>When it became clear that Uber's strategy (under Kalanick anyway) was premised on replacing drivers with AIs before the cash ran out I couldn't see general self-driving vehicles coming within 20 years. I still say that's true.
Even so, this never made sense as a business strategy, unless Uber somehow has a comparative advantage in achieving self-driving cars and then can get a long monopoly on them.
If they don't -- if others have SDCs around the same time, then sure, their costs go way down, but they can also charge a lot less, because the competition has the same "advantage"!
It's like:
"Hey, man, do you really think your grocery store can make those superhuge profits when you sell at the wholesale price?"
'Oh, no, I have a plan. You know those barcodes they're putting on products now? I'm going to invent a way to integrate that with the checkouts, and boom, I don't have to pay for people to put price tags on. Labor costs go way down!'
Same problem: "No, you're not. Someone better at that will, and they'll sell the tech to all grocery stores."
There was never a reason to believe Kalanick's operation as it stood in 2010/11 had that comparative advantage, so that strategy never made sense. And today, not surprisingly, Uber is one of the worst at SDCs, and is correspondingly unlikely to have that advantage.
I think you mean competitive advantage, not comparative.
I got a D in my only economics class, but I think that I've seen comparative advantage used to mean that "X is better at doing Y than doing Z", whereas competitive advantage is "X is better at doing Y than Z is at doing Y".
If you're not using it as jargon, then the fact that it is jargon might be confusing.
If you’re going to insist on proper jargon, you might want to refresh first. Comparative advantage [1] in X means you suffer a lower opportunity cost (forgone profit from what you could have done) to produce X than others.
A canonical example would be the doctor who is a better secretary than their secretary (produces more value per hour, looking only at secretarial value). The secretary still has a comparative advantage in secretarial labor because they forgo $0 of doctor income to work that job, while the doctor would forgo $100/hour they could be earning as a doctor in order to work as a secretary.
This is true even though the doctor has an absolute (or competitive) advantage in secretarial work.
The real test for whether something is financially optimal is if you have a comparative, not absolute advantage.
Uber not having a competitive/absolute advantage in SDCs would also be a reason not to do it, because of the details of this case, but comparative advantage is correct as well, though perhaps an unnecessarily strong criterion for the point I needed to make.
"Comparative advantage [1] in X means you suffer a lower opportunity cost"
Yes, however I don't see a relevant difference between that and my phrasing.
It still looks to me as though you were clearly describing a lack of competitive advantage, while using the word comparative. Sure, you can discuss comparative advantage if you want.
Even so, this never made sense as a business strategy, unless Uber somehow has a comparative advantage in achieving self-driving cars and then can get a long monopoly on them.
If they don't -- if others have SDCs around the same time, then sure, their costs go way down, but they can also charge a lot less, because the competition has the same "advantage"!
It's like:
"Hey, man, do you really think your grocery store can make those superhuge profits when you sell at the wholesale price?"
'Oh, no, I have a plan. You know those barcodes they're putting on products now? I'm going to invent a way to integrate that with the checkouts, and boom, I don't have to pay for people to put price tags on. Labor costs go way down!'
Same problem: "No, you're not. Someone better at that will, and they'll sell the tech to all grocery stores."
There was never a reason to believe Kalanick's operation as it stood in 2010/11 had that comparative advantage, so that strategy never made sense. And today, not surprisingly, Uber is one of the worst at SDCs, and is correspondingly unlikely to have that advantage.