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The autonomous vehicle narrative has historically gone something like this: remove the labor component of rides (i.e. drivers) and rides will become significantly cheaper. Then, people won't need or want to own a car anymore. They'll just Uber or Waymo or whatever around.
But as Waymo provides in and around 250,000 paid trips per week in the 4 cities in which it operates, the opposite has proven to be true — at least so far. A recent report by Obi (an app that aggregates real-time ride pricing) has just revealed the following for San Francisco during the period of March 25 to April 25, 2025:
In other words, Waymo is more expensive than Uber and Lyft, especially for shorter distances. Is this right? Well, Waymo may not have to pay drivers, but they do own and operate their own cars. Uber and Lyft do not. This represents a very different cost structure.
They also have a more inelastic supply base, meaning they have cars whether demand is high or not. Whereas in the case of Uber and Lyft, supply can be variable. That's the idea behind "surge pricing" — to induce more drivers onto the road when it's needed the most.
Fewer Waymos also means that wait times are going to be longer and that their cars are probably spending more time driving around without paying passengers. That's a cost.
Whatever the reasons, lots of people seem to be willing to pay the premium. Part of this almost certainly has to do with the novelty of riding in an autonomous vehicle. I'd pay more if they were in Toronto today. But another reason seems to be that people really appreciate being in the car alone. I guess it's akin to driving your own car.
It, of course, remains to be seen how Waymo's cost structure and pricing model will evolve over time, but I have no doubt that privacy will remain a feature people are willing to pay something for. In the modern world, we are all going to have at least two places of solitude: bathrooms and Waymos.
Cover photo by gibblesmash asdf on Unsplash
On Monday it was reported -- by the Wall Street Journal, Tech Crunch, and others -- that Uber will be laying off another 3,000 employees and closing 45 of its offices around the world. Here is a quote from TechCrunch:
“I knew that I had to make a hard decision, not because we are a public company, or to protect or stock price, or to please our Board or investors,” Uber CEO Dara Khosrowshahi wrote to employees today in a memo, viewed by TechCrunch. “I had to make this decision because our very future as an essential service for the cities of the world — our being there for millions of people and businesses who rely on us — demands it. We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating.”
According to this SEC filing, the company expects to pay approximately $110 million to $140 million in severance and other termination benefits, and somewhere between $65 million to $80 million in costs related to closing its offices.
All of this is, of course, being driven by a steep decline in ride bookings, which is about 70% of the company's revenue. Ride bookings were down 80% in April from a year earlier. For Q1 2020, they were down about 5% compared to 2019.
The autonomous vehicle narrative has historically gone something like this: remove the labor component of rides (i.e. drivers) and rides will become significantly cheaper. Then, people won't need or want to own a car anymore. They'll just Uber or Waymo or whatever around.
But as Waymo provides in and around 250,000 paid trips per week in the 4 cities in which it operates, the opposite has proven to be true — at least so far. A recent report by Obi (an app that aggregates real-time ride pricing) has just revealed the following for San Francisco during the period of March 25 to April 25, 2025:
In other words, Waymo is more expensive than Uber and Lyft, especially for shorter distances. Is this right? Well, Waymo may not have to pay drivers, but they do own and operate their own cars. Uber and Lyft do not. This represents a very different cost structure.
They also have a more inelastic supply base, meaning they have cars whether demand is high or not. Whereas in the case of Uber and Lyft, supply can be variable. That's the idea behind "surge pricing" — to induce more drivers onto the road when it's needed the most.
Fewer Waymos also means that wait times are going to be longer and that their cars are probably spending more time driving around without paying passengers. That's a cost.
Whatever the reasons, lots of people seem to be willing to pay the premium. Part of this almost certainly has to do with the novelty of riding in an autonomous vehicle. I'd pay more if they were in Toronto today. But another reason seems to be that people really appreciate being in the car alone. I guess it's akin to driving your own car.
It, of course, remains to be seen how Waymo's cost structure and pricing model will evolve over time, but I have no doubt that privacy will remain a feature people are willing to pay something for. In the modern world, we are all going to have at least two places of solitude: bathrooms and Waymos.
Cover photo by gibblesmash asdf on Unsplash
On Monday it was reported -- by the Wall Street Journal, Tech Crunch, and others -- that Uber will be laying off another 3,000 employees and closing 45 of its offices around the world. Here is a quote from TechCrunch:
“I knew that I had to make a hard decision, not because we are a public company, or to protect or stock price, or to please our Board or investors,” Uber CEO Dara Khosrowshahi wrote to employees today in a memo, viewed by TechCrunch. “I had to make this decision because our very future as an essential service for the cities of the world — our being there for millions of people and businesses who rely on us — demands it. We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating.”
According to this SEC filing, the company expects to pay approximately $110 million to $140 million in severance and other termination benefits, and somewhere between $65 million to $80 million in costs related to closing its offices.
All of this is, of course, being driven by a steep decline in ride bookings, which is about 70% of the company's revenue. Ride bookings were down 80% in April from a year earlier. For Q1 2020, they were down about 5% compared to 2019.
Back in 2006, Paul Graham penned an essay about how to be Silicon Valley. Since then, it seems like every city on the planet has tried to replicate the successes of the Valley. At the time, his argument was pretty simple. Geography used to be destiny when it came to cities. New York City, for example, is arguably what it is today because of its geography and its deep harbor, which created a natural competitive advantage compared to other east coast cities such as Boston and Philadelphia. But this, he argues, has become far less relevant. Now, you can create a great city pretty much anywhere. So what are the necessary ingredients?
Paul argued that you only really need two kinds of people to create a technology hub: rich people and nerds. You need people creating new things and you need rich people to fund those new ideas. That's it. So in theory, if you could just dump a bunch of these kinds of people in one place -- Nunavut? -- you'd perhaps get unicorns coming out the other end. He goes on to say that Miami is a perfect example of a city that has lots of the former, but very few of the latter. It has lots of rich people, but, in his words, it's not the kind of place that nerds like. So it is/was not a good startup city. (I'm a nerd and I like Miami.)
But the year is now 2021 and a global pandemic seems to be helping to change this dynamic. Every tech entrepreneur and/or investor now seems to want to move to either Austin or Miami. To that end, SoftBank recently announced that it has earmarked $100 million for startups that are based in Miami or that plan to be based in Miami in the near future. It's perhaps a good testament to the momentum that seems to be developing around the startup scene in the city, which is something that their mayor has been incredibly vocal about.
But here's something to consider. Was Paul right about the two requisite ingredients for a successful startup hub? And if so, does Miami now have enough nerds? Maybe this recent influx of people was just what it was missing.
Photo by Cody Board on Unsplash
Uber Eats has seen a spike in demand with people staying at home. Bookings were up 52% in Q1 2020 from a year earlier. The problem is that, unlike its rides business, their food delivery business is far from profitable. That's the point of the possible merger with Grubhub.
The company has said that they are seeing some signs of a recovery in markets that have begun to reopen. But it's too early to predict what that will really look like. The hole is pretty deep.
Pre-COVID, ride hailing demand tended to surge on the weekends as people went out to restaurants, bars, and clubs. So presumably those activities will need to return for its revenue to return. But I also think we could see a spike because of people being nervous to take public transit.
Either way, the company is making some really tough decisions right now. But it seems to be doing what it needs to do in order to get to the other side of this and become a self-sustaining and profitable business. Full disclosure: I own some $UBER.
Chart: Uber Q1 2020 results
Back in 2006, Paul Graham penned an essay about how to be Silicon Valley. Since then, it seems like every city on the planet has tried to replicate the successes of the Valley. At the time, his argument was pretty simple. Geography used to be destiny when it came to cities. New York City, for example, is arguably what it is today because of its geography and its deep harbor, which created a natural competitive advantage compared to other east coast cities such as Boston and Philadelphia. But this, he argues, has become far less relevant. Now, you can create a great city pretty much anywhere. So what are the necessary ingredients?
Paul argued that you only really need two kinds of people to create a technology hub: rich people and nerds. You need people creating new things and you need rich people to fund those new ideas. That's it. So in theory, if you could just dump a bunch of these kinds of people in one place -- Nunavut? -- you'd perhaps get unicorns coming out the other end. He goes on to say that Miami is a perfect example of a city that has lots of the former, but very few of the latter. It has lots of rich people, but, in his words, it's not the kind of place that nerds like. So it is/was not a good startup city. (I'm a nerd and I like Miami.)
But the year is now 2021 and a global pandemic seems to be helping to change this dynamic. Every tech entrepreneur and/or investor now seems to want to move to either Austin or Miami. To that end, SoftBank recently announced that it has earmarked $100 million for startups that are based in Miami or that plan to be based in Miami in the near future. It's perhaps a good testament to the momentum that seems to be developing around the startup scene in the city, which is something that their mayor has been incredibly vocal about.
But here's something to consider. Was Paul right about the two requisite ingredients for a successful startup hub? And if so, does Miami now have enough nerds? Maybe this recent influx of people was just what it was missing.
Photo by Cody Board on Unsplash
Uber Eats has seen a spike in demand with people staying at home. Bookings were up 52% in Q1 2020 from a year earlier. The problem is that, unlike its rides business, their food delivery business is far from profitable. That's the point of the possible merger with Grubhub.
The company has said that they are seeing some signs of a recovery in markets that have begun to reopen. But it's too early to predict what that will really look like. The hole is pretty deep.
Pre-COVID, ride hailing demand tended to surge on the weekends as people went out to restaurants, bars, and clubs. So presumably those activities will need to return for its revenue to return. But I also think we could see a spike because of people being nervous to take public transit.
Either way, the company is making some really tough decisions right now. But it seems to be doing what it needs to do in order to get to the other side of this and become a self-sustaining and profitable business. Full disclosure: I own some $UBER.
Chart: Uber Q1 2020 results
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