[veyron_head]

The writing is on the wall for Uber. Its actually the same with many funded companies these days. Raise more money so you can take more losses.

I recently read about a milk delivery startup (yeah milk delivery, go figure) which shut down. They deliver at MRP and dont charge anything for delivery. How on earth did they even plan to make money on this one or didn't they? While they were making losses, they were also raising money.

[coolvenk]

Originally Posted by veyron_head

I recently read about a milk delivery startup (yeah milk delivery, go figure) which shut down. They deliver at MRP and dont charge anything for delivery. How on earth did they even plan to make money on this one or didn't they? While they were making losses, they were also raising money.

The dairy sells milk to the retailers at less than MRP. This is how your neighborhood milkbooth can pay their rent/electricity and sell milk at MRP, while still turning a profit. In principle, it could work, if efficient enough.

[saket77]

I don't think that Uber and Ola are cheap anymore. We pay anything between 120-140 daily for a 4KM ride. That is at least Rs 30 per KM. I was in Kolkata last week after about an year or so. I took Ola/Uber everyday to my branch office. I noticed that the fares have almost doubles since last year.

What about other cities?

[laser2707]

I am not surprised at Uber's figures. All tech companies use the PE/Valuation model to scale their business. Topline or GMV & not Profit is their goal. I will not be surprised if Uber mentions growth in "Rides" as in the number of times Uber Drivers ferry passengers around as their Key Performance Metric.

For those of us who are old-school and believe that in business you aggressively go after new customers to drive topline & even more aggressively control costs so that you are left with something called the bottom line, this approach is anathema.

However, all the so-called "FANG" companies have built their valuations this way. It's the new trick in town. I watched a video of Aswath Damodaran where he describes how seductive these companies are in luring new customers. He uses the example of Amazon Prime. Once you get used to 1-day delivery, streaming Movies & Music you can't go anywhere else.

I very much relate to this. Despite owning a car my instinct is to reach for the app rather than my car keys. So the likes of Uber have ensnared me. When they want to juice revenue from me I have no choice but to succumb.

So while we may gasp at Uber's losses and wonder who is picking up the tab? Remember that soon or later this will be made good from our Uber addiction which will be hard to kick.

[Vians]

Originally Posted by srini1785

2. Nifty / Sensex : Do we need a bigger financial ponzi scheme?. Nifty is at its all time high when the country is experiencing a slow down as it is evident from all the indicators. FII's control everything and local investors fall prey to their whims.

It is general belief that price of a stock or market is based on numerous factors and not just current state of economy. A decade from now, we may not bother much about 1 year of slower growth of economy in 2019. Market is forward looking and prices may go up well before the economy recovers.

Nifty PE or simple valuation techniques don't really work so well in the long term as the future variables are constantly changing and randomness dictates price.

[AirbusCapt]

Think about it like this. Uber is a social service company. We are getting cheap taxi rides subsidized by rich fools pumping in money. Ideally the government should tax the rich and give good infrastructure to all, but never mind atleast Uber is giving a decent infrastructure to the middle class and above..lol

[The Observer]

Amongst the priority targets for any disruptive startup is to “create a new habit” amongst consumers in a market, not making a profit. Once this habit formation is done then consumers are hooked. Would you believe me if I told you that decades ago Colgate spent many $$$ in India to make brushing our teeth with a toothbrush as an habit ( away from neem tree twigs) , now in this generation do anyone of us even think twice?

Uber, Ola, Zomato, Netflix, flipkart, Furlenco etc are exactly in that business, the business of creating new consumer habits and that in a country like India needs fat coffers. So the VCs understand that very clearly. Early market leaders will then rake in the moolah until then it’s a game of who blinks first between two startup’s ( or even VCs) in the same game.

Truck loads of money from super rich folks who are tired of trying out gold, stocks, real estate, art etc are now directed at more exciting stuff - buying startup’s

[NiInJa]

Despite all the loses, its amazing how Uber (and others) are offering some of the highest packages for Software engineers in India. People who are interested in the technology side of it will be amazed to see how creative these software engineers are. I guess strong USD against Rupee also plays a big role.

Anyway, l would not worry much about Uber after metro rail comes to life in cities like Pune. I see cab rides getting reduced in terms of distance traveled and people switching to autos again. By that time, these cabs will get 'premium' once again but won't pose a big problem for end users.

[Rajeevraj]

Originally Posted by saket77

I don't think that Uber and Ola are cheap anymore. We pay anything between 120-140 daily for a 4KM ride. That is at least Rs 30 per KM. I was in Kolkata last week after about an year or so. I took Ola/Uber everyday to my branch office. I noticed that the fares have almost doubles since last year.

What about other cities?

Am of the same opinion. I have paid upwards of Rs 300 for a 4 km ride during peak times. This is in Bangalore. Rs 30 per km seems to be standard during peak hours.

But in the absense of reliable public transport, people are now hooked and dependent on uber and ola.

[naveenroy]

Originally Posted by laser2707

I watched a video of Aswath Damodaran where he describes how seductive these companies are in luring new customers. He uses the example of Amazon Prime. Once you get used to 1-day delivery, streaming Movies & Music you can't go anywhere else.

I very much relate to this. Despite owning a car my instinct is to reach for the app rather than my car keys. So the likes of Uber have ensnared me. When they want to juice revenue from me I have no choice but to succumb.

So while we may gasp at Uber's losses and wonder who is picking up the tab? Remember that soon or later this will be made good from our Uber addiction which will be hard to kick.

Totally agree with this point. I think it is also connected to the concept of self-driving cars. Most of us already reach for our Uber app when needing a car. Once self-driving cars are the norm, Uber will be there and ready.

But about the Ponzi scheme - I still think this is one of the biggest.

[pixantz]

Originally Posted by saket77

I don't think that Uber and Ola are cheap anymore. We pay anything between 120-140 daily for a 4KM ride. That is at least Rs 30 per KM. I was in Kolkata last week after about an year or so. I took Ola/Uber everyday to my branch office. I noticed that the fares have almost doubles since last year.

What about other cities?

Originally Posted by Rajeevraj

Am of the same opinion. I have paid upwards of Rs 300 for a 4 km ride during peak times. This is in Bangalore. Rs 30 per km seems to be standard during peak hours.

But in the absense of reliable public transport, people are now hooked and dependent on uber and ola.

Saket and Rajeevraj, I think you'll should look at the breakup of the fare which is shown for all rides to understand how and why you are being charged what you are being charged. Based on that cost structure, it's not a very smart move to use Uber (or any other ride hailing cab) for journeys of less than 8-10km. Cheers.

Originally Posted by laser2707

I am not surprised at Uber's figures. All tech companies use the PE/Valuation model to scale their business. Topline or GMV & not Profit is their goal. I will not be surprised if Uber mentions growth in "Rides" as in the number of times Uber Drivers ferry passengers around as their Key Performance Metric.

For those of us who are old-school and believe that in business you aggressively go after new customers to drive topline & even more aggressively control costs so that you are left with something called the bottom line, this approach is anathema.

However, all the so-called "FANG" companies have built their valuations this way. It's the new trick in town. I watched a video of Aswath Damodaran where he describes how seductive these companies are in luring new customers. He uses the example of Amazon Prime. Once you get used to 1-day delivery, streaming Movies & Music you can't go anywhere else.

I very much relate to this. Despite owning a car my instinct is to reach for the app rather than my car keys. So the likes of Uber have ensnared me. When they want to juice revenue from me I have no choice but to succumb.

So while we may gasp at Uber's losses and wonder who is picking up the tab? Remember that soon or later this will be made good from our Uber addiction which will be hard to kick.

I think India's brainiest investor Rakesh Jhunjhunwala has put up a pretty accurate perspective about how we should value Uber or similar companys. Here's what his thought are: https://www.financialexpress.com/mar...model/1077629/

[sumeet007]

Originally Posted by Rajeevraj

Am of the same opinion. I have paid upwards of Rs 300 for a 4 km ride during peak times. This is in Bangalore. Rs 30 per km seems to be standard during peak hours.

But in the absense of reliable public transport, people are now hooked and dependent on uber and ola.

Uber has become my main mode of transport for at least 4 years ever since they came to Bangalore. The benefits for customer are many and convenience obvious. At a certain phase they aggressively promoted ride shares which evidently is good for environment too.
I used to have long conversations with the Uber drivers, who were mostly local lads from surrounding towns and first time drivers. I distinctly remember the first phase when Uber to gain market share from Ola who had already got a head start splurged money like there is no tomorrow and I have seen drivers claiming to make upto 8K per day, provided they did crazy hours from 5 am to midnight completing the mandated number of rides. Riders like us got huge discounts too and got hooked leaving own cars to languish at home! Hundreds more joined the driver band wagon lured by friends who were making hay. At this stage thousands attached to traditional travel agencies and to MNC corporates, abandoned their jobs, took huge loans and started to work for Uber or Ola. With more competition , hundreds of cars added virtually every day, party had to end some day.
In a way that phase has started in last 2 years slowly but surely, leaving thousands of drivers to despair, not having been able to pay up EMIS, maintain and service their cars, ever rising fuel prices, depleting to now negligible discounts from Uber/Ola, and all of a sudden the NBFCs and banks came after them taking possession of cars as drivers even willing to sell their yellow board cars for deep discounts had few takers! There are places you can literally see hundreds of such cars taken back by debtors and rotting!
Meanwhile for reasons not very clear to me, Uber and to a large extent Ola have actively connived to discourage Share rides. There are times (quite commonly) when share ride shows more cost than Ubergo! Cant understand the logic!
As cars became expensive for riders used to low fares (lower than Autos initially) now Uber too has jumped in to autos too!
I used to caution the drivers that this is nothing but a Ponzi scheme on a global scale and make hay while the sun shines!
As others noted now you are hooked to it with no recourse! Only saving grace for long term users (not sure if occasional users get this) is the ride pass which some what subsidises surge pricing!
Just today Softbank has announced 9 billion USD in the recent one quarter loss, mainly contributed by their exposure to Uber and WeWork.

[avishar]

The quantum of money that is passing through Uber's systems is huge though. In their last quarterly report they said that gross bookings, or the money that they collected from fares (I am guessing globally) was $16.5 billion (Rs 1.17 lakh crore) for a single quarter. This is before their expenses and payments to drivers. Compared to that cash flow coming in, their EBITDA losses was $631 million or Rs 4900 crore. I am guessing they got screwed in their interest payments, but right it looks that there is a path to profitability.

They have clearly grown themselves to be a monster and is right now a clear no 1 in many global markets. There is a lot of value in that, even in the hyper-crazy world of start-up valuations. It is just that now they have to steadily turn it around to be profitable.

These platform start-ups are all about scale, that is their only moat. Uber has built itself into a successful brand and a user experience (inspite of its endless negative PR), and it is something which we cannot go back from. This sort of business did not even exist a decade back, and now there is one company that is essentially owns taxi business in maybe a 100 cities across the world.

If nothing else works, Uber might have to sell operations in some countries to local competitors or close down in other places considering it still has 70% of the US market.

There is endless money in this world. Money chases opportunities around this world whenever it feels as if there is possibility for a better return. Right now is it is billions that are going into startups across the world. But honestly it is not such vast pile as it is made out to be, especially in India. Even the biggest startups dont often raise more than $300 million in a round and that is a monster deal, usually it is 10 crores here or 50 crores there. Pales in comparison to general corporate debt or corporate cash reserves in India or anywhere else in the world.

[sumeet007]

Originally Posted by V.Narayan

Vast volumes of idle wealth - the royal family of Saudia, some oil tycoons, some dictators from Africa - they all need a place to invest. In come Soft Bank & Co. They believe that by buying out entire markets with a deep price discounting strategy, thus hooking the retail customer, destroying the local competition and one day when they are a monopoly or a duopoly they can demand the price they desire at the expense of the captive and helpless customer. Or at least such is their thinking. Technically such deep discounting with the clear aim of eliminating competition should be a restrictive trade practice that should invite Govt intervention. But In India at least as FDI is coming in the Govt chooses to look the other way. Will the customer benefit in the medium or long run - I doubt it. Watch how the Jio story unfolds - same principle.

On one day Uber needs to be appreciated for the IT backbone it built and the way idle or waiting taxi resources are used more efficiently and passengers get cabs at odd places and even for short stretches. Must give the devil his due for this. But allowing them to build a monopoly or a duopoly with Ola is not wise for Indian road transport or the passenger.

Softbank's fund raising and shuffling its investments between its various funds is a Ponzi scheme waiting to unfold but that story for another time. Softbank is spelt BERNIE MADHOFF

You are right on most points, except the competition part. What Uber created at least in India and most other cities except some like Mumbai is a product which didn't really exist. How many regular Uber users were availing taxies for daily commute in their cities, practically negligible numbers. They did break fresh ground, built a robust app which did a limited task but well, connecting nearest cabs to users looking for rides at attractive prices and deep discounts at least in first few years when the going was good. Its a lean machine with not even a call centre for the users, who can only complain or redress thru the app itself with menu driven system approach, which is frustrating many a time, as you cannot choose the right option always. As to Softbank I agree with you. In India and some other markets Soft bank seems to have invested in rival players, as they have substantial stake in Ola too!

[dark.knight]

Uber works for American way of travel only, it was never meant for India. My observation is that whatever refined, polished drivers Uber had, when they were doling out rewards and points like crazy, those people are long gone today. Even your average cars like Duster, Corolla, Innova, Sunny etc which Uber drivers drove around in, are long gone today.

Now the cost of an average ride in Bangalore (3-4 km) works out to 110-120 rupees, the tin can cars Etios/Dzire (I'm not calling them unsafe, only tin cans by the way the doors shut and NVH, horrible) are helmed by extremely boorish, illiterate drivers (again, illiterate in the road sense) and know next to nothing about customer service.

If it makes any sense, I'd urge Bangaloreans to stop using Uber or Ola as much as possible, use basic autos (without app) or buses, walking and of course, own car. Yesterday I had an UBER driver pull up beside my car and abuse me for blocking the path straight (red signal) where I was waiting to turn at the green at the extreme right. if I weren't so tired and absolutely flabbergasted by his rule breaking logic, I might've responded, but then what do these 2 bit cockroaches know? They hog literally every parking spot in airports, roads and hotels, they hog the roads and now they think they own it

Time to get these misfits off the roads, hope UBER continues to go into the red 100x. We all know SoftBank is waiting with their next 500 trillion $ handout.