By Don McCurdy
They did it, they did it! Uber’s IPO is now in the history books. Congratulations.
Being a huge company, way out of my league, I only have one real question, what is Uber going to change to make a net profit? Investors, those whiners that bought Uber stock, are now looking for quarterly reports and financial progress toward the lofty goal of making a profit.
It’s terrific that Uber has clobbered the taxicab industry with some cool innovation and “a take no prisoners” attitude toward regulators, but that hasn’t quite turned a buck for Uber, and, more importantly, their investors.
While obsolete, unimaginative and over regulated, the taxicab companies were generally making a profit. Now, Uber is the taxicab industry.
Their pal Lyft had the lowest close of its short big board life on the day of Uber’s IPO. It doesn’t seem that investors are overly impressed with the potential windfall profits the “shared ride” industry is attempting to present.
Uber has the same problems the taxicab industry had without the protection the local regulators used to provide the taxicab industry. Uber kicked down the regulatory door in a lot of places, veritable pioneers in that regard, but now the doors are open.
Uber has to contend with more players on the board than the comatose taxicab industry that was easily dispatched. They’re not facing the regulatory hurdles Uber knocked down for them. The “any driver” mentality that plagued the taxicab industry has simply moved to Uber’s operation.
Perhaps, autonomous vehicles will save the day, but that is at least a couple years away. I cannot even imagine the potential profit available in the scooter rental business. However, I can attest to the quality of driver you get when you fail to consider driver income when deciding how many vehicles to allow to service an area.
Will future companies emulating the Uber model have the same issues? Maybe so, but Uber has paid a dear price to blaze the trail for their future competitors.
It does appear that everybody wants to be Walmart, but nobody wants to be Nordstrom’s. Perhaps, something in between. It will be interesting to see how long, if ever, it takes for Uber to make a profit and, perhaps, someday pay a dividend.
I recently read an article lamenting the slow pace of Waymo’s growth in the suburban Phoenix area. While the author was noticeably unimpressed with Waymo’s demonstrations, it seemed to me that the idea that the car got where it was supposed to go and didn’t get run over by humans was quite an accomplishment.
I suppose the Microsoft method of putting it on the street and then working out the bugs is preferable. I would imagine that expanding the operation is based more on the lower number of driver interventions than the company’s desire.
Waymo may ONLY have a thousand customers, but they’re the only ones currently reporting collecting fares for autonomous rides. Like a lot of articles, you have to try and figure out what the author didn’t know or didn’t seem to know, like the phrase “although often monitored by human safety drivers.”
Excuse me? Often monitored? Yep, Waymo is reported to be eliminating some of its “safety drivers.” The most interesting part of the story for me was the reported comments of one of the regular users who hadn’t gotten a vehicle without a driver yet. She thought it would be “really cool” when she does.
The best quote was reported to be, “Most of the time I’m on my phone, it’s just a car taking me someplace.”
My thoughts are that Waymo’s one thousand paying customers is substantially ahead of their competition. Armed with a proven track record Waymo should have considerably less trouble breaking into other, potentially nervous, markets. Couple that with Lyft starting to offer Waymo driverless cars to their customers and the potential is astronomical.
I wouldn’t want to dis scientists, especially since my daughter in law, Shannon Miller, recently got a degree in science, but a recent study of germs in for hire vehicles seems to have skipped some considerations that might be relevant.
A recent study concluded that ride share vehicles had more germs than taxicabs and rental cars. The three ride share vehicles tested had over six million “colony forming units” per square inch. Wow, over six million. Uh, is three ride share vehicles a representative sample?
Were the vehicles in service the same amount of time for that day, month, year? How many years has the vehicle been a vehicle for hire? Was it the same make and model of vehicle? Do some models of cars tend to accumulate greater colony forming units? Do different interior materials foster different levels of germ collection or growth? Beats me, I’ll ask the family scientist. The article seems to generate more questions than answers.
I recently read a piece regarding the big strike of ride share drivers before Uber’s IPO. The author had all kinds of interesting theories on why it didn’t work including my personal favorite, a “disjointed workforce.“
First, drivers are independent contractors, not employees. Many are part time and drive to supplement their incomes. The competition for customers isn’t the other companies or the taxicab companies, it’s the drivers at your company.
Ten or fifteen percent of the drivers are going on strike? Great, that’s more business for the drivers that are available.
The Uber unlimited number of drivers idea don’t make full time driving a worthwhile endeavor except for those who can’t find better work which is part of the problem with the whole industry.
I recently read an article about the new tech millionaires fleeing California for low tax states with Texas being on the list. If they move out of California before their company’s IPO, all of the windfall they get will be state income tax free.
When your cut is five or ten million that amounts to a sizable savings. I have never understood why anyone would want to live in a state that has high taxes, it just doesn’t make sense to me.
The article quoted some studies that concluded that taxes weren’t the reason people were relocating except that none were relocating to high tax states. Taxes? No, not at all. Uh huh.
If you have any comments regarding this or any of my articles please feel free to contact me at: don@mcacres.com. – dmc
