I should have stated that more generally. Why are you concluding that only one company will survive in the rideshare industry. If the business model is not workable, then both companies would be affected by that. The bigger the company, the more exposure the company has to the deficiencies in the business model. It's possible that the bigger company will be more adversely affected. The reason Google dominates the market is because the more users who use Google, the better the search engine becomes, so more people use it. The reason Facebook dominates the market is because the platform that more people use is the platform that people will have to use to connect to those people. In the rideshare industry, the customer wants to get from point A to point B. The company's app that provides that is fungible. In the soft drink industry, both Coke and Pepsi can co-exist because both those products are fungible. The reason for one company dominating the rideshare industry is not clear. The reason for that might be that Uber is the pioneer and the most aggressive player in that market. The company that trail blazes the way will get more flak until the laws change and there is more acceptance. Or alternatively, the laws won't change and the whole concept will dissipate. How would Uber's bad press affect Apple? Google has invested in Uber without any noticeable effects. There's no reason to believe that Apple would be different in that. From the article: It's the business reason why Microsoft invested in Apple. From Apple's perspective, that doesn't have a bearing. Apple benefited from the investment Microsoft made in Apple regardless of Microsoft's motives for doing so. It's only applicable if in this case, as in that case, Apple is making decisions based on its rivalries rather than business sense. In the case of Microsoft, Steve Jobs had the foresight to accept the funding, regardless of the reason for the funding.1) I'm not "concluding" that Uber is pushing out Lyft. I'm stating that from Pando's ceaseless coverage of all things Uber over the past 18 months. You're right- most drivers for Lyft also drive for Uber. However, these are two startups that aren't making profit and the bubble is about to pop. Only the strong will survive. It's not appropriate to model either as regular businesses considering that the fundamentals of both can be completely out of whack and still garner investment cash.
2) Didi is every bit as illegal as Uber, but the torch and pitchforks reserved for Uber rarely hit Lyft.
3) It's a bad idea to form an alliance with a company that has demonstrated disloyalty and bad acting. There is no good press for Uber. Apple doesn't need any bad press right now. Uber, for its part, has demonstrated an ability to generate bad press on a weekly basis.
And Google-- while it’s sparred with Uber-- is also an investor in Uber.
4) It matters why Microsoft invested in Apple because we're discussing business. The business reason for the Apple investment was related to legality and anti-trust. It is therefore not applicable in this case.
The only thing I have to chime in with here is that it is not uncommon for business models to be ineffective on a small scale but effective on a larger scale. For instance, restaurant chains are able to expend money opening and maintaining nonprofitable single restaurants in certain 'desirable' areas with the hope that after 3-5 years, the nonprofitable establishment will become profitable as it becomes a familiar part of the local scenery, or whatever. In other words, I don't agree that the bigger the company, the more exposure that company is guaranteed to a certain business or operating model's deficiencies - quite the opposite, in fact. A big company will have separate arms, some of which will make profit, some of which maybe won't. The profitable arms cover the others. A small business cannot sustain the sort of expenditures needed to take risks and fund an establishment which may not become profitable for 5 years. The ride share company with the most backing will be able to expand faster, more easily, and further. If a company succeeds in that more quickly than all other companies, it will grow to dominate the market everywhere. People who always can rely on Lyft in their home city will automatically turn to it first when they are in other cities - so whatever company gets a foothold in the most major and transportation-deficient cities first will essentially then be able to propagate itself faster by dint of familiarity, trust and comfort in its user base. As for how one company's bad press might impact another company's reputation based on investments, it's a real thing called reputation risk and in US financial industries at least real people have real jobs where their duty is to look out for exactly such a thing. Google ain't a financial industry but I doubt they don't have people in exact such roles as well. Here's a hint, by the way - sometimes, the average consumer's opinion doesn't mean shit in terms of the "reputation risk" of a certain action. But in the eyes of legislatures, it sure as hell does. Companies aren't playing their reputation risk cards to consumers all the time, they're playing them to the gov't. just some thots
I agree with you as a general principle. Economies of scale and diversity can both make larger companies more risk tolerant. In this particular case, I was responding to this: If both companies are not making a profit and the fundamentals of both are "out of whack", then they're not benefiting from economies of scale or diversity since both are already geographically world wide. If investment cash is keeping both afloat, then infusions of cash are unlikely to last indefinitely. The larger the company, the more cash is likely being used quicker, so it has the bigger exposure. I don't know if any of this is actually happening. I was just responding to the quote. This is possible, but not necessarily true. It's also possible that more than one company can grow simultaneously and share the market. Google ain't a financial industry but I doubt they don't have people in exact such roles as well. I agree that reputation risk can be real. In this case, if there's a reputation risk from bad press about Uber, Google hasn't considered the reputation risk high enough to not invest in Uber. There hasn't been anything discussed so far that would raise that reputation risk for Apple. That may be true in general. In this case, considering that Apple just refused to respond to the government when the government was asking for Apple to crack the code on the iPhone, Apple's investment in a company in China doesn't look like posturing to the US legislature. If Apple is posturing to the Chinese government, there's no reason for that government to care about Uber's reputation, which is largely tarnished in other countries.In other words, I don't agree that the bigger the company, the more exposure that company is guaranteed to a certain business or operating model's deficiencies - quite the opposite,
However, these are two startups that aren't making profit and the bubble is about to pop. Only the strong will survive. It's not appropriate to model either as regular businesses considering that the fundamentals of both can be completely out of whack and still garner investment cash.
The ride share company with the most backing will be able to expand faster, more easily, and further. If a company succeeds in that more quickly than all other companies, it will grow to dominate the market everywhere.
As for how one company's bad press might impact another company's reputation based on investments, it's a real thing called reputation risk and in US financial industries at least real people have real jobs where their duty is to look out for exactly such a thing.
Here's a hint, by the way - sometimes, the average consumer's opinion doesn't mean shit in terms of the "reputation risk" of a certain action. But in the eyes of legislatures, it sure as hell does. Companies aren't playing their reputation risk cards to consumers all the time, they're playing them to the gov't.