Tag: $uber

• Young people are driving a lot less

  As a kid growing up in the suburbs, I got my driver’s license the day I turned 16. Being able to drive was a big deal. But we know that this desire to drive has been changing in profound ways. Here’s some recent stats on the percentage of licensed drivers in the US by age (taken from the WSJ):

  

  In 1983, about 46% of 16-year-olds had a driver’s license. By 2014, this number had dropped to 24.5%, which is the lowest it has been in recent years, and was probably impacted by the broader economy. As of 2017, this number was up to about 26%.

  If you’re a car company, I would imagine that these are pretty important numbers. They represent the top of the sales funnel. Most people probably like to have a driver’s license in hand before they go out and buy a car.

  Supposedly, some people in Detroit are betting that young people will still eventually buy a car. And when they do, it’ll be a nice big one like an SUV or a truck. But, the data suggests that it is not just young people who are eschewing driving.

  Here’s some data from the University of Michigan Transportation Research Institute (via NPR), looking at the proportion of licensed drivers in the US by all age categories:

  

  While the biggest drop has certainly happened among younger generations, licensing is still down for older cohorts. Based on these numbers, we don’t hit parity until somewhere around 50 to 54 years old.

  And the only cohorts where licensing has increased significantly are when people reach over 55. Over 70 is up by a huge margin — more than the drop among 16 year olds — which is probably a symptom of people living longer.

  Some of this decrease among young people can probably be attributed to delayed family formation and people living in denser urban environments, where it is more convenient to get around without a car. But I don’t think that’s all of it.

  Which suggests to me that the race to autonomy is a pretty important one to win.

  2019.04.21

• Liquidity network effect

  Uber filed its S-1 last week in anticipation of going public in May. The WSJ reported on it, here. These are always interesting documents because you get access to previously private information. Here we can see that Uber’s ride-hailing market share in the US is down to 67% (as of February 2019) from 78% two years earlier. Revenue from this business line — which is the company’s biggest — also seems to have levelled off (chart from the WSJ):

  

  The ride-hailing business today has become a commodity. A lot of people, myself included, simply check to see which service is the cheapest (usually it’s Uber vs. Lyft). So this space feels to me like a giant race to build the biggest network and get to something new, whether that be autonomous vehicles or delivery drones. Uber calls this creating a “liquidity network effect.” Here’s an excerpt from the S-1:

  We have a massive, efficient, and intelligent network consisting of tens of millions of Drivers, consumers, restaurants, shippers, carriers, and dockless e-bikes and e-scooters, as well as underlying data, technology, and shared infrastructure. Our network becomes smarter with every trip. In over 700 cities around the world, our network powers movement at the touch of a button for millions, and we hope eventually billions, of people. We have massive network scale and liquidity, with 1.5 billion Trips and an average wait time of five minutes for a rider to be picked up by a Driver in the quarter ended December 31, 2018. Every node we add to our network increases liquidity, and we intend to continue to add more Drivers, consumers, restaurants, shippers, carriers, and dockless e-bikes and e-scooters. We also hope to add autonomous vehicles, delivery drones, and vertical takeoff and landing vehicles to our network, along with other future innovations. Our strategy is to create the largest network in each market so that we can have the greatest liquidity network effect, which we believe leads to a margin advantage.

  If you’d like to download a full copy of their filing, click here.

  2019.04.14

• IPOs and home prices

  Fred Wilson made an interesting remark in his recent post about the current “IPO bonanza” that is taking place in the tech space. He is, of course, talking about the recent IPO of Lyft, the recent S-1 filings from Pinterest and others, and the expected filings from Uber, Airbnb, and so on.

  After listing the benefits of going public, he went on to say that this bonanza will surely also mean that it is going to become even more unaffordable in the Bay Area. Part of this is perhaps self-serving, since he operates a VC firm out of NYC. (Take your money and move to NYC.)

  But the data suggests that there is truth to this.

  When Twitter when public in 2013, it was estimated that it created some 1,600 millionaires. This is great for the local startup ecosystem as many of these beneficiaries could go on to found their own companies and create a whole new batch of jobs. The money gets recycled.

  But what does it do to the local housing market — especially a supply-constrained one like that of the Bay Area where it is difficult to build?

  In 2018, Barney Hartman-Glaser, Mark Thibodeau, and Jiro Yoshida penned a paper called, Cash to Spend: IPO Wealth and House Prices. In it, they looked at the impact of IPOs on local home prices in California from 1993 through to 2017.

  What they found, among other things, was a “positive and significant association between local house price changes and firms going public.” The price increases were also found to be the greatest the closer you get to the headquarters of the firm that just went public.

  If you’d like to download a copy of the paper, you can do that here.

  2019.04.02

• Mobility at CES

  CES is underway right now in Las Vegas. About 200,000 people are in attendance. 

  Since tech and mobility are today closely intertwined, the show has become an important platform for the automative industry.

  Here is a video showcasing BMW’s new iNext concept (expected by 2021):

  [youtube https://www.youtube.com/watch?v=x9-f3cALABk&w=560&h=315]

  It is based on level 3 autonomy, which means the car will do mostly everything, but you need to be ready to take over at any time.

  The video is interesting because it begins to show you what becomes possible when you no longer need to pay attention to the road. It is a bit like flying (but hopefully more enjoyable). 

  And here is a video of Bell’s new urban air taxi, which is called Nexus (expected by the mid-2020s):

  [youtube https://www.youtube.com/watch?v=1o4d8N-A1G8&w=560&h=315]

  This is the company’s first concept. But they’ve been working with Uber since 2017 to develop a network of flying taxis for cities.

  Finally, flying cars.

  2019.01.10

• To invest or not invest

  We used Uber to get pretty much everywhere when we were in Rio de Janeiro. For reasons of convenience, cost, and safety, it just made the most sense. I can tell you that it felt a lot more valuable in place where you don’t speak the language and you’re acutely aware of being in the wrong place at the wrong time.

  And since Uber is going public later this year (along with Lyft), it got me thinking about whether or not it is a stock that I would want to own. Are they destined for monopoly profits? Do they have a defensible business model? How powerful are their network effects? Having first-mover advantage doesn’t guarantee anything.

  My initial thoughts are that the network effects for their core offering – single rides – don’t feel that strong. Sure you need a critical mass of drivers so you’re not waiting around too long, but at a certain point the response time is likely good enough. Rides are a commodity.

  This arguably changes as you get into services like Uber Pool and Uber Commute, because more users on the network in close proximity to you can mean lower costs and higher service levels. But is there any sort of lock-in effect?

  Many passengers and drivers seem to “multi-tenant.” In other words, many (or maybe most) people have multiple ridesharing apps installed on their phone and they will switch back and forth when it makes sense to do so. I do that when prices are surging. And drivers appear to be doing the same based on the Uber and Lyft emblems in their cars.

  For a long time, Uber was the only show in town here in Toronto. Hailo only lasted about two years or so. But as soon as Lyft entered the market, both companies moved to aggressively discount their rates, and that is still going on to this day. This suggests certain things to me.

  Among other things, it is a reminder that the demand for (commoditized) transportation services is highly elastic. We are price sensitive. We will use whatever is cheaper. So one way to win is to obviously create a cost structure advantage. Hence the current autonomous vehicles “arms race.” 

  Lyft is also trying to establish itself as a multimodal transportation solution. (When are scooters coming to Toronto?) Perhaps that will make them less of a commodity. But again, how defensible is that approach? I suppose the market will tell us what it thinks later this year.

  2019.01.09

• Oi Rio

  I just arrived in Rio de Janeiro, which is where I’ll be for the next ten days. Here is a photo looking south from the rooftop of our hotel (more photos to follow on Instagram):

  

  Today was a fairly relaxed day after many hours of travel. But tomorrow the architecture and design tour begins. 

  I am still trying to get a feel for the city. The first thing people tell you after you arrive is to be careful. Don’t go out at night. And take Ubers. 

  Uber is a significant advantage in a place like Rio where few people seem to speak English and you may be concerned about somebody taking you for a ride.

  Not only was the Uber from GIG about R$80 less expensive than a taxi (I was probably quoted the gringo rate), but you also get perfect information in terms of where you are going.

  This emphasis on safety and security is, of course, highly evident as you walk around the city. Lots of gates and lots of cameras.

  It’s perhaps a bit ironic to see so many places sealed off from the outside when you consider how great the climate is and how friendly the people are.

  2018.12.24

• Uber to go public in 2019

  Last week it was announced that Uber had confidentially filed for an IPO (right after Lyft did the same). It could go public as early as Q1 of next year. And supposedly, a valuation of $120 billion is being tossed around. The company last raised money in August of this year (from Toyota) at a $76 billion valuation.

  

  Here are a few other interesting figures from a WSJ article published in the fall:

  – Uber has indicated that it doesn’t expect to be profitable for at least another 3 years. This year it is expected to hit between $10 and $11 billion in revenue, compared to $7.78 billion last year.

  – First Round Capital invested about $1.6 million in Uber’s first two fundraising rounds (2010 and 2011). If the company does in fact reach a valuation of $120 billion in the public markets, that early investment will be worth $5 billion. (First Round sold some of their shares to SoftBank in January and I’m not sure if the above figure accounts for that.)

  – Over 50 companies have invested in Uber since its founding, not including a slew of individual investments from people like Jeff Bezos of Amazon.

  On a related note, Fred Wilson, who is far more knowledgeable on this topic than I, recently published a post talking about the relationship between the private and public markets and what could happen to (tech) valuations in 2019. 

  It’s a good follow-on read to the above.

  Figure: WSJ

  2018.12.13

• Uber to invest $200 million in Toronto

  Uber CEO Dara Khosrowshahi was in Toronto today, where he announced that the company plans to invest more than $200 million over the next five years to expand the autonomous vehicle research lab that it already has here in the city. 

  The Toronto outpost of Uber’s Advanced Technologies Group (ATG) – which is its only international outpost – is led by renowned University of Toronto professor, Raquel Urtasun. She is also the cofounder of the Vector Institute for Artificial Intelligence and splits her time between Uber and UofT.

  With this investment, Uber also expects to open its first engineering facility in Canada and grow its local headcount to 500, up from the 200 or so it has today. Some of these hires will be local. Some will be international. And some will be transplants from Uber’s other offices.

  Also notable about the announcement is that Khosrowshahi mentioned that he thinks fully autonomous vehicles roaming the streets of our cities is a good 10 years away. But I wonder if that isn’t political PR speak intended not to spook its drivers. So are we closer to the mid-2020′s?

  Either way, as a proud Torontonian and UofT alumnus, I was happy to see this announcement. I think it’s far more exciting than the Apple event that took place earlier this week.

  2018.09.14

• In defense of the gig economy

  Bill Gurley – who by the way is an investor in Uber – has an interesting piece up on his blog about the thing he loves most about Uber. It is the ability for the network to level load on its own. And here’s what he means by that:

  In spite of all the ink that journalists, analysts, and pundits have spilled on Uber over the years, no mainstream article has focused on what I consider to be the most elegant feature of this now ubiquitous, high growth global service — no driver-partner is ever told where or when to work. This is quite remarkable — an entire global network miraculously “level loads” on its own. Driver-partners unilaterally decide when they want to work and where they want to work. The flip side is also true — they have unlimited freedom to choose when they do NOT want to work. Despite the complete lack of a “driver-partner schedule” this system delivers pick-up times that are less than 5 minutes (in most US cities (with populations over 25K) and in 412 cities in 55 other countries. The Uber network, along with Mr. Smith’s invisible hand, is able to elegantly match supply and demand, without the “schedules” and “shifts” that are the norm in most every other industry.

  When surveyed, most people seem to prefer a job where they set their own schedule and get to be their own boss, compared to a steady 9 to 5 job with benefits and a fixed salary. Assuming that’s true, then this is a feature worth talking about.

  2018.05.23

• 1 out of 5 commuters in Manila relies on ride-hailing

  Earlier this year Uber sold its Southeast Asia business to Grab. At the time, it was estimated that Grab had 95% of the ride-hailing market in Southeast Asia. That’s why Uber decided to sell. Instead of continuing to bleed, they figured it would be better to instead merge businesses in exchange for a “sizeable stake in Grab.” This is similar to the deal that it struck in China with Didi.

  It’s clear evidence of cultural advantage. Though maybe you could argue it’s first mover advantage. Either way, many, including Wired, have argued that while Uber has dominated in the West, it has often struggled in the developing world. Different markets. When Grab launched you could pay with cash because so many users didn’t have a credit card.

  

  Here is another interesting insight from Bloomberg (see above): Nearly 1 out of every 5 commuters in Manila relies on a ride-hailing service because the public transit situation is allegedly so dire. Grab controls 90% of the market with 35,000 vehicles receiving somewhere around 600,000 requests a day.

  When Uber launched it was positioned as “Everyone’s private driver.” It was expensive. It was luxurious. And it was done because they knew they weren’t going to be able to compete on speed and/or price in the early days. But now ride-hailing services are tackling the very opposite end of the spectrum.

  2018.05.15