back to article Uber? Worth $40 BEEELLION? Hey, actually, hold on ...

The latest fundraising for Uber seems to peg the value just north of $40 billion. Which is, when you think about it, quite a hefty sum for what is, after all, just a registry of hireable people with cars. Sure, we're talking 50 countries now, 250 cities, but it's still about taxi rides. And it's a competitive market. There're …

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Maintenance

Driverless cars won't fuel themselves, wont clean and won't repair, so that means huge maintenance depots and competition with other driverless taxi companies (noone seriously thinks that Google will have some exclusive rights to technology, after all all these cars need be manufactured by someone who knows how to do it if/once driverless cars approved by legislators). That's a bit too far from being a company with bunch of cloud servers and an app.

All Uber would have by then is customer base but so would taxi companies around the world.

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Anonymous Coward

Re: Maintenance

The cleaning bit was what first pinged in my head. Given the way people treat 'common' kitchen areas, public areas, etc. How long would a driverless car have to be on the road before any potential customer would open the door, see the state of the upholstery, discarded litter on the floor, etc. and just walk away?

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Re: Maintenance

The cars will indeed refuel themselves. They'll be electric and if your Roomba can do it so can a robot car. They won't repair themselves but if your taxi driver repairs their car you probably should be looking for another taxi driver. (Why would a qualified mechanic be driving a taxi?) That just leaves the cleaning. A few low paid workers in a shed replacing hundreds of drivers is not exactly a massive financial burden. The first company to market with robot taxis will make a killing and one of the first corpses will be Uber.

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Re: Maintenance

Well, you'll need to buy or rent all these cars and it is still a loooong way from charging 20% off drivers fees for only providing an app.

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Re: Maintenance

A significant chunk of taxi business happens in the small hours of Friday and Saturday nights (and other nights especially at this time of year). How is a driverless car going to fare in such circumstances?

Will be fun when the first gang of drunken students manages to take a driverless car hostage and turn it upside down or something...

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Re: Maintenance

I don't see cleaning as being a big deal - I'm sure initially driverless cars will need an account with positively identified users (like those by the hour car club thingies). Driverless car arrives at your home and is foul - press the 'it's foul' button, it'll go to get cleaned whilst a replacement makes its way over to you. Fueling - even if not electric vehicles, hit the reserve tanks and the car goes back to the same depot for a drink. Or a different depot, maybe local filling stations can have service agreements, hardly an insurmountable problem. If you can make a driverless car, you can imagine how to service it.

Personally I'd be all over a driverless car hire especially of they've got a national range. I hate driving.

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Happy

Re: Maintenance

See Total Recall (at least the first - never saw 2)

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Anonymous Coward

Re: "buy or rent all these cars "

"Well, you'll need to buy or rent all these cars "

Maybe.

Or you could get a sweetheart deal with a car manufacturer, like Car2Go did for Smart cars for their "pick anywhere, drop off anywhere, pay by the minute" car rental service.

That'd be Car2Go that pulled out of the UK earlier this year because they couldn't make any money. As not reported by The Register or indeed anywhere much. They're still operating elsewhere.

[1] Actually in the case of Car2Go, it's more than a sweetheart deal - Daimler own Car2Go.

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Re: Maintenance

They won't repair themselves but if your taxi driver repairs their car you probably should be looking for another taxi driver. (Why would a qualified mechanic be driving a taxi?)

I think you overestimate the complexity of vehicle maintenance, and underestimate the background of some taxi drivers. Fixing a wonky Windows install can be more hassle than a full fluids change, and stripping and rebuilding an engine is actually quite straightforward, if time consuming.

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Re: Maintenance

Mass production will result in millions of these things, one being off the road for a day or two won't make a jot of difference anyway.

The thing about robot hordes is that there's always another one fresh off the production line.

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Re: "Other intangibles"

' How many such illegal enterprises allow the authorities to actually beckon the illegals?"

Drugs, prostitution to name 2

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Anonymous Coward

Re: Maintenance

but will unions allow automatic refuelling or oppose it because it "eliminates jobs"?

I guess it depends on which political party the robot taxi manufacturer donates his money to.

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Re: "Other intangibles"

Said the west end cabbie....

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Re: Maintenance

My petrol powered car goes for about 200 hours between services and about 10 hours between refuelling stops, so it's not like each vehicle needs one dedicated support person. When you're supporting a fleet of identical vehicles, even major services can be performed reasonably quickly.

Transition to electric vehicles and the service interval becomes much longer. Recharging might become an issue if it's required more than once a day, which (based on current EV range) it probably will be if the vehicles are in service 24 hours.

I can only speculate about what the cleaning requirements would be, but there are ways to encourage people to treat the vehicles with respect...

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Re: Maintenance

"Driverless car arrives at your home and is foul - press the 'it's foul' button, it'll go to get cleaned whilst a replacement makes its way over to you. "

It's Saturday morning. The next one is in the same condition as is the one after that. At some point it dawns on you that either you get in anyway or you miss your plane.

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Re: Maintenance

>How long would a driverless car have to be on the road before any potential customer would open the door, see the state of the upholstery, discarded litter on the floor, etc. and just walk away?

Solution: Charge customers a fee if they leave the vehicle dirty or littered. This is easy - image recognition can be used inside the vehicle. The same system would allow lost property to be reunited with its owners - or even prevent customers from leaving their belongings in the first place.

For cleaning: Automated cleaning at stations

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Anonymous Coward

Re: "Other intangibles"

> Drugs, prostitution to name 2

Err... neither of those is illegal in my corner of the woods.

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Re: "buy or rent all these cars "

"Or you could get a sweetheart deal with a car manufacturer, like Car2Go did for Smart cars for their "pick anywhere, drop off anywhere, pay by the minute" car rental service. That'd be Car2Go that pulled out of the UK earlier this year because they couldn't make any money"

Er, the reason C2G flopped here is that they didn't follow that model here. It was 'pick it up at a specific point, drop it back to the same point, pay by the hour/day'. Utterly pointless, and no surprise it flopped.

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Terminator

Re: Maintenance

"The first company to market with robot taxis will make a killing"

If they do, then that will be the end of robot taxis...

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Anonymous Coward

Re: Maintenance

Google can't update a smartphone's firmware and have it work correctly.

I'd sooner someone with some experience of failsafe mission critical software was involved.

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Re: "buy or rent all these cars "

Plus, being Smart cars, they only have one seat left for passengers, kit, etc.Yes, "most journeys only have the driver" etc., but if you need an occasional car, sometimes you want it because you need to move a group of people, or even just your wife and child, at the same time.

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Re: Maintenance

They won't repair themselves but if your taxi driver repairs their car you probably should be looking for another taxi driver.

Good luck with that. In the US, at least, apparently it's quite common for taxi companies to hire drivers as independent contractors and make them repair their own vehicles.

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billion?

Easy to confuse those "b" and "m" keys on a qwerty!

The valuation looks a bit like a worldwide monopoly figure. For something at the optimistic end of how big "dial-a-vehicle" might eventually grow. How much will a day of Ellison's superyacht eventually cost through uber?

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Re: billion?

Indeed - a billion is huge compared with a million but people can't picture large numbers accurately. For context people can picture ...

A million seconds is 11 days

A billion seconds is 31 years.

A billion is a BIG number.

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Re: billion?

I don't see how a service that connects drivers to passengers can be worth over a billion dollars, let alone 40 billion. They don't own the cars, I doubt they own their own data center infrastructure, it's an app, some developers, and a yacht.

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Re: billion?

it's an app, some developers, and a yacht

Based on the behavior of Uber devs and execs, I'd guess they also have a tidy amount of alcoholic beverages available.

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LDS
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"The first being that it's their money to waste" - are you sure?

If I learnt something about economy, is that investors often like to waste somebody else money. While storing their own safely in some "paradise".

Don't get me wrong - I like investors who risk their own money. That's what a *true* investor is.

What I do not like are investor that borrows money, or lure banks and the like to back their very risky and often absurd investments - and when the bubble collapse, ask for taxpayers money because they're "too big to fall", the whole economy would collapse without a bailout, etc. etc.

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Re: "The first being that it's their money to waste" - are you sure?

Worse, it's institutional investors gambling other peoples pensions for personal gain. Shits.

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Re: "The first being that it's their money to waste" - are you sure?

"What I do not like are investor that borrows money, or lure banks and the like to back their very risky and often absurd investments"

I find even more troubling the extent to which Too Big To Fail (and even previously bailed out banks) are busy with their own private equity arms, which are simply using bail out money, central bank QE, and public guarantees to underwrite their own direct gambling in the private equity space, in much the same way that these same banks engage in proprietary trading that privatises the gains whilst socialising any major losses.

Of course, if the investments in Uber, European property, or tulips goes bad, then the Fed, BoE or ECB will take the now worthless "collateral" and hand out a big wadge of fresh cash to the idiots to waste on something new.

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Surprise - the bailouts were profitable!

Fannie Mae alone earned a profit of $84 billion in 2013. That's more than Apple, Google, Microsoft, Exxon and GE made in 2013 combined.

Certainly the way it was done where those responsible for the mess escaped blame and got to keep their ill-gotten gains really sucked, but in the US the bailout has been paid for and will end up with very large profit.

Not saying it is a good thing for the government to be in competition with private business, but since private business demonstrated it was not capable of managing mortgage sales on its own I'd prefer the taxpayers take the profits rather than a few CEOs and connected shareholders who get warned in time to cash out before it is too late, while the little guy takes the fall.

http://money.cnn.com/2014/02/21/news/economy/fannie-profit-bailout/

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Re: Surprise - the bailouts were profitable!

Careful when comparing US mortgage debt with other countries.

In the US, Fanny Mae got into trouble when people couldn't repay their mortgages and choose to wlak away. The asset passes to Fanny Mae and the borrower is left with nothing (no asset but also no debt) which leaves Fanny Mae with a large loss that has to be filled with government money but can be quickly rescued (assuming you don't ask too many questions about where all that government money comes from and the side effects....). Hence Fanny Mae is now profitable.

In many other countries (i.e. the UK), failing to pay your mortgage triggers a mortgagee sale and then any difference between sale of the asset and the outstanding debt remains the responsibility of the borrower - this leads to a large pile of debt that continues to accrue interest with something that will eventually be written off (it's labelled "toxic debt" as it will never be repaid). As this debt can only be written off as banks make more money, it greatly slows an economies recovery.

Note: there are some generalisations but the post is long enough as is...

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Re: Surprise - the bailouts were profitable!

My point was that all that money that the US government put into Fannie/Freddie has now been paid back and are now accruing profit for the US government. The "large loss" you mention is gone as all that original money has been paid back. ALL of the money (plus 7.5% as of Dec. 1) the US government put for for ALL bailouts has been paid back in total, with some sectors like the automakers still not fully paid back but compensated for others (and bailing them out meant their employees who stayed employed kept paying taxes, instead of being added to the unemployment rolls so really the auto bailout has been paid for too if you take that into account)

There are only some states in the US that are "non recourse" and allow you walk away from your debt as you say. It is a minority of states though - however, it is probably no coincidence that most the states at the epicenter of the mortgage crisis in the US were non recourse.

"Where the money came from" was of course additional debt of the US government, but as it has been paid back the net debt added is now zero. There were other measures like QE that will take years to unwind, but now that the US government is no longer continuing to add to that total it will resolve itself over the next 5 to 10 years as most of the debt held by the Fed matures.

I agree that other countries approached the problem differently, due to different circumstances, and their bailouts may not be as successful as the US bailout can be judged in hindsight. That may be the reason why the US economy is finally starting to show signs of strength while much of the rest of the world is still struggling with the effects of the economic shock.

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And now Spain says 'No'

http://www.bbc.co.uk/news/business-30395093

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Re: And now Spain says 'No'

And India too

http://www.bbc.co.uk/news/world-asia-india-30390691

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Anonymous Coward

Money

It is correct to say that it is the investors money to spend/ waste as they wish, but if Uber floats anywhere near the proposed value then a significant number of pension funds, insurance companies and tracker funds will be obliged to buy stock.

So even if you do not want to actively invest in Uber your hands-off financial instruments will be doing so on your behalf.

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...your hands-off financial instruments ...

And that is why I have a SIPP.

15 years to retirement and I have most of my investments are in Biotech/healthcare/pharmacy.

Pretty certain that Uber will not be invested in by any of my funds.

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JLV
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Re: Money

So true.

After poking fun at Zynga a few days ago, I clicked on its "major stockholders" section of Google Finance. Guess what, I recognized some of my mutual funds.

Oft overpaid idiots, mutual fund firms. 2% (Canada) to manage someone else's $? Whether you make them a profit or a loss?

Nice work if you can get it. And certainly enough $ bilked to pay for all sorts of spiffy ads & "unbiased" investment advisor kickbacks.

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Re: Money

Disclaimer - I'm not an investment professional and this does not constitute financial advice - it's purely anecdotal.

I shifted my Pearl Assurance private pension back in May as I was sick of sub 3% returns.

I opened a SIPP with trustnet direct (low charges and fairly free choice of funds/trusts/shares - more or less limited to whats available on the UK market, so no NASDAQ directly).

A weekends research later, plus a good helping of my own prejudices/beliefs (that banking/finance sucks balls and that aging populations/Ebola/cancer/HIV/dementia/ad infinitum means good returns on healthcare/biotech for the foreseeable future). I invest the lump across 8 funds and 2 trusts.

6 months later I've averaged 16% growth (after fees) though if I had gambled it all in biotech/healthcare it would have been between 30 and 50% growth depending on how I split it - there were 2 of my choices that havent performed as well as I would have hoped (both having lost around 8.5%) but these are not short term holdings - I'll see if they pick up over the next 2 or so years then decide what to do with them.

So if your traditional private pension is tanking take control of it with a SIPP, chances of doing worse than the mutuals is low and you may hit the jackpot. The longer you have till retirement the more chance you have to make a difference to your retirement pot.

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problem...

Uber has raised the jolly roger and has, at least here in the Netherlands, stated they are not planning to go through due process, ignore national laws and regulations, and soldier on regardless. This does not endear you to our otherwise extremely tolerant government, let alone less tolerant ones. If you interfere with government revenue streams ( which taxy licensing is...) and make long faces while doing it, well..

But let's go with the autocab idea.. Assuming the technology is refined at current speed, trials are held, larger scale trials are held, laws are adapted to allow for the technology, infrastructure is modified to allow for the technology... you're talking 10 to 15 years in the future. If there's an actual political will to do so. It might be feasible in a dense urban area, but even then I simply can't see it happening, unless the scheme is comprehensive and would effectively act as the sole mode of transport, except the few top dogs who could afford the permits for a personal vehicle.

It won't fly, and Uber will eventually be a nice black hole.

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Re: problem...

The problem in the Netherlands (and in Spain) seems to be with their UberPop ride-sharing service - not surprisingly, since these are just ordinary Joes driving their personal vehicles seemingly without all the background checking, hire-and-reward insurance, public liability insurance etc that taxis are subject to. The Uber taxi-booking service as operating in London and elsewhere puts all those things in place and runs on the same basis as ordinary private hire vehicles, making it far less controversial.

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Bronze badge

Re: problem...

Easy solution, no need to fight company. Book Uber, get into the car, issue fine on the spot for operating unlicensed taxi, preferable with license suspension and court appearance, spread the word in the local news. 20-50 fines should be enough to put drivers off Uber for life.

Hell, I'd be doing it all day for mere 50% of 1700 AU$ fine.

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Anonymous Coward

Re: problem...

Impound the illegal taxi.

Regulators and Authorities can clean out their jurisdiction in a couple of days.

Uber won't be worth billions once everyone realizes how trivial it is to shut them down. It's like catching hungry stray dogs when you have a truck load of bacon and cheese, 'Here Boy!! Come here boy!!'

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Re: problem...

"Impound the illegal taxi."

Here in my neck of the woods (of Blighty) such an approach would (and occasionally does) result in near shut down of the officially licensed taxi service, because for some mysterious reasons the licensed taxis are "shared" by multiple drivers all working less than twelve hours a week (so as not to affect their "benefits") and the majority of the cars are therefore used by everybody, maintained by nobody.

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Re: problem...

"If you interfere with government revenue streams ( which taxy licensing is...)"

I used to be a local government licensing board member. Taxi licensing isn't a revenue stream, the fees barely covers the costs of the licensing system. Uber is nothing new, it's just a version of telephone booking. As long as the vehicles pass their MOT-plus and are licensed, and the drivers pass their CRB-plus and are licensed, I don't care how a taxi is booked. In my area local taxi companies have had online and SMS booking facilities for yonks.

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JLV
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Re: problem...

>Book Uber, get into the car, issue fine

Upvoted for common sense but

wouldn't that be legally considered as entrapment? Though I agree with your sentiment in principle.

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Re: problem...

wouldn't that be legally considered as entrapment?

IANAL, and who knows how courts would interpret it; but I can see an argument that it's not entrapment. You're not enticing someone to commit a crime. First, you're not communicating with the driver directly - you're just publishing a notice via the app. Second, they've already agreed, in principle, to commit a crime, and you're merely suggesting where it might occur.

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Joke

It's a bargain

They said similar things about Boo.com - look how big they became.

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Re: It's a bargain

dotcomboomandbust1.0, I remember it well.

Apparently I'm alone in that, so here we all go into #dcbabv2

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Bronze badge

I suggest that car hire companies, particularly the newer ones with membership where you can book a car online and unlock it electronically from it's parking spot are best placed to take advantage of driverless cars.

In Australia, taxi licenses are around $250,000 - $500,000 and are rarely owned by the driver. Cars are upgraded every 4 years so. Drivers make ~50% of the fare so once driverless cars are available it won't take long for the taxi industry to take advantage.

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