Sometimes clients and Taxi Profits Inner Circle Members ask me: Tom, why haven’t you started Uber?
To which my answer is: you do realize that Uber has been in business since 2009 and they haven’t made a penny of net profit, right?
That’s where the questions usually end.
In case you don’t know, according to leaked Uber financials Uber is spending $2 to make $1. See, for example, here: New revenue figures show $50 billion Uber is losing a lot of money
Let me explain you how it works. You give me $100,000. I get to work. In a few months I come back to you and say: I’ve spend your $100k.
You’ll probably ask: How much did you make after spending those $100k?
And I’ll tell you: I’ve made $50k, but the company is growing like crazy!
And that’s the business that Uber is in: telling fairy tales to investors to get money from them.
Here’s what’s even more interesting: Uber is one of the first transportation network companies to grow really big. Yet history shows us that the first ones usually fade very quickly in the technology field. Apple’s iPhone wasn’t the first smartphone to the market. Google was not the first search engine. Facebook was not the first social network. Amazon was not the first ecommerce store. I could go on and on and on.
Here’s what happens when someone starts gaining traction: competition arises and starts taking a bite. In the transportation network company field they only know one way to compete: based on price burning investors’ money.
In New York, where I live, there’s now Gett, offering $10 unlimited rides in Manhattan (and let me tell you, a 1 mile ride in Manhattan can last 3 hours).
Because of this, there are now videos on the internet comparing Uber and Gett. Here’s such a video from Business Insider.
Ask yourself two questions before watching it:
1. Would you like to have this guy as a customer?
2. Do you think you could keep him as a customer? What would happen if the promotion ends or the more expensive company becomes a penny cheaper than the other one?
Here’s the video:
Share your thoughts in the comments!