Slashdot Mirror
Uber Losing $1 Billion a Year In China (thestack.com)
An anonymous reader writes: Uber CEO Travis Kalanick has revealed that the ride-sharing company is writing off $1 billion a year in order to consolidate its place in the Chinese ride-sharing app market. Kalanick said in a speech at the Vancouver Launch Academy that Uber is deeply engaged in a fight for customers in the Chinese market, and that an unnamed competitor is "buying up market share." Uber's main rival in China is Didi Kuaidi, which invested $100 million in Lyft and Ola to last year in a consolidation effort against Uber's incursion into the market — which many believe to have occurred too late into the development of ride-share schemes in China.
Indeed.
They're underpaying their workers worldwide to burn money in China? Talk about being sacrificed on the altar of capitalism.
I was just there a couple weeks ago and everyone was using Didi, and there were several conversations around how it was similar to Uber. Which no one there had heard of. Until I read this I didn't even know Uber operated in China.
Eagles may soar, but weasels don't get sucked into jet engines.
the development of ride-share schemes in China.
Isn't ride sharing where one is already going to a specific location and someone asks if they can come along, maybe picking up the cost of tolls for the ride? Or has the definition of ride sharing changed to mean directly contacting someone to have them pick you up at a specific location so you can be driven to a location where the person was not otherwise going and you pay them a fee and maybe give them a tip for their work?
At least the scheme part is right.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
Uber is an app. An app that's already written and finished. How the HELL do they burn through so much money? I know that most of the dot-coms are just robbing the dumb investors, but to lose this amount of money is truly astonishing.
I don't respond to AC's.
WTF are they spending $1 billion a year on? Unless they're buying everybody a car it's not like there's a lot of capital investment.
I just don't get it. What is it about some alternative to regular taxi service that warrants so much attention from the media and Slashdot? It's boring as shit.
Uber will have a problem in any market where it is already standard to take advantage of impoverished desperate people. They have just been surviving in North America because they found an untapped resource of desperate 'workers' who have not been taken advantage of yet due to the recent years of poor economy. We're all headed for the conditions that poorer nations are in, really.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
The problem I see with uber is there is no major deterrent for other companies to enter the market. A uber driver could easily be recruited for another ride share program. It is more like groupon than tesla.
... and start calling a taxi company a taxi company, or in most cases, pirate taxi company?
Why do you hate capitalism and love big government and regulation?
It's a lot to commit in a country where their popularity and brand won't be as "heard" as in lax media censorship-bound locations. Then again, it's a market where having 10% share is enough to break-even that billion, real easy, as soon as the ride-share thingie gains full traction (pun intended).
Uber is an app. An app that's already written and finished. How the HELL do they burn through so much money?
Uber is a company. Uber the company has an app which is also called Uber. Uber the company has marketing, sales, legal, administrative and a lot of other costs. The actual percentage of Uber's expenses from building and maintaining the app is probably something around 10-15% of their total expenses if their books are like any other software company. Most of the expenses for any software company are not in engineering. This is true for Microsoft, Oracle, and pretty much any other software company you care to name. Also Uber has to pay its drivers. If they are paying the drivers more than the revenue from providing the service it would be quite easy to lose a lot of money very quickly. They might be doing this to attract drivers to the service though I have no idea if this is actually the case.
While I have no idea if Uber is actually losing $1B in China, I can say with certainty that it is not from their software development.
Investors are nuts to support a baloon company like Uber. Uber execs know too well that it can't work like that in the long term, but they're riding the crest and to continue (keeping their huge salaries, bonuses, and, in the end, sell out, if possible), they must continue to expand, even at a cost of burning too much money. For example in Croatia they advise drivers to break the law and even pay all the fines, it seems the money is there.
...a domestic company doing the same quasi-legal activity, in a country that many describe as embodying neo-mercantilism. I don't see things ending well for Uber.
Actually I'm driving about 100 virtual cabs in Beijing and I've never been there. I have an app that hails fake rides. We have to give uber a cut but their actually handing out bonuses for lots of rides at odd hours so it's a small net profit times 100. Thanks suckers.
when they're "just an app"?
Send in Donald Trump
I will guarantee that I can lose at least $2 billion a year in China!
Rule 35 of the internet: "If it can be hacked, it will be". - Charles Stross
I simply have absolute zero sympathy here for existing cab companies.
They were the ones that allowed the cab licensing tags to become so massively expensive, they did it to themselves by paying those exorbitant fees. They are the ones letting their cabs go to shit. They are the ones providing absolutely awful service.
When (not if) Uber comes to my city, I will happily buy a brand new Tesla, and use the income I get from Uber to pay for that vehicle. Damn the cab drivers. Let them join Uber and make more than they do now with their cab companies.
You can't force me not to accept money for sharing my ride. You can't disallow me from using an App to make that easier. If I have the appropriate licensing and insurance, you prevent me from doing this either part time or full time. You also cannot then imply I'm an employee of the make of the software that allows me to share my ride. Its a completely stupid argument to say that somehow I am now an employee of a cab company that doesn't own it's own cars, doesn't control me in any way, and only writes software.
Sure, a bit. Uber's the same thing. It's designed to make maximum use of crazy people and force the others to live up to that standard or be fired.
I'll define 'crazy Uber people' not as 'danger to customers', but 'people who are bringing more value in terms of vehicle, skill and desire to please, than they are getting back in pay and benefits'. So the crazy Uber person is the one who keeps buying a new Lexus or whatever, vacuums their car three times a day and busts their ass to outperform all the other Uber drivers, so they can continue to win out over anybody else seeking to be a driver.
The key factor is that they are giving more than they get back, in the belief that they're cornering some kind of market or buying in to something important.
If you make a business that relies on people like this, you can demolish anybody else because you've worked out how to get voluntary unpaid labor, like the Amazon exec who was said to use her own money to hire subcontractors to do more. As long as there are people who are willing to do that, the market breaks and Amazon/Uber get to do what Wal-Mart did in small towns, break the back of other market participants so they can't break even or continue.
Another way to be a crazy Uber person is to put more depreciation and wear and tear on your car than you can afford to repair (or replace). It's easy to be crazy in these ways. It's externalities which are easy to overlook. These Amazon/Uber business models are designed to leverage that kind of crazy as hard as possible, and kick out everybody who's not willing to lose (one way or another) on the deal. Psychology is useful in getting people to buy into this stuff.
As they say, a cult.
mfwright@batnet.com
I did not expect this, but kudos to Chinese people for "fixing" the Uber problem. How long can they sustain such an annual loss?
That said, even in the US there are plenty of multi-billion dollar industries all pretty much based on magical unicorns (subverting existing regulation)... Such as online sporting pools, because they aren't "gambling" they are entertainment... online casinos for pretty much the same reason... probably a host of weird financial "vehicles" on Wall Street, because it is gambling, or entertainment, or whatever... All of the above perhaps because enough politicians palms have been greased... Which is pretty much the definition of corruption (essentially paying bribes to avoid having regulations apply to them).