
Will the Uber/Lyft IPOs Finally Change the Public Narrative About Ridesharing? - Cbasedlifeform
https://www.nakedcapitalism.com/2019/05/hubert-horan-will-the-train-wreck-uber-lyft-ipos-finally-change-the-public-narrative-about-ridesharing.html
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manfredo
> Uber is the breakthrough case of a company that skipped the difficult
> process of finding legitimate efficiency advantages, and used tens of
> billions in predator investor subsidies to fuel its rapid growth.

This is just so blatantly false that it's hard to take the rest of the article
seriously. Let's take just a cursory glance at Uber and Lyft's efficiency
advantages:

* Uber and Lyft have massive efficiently advantages over traditional taxi cabs and ride services. Taxis drive around the city burning fuel while they look for someone to wave them down. This results in considerable wasted time and gas between rides. Uber any Lyft drivers connect to the internet to get hailed by drivers, thus getting rides at a much higher rate and without burning gas driving around waiting to get hailed.

* Uber and Lyft handle payment, thus avoiding the issue of cabs with credit card machines that don't work - and more often than not, mysteriously start working again when the passenger explains that cabs (at least in my city) are required to have operating credit card machines and if the machine is inoperable the ride is free.

* The fact that ride share companies don't hail drivers on the street means that they are not required to be a part of the artificially constrained supply of taxi medallions. This allows for much lower barriers to entry for drivers, and eliminates the need to spend six figures on medallion.

* GPS tracking of riders and drivers is a safety benefit.

Saying that Uber and Lyft did not develop efficiency advantages is just
willfully ignorant. There's valid complaints to be raised about these
companies, but saying that they have not developed any efficiently advantage
is just plain wrong.

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sharkmerry
You are correct that they brought these innovations to market, but the point
here is that the biggest determining factor is price.

The next line from your quote was.

>These subsidies distorted normal price signals which in turn subverted the
ability of consumers to allocate resources to the most efficient competitors.

I think that makes clear that while Uber did introduce some efficiencies, they
still were not competing on an even playing field given their massive funding

~~~
manfredo
> I think that makes clear that while Uber did introduce some efficiencies,
> they still were not competing on an even playing field given their massive
> funding

I don't think so. The article wrote that Uber, "skipped the difficult process
of finding legitimate efficiency advantages" It sure seems to me that the
author is claiming that Uber did not find efficiency advantages, or at least
not any "legitimate" ones. This isn't the only place where the author
essentially claims that Uber and Lyft provide no value:

> The narratives Uber has successfully manufactured are the key to how $80
> billion was created out of thin air and key to the subversion of the market
> discipline that would normally limit these resource misallocations and
> welfare losses.

Apparently Uber's $80Bn valuation was "created out of thin air" and not, you
know, building and engineering an internet based ride-sharing application.

> Uber is the breakthrough case where the propaganda-type narratives that
> dominate partisan political coverage successfully developed a multi-billion
> dollar private company from scratch.

This is just a small excerpt of a whole section that essentially tries to
claim that Uber and Lyft's sole reason for their valuations were the narrative
and hype they built up around their brands.

Personally, I think this author thinks that Uber and Lyft are going to be the
next Theranos - the way he tries to attribute the former two's valuations with
a narrative and propaganda rather than their product seems very similar to how
Theranos was covered after its collapse. But unlike Theranous, Uber and Lyft
actually have a product. One that may not turn out as well as its later
investors as hoped, perhaps. But it's not going to crashing down to the bottom
like a company that actually fakes having a product..

~~~
sharkmerry
>> I don't think so. The article wrote that Uber, "skipped the difficult
process of finding legitimate efficiency advantages" It sure seems to me that
the author is claiming that Uber did not find efficiency advantages, or at
least not any "legitimate" ones. This isn't the only place where the author
essentially claims that Uber and Lyft provide no value:

The efficiencies you state did not cause them to have lower prices though, the
lower prices came the effect of the funding that turned into subsidies.

~~~
manfredo
Do you earnestly think that using a mobile app to pair drivers with riders
(and especially multiple riders with similar destinations through pool)
doesn't offer any efficiency advantage over driving around burning gas and
waiting to be hailed?

On top of that, it's not just lower prices it's also better service. I'm sure
there's some people that have their Uber horror stories, but I've had several
cab drivers that said some really creepy stuff (stuff that a >6' man like me
just kinda cringes at, but I can definitely see it being very uncomfortable
for women). It's night and day, Uber/Lyft drives have always had clean cars,
didn't pull any route shenanigans, and often had amenities like water and
wifi. My only bad experience was when a driver messed up the destination and
ended up getting on the Bay Bridge. He apologized profusely, ended the trip
immediately on the app (so I barely got charged anything), and drove me to my
destination.

While I think it's true that these companies are offering rides at
unsustainable rates at the moment, I don't see customers ditching Uber and
Lyft for cabs even if prices rise by 20-30%.

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thorwasdfasdf
I don't know why investors would be so fatalistic. I mean, if Uber really was
destined to do well, it will eventually show up in the profits and earnings in
the years and decades to come. The only reason to cash out quickly right now
is if they think future earnings will be terrible and it was all just a get
rich quick scheme hinged on finding a greater fool

