both.

Uber's business model for their core business is unsustainable, the margins and operating costs are identical to other operators, there is no advantage of scale.

> Public transport is barely used.

In one of Uber's largest markets, NYC, public transport is extensively used, and I assume that many price-sensitive Uber users will go back to taking the subway or bus if Uber raises its fares too much.

Andy Byford is one of the most dangerous people in Uber's world.

Luckily for them: Cuomo and De Blasio have a running bet going to see who can bugger it up more completely.

Oh lyft will be in business until then. How do you think Google is planning on selling their Waymo rides?

I would personally pay twice the rate I pay for an Uber to be honest.

Amazon was cashflow positive from the early days and raised less than $100m in its entire existence.

To be fair, AMZN was valued at $400mn at the IPO and not $80bn (only in 2011 did Amazon reach that valuation).

Amazon went public in 1997 with revenue of $16M in Q1 of that year. Its revenue was up a startling 1,800% or so YoY. Its losses were about $3M, so about 19% of revenue. Its market value at launch was about $438M, about 27x quarterly revenue.

Uber's Q4 2018 revenue was about $3B, up about 25% YoY. Its losses are a little hard to parse due to some tax shenanigans, but maybe $865M is about right (or maybe it should be worse), so 28% of revenue. Its market cap right now is around $85B, about 28x quarterly revenue.

Amazon was cash flow positive within few years (6?). Uber still isn't

Can you elaborate?

Amazon stock success has always been built on AWS.

It went from $18 to $106 in 1997-1999 and it was not due to AWS.

Amazon was a public company for almost 10 years before AWS was a product.