Assuming this is actually true, this tweet [0] captures the unusual state of Uber right now "Uber no longer has a COO, CBO, CFO, CMO or SVP of Eng and may temporarily not have a CEO. From autonomous cars...to autonomous company." And there have also been reports about the CTO being asked to leave [1].
HN has been extremely dismissive of Holder's investigation and there was (and is) good reason to be skeptical but you also can't deny what looks like real consequences and hopefully change.
2.)Their other competitive advantage is branding, but that is not a moat-like advantage, if Uber was to disappear tomorrow, there are competitors who will quickly takeover & grow, this happened when Uber left Austin.
3.) They were complacent with sexual harassment & discrimination in the company. A business/startup should never allow harassment to be a thing, this is failure at leadership 101.
Their branding and existing install base is a huge advantage.
Uber and Lyft returned to Austin last week after the Texas state legislature passed a law that overturns Austin's regulations. The local competitors have lost huge numbers of customers. Fare is shutting down, Fasten had to lower their rates, and Ride Austin saw their trip volume decrease by 55% in the first week [0]. I'd say it's pretty unlikely they will survive to the end of this year.
It is an advantage but it is not huge, it is not moat-like. They have more money to spend marketing and subsidizing rides. Again you said:
"Fasten had to lower their rates"
It is a price war, it is not truly about innovation in the space. Their software & services are not so innovative/defensive that it is hard to switch.
The argument for Uber's leadership is that they are special because they are building something that other Entrepreneurs/Leaders could not, that is not accurate if it is so easy to switch to a competitor. Not much hassle, loss of service when switching, same drivers / same cars.
> It is a price war, it is not truly about innovation in the space.
Longer term it certainly is about innovation. The next leap for Uber and its competitors, is going to be removing most the drivers from the business. That's an extremely difficult and expensive path, Uber is among the few that can afford to pursue it early. Their moat may end up being the vast data they have to leverage to compete in autonomous. The winning Uber-type company in the future is going to be the one that best utilizes the most driving/use/traffic data. The company that does that, will have dramatically greater margins (and potentially greater customer satisfaction) than any upstart competitor can manage; that'll mostly be the end of new competition in the Uber space. After the segment settles down, there will still be a rare gimmick-based company (like Cuil), they'll all fail or be acquired however. All tech spaces that produce a giant company, end with very little competition, this will be no different. There are not going to be 47 Uber clones succeeding in the US market, three or four would be pushing it.
The interesting question is how much of that is due to hard advantages:discounts, lower costs, and better technology, having access to drivers vs branding ? because if the model changes(self-driving, or shuttles) and big competitors attack, the hard advantages will look quite different.
It simply underscores the fact that ridesharing is a commodity. If the price or experience is in any way different users will happily jump ship. I don't fear monopolization of the technology too much as it's relatively easy to bootstrap one of these companies in a short amount of time (options, while most would say are and were inferior, popped up in Austin within a month after Uber and Lyft's departure). As these apps grow, I think there will be an eventual ceiling on the experience part of it (there's only so much you can improve on the app experience of getting from point a to point b before you start to face diminishing returns). Eventually like gasoline the price of the service will be the main deciding factor in the future.
This train of thought does not take into account the game-changing possibility of self-driving cars.
> If the price or experience is in any way different users will happily jump ship
And that's one of the many reasons why users will not jump ship. It'll cost billions of dollars in red ink to compete with Lyft and replicate the price & experience. It costs more to successfully compete with Uber. Which is why there aren't / haven't been tons of successful competitors to Uber in the US market.
No, you can't bootstrap a competitor to Lyft's $2 billion VC blackhole. No, it's not easy to do. No, users won't just bail on Uber to try your start-up. No, ridesharing isn't a commodity, precisely because the experiences are not all the same and never will be.
It'd be like claiming that retailing is a commodity (it's not), so therefore you can bootstrap a competitor to Walmart or Amazon. Except, you know, for the hyper scale that enables them to operate at slimmer margins than you can (your ability to compete with them at what they do declines at an accelerating rate as they increase scale), and the vast data they have on every angle of customer behavior (which you entirely lack, which negatively impacts your business in a thousand ways vs Walmart or Amazon). One of the things that protects a Walmart from being susceptible to commodity-style competition, is among other things their incredible data and national consistency (which small time operators and start-ups can never replicate; if I go to a Walmart in Texas it'll be similar to one in Virginia, I can be relatively confident in the results of my shopping trip there).
>a moat-like advantage, if Uber was to disappear tomorrow, there are competitors who will quickly takeover & grow, this happened when Uber left Austin.
What company, were it to disappear tomorrow wouldn't have competitors to take over its place? And how, from a Bayesian point of view, does P(competitors take over | company is dead) affect the chances of survival of a company?
I think the argument is that Uber has almost zero switching cost. If I wanted to replace Facebook with Google+ or switch from Xbox to PlayStation I'd have to convince my friends to do so. To switch to Lyft I just had to install the app. Most of the drivers are the same since they just keep both apps running.
That's in a fantasy premise that will never actually exist.
Back in reality, here's the switching cost: the start-up trying to take Uber's market share, has dramatically inferior data on ride timing/volume; said company has dramatically inferior ride availability in a given city (and at a national, city to city consistency level it's a joke comparison). Further down the line, the upstart is going to lag even further behind due to Uber's data wall, as we shift into autonomous.
Fantasy: it's friction free, anyone can start an Uber clone, there's no switching cost
Reality: it's extraordinarily difficult to compete with Uber, which is why so few have or can. There's a huge switching cost: Uber has all sorts of advantages over a start-up, that help Uber provide a superior service - locally, nationally, globally - over what a new company can manage. Oh yeah, and the biggest one: it's very hard to build what Uber built, it's ten times harder to do it while there's already an Uber, because you have to fight with them and their hyper scale while you're doing it (Uber didn't have to kill an Uber, now you do, good luck).
Wait there's more: and that's before we get to the fact that people are huge creatures of habit. Duck Duck Go produces excellent results, it'll never dent Google's search monopoly in a meaningful way; people do not want to switch unless they either have to, or the context goes beyond an extreme inconvenience. Both drivers and customers will tolerate a lot to not have to go through the immense (to them) hassle of switching. People grow to like their routines a lot, the things they use day to day, week to week; in fact, it's far beyond that, people are hyper resistant to change once they become settled in.
There may come a day when Uber is winning because of their data, but that day is years away. Until then, back in reality, Uber is winning by spending investor money to pay customers to use their service.
I tried DuckDuckGo and did not find the results to be excellent, so I switched back to Google. But I literally can't tell the difference between a Lyft, an Uber or a Fasten cab, it's just a sticker on the window as far as the customer is concerned. Price is the only significant discriminator.
No, availability / scale, is also a massive discriminator. That's at least as important as price in the equation of succeeding as an Uber competitor. Lyft has some scale, however that requirement keeps out other new competition in a extremely big way. It'll have cost Lyft billions of dollars just to try to stay in the game with Uber and to get to meaningful scale; no VC is throwing another $2+ billion at the Nth Uber clone (particularly when you still have to compete with an existing Lyft).
Few customers will keep track of a dozen Uber-clone services, and remember which ones have good city-by-city availability / representation. I live in SF, I'm going to Dallas, I want to have one Uber-like service that I can use in both locations without having to think about it, it just works in most or all major cities. That one issue will keep out most competition (as though the billion dollar cost of trying to dig into the market, trying to take share away from Uber & Lyft, isn't enough).
Lyft, which is still experiencing 100% growth year-over-year?
Didi, which dominates the Chinese market?
Ola, which matches Uber in India?
Grab, which dominates in Malaysia and is experiencing large growth in Southeast Asia?
Didi, Lyft, and Uber are all nearing the point where they can't dump subsidies on the market; they have to raise rates or they won't raise more money. They have to become profitable soon. When they become public companies, they won't be able to lower rates at the expense of profits without raising the ire of shareholders.
By the way, the entire European market is open to the ride sharing company who can be palatable to EU governments. Uber is failing at this; the opportunity is very much there.
Lyft is going bankrupt in my opinion. They'll be acquired by one of the far larger companies interested in the space. They have a maximum of 12 to 18 months before an acquisition is forced upon them, as it nearly was a year ago, when they failed to find a buyer at the valuation they were seeking. There's no scenario where Lyft remains a viable stand-alone competitor; they're already not a viable competitor, their last funding merely bought them one more year of flailing about, burning vast red ink, looking for a buyer.
It's obviously a different context globally, due to regulations, nationalism, et al. Didi for example will never own the US market, they're likely to end up like other Chinese tech giants, struggling to dominate internationally as they do domestically.
But how is that any different than Uber? IMO people are going to be in for a real wake-up call when these companies finally kill traditional taxi company and there is a massive rate hike. Right now everyone loves Uber because they are cheaper than the equivalent Taxi ride but that is only because they are operating a massive loss and do some shady things with the way they hire and pay drivers.
Because they have a lot more money and will remain standing as an independent entity. Prices will either rise, or Uber will remove costs via autonomous driving (they're hoping to get there before they have to hike prices, because if they get there in time, it becomes a very difficult to overcome moat and they win).
Amazon nearly went bankrupt on their hyper thin margins early on. Had the dotcom bubble popped just a bit sooner, they'd have gone under. They were bleeding red ink trying to get to scale before the easy money ran out. Uber is trying to do a similar thing, fortunately for them the asset bubble party has continued on long enough for them to raise a vast warchest of cash.
Prices likely won't go up when taxis are gone. Uber doesn't consider taxis to be a competitor. Uber is trying to compete with car ownership. Liquidity begets liquidity. This is why marketplaces like stock exchanges and Amazon are natural monopolies.
So if prices don't go up, and prices are only held artificially low by burning VC money, what happens to the company? I'm not seeing an end-game that isn't "VCs pull out" or "prices go up".
Google's research arms (in terms of actually shipping), the oil supermajors (scale is the only thing that matters, and that takes time), and probably IBM (because they don't seem to actually do anything)
It was run on hubris more than greed, and greed more than ethics. Actually it was probably run more on coffee, than ethics. And it was all wrapped up in a genuine innovation, backend and app for transportation.
I wonder if the Holder report ever sees the light of day, seeing as it's a privately held company still. If it goes public... maybe.
I'd speculate that most businesses would benefit from a good CMO. From [at times painful] experience: CMO should be a surrogate-founder level position for a quant marketer who is aware that they are not a qual marketer. Ultimately the challenge of optimising the deployment of a marketing budget in excess of $5m USD is difficult for a CEO who is operationally involved in any other area of the business, but pre-profit is an incredibly metric driven task. A good quant marketer will be able to handle numbers in a way that a brand marketer will not, but will be open to listening to arguments for qualitative marketing.
The trouble is that marketing as a discipline is full of quals pretending to be quants, and most of them are bad. Whenever I have dinner with friends who run venture-backed startups I ask how happy they are with their CMO, and there's a general acceptance that CMOs have a two year lifespan.
(I should add that I'm certain it's incredibly unforgiving being CMO in a startup where product/market and the unit economics are probably not proved. Simple things like calculating churn or LTV are made impossible. Tough gig.)
[0] https://twitter.com/hemal/status/874300172330647552
[1] https://www.recode.net/2017/5/16/15616024/uber-sexual-harass...