>In this regard Uber is pretty different from other fast growing startups.
>Economies of scale won’t help, since Uber has a high fixed cost per unit associated with their service - the drivers - that won’t become significantly cheaper as the service grows.
>Network effects are mostly irrelevant for Uber’s business. Yes, they need a large supply of drivers to make the service viable, but this isn’t an advantage of Uber compared to regular cabs which have sufficient availability in most cities. I also don’t see a potential network effect in Uber’s global availability. Most users take rides in their home city and they would happily switch to a local competitor with lower prices, even if that means they would need to use a different service when they are traveling.
Also, Tesla will continue to generate losses until they hit full scale and stop growing, at which point they will have the economies of scale that they need to deliver profits. Amazon's "profits" or "losses" are miniscule in comparison to revenue, because they are reinvesting so much. Uber has huge losses because they are taking a loss on each ride; which would be fine if they would get something out of that growth. Amazon gets better distribution, better deals with manufacturers, and other economies of scale. What efficiency gains does Uber get as it grows? Uber pool? Is that going to be a big profit source in the future?
I don't think he's saying that it will take a long time for them to turn a profit, but that they never will (or only ever will see the tiny profit margins that, say, the airline industry does).
Amazon and Tesla both required large capital expenditures to get running and get more efficient. It's not like Amazon was actually losing money each sale like Uber is.
