No, that was never the strategy, no matter how many times people on HN claimed it was. Both Uber and Lyft are aiming for profitability next year with human drivers.

(Disclaimer, I work for Lyft but this has been said in public many, many times by both companies.)

One of their execs literally pitched me this very vision when I turned Uber down for an eng mgr position several years ago.

I thought it was comical that his pitch was "The reason we're going to be successful at Problem 1 (taxis) is because we're going to be successful at ridiculously-difficult Problem 2 (self-driving) which we're not close to solving". Pass.

I love it when job interview pitches fall flat like that. Many years ago, I had a job offer from IBM for a class of server I wasn't familiar with. The guy explained it to me like this: "You see, desktops these days are running Linux, and mainframes are running (IBM OS something?). We represent a class of server bigger than desktops but smaller than mainframes. It's an exciting space. The desktop class of PCs are handling bigger and bigger workloads every day, and the mainframes are getting cheaper and smaller all the time, too...." and then he sort of trailed off and we sat quietly for a few seconds, and then he started talking about the nice office.

If my guess is correct, it seems that you have missed a chance to work on relatively popular AS/400 servers ... :-)

I have no idea, but the engineer I was talking to was describing the unique challenge of working with the OS, as it was the sole system compiled in that language, and how about half of the bugs they fixed were OS bugs and the other half were compiler bugs, and I ran away from there as fast as I could. This would've been somewhere around 2005, so it could've been.

I see. Yeah, it sounds pretty scary. Well, hopefully, the job that you have accepted instead of that one has been much better.

Could you explain why are AS/400 relatively popular? I don't read much about these mainframes, and am a user of Personal Computers (macbook, thinkpad) and EC2 instances (something that runs Linux?) , so I am not sure what AS/400 servers are, but I'd love to learn more!

Well, by "relatively popular" I meant that AS/400 servers (aka AS400 or IBM iSeries or IBM System i: https://en.wikipedia.org/wiki/IBM_System_i) have been quite popular mostly only within certain industries and/or niches (e.g., banking, insurance, manufacturing, supply chain). They are still widely used there for legacy reasons, however demand for AS/400 developers (which implies proficiency in RPG language, since, as I understand, most legacy applications are written in RPG: https://en.wikipedia.org/wiki/IBM_RPG) is tiny; so, it's a good language to know to potentially expect a relatively high salary or consulting rate (hello, Delphi!), but a dead end for IT career growth. I would also venture to guess that some (many? most?) companies currently using AS/400 plan to migrate their legacy applications to the cloud.

I wouldn't want to work on the AS/400 systems, but its Technology-Independent Machine Interface (TIMI) was basically Android Runtime decades before flip phones were even a thing: ship all of your userspace binaries as bytecode, and compile that bytecode to optimized machine code for your CPU at program installation time.

That's quite fascinating. I appreciate your comment.

"Popular" was a touch sarcastic. AS/400s were most recently called the IBM system I, and are now a discontinued product. IBM still sells mainframes, and they have discontinued the AS/400.

They are most certainly not a discontinued product. We just purchased a brand new Power9 server at work. The model we purchased was just released. Everyone at work still calls it an AS400. They are bulletproof and run many large businesses today. They are also not mainframes but are a class of machines called minicomputers.

IBM Power Series is closer to the RS6000, no? Running real AIX and having a full JCL makes them a far sight better than the RPGII stuff on the AS/400. Night and day.

IBM AS/400 is not discontinued, but rather has been rebranded as IBM Power System: https://www.ibm.com/it-infrastructure/power.

As a former IBMer you missed nothing.

IBM is a terrible work place if you are technically inclined, if you are a slime ball of a manager it’s perfect for you.

IBM "Midrange", aka AS/400: https://en.wikipedia.org/wiki/IBM_System_i

They were an interesting - but dead - sideline of computing evolution. I never used one, but they had a interesting object-based (instead of file based) operating system.

A friend used one of these (the shorter models) as a coffee table -- I distinctly remember how hard it was to move the big, dense metal cube in and out of his room!

My only experience on them was interacting with some API hosted in an AS/400 via FTP protocol. Felt like I was going back to the 90s.

I guess it wasn't a real country after all.

Not to mention, a ridiculously difficult problem that can't only be solved by technical breakthroughs, but also relies on legal and social advancements in order to see widespread adoption.

Also a problem that when solved completely changes their business model (not owning cars) into a different one (owning robot cars) that’s much less profitable and they have no expertise in.

As time goes on I find more and more parallels with designers and legal/policy writers.

One just builds a specification of a technical system while the other builds a specification of a societal system.

Societal systems just have much more legacy code and inertia with very little in the way of mechanisms for in house testing at scale. There's no development server, just keeping tabs on competitors (ie other countries) to see how the change in production (ie a new law introduced) had second order effects.

Ubers not been one to shy away from legal skirmishes though.

Even so, profitable self driving is binary; either there’s a human driver in the car or there isn’t. Uber is ”bold” but not bold enough to put thousands of self-driving cars on the road illegally.

That's just not true. Way before Uber IPO'ed and started aiming at profitability next year, self-driving cars was the big thing for Uber's future.

(Disclaimer, I worked at Uber 2014-18).

I'm not saying there wasn't excitement about AVs. The specific claim I'm disputing (which I've heard over and over again over the past few years) is that either company considered AVs to be the only path to profitability. The history is a bit complicated, because before the IPOs neither company was focused on profitability as a primary goal.

I agree for Lyft but Uber pretty aggressively pushed the vision as necessary for their future when they were burning so much cash on ATG.

They pushed it as necessary for their future because the future will be self-driving and anyone without access to that tech will be out-competed. That's completely different than it being necessary to their future because their present business model cannot be made profitable.

You contradicted yourself. You said anyone without access to self driving will be out-competed but that doesn’t mean it’s necessary for them. It’s extremely necessary for them. I’d much rather take a driverless Waymo than a ride with a random Uber driver that might be driving distractedly, might get lost, etc. Not to mention the robotaxi should be cheaper at scale as they can operate 24 hours a day.

"only path" is a much stronger statement than you were reacting to, which is that it was the chosen strategy.

And nothing about this deal indicates Uber is stepping away from self driving cars.

They basically structured the deal as buying stock in the company and investing $400M.

Letting them focus on their core business while still having a large financial stake in AI cars.

The big development is that self driving cars turned out to be an extremely hard problem which didn’t match company timelines (or potentially company business models, if for example AI kits can get installed in existing cars and brands for which they become the denominate call network) and they outsourced it to one of the best companies around.

"turned out"... it's been starkly obvious since day one that true self-driving is a problem that requires general intelligence to solve. All you have to do to know that is drive a car and think about what's actually required to successfully drive from A to B in the real world.

Waymo is running self-driving cars with paying passengers and no backup drivers right now in Phoenix, and last I checked we don't have general AI yet.

https://www.reuters.com/article/waymo-autonomous-phoenix/way...

Sure, you can move the goalposts and say it's not "true" self-driving until it can handle all environments and weather conditions and whatnot, but self-driving cars are here. The question is how fast they'll go mainstream.

This doesn't prove that the technology is ready or safe. It only proves that Waymo thinks it's a worthwhile gamble. This is the same place where Uber's self-driving car killed a person with no repercussions to the company.

It's obviously ready and safe enough for Waymo to roll it out (and they've been a lot more conservative than Uber here).

As for safety, all we really need is for them to be safer than the average human driver. As evinced by the ~40,000 road deaths every year in the US, that's really a pretty low bar. I'd even argue that full autonomous is/will be less risky than halfway houses like Tesla Autopilot where neither side is really in full control, but that's another story.

That’s actually a high hurdle to clear. Looking at fatalities per hundreds of thousands of miles driven humans are insanely good at driving. Using the 2018 NHTSA number of 1.13 deaths per 100 million miles driven, avg speed of 60 mph, 20 predictions per second, that equates out to an autonomous system can make a fatal mistake on average about every 120 billion predictions.

You make it sound like every mis-prediction could result in death.

"Ready" or "safe" are matters of opinion, though.

It's ready/safe when governments ("the people") decide it's such.

The technology is safe:

https://storage.googleapis.com/sdc-prod/v1/safety-report/Way...

They've been very careful about it, and they have not finished work on it, so they need to keep the same standard that they had until now.

The technology is also ready for Phoenix. The company is not yet ready for the whole world (but I have no specific insight into what's holding them back).

It's totally different from Uber.

The obvious question is, why does this work in Phoenix?

Where I live, road conditions are changing all the time. There’s new construction, new roads opening, temporary (a few hours at a B time) changes in lanes where you have to drive against the normal direction of traffic.

You can call it moving goal posts, but to deploy them generally, they either have to have general intelligence, or you need to input construction schedules, so that it won’t take certain roads during certain times. And then what? You can’t order a ride to certain locations?

Waymo has been dealing with construction since day one. If the road is entirely blocked, Google Maps/Waze is already capable of changing routes on the fly.

There will always be corner cases that automation can't deal with, but Waymo will have some human troubleshooters around for that. So do us humans, for that matter: when a car breaks down, most people call the mechanic instead of applying their own general intelligence to fixing it.

What’s the mechanism?

Eg A road is accessible from 5am to 8pm. Outside those times traffic conditions change. Humans setup cones and control the flow of traffic. 2 lanes becomes 1 lane for all traffic. And traffic is managed so that depending on what direction you’re going, your driving against the normal flow of traffic.

This is a real scenario in a moderately busy area. Times may be wrong. The road is not blocked. But you have to take direction from a person. In fact this sort of temporary traffic change is fairly common especially due to road works.

That's not moving the goalposts, those are the goalposts. Anyone can make a car that loops round a racetrack by itself, on a good day (well, not anyone, but it's relatively straightforward). The challenge is making it robust against "the real world".

Something something "self-driving-complete"...

Not human-level AI, though. Plenty of animals do fine with challenging navigational problems. Birds fly through forests, catch or evade other birds, cross continents, etc.

What am I even reading. "Nothing indicates Uber is stepping away from self driving cars". Yeah right.

Prior to this deal, Uber had a couple of billion (at the value of this deal) in a self driving car company named ATG. After this deal, they have a couple of billion in a self driving car company named Aurora.

That might not be their internal strategy, but that's pretty much the investment thesis of every Uber bull buying their stock at $100 billion market cap.

I actually poked into this a bit out of curiosity. Without doing deeper research than I have any interest in, indeed Kalanick never seems to have publicly said anything like "We are so f'ed without self-driving" (which would be a truly idiotic thing to do) and even made some references to the length of the transition. But he also made reference to things like Uber's growth being limited until Uber was cheaper than owning a car and a ton of pubs seem to have "independently" reached the opinion that this was necessary. And I also don't see a lot of fervent denials from Uber in this regard.

"If we are not tied for first, then the person who is in first, or the entity that's in first, then rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber's, then Uber is no longer a thing," Kalanick said." - https://www.businessinsider.com/travis-kalanick-interview-on...

>And I also don't see a lot of fervent denials from Uber in this regard.

Why would there be? If it's helping their stock price or even neutral to it then why deny it and risk it going down?

It seems like a narrow path to try to navigate. When a reporter prefaces a question with "Next year when you've perfected your transform-manure-into-gold machine..." it seems executives either quash that nonsense, run away screaming "I can't hear you!", or make themselves liable when the TMIG machine doesn't ever work.

Does profitability equate to paying back all the VC money burned getting to this point? They were losing billions every quarter for a long time. I haven't looked at their quarterlies in a while though but Id be surprised if they were remotely right-side up.

No, because the VC money is equity rather than debt. Profitability doesn't include "make sure the owners get some cash." It just means you made more money than you spent this quarter.

Investment rounds aren't loans, they're... Investments. You're selling them a stake in the company, not borrowing money. I'm sure there are exceptions but that's generally how it works.

No, it means a profitable quarter.

It may not be the strategy, but it is definitely the only reasonable path to profitability where the drivers will make at least a reasonable income and the cost of a ride is competitive with a cab.

Either ways, next year is pretty close. Perhaps I'd be proven wrong.

Only because they have burned so much VC. Both Uber and Bolt charge like normal taxi companies in Stockholm and can therefore afford to pay their drivers at the same time as making a profit. And as far as I know Bolt is basically already profitable, they just copied Uber's business but reduced the administration costs and did not blow a ton of cash on self driving cars. Having their HQ in Tallinn rather than SF also helps.

There is definitely a market for a modern taxi company, but it won't be as cheap as Uber is in the US. And Uber has too large overhead.

Hard to pay your execs and engineers insanely bloated Tech salaries on Taxi profit margins. It's a bubble ready to pop.The guy saying they will profitable in the next year is delusional.

"The guy" - the CEOs of both companies? You're essentially stating that the CEOs of Uber any Lyft are lying to their investors, which is a crime. That's a serious accusation and some actual evidence is needed.

No, he's stating the CEO is delusional. It's not a crime if you honestly believe what you're saying.

(Oversimplification, of course. I'm fully aware of corporate obligations around market disclosure, profit forecasts, etc).

This is hilarious, honestly. Who was arrested at Helios Matheson with the joke that was MoviePass?

What strategies do rideshare companies plan to employ to reach profitability: increasing prices, cutting costs, etc? And what will the implications be for riders and employees alike.

My assumption would be both. Taxi companies have way lower cost structures. They certainly don't employ lots of software engineers. And there's no reason to think that Uber should be significantly cheaper than a taxi ride. Scale buys you something but probably not a lot. (And scale has some costs too.)

You underestimate what you can extract from making the market larger and more efficient, which taxis could never do. Why don't people barter instead of paying huge sums to Wall Street to intermediate?

Bartering in this problem space is hard. Let me call up 5 of my closest friends in my city, to see if they want to leave their home, drive me from Point A to Point B, then go home, right now.

In part, because, on an individual basis, Wall Street's skim is tiny. It's only big in aggregate.

"If we are not tied for first, then the person who is in first, or the entity that's in first, then rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber's, then Uber is no longer a thing," Kalanick said." - https://www.businessinsider.com/travis-kalanick-interview-on...

Profitability maybe, but the obscene valuation was based on Uber having a self driving fleet one day, at least to my understanding. Many businesses are profitable and even much more profitable than what Uber might be in a few years time and yet they have never come close to any valuation such as Uber has seen.

Why are you repeating this falsehood? What facts do you have to present that Ubers current valuation is majorly driven by a selfdriving future?

What is the strategy to get to profitability then? Have only heard of the self driving route before.

Can you point to some sources to back that up? I have always been under the impression that self driving was the end goal that they were all working towards.

Everytime someone mentioned that idea I thought it made no sense. The Uber strategy is to delegate all the cost to a 3rd party (the driver and their own car). The idea of spending billions of dollar on hundreds of thousands of cars around the world and maintain them hardly seemed like what they were setup to do. They wanted the exact opposite. Externalize all cost, labor, material, etc. and just develop a software that generates them a % of profit. This would be an entire 180° in terms of business strategy.

So if they invent the first reasonable self-driving car, they can sell those and provide service for them. Ideally TCO would be lower than a human driven car so basically a third party could buy and manage the fleet for Uber and Lyft. Neither company would need to own the cars to reap the benefits of making them.

They could, but that’s a completely different business to building middleware to facilitate unlicensed taxis. It’s like saying “AirB&B will help people rent their spare rooms out until they launch their own hotel chain.”

How do drivers make any money while keeping the overall price less than a taxi? Factor in fuel and maintenance, and drivers are already getting pretty screwed on these platforms.

They don't. Which is why Ubers cost only slightly less than normal taxis in markets like Sweden where Uber has to follow the same regulations as their competitors. The low prices they have in markets like the US are not sustainable.

Prop 22 voters think otherwise... but yeah they're delusional.

Absent self-driving--which was always a pipe dream--the overall price will not be materially lower than a taxi. Perhaps people will prefer the service for other reasons. Perhaps they'll go back to transporting themselves however they were pre-Uber.

Taxi medallions used to cost hundreds of thousands (SF) to more than half a million (NYC). Nowadays they still cost tens of thousands in SF and hundreds of thousands in some areas like NYC.

Also, more efficient use of time from app-based routing.

I'm not convinced. Do you have evidence that "more efficient use of time from app-based routing" actually results in drivers making more money?

"app-based routing" is a mirage anyway. When you request an Uber ride, your request is advertised to drivers in the area, who can choose to accept it. There is no routing happening.

Sure, the driver then drives a route given to them to by the app, but so does everybody else, just in that case, the app is Google Maps.

AFAIK, the only routing cleverness is that the end of a shift, drivers can request to only take passengers who are heading in the direction of their own home. That's useful.

Medallions alone should be enough to make a difference. The efficient use of time probably has much less of an effect on earnings, if true.

I'm also not terribly convinced of this. Medallions are a one-time fixed cost. This should have little to nothing to do with long term prices, especially given that the prices of medallions have gone down significantly.

That seems disingenuous and intended to save face. I liken this to the Soviets claiming they never lost the space race after the US moon landing because "landing humans was never the goal" and they denied ever building a lunar lander. I think the kids these days call it gaslighting. Statements from key executives at uber like Meyhofer who said “The ultimate north star for the company is Level 4 autonomy” are proof of this intent.

Yeah the more I look the more I find proof that self-driving cars has been seen as an existential threat by Uber/Lyft for years and years with Travis Kalanick (ex-CEO) saying it repeatedly. Here's an interview from him on exactly this topic. https://www.businessinsider.com/travis-kalanick-interview-on...

If there are competitors (e.g., Waymo) that have self-driving that's significantly cheaper, then Uber and Lyft can't compete. So it's a huge potential threat to their businesses. And if self-driving makes rides much cheaper, that can significantly boost the size of the market. But that does not imply that they can't be successful and profitable businesses in a world without self-driving cars, which is the frequently-made claim in the top post.

I agree that saying self-driving is a threat is very different from saying that your business will fail unless you create self-driving cars.

Also, saying that Uber/Lyft need to create their own self-driving cars is ignoring the fact that other companies that create self-driving cars are, and will likely continue to offer rides in their cars through existing ride sharing companies.

> other companies that create self-driving cars are, and will likely continue to offer rides in their cars through existing ride sharing companies

That remains to be seen. If a company is able to create self driving cars, what's the value add provided by Uber and Lyft? Having a middleman TNC platform skim some profits doesn't really make sense from that perspective.

Compared to achieving reliable and cost effective autonomy at scale, building a ride sharing app is trivial, and customers have indicated that they're willing to install another app if the fares are cheaper. The complexity of getting a self driving service is high enough that there probably will be only a few entrants in the market, unlike the current value add provided by the TNC apps that match customers with a large pool of individual providers.

Uber seems to be expanding into food delivery and other logistics, where trust is still valuable so a middleman can be useful, but it’s hard to say how well it’ll work.

Realistically though it's about as much of an actual threat as teleporters are.

Can't speak for Lyft leadership, but I think Travis and Dara have very different perspectives on self driving.

As for the existential threat narrative, consider that there are many places that sell cheaper/better food than McDonalds, and yet, McD is everywhere. I don't think technical merit alone is going to win the rideshare pie.

Cheaper than a $0.39 hamburger? Where?

What currency are you using? In USD, the cheapest item on the menu that I can find (apple slices) goes for $0.57. A big mac combo goes for around $10, while a subway footlong goes for about $7.

$10 is also a pretty wrong number for "hamburger". Looking at this ordering form, I see $2.49 for a mcdouble and only $1.39 for a basic hamburger. And the mcchicken is $1.19

(Though wow, mcdouble was half that 2-3 years ago. Big mac hasn't really changed.)

I do recall an article from a few years ago about how the basic McD burger was arguably the most bang-for-your-buck in terms of calories per cent, and I agree it's hard to beat (though not impossible, e.g. the costco hotdog combo costs a measly $1.50 and packs ~3-4 times more calories)

But yeah, a lot of the McD classics and new offerings that one might purchase for a "normal" meal are actually quite expensive nowadays. On a side note (pun intended), I suspect that there are some pricing structure shenanigans going on, because fries are clearly marked up way more than burgers.

Well, if they were only afraid of them, rather than needing them, they're in decent shape, 'cause the last few years have kind of given the impression that self-driving cars aren't coming any time soon. They've been "90% here" for at least ten years but that's not enough.

Or maybe they're just playing both sides. That way they always come out on top.

Within Uber, it was categorized as a "big bet", as opposed to a core vertical, like ride share/eats. Having now shed new mobility, elevate and now SDV, It looks like Dara is really set on focusing on the core verticals now.

Big bets and promises for the future was all they had. Trying to be a solid profitable business in a dying industry isn't going to work out well for them.

Wait, how is ride-sharing / cabs a dying industry? People are always going to need to get from point A to point B, and if anything, the younger generations are less likely to own cars. Public infrastructure is never going to fill the gap except in certain urban areas.

>the younger generations are less likely to own cars

There's nothing inherent about this. If the promised alternatives to owning cars turn out to be BS, the younger generations will have to own cars whether they want to or not.

A much more durable change is the shift in social norms towards intoxicated driving being unacceptable under any circumstances. Just 40 years ago the DUI threshold was .15 and even then the penalty was light. Today it's .08 with talk of lowering it, penalties have been ramped up multiple times, and nobody sees DUI enforcement as a technicality.

That's a pretty big opportunity for any firm that gets you home from the club at 3 AM.

I don't disagree with that but is the shift in drunk driving norms really enough to shift from owning cars to taking taxis? In my experience, most people don't primarily use cars to go out drinking--including among those in a position to just take Ubers instead.

Personally, I think drunk driving isn't that much of a factor: drinking is a relatively short term kind of planned activity. What I think has a much bigger impact is long term stuff, like the desire to live downtown and/or housing prices (with downtown condos and midtown townhouses being more affordable than big detached homes in burbs)

I know families that are rather against the idea of owning a car and arrange housing around that consideration. They prefer to rely more heavily on public transit and the occasional car rental or cab/rideshare.

I wouldn't say that, no. Other factors might reduce car ownership, of course, but I meant only to address the larger question of Uber's potential market. Another major use case is the airport, because airport parking has become egregiously expensive and cost-cutting favors rideshare infrastructure over parking (which is a good thing land-use-wise). There's also "transit in taxi out" trips because it's cold at night and people are tired and don't want to walk/wait/transfer, which grow as public transit is expanded, another trend that is likely to continue because the reduction in air pollution from electrification makes urban areas more desirable, as well as various secular trends pointing towards urbanization that may or may not continue (some recently reversed by the covid-19 pandemic) -- environmentalism in particular seems like it won't go away.

In any case, plenty of people are enthusiastic about a world where owning cars is less popular, so it's a common refrain.

Sometimes I wonder if people talking about this "inevitable unprofitability" have used ridesharing recently. At least around SF, prices were steadily going up for the past couple of years.

The younger generation is always more likely to go to cities. As they get older they move out. And buy cars.

Are they willing to pay the actual cost, though?

I know that where I live I've started blanching at how much it actually costs to take an Uber, which is now approaching what taxis cost.

cost is fine if you don't take one every day, which in a remote work world is not at all a stretch

but that would effectively limit Uber to a smaller, pre-Uber sized market. Which would probably be news to investors.

> the younger generations are less likely to own cars. Public infrastructure is never going to fill the gap except in certain urban areas.

And Uber/Lyft work reliably only in urban areas. "Younger generations" will inevitably grow older and may want to move out of tiny, expensive city apartments to larger accomodations outside the city. Guess what. Public infrastructure fills the gap much better than Uber/LyfBolt do (at least in Europe).

Elevate is also gone ? Didnt read about that

Still rumours

https://www.theverge.com/2020/12/2/22086597/uber-sells-flyin...

Oh, I stand corrected

Kalanick said that self-driving was “existential” to the company.

But in context, he didn’t mean Uber needed self-driving to exist. He meant Uber can’t be left out if self-driving becomes a reality.

In that sense, the sale seems pessimistic. They no longer see self-driving on the horizon, or they aren’t on track to deliver the technology themselves.

They’ll have a major share in Aurora after the fact. They just are focusing on their core competencies, I assume. To compete in the self driving space, you need to have 1) a crap ton of money and 2) the patience to wait 10 years before you see any ROI. Uber is not structured to do that this late in the game. They’ll probably get a preferred partnership for licensing the tech once it rolls out, if Uber still exists in 10 years.

Do they get ROI on rides or Eats? I was under the impression they were still pretty substantially subsidizing prices on those, though maybe that's just out of date information.

It's not about subsidies as a business model so much as a war of capital attrition with weaker competitors, which is necessarily not endless.

Current competitors may go out of business. If there really is a niche, however, seeing off current competitors won't be the end of it. There's always someone else, who may not have burned so much VC.

The other option is that there will never be a sustainable business here.

If so then why would VC's fund new competitors? The answer is they would not. VC's may throw their free money at new unquantifiable opportunities, but for this niche the financials will have become well known. In other words there would be less risk premium.

VCs are looking for firms who can build "moats", i.e. commercial positions within markets that have built-in advantages against potential competitors. Sometimes this is some technological feat that is difficult to match, like Uber have been promising. Other times this is unethical business practices, like paying employees less than minimum wage. Such moats may not last very long, but the concept appeals to VCs.

The phrase "war of capital attrition", however, will send capable VCs running for the exits. If they liked that sort of thing they would have been bankers.

That claim was infinitely repeated on internet message boards but never acknowledged by the company or taken seriously in the industry or by investors. That entire division was an expensive moonshot. Uber's core strategy and valuation have always been rooted in being a taxi company with human drivers.

So whats the big plan to lower overhead on rides? I looked up their last quarter and it was billions lost yet again. This doesn't seem sustainable, just shoveling money into the furnace quarter after quarter like that.

The big plan is a war of attrition to capture a monopoly/duopoly status for taxi services within a given country. Acquire all competing taxi companies or price them out of business.Once that is done, raise prices. If competition arises, lower prices again until they go away. In some senses, its just like Amazon.

How long can they afford to fight it? It's not hard to spool up a rideshare competitor per say. When they pulled out of Austin several other rideshare companies popped up in their wake. If prices got exorbitantly high for the average user, I wouldn't be surprised if a company came in undercutting uber.

Agreed - its "an" investment strategy, not necessarily the best one. And if you have Softbank's backing - maybe a valid one? Kinda works/worked for Walmart/Amazon.

Selling or shutting underperforming divisions (like ATG, air taxi), reduced competition in the space as players consolidate, higher prices, cutting expansion/marketing costs.

They can sustain it as long as investors are willing to shovel money into Uber... and no longer.

Uber's true mission is a charitable effort by SV capitalists to subsidize the cost of taxi rides. Of course they're not meant to make money. How silly to think so!

It’s actually charity by SoftBank and Saudi Arabia at this point, but yes, this is what it actually seems to be.

Amazon is also an investor charity to give us all one day shipping since the investors show no sign of wanting profit margins above 1%.

Uber don't need to invent self-driving themselves so long as whoever does invent self-driving cars sells them on the free market. Uber has a strong brand and loyal customers, and they could make out like bandits even if they have to buy the tech from someone else.

Their real problem is if some other company perfects self-driving cars and doesn't sell them. Perhaps Uber have decided that's unlikely, either because no one will or because a company that isn't looking at ride-sharing will.

Uber has a strong network effect, but I don't think there's actually much brand loyalty.

I'm not sure how strong a network effect other than in a local area. I'd be pretty sure that (in normal times) their primary market isn't business travelers flitting from SF to NYC to London but residents of $CITY using Uber Pool for commuting or Uber to go out with friends on a night out to a bar.

Contrary to that, local profitable markets like Manhattan have had significant entrants eat away at Uber’s market share with companies like Juno scooping up the best customers and drivers. The same thing happened in many cities in the early 20th century before streetcar operators managed to get jitney cabs (the unlicensed pool taxis of their day) banned because too many teens would borrow the family car after school and drive in front of streetcars on profitable lines and scoop riders for nickels instead of dimes.

Uber and Lyft have a de facto duopoly amongst those hopping off planes because it’s hard to know that there are any other local options available.

And for that matter, I often take a cab from the airport because it's not my money and I can't be bothered to mess around. Uber and Lyft are often more trouble than they're worth.

But if there's a local alternative known to be better for going out with their friends, you can be sure that a person used to going out regularly with their friends will know what it is.

Perhaps negative brand loyalty, to be honest.

It seems really premature to make any declarations about brand loyalty when Uber is still majorly subsidizing consumer prices with a VC cash bonfire.

The big scare at the time Uber started it's own unit was that "once Waymo or another competitor has self driving cars, it will be easy to offer a ride share network and compete with Uber"

that sounds unlikely. self-driving isn't like a social network, the ones end up building it would've invested tens of billions - so basically Amazon or Google. I find it hard to believe they would want to sell that technology to Uber. If anything, Google has large investment in Lyft, more likely they will acquire Lyft to deploy their own driving fleet all integrated under G Suite.

You don't need to own the tech to use it, anymore than they would need to be manufacturing the cars they're using.

OR: they finally accepted the fact that self-driving cars aren't realistically happening anytime soon, at least to the level needed to entirely eliminate the driver cost.

That, and they probably realize they have enough market share at this point to be able to (long-term) raise prices instead of lower expenses.

Even if that were the case, selling your self-driving car unit might still make sense.

If you assume that self-driving cars eventually become a commodity, Uber and Lyft could just buy them rather than develop the tech in-house. The key strategic bit of the landscape to own would be the app that everyone uses to book them.

No matter who makes the driverless cars, they will still need a network to run those cars on. I think Uber/Lyft area better off allowing thirdparty self-driving cars on their network. Waymo on other hand is trying to build its own network, but that is going to be extremely expensive proposition.

IMHO being the only one with self-driving car technology would be a much better moat than having 'a network'

London has Uber, Bolt, Kapten, Ola, Viavan, Hailo, Wheely, Xoox and that's just a single city - so the ride-hailing-app tech isn't a moat. A self-driving-car business doesn't need any drivers on board, so driver recruitment isn't a moat. And Google already have Google Maps on a big fraction of phones, so app installation is scarcely a moat.

Of course Google will have plenty of opportunities to shoot themselves in the feet, so it's certainly not a done deal.

I always considered that a dubious business model. It's outside of Uber's core competence, and it won't lead to superprofits/a moat for very long, since they'll have competitors. Sure, it lowers their costs, but once a second (third, etc) competitor has SDCs, Uber will be able to charge a lot less as well, because competitors will have lower costs too. It's not the golden ticket to profitability.

I've been long hoping, for their own sake, that they'd sell off the SDC division, since it was hurting their balance sheet anyway. Glad they've seen the light.

It doesn't have to be developed by them. Just like the don't make their own cars. If some car company makes a reliable level-5 car Uber can just offer a deal with owners of those cars.

Was there anyone who actually still believed that story? I mean, it should have been pretty obvious for at least a few years but did someone still believe it? (Less snarkily, they do still have a financial interest but yeah.)

Maybe they've decided that Uber's future lies in letting someone else solve that hard problem of self-driving cars and Uber figuring out how to line up the capital to lease self-driving cars from that winner.

Clearly not since they're still sitting at a $95B market cap after this news. Or perhaps just nobody else has realized this, so why don't you short the stock?

When you look at the numbers, you actually see how Uber actually paid Aurora to take ATG.

The headline is a little decieving. Though Uber sold their self-driving division to Aurora, Uber is taking a stake in the company so it seems like a partnership.