Articles/megaposts by DaveT

[bh1783]

I'm having a difficult time why you'd think Tesla would face no limitations in Korea. With their cars, I understand since South Korea needs to appear like they're being fair to foreign car makers to satisfy free trade agreements. However, if Tesla in the future tries to launch an autonomous ride-sharing network in South Korea... and the jobs of 250k taxi cab drivers in the country are threatened to extinction, I can imagine it'll rile up things and Tesla could face the same resistance that Uber faced, maybe even more.

Korea has a medallion system for taxi's. It's something like 100k to get a taxi license in the country. Tesla will just have to buy medallions from existing owners.
VW did this to themselves in Korea. They refused to give any compensation or fix their vehicles so they got shut down. It's the 4th or 5th largest market for Audi globally and the prospects of them selling again soon are pretty low.

I think it's going to be a long time before autonomous driving works in inner cities. Autonomous driving is better suited for highways than city driving. It will only take 1 drunk passenger to mess everything up. Autonomous vehicles will still have drivers even if they can handle the driving part on their own.

Autonomous vehicles will be good for driving drunk drivers home in their own vehicles. There is a system like that in Korea. You drive your car to the bar, drink, and then when you go home you call a driver service and within 5 minutes a driver shows up to drive you and your car home for $15.

Here's one scenario where autonomous vehicles will never work in:
In a lot of inner cities there are blind corners and buildings in the way. Radar and cameras will never be able to see around corners like a human can. In Seoul, a lot of roads and intersections use mirrors to drive. You have to look at these convex mirrors to see approaching traffic. You listen for oncoming cars, you watch shadows to see if a car is approaching.

Autonomous vehicle cameras are not sophisticated enough to inverse an image on a convex mirror, calculate speed and avoid oncoming traffic. Taxi drivers will exist for a very long time in inner cities.

 

[Fallenone]

But overall, my point isn't necessarily to defend Uber. Rather, it's to start a discussion on Tesla's prospects in the worldwide ride-sharing business. For example, how is Tesla going to compete against Didi Kauidi in China, KakoaTaxi in Korea, Uber in the U.S./Europe/etc?

Dave, I love Uber and use it a lot. But I want to say the network advantage Uber enjoys now can evaporate very quickly if a competitor can bring the cost down on the rider's side. Today I need to go somewhere and opened my Uber app, saw the 1.5x surge fee. Opened Lyft, no surge, used Lyft. To me, Uber and Lyft offer exactly the same service and I use the cheaper one and I think most people feel the same. In the ride-sharing market, whoever gets the cost down most will be the 1st player and enjoy the winner takes all situation. If Tesla can achieve autonomous driving faster than Uber or whoever else is going into this market to the point the vehicle can offer the same service, and lowers the cost on the customer's side by even 20%, then Tesla can take away as much market share from Uber as how many cars they can provide. Ride-sharing is a market of such homogeneous service that the only factor is how much the customer need to pay. Of course, it could be the case that even if Tesla came up with a fully autonomous ride-sharing capable product with a much lower cost first, but during the ramp up Uber arrived with the same level of product with the same price and Tesla loss by not being able to grab enough market share. However, given currently Uber has to collaborate with other OEMs on autonomous driving, and the pace other OEMs are moving, I don't see this scenario likely to happen.

 

[bh1783]

Uber runs a commodity business where they cannot control the quality of their product(the independent contractor drivers). Tesla will be able to control the entire system, making it a much stronger threat to Uber than Uber is to Tesla.

Uber is already years behind current competitors in China and Korea. Their $69 billion valuation in comparison to Tesla's $33 billion is suspect. For Uber, they operate on a city by city basis and have lost or been shut out of a lot of markets where Tesla thrives. Companies that can't thrive in every market often have a fundamental flaw that becomes more apparent when they enter hyper-competitive environments.

I would put Uber in the category of companies like FB, GOOGL, and AMZN that are unable to survive or enter really important markets like China. If these companies had such a unique product that no one else could replicate, then they would be in China. Tesla is in China because they have no credible competing alternative.

Uber's inability to adapt or survive in the world's largest market should be a indicator of where the company is headed(down). Their efforts to develop autonomous vehicles are an attempt to adapt in a market they are behind in. On the other hand, Airbnb, which operates on the same concept as Uber is thriving in China and South Korea. Uber is going to be the next gopro. A company producing a single product that can be easily replicated by many others.

Uber should be expanding their ecosystem into more transport related companies. Things like parking apps, maping, navigation, etc. Their competitor in South Korea has beaten Uber badly. They bought up mapping,navigation, and parking companies to create an entire ecosytem.
Kakao acquires Park Here, a startup providing parking search and booking service in Korea - beSUCCESS
They have integrated their services with buses and subways. Uber's services are archaic compared to what Kakao Taxi offers in Korea.

Uber is based on a userbase that uses smartphones. Their largest market(the United States) has an 80% market penetration of smartphones. Uber failed in places like China and Korea. South Korea has a 99% market penetration for smartphones(actually I think it might be closer to above 100%, a lot of people have more than 1).

 

[bh1783]

This is how delivery drivers in Seoul operate. They might work for 5 or 6 different companies all at once. And their scooters are decked out with 6 smartphones at once. The delivery services in Seoul are probably 5-10 years ahead of what is available in America. Uber isn't in Korea because they can't compete. If you want an important delivery done in Seoul (let's say a legal contract or something like that)
you can track it in real time as it goes from place to place.
There are services where working mothers can deliver breast milk to their babies at home while they are working. So a mother can take a 10 min break at work, the driver will be at her office in 2 min, pick up the milk and deliver it to her baby in less than 30 min. And the mother can track it all the way to her home.

Here's another anecdote:
If you're in the subway platform and you are too hot you can text the government your location and they will turn up the AC for you at your specific location. It's really insane when you consider how far advanced the "internet of things" is in places where Uber has no chance.

The delivery drivers in Seoul have programs and apps that Uber might have 5 years from now. Uber is not in certain markets because they are already obsolete. They just don't know it yet. They are losing billions and cannot compete. They got destroyed in Korea not because of legal issues. They just got outright beaten very badly. Korea is a great market predictor of if a company can be successful. It's hyper competitive, the population is highly educated, and smartphone penetration is over 100%. It also has an extremely complex business bureaucracy and the population is extremely nationalistic. So to survive you need a product that is above and beyond domestic products. The services in Korea are years ahead of anything available in the states for apps like Uber. Short of a drug dealer, I can't think of anyone in America that would use 6 phones at once. In Seoul, almost every delivery driver has a setup like this.

Uber got beaten badly by Kakao in Korea. It's part of a larger tech company with a $25 billion market cap and is an extremely profitable publicly traded company. It basically competes against Facebook, Google, Uber, and Amazon all at once in Korea.
Naver on the Forbes World’s Most Innovative Companies List
Uber in Korea, is currently handing out free vouchers to anyone they can. They send me emails all the time with free rides and stuff. No one uses Uber. They got taken out in less than 6 months in Korea. How is uber worth $69 billion? So Uber is currently competing against companies that are just as big as it but are generating billions in profits. TSLA's valuation in the context of Uber is really hard to understand. It just doesn't make any sense how Uber can be worth double TSLA when Uber is failing badly. Uber claims that the taxi laws prevented them from succeeding in Korea, but the truth is that they got beaten so badly that they pulled out of the market. Kalanick didn't even bother showing up to his court date in Korea. It's false to argue that Uber is this huge company that is going to beat out competitors by volume. Their business model is so flawed that they are giving out their services for free in Korea.
The Chosun Ilbo (English Edition): Daily News from Korea - Uber CEO Fails to Appear in Court

The company that beat Uber also paid their employees an average of $160k last year(mostly stock options)
The Chosun Ilbo (English Edition): Daily News from Korea - Kakao Pays Top Dollar in Korea, But Japanese Earn More

 

[Troy]

@DaveT, I don't think Elon's aim is to build a large ride-sharing business. I think it is more about proving that self-driving electric cars would be perfect for ride sharing because you could deploy them for a much longer time during the day and the running costs would be low. This has two positive effects in terms of environmental impact. Firstly, it would increase demand for these cars. Therefore other car companies will have to step in to fulfil the demand. Secondly, each self-driving electric car would replace maybe 5 ICE cars. This is Elon thinking how to accelerate the transition to electric cars as quickly as possible. It is not about making lots of money or becoming the industry leader in ride-sharing.

 

[DaveT]

Uber runs a commodity business where they cannot control the quality of their product(the independent contractor drivers). Tesla will be able to control the entire system, making it a much stronger threat to Uber than Uber is to Tesla.

Actually Uber has a requirement that all drivers maintain a 4.6 star rating or higher in order to remain an active driver. Many drivers are very sensitive about their ratings and try to keep their ratings as high as possible. This is one of the reasons people typically like ride-sharing... it's because the ride-sharing companies have figured out how to maintain a high quality of drivers and user experience.

Uber is already years behind current competitors in China and Korea. Their $69 billion valuation in comparison to Tesla's $33 billion is suspect. For Uber, they operate on a city by city basis and have lost or been shut out of a lot of markets where Tesla thrives. Companies that can't thrive in every market often have a fundamental flaw that becomes more apparent when they enter hyper-competitive environments.

I would put Uber in the category of companies like FB, GOOGL, and AMZN that are unable to survive or enter really important markets like China. If these companies had such a unique product that no one else could replicate, then they would be in China. Tesla is in China because they have no credible competing alternative.

I'm sure Uber wouldn't mind being in the same category as FB, GOOG and AMZN. Those companies are some of the largest and most successful companies in the world. In fact, Google isn't even in China and they are the 2nd largest (sometimes 1st largest when AAPL is down) company in the world. And it's more Google's and Facebook's choice that they're not in China due to moral/ethical issues. Just like Amazon doesn't need China to be one of the largest/valuable companies in the world, Uber doesn't need China or South Korea... as long as they control a significant portion of the other markets in the world, which they are doing.

 

[DaveT]

Uber got beaten badly by Kakao in Korea. It's part of a larger tech company with a $25 billion market cap and is an extremely profitable publicly traded company. It basically competes against Facebook, Google, Uber, and Amazon all at once in Korea.
Naver on the Forbes World’s Most Innovative Companies List

Actually, Kakao Corp (which merged with Daum) and Naver are two separate companies.

Also here's an article describing Uber's journey in South Korea,
Tech in Asia - Connecting Asia's startup ecosystem

 

[DaveT]

@DaveT, I don't think Elon's aim is to build a large ride-sharing business. I think it is more about proving that self-driving electric cars would be perfect for ride sharing because you could deploy them for a much longer time during the day and the running costs would be low. This has two positive effects in terms of environmental impact. Firstly, it would increase demand for these cars. Therefore other car companies will have to step in to fulfil the demand. Secondly, each self-driving electric car would replace maybe 5 ICE cars. This is Elon thinking how to accelerate the transition to electric cars as quickly as possible. It is not about making lots of money or becoming the industry leader in ride-sharing.

Actually this is what I'm afraid of, and I think there's a decent possibility that you're correct.

The problem with TSLA is that Model 3/Y (1 million production) is basically priced into the stock.

If we're going to see long-term significant and sustainable appreciation from here, then investors will need to be convinced of what comes after the Model 3/Y. If all TSLA has to show is the pickup truck or a minibus, then it'll a downer.

Previously I had thought that Tesla could move into Gen4 (smaller, cheaper than Gen3) car production and sell 5 to 10 million a year of those. But if autonomous ride-sharing is coming in 5-6 years, then it will likely shrink the overall car production market by a huge amount (maybe up to 75% reduction). So, Tesla's overall addressable market (for all current and future vehicles) might only be 1/4 of what it is right now. Hence, in Elon's master plan part 2 he says that they might not need another cheaper car after the Model 3.

Another option would be for Tesla to produce 5M Model 3/Y cars a year due to it's standout autonomous driving tech. But I don't know if Tesla can build and sustain a big enough lead in the autonomous driving field for them to sell that many cars when the overall car market would be shrinking significantly, and there would be formidable competitors.

And another option would be the "next big thing" to not be about cars, but rather the scaling of Tesla Energy. But I have my doubts here on how fast and how much margin Tesla can really achieve with this.

 

[kenliles]

Actually this is what I'm afraid of...
The problem with TSLA is that Model 3/Y (1 million production) is basically priced into the stock.

Previously I had thought that Tesla could move into Gen4 (smaller, cheaper than Gen3) car production and sell 5 to 10 million a year of those. But if autonomous ride-sharing is coming in 5-6 years, then it will likely shrink the overall car production market by a huge amount (maybe up to 75% reduction). So, Tesla's overall addressable market (for all current and future vehicles) might only be 1/4 of what it is right now...

Well at least that'll relieve your fear they can't deliver volume with quality and reputation.

 

[adiggs]

Talk about accelerating the advent of sustainable transport - if you can shrink the annual car market from 80-100M units to 20-25M units, and do it because an electric car is so much more usable and inexpensive to operate, that's going to crater every other car maker at a frightful pace.

Maybe Tesla as a 50% market share company isn't nearly as unrealistic - just 50% of a 20-25M unit market. It might not be as valuable of an end game for investors in TSLA, but it might be a development we need for the species.

 

[DaveT]

So many of the articles out regarding Uber contain a lot of FUD. It's amazingly similar to Tesla articles (ie., losing money, overvalued, etc).

But if you dig down into the data, it turns out Uber has a very compelling growth story.

This article is showing Uber the dominant ride/taxi-hailing app in 108 countries.
Uber Is Now the Most Popular Taxi App in 108 Countries

The main battle areas are:
1. India
Uber is in a dead heat battle with Ola. And the battle is just getting more intense. This will likely be Uber's top priority over the next 1-2 years. Uber claims they have even market share w/Ola but Ola claims they're larger. It looks to me like Uber has got momentum here, but Ola is a formidable competitor w/more tailored options for the locals.

2. SE Asia
Harvard grads started Grab in 2012 to basically do Uber in SE Asia, so they have a headstart over Uber and they're very smart in localizing the service to the SE Asia region. But Uber is gaining traction in this region, so I think the battle will get more intense.

3. South America
Easy Taxi merged with Tappsi late last year to fend off Uber emerging in the region. But Easy Taxi has lost a lot of momentum. They used to be in Asia and other parts of the world, but they've pulled back significantly. And even in the home markets Uber is gaining ground. Easy Taxi also doesn't have the funding needed to take on a giant like Uber. I'd give this a couple years and I think we'll see Uber dominate South America.

4. Russia
Yandex is the leader here and Uber can afford to lose this country, but it appears that Uber (though much later to the game than Yandex) still has a chance. Game not over here yet.

A few other notes. Israel's first place player is Gett... and VW just acquired a controlling stake in the company.

When Didi Kuaidi acquired Uber China, they also did a board tie-up of sorts. Didi's CEO joined Uber's board and Uber's CEO joined Didi's board. Seems like they're intending to cooperate more in the future, perhaps in future markets.

Overall though, it's very impressive that Uber has been this effective in over 100 countries. It must be a logistical nightmare to have operations in so many countries, and to be doing so at a frenetic pace.

(note: these are my thoughts after reading a few hundred articles on the ride-sharing industry worldwide, but my thoughts will probably evolve as I read more... i'll probably have read few thousand articles after another month since I'm investing a lot of time into this)

 

[X Fan]

Talk about accelerating the advent of sustainable transport - if you can shrink the annual car market from 80-100M units to 20-25M units, and do it because an electric car is so much more usable and inexpensive to operate, that's going to crater every other car maker at a frightful pace.

Maybe Tesla as a 50% market share company isn't nearly as unrealistic - just 50% of a 20-25M unit market. It might not be as valuable of an end game for investors in TSLA, but it might be a development we need for the species.

I can't be too giddy about that.....think about the social unrest and economic impact tied to the elimination of millions of jobs globally....yeah, I know, something else will be discovered that is a job creator but if not.......

 

[DaveT]

Talk about accelerating the advent of sustainable transport - if you can shrink the annual car market from 80-100M units to 20-25M units, and do it because an electric car is so much more usable and inexpensive to operate, that's going to crater every other car maker at a frightful pace.

Maybe Tesla as a 50% market share company isn't nearly as unrealistic - just 50% of a 20-25M unit market. It might not be as valuable of an end game for investors in TSLA, but it might be a development we need for the species.

I can't help but think that we might have hit a historical "peak production for cars" and from here on out, we'll see a radical decline in auto production worldwide.

Already, in urban areas people are starting to ditch their cars in favor of ride-sharing services. With ride-sharing services, you don't need to worry about parking, insurance, maintenance, or the stress of driving.

Some might think that Uber is disrupting the taxi industry. But Uber's real disruption is they're starting to disrupt the entire auto industry because in urban areas people don't need to own a car. In other words, ride-sharing will likely shrink worldwide auto production.

This is dramatic since just 10 years ago most people were looking at the huge populations in China and India that would enter the middle class in the coming decades and they forecasted a continual increase in auto production.

So for this trend to be reversed is very significant.

I think even without autonomous driving, Uber (and ride-sharing services) could probably lower the annual production of cars by 20% or so within the next 5-8 years.

However, autonomous driving when paired with ride-sharing will further reduce the worldwide auto production in even more radical ways.

One autonomous car that one a ride-sharing network could probably replace 5-10 existing cars (perhaps even more) since they would be in constant use.

So yes, @adiggs I think your numbers are realistic... from 80-100M cars/year to 20-25M cars/year. Of course, this would take some time. But it might even happen sooner than most people realize. When the first autonomous car gets regulatory approval... the global tidal wave starts.

There's going to be a lot of chaos and havoc in the auto industry, especially when your market shrinks by 75-80%.

I don't see how many of the car makers we know today will be able to survive.

But I think there will be valiant efforts to survive. Already there are lots of competitors to Tesla on the autonomous driving front. I don't think Tesla will have a monopoly on this technology. And in fact, I think there will likely be at least one other excellent implementation of autonomous driving besides Tesla that comes out not to much later than Tesla's version. Maybe within a year or two following Tesla.

 

[DaveT]

@DaveT, I don't think Elon's aim is to build a large ride-sharing business. I think it is more about proving that self-driving electric cars would be perfect for ride sharing because you could deploy them for a much longer time during the day and the running costs would be low. This has two positive effects in terms of environmental impact. Firstly, it would increase demand for these cars. Therefore other car companies will have to step in to fulfil the demand. Secondly, each self-driving electric car would replace maybe 5 ICE cars. This is Elon thinking how to accelerate the transition to electric cars as quickly as possible. It is not about making lots of money or becoming the industry leader in ride-sharing.

@Troy
I was re-reading Elon's Master Plan Part Deux and it seems like it can still be accomplished even if Tesla doesn't get into the ride-sharing business...

Create stunning solar roofs with seamlessly integrated battery storage
Expand the electric vehicle product line to address all major segments
Develop a self-driving capability that is 10X safer than manual via massive fleet learning
Enable your car to make money for you when you aren't using it

As long as Tesla can accomplish #3, then car owners could lend out their cars to Uber to achieve #4, which would then make money for the car owner when they're not using it.

So, if we look at things not as a TSLA investor but as a eco-conscious citizen of the world, then we still get a similarly positive environmental benefit whether Tesla does their own ride-sharing business or just lets owners lend their Tesla cars to Uber. And Tesla accomplishes their mission, to accelerate the advent of sustainable transport.

 

[bh1783]

Actually Uber has a requirement that all drivers maintain a 4.6 star rating or higher in order to remain an active driver. Many drivers are very sensitive about their ratings and try to keep their ratings as high as possible. This is one of the reasons people typically like ride-sharing... it's because the ride-sharing companies have figured out how to maintain a high quality of drivers and user experience.



I'm sure Uber wouldn't mind being in the same category as FB, GOOG and AMZN. Those companies are some of the largest and most successful companies in the world. In fact, Google isn't even in China and they are the 2nd largest (sometimes 1st largest when AAPL is down) company in the world. And it's more Google's and Facebook's choice that they're not in China due to moral/ethical issues. Just like Amazon doesn't need China to be one of the largest/valuable companies in the world, Uber doesn't need China or South Korea... as long as they control a significant portion of the other markets in the world, which they are doing.

Those points are insightful Dave but if you look at the numbers its a different story in South Korea.
In South Korea Uber's competitor has almost 250,000 full time professional drivers using their service(the US has 236,000 taxi drivers in the entire country
Taxicabs of the United States - Wikipedia, the free encyclopedia

Uber had something like 450,000 drivers in the US using the app each month, but how many of them were full time drivers? The ride sharing market in Korea might currently be just as large as the ride sharing market in the US despite being 1/6 the population of the US.

Also, the user base in South Korea for Kakao Taxi is pretty much close to 100% of the population. Smartphone penetration is 100% and everyone in the country uses Kakao Talk so by default they have the taxi program already preloaded in their phone.

Kakao Taxi gets something like 700,000 daily requests from a country with less than 50 million people.
http://www.kakaocorp.com/upload_resources/ir/siljeok/siljeok_20160523115531.pdf

I don't think Uber can afford to lose the South Korean or Chinese markets. Especially when you consider how big taxis are in those countries.

How will Uber get to the same market saturation that Kakao Taxi has in Korea(100% of taxi drivers and 100% of the population?)

Wouldn't the bigger threat to Uber be someone like Facebook starting a ride sharing app on the facebook platform? They would have a much higher user based than Uber.

 

[DaveT]

Those points are insightful Dave but if you look at the numbers its a different story in South Korea.
In South Korea Uber's competitor has almost 250,000 full time professional drivers using their service(the US has 236,000 taxi drivers in the entire country
Taxicabs of the United States - Wikipedia, the free encyclopedia

Uber had something like 450,000 drivers in the US using the app each month, but how many of them were full time drivers? The ride sharing market in Korea might currently be just as large as the ride sharing market in the US despite being 1/6 the population of the US.

Also, the user base in South Korea for Kakao Taxi is pretty much close to 100% of the population. Smartphone penetration is 100% and everyone in the country uses Kakao Talk so by default they have the taxi program already preloaded in their phone.

Kakao Taxi gets something like 700,000 daily requests from a country with less than 50 million people.
http://www.kakaocorp.com/upload_resources/ir/siljeok/siljeok_20160523115531.pdf

I don't think Uber can afford to lose the South Korean or Chinese markets. Especially when you consider how big taxis are in those countries.

How well Uber get to the same market saturation that Kakao Taxi has in Korea(100% of taxi drivers and 100% of the population?)

markmacgann on Twitter

January of this year a senior board advisor to Uber tweeted that Uber had 1.5 million drivers.

But Uber has grown a lot since January. If you examine the revenue numbers, their revenue has roughly doubled in the past 8-9 months. So, based on that the current number would be close to 3 million drivers.

And growing at over 2x per year. Meaning next year we'll likely see roughly 6 million drivers. This is why Uber can lose the 250k taxi drivers in South Korea. 250k is just 4% of 6M.

Now the China market hurts a lot more. If I was an Uber investor, I'd be fairly unhappy about the loss there. But at least they picked up a nice 17.5% stake of the dominant player there so they have a healthy equity stake in what happens there.

 

[bh1783]

markmacgann on Twitter

January of this year a senior board advisor to Uber tweeted that Uber had 1.5 million drivers.

But Uber has grown a lot since January. If you examine the revenue numbers, their revenue has roughly doubled in the past 8-9 months. So, based on that the current number would be close to 3 million drivers.

And growing at over 2x per year. Meaning next year we'll likely see roughly 6 million drivers. This is why Uber can lose the 250k taxi drivers in South Korea. 250k is just 4% of 6M.

Now the China market hurts a lot more. If I was an Uber investor, I'd be fairly unhappy about the loss there. But at least they picked up 20% of the dominant player there so they have a healthy equity stake in what happens there.

How many of those full time drivers are driving 6 days a week 12 hours a day while running the Uber app? What percent of US Uber drivers run the app 60 hours/week?

I agree that Korea is not that important of a market for Uber in the long run, but isn't the precedent set that a social media company like Facebook could create a more compelling competitor to Uber?

The taxi drivers in Korea are probably doing 10 times the volume of the average Uber driver in the States. So it's not a fair comparison to look at the total number of drivers. What is the driver participation rate in the states? Also, how much did Uber have to pay for each driver to sign up? How many drivers quit Uber each month in the States?

In Korea, those Kakao taxi drivers will drive for the rest of their lives(most are older retired men in their 50s). What is the churn rate for Uber drivers in the states to competing services?

 

[DaveT]

But Uber has grown a lot since January. If you examine the revenue numbers, their revenue has roughly doubled in the past 8-9 months. So, based on that the current number would be close to 3 million drivers.

And growing at over 2x per year. Meaning next year we'll likely see roughly 6 million drivers.

On a side note, as a TSLA investor I really do hope that Uber's growth starts tapering off significantly. Compound growth is a very scary thing, and for Uber to be growing at a 2-3x rate when they're already at a $20 billion annual revenue run rate ($5 billion in Q2 2016) is just astounding.

 

[bh1783]

On a side note, as a TSLA investor I really do hope that Uber's growth starts tapering off significantly. Compound growth is a very scary thing, and for Uber to be growing at a 2-3x rate when they're already at a $20 billion annual revenue run rate ($5 billion in Q2 2016) is just astounding.

Uber needs to become a total transportation company to justify it's valuation. It doesn't provide any of the ancillary services or integration that other ride sharing companies currently offer.

Uber's outreach efforts in Korea currently consist of workers making fake airbnb accounts and messaging hosts with offers of free vouchers.

 

[DaveT]

How many of those full time drivers are driving 6 days a week 12 hours a day while running the Uber app? What percent of US Uber drivers run the app 60 hours/week?

I agree that Korea is not that important of a market for Uber in the long run, but isn't the precedent set that a social media company like Facebook could create a more compelling competitor to Uber?

The taxi drivers in Korea are probably doing 10 times the volume of the average Uber driver in the States. So it's not a fair comparison to look at the total number of drivers. What is the driver participation rate in the states? Also, how much did Uber have to pay for each driver to sign up? How many drivers quit Uber each month in the States?

In Korea, those Kakao taxi drivers will drive for the rest of their lives(most are older retired men in their 50s). What is the churn rate for Uber drivers in the states to competing services?

First, I really don't see how Facebook could create a more compelling service than Uber right now. I think if Facebook got in at the beginning, then that would have been a different story. Facebook could have leveraged their app/services to push their ride-sharing services. But since Uber has the dominant and established market leader position in the U.S. (for example), I don't think Facebook having much advantage at all. Facebook could debut their own ride-sharing service but it wouldn't be as good as Uber, and thus people wouldn't use it much. It would be a waste of time for FB and FB probably knows it, thus they haven't entered the market. I think it's different in parts of Asia, since the companies that either started or backed the earlier ride-sharing companies were often the large social/internet companies in that area. So, it was more natural for them to include the ride-sharing services within their app along with a host of other services. That can help in the beginning to gain exposure/marketing. But once a dominant player has been established in a country, it's proven very difficult to unseat them in this market.

Regarding Korea, I would agree that the total taxi business there is probably currently larger than Uber's U.S. business in terms of revenue. But I think that's missing the point. The point is that Korea's taxi business isn't growing at a very fast rate. Compare that to the very-fast growing ride-sharing business in the U.S. So, it's not about today but it's about where things are headed. And things are headed to where the ride-sharing business in major markets will be much larger than the traditional taxi markets.

Uber's goal is not really to disrupt the taxi industry. They actually prefer not to work with existing taxi companies. Rather, Uber's goal is to reduce car ownership... so Uber is really going after people who own cars. Uber wants to provide a service that is cheaper/better than evening owning a car. Also Uber prefers to work outside the taxi industry because they can make larger margins when working with independent individuals. This is part of the problem that Uber faced in Korea... Uber wanted to bypass the taxi industry by going straight to UberX and using independent cars/drivers. But the taxi industry (250k drivers) basically flipped out, and the government supported the taxi drivers who are a significant part of the economy and society there. Also, Uber's brash western direct approach I'm sure didn't help in an environment like Korea.