
Uber and Lyft Have Become Indistinguishable Commodities - prostoalex
http://bits.blogs.nytimes.com/2014/08/28/uber-and-lyft-have-become-indistinguishable-commodities/
======
austenallred
I took Uber a half dozen times in the past couple days (on vacation). Since
I'm very interested in the Uber vs. Lyft battle, I've been talking to all of
the drivers.

All of them except for one drive for both Uber X and Lyft, and none of them
really care one way or the other about who wins. Only one had a pink mustache,
and it was a little stuffed one on the dashboard, probably six inches wide; he
also had an uber sticker. One expressed worry about Uber taking over and not
having a competitor to hold its feet to the fire.

The one who only drives for Uber is a new mother that just likes to get out
and talk to people who aren't babies, and she gets paid to do so.

To them, at least, the article is right. The services themselves are awesome,
yet mostly indistinguishable.

Interestingly enough, I'm 99% sure if I came here pre-Uber/Lyft I would just
rent a car. I have a serious aversion to taxis, but Uber just takes the pain
away. The drivers noted that tons of people have been saying that.

------
BronSteeDiam
I've been using Uber for a while now, at home and on holiday. I still haven't
tried Lyft. The main reason being it's not available outside the US, and I'm
one of the few people out here in the world.

Last month I was in San Francisco and I STILL couldn't use Lyft, because you
need a US phone number to sign up.

From day one Uber has been thinking on a different scale.

------
hol
“I’ve noticed lots of Lyft drivers dropping the signature pink mustache from
their cars. Many also don’t bother with the fist-bump introduction, another
Lyft convention.”

This is very noticeable now. Lyft used to stand for a different customer
experience to Uber, but now it's effectively the same. It's sad (although
probably inevitable) that their growth has lead to such a dilution of their
brand.

~~~
potatolicious
The fist bump was always awkward. This isn't Couchsurfing, you're not my buddy
and we're not about to share some profound life experience together. I'm not
going to get out of your car in 10 minutes with your contact and a promise to
grab a beer.

This is strictly a quid pro quo transaction - nobody is going around riding
Lyfts to meet interesting people, except maybe journalists hunting for a
story. And nobody is out there driving Lyfts to meet interesting people...
except maybe journalists hunting for a story. Let's not pretty it up with SV-
style faux-populism.

Friendliness and mutual respect? Absolutely, the same respect and courtesy
you'd show to any other human. But let's be real about the other stuff.

The fist bump got dropped because neither the drivers nor passengers cared
about the fist bump.

~~~
rjf1331
I thought the fist bump was awkward, but I would disagree with your statement
that nobody drives around to meet interesting people. Most of the drivers I
meet actually say that's a big part of the appeal.

~~~
rhizome
He didn't say nobody drives around to meet interesting people, he said nobody
_rides_ for that reason.

~~~
jn
He said both

------
jw2013
For one thing, how many drivers they have matters. More data might produce
better estimated ETA (at least Uber use the data from the drivers to predict
future traffic congestion, etc.).

Another thing is how well they control supply and demand. Say Uber has 10x
drivers than Lyft, what if Uber has 100x consumers than Lyft? Uber likely has
to surge at a very high rate, and the consumer can't afford a surge might go
to Lyft instead. Since Uber can't control well how many total consumers they
have at the moment without surging, one realistic alternative is to just
reduce the number of Lyft drivers, so Lyft have to charge higher rates as
well.

Here Uber doesn't just want more consumers coming in, because even less
consumers is better than more consumers come in initially and can't afford a
surge and then have to turn to Lyft.

So to sum up, in the end, Uber have to recruit more drivers (hey, they even
just opened API for their product) or cut the number of drivers from Lyft
(through alluring them). You can't blame Uber on that, it's the
competitiveness of this market.

------
jonemo
I don't use these services much, so I might be confused, but wasn't Uber
initially a limousine/black car type service with professional (insured,
taxed, maybe trained) drivers, and only later expanded into "ride sharing"
with UberX, while Lyft has always been doing ride sharing?

Personally I prefer the old Uber over the "ride sharing" Uber and I don't
really understand why they have diluted their brand to the point where some
people don't even realize that Uber drivers are not necessarily random people
driving their family car, but may be professional drivers.

~~~
ghshephard
I use both of these services extensively, but have only used Uber (the
limousine service), a half dozen times or so.

UberX is at least a 20x, if not 30-40x larger business than Uber proper, which
is why they transitioned away from simple black limousine service. A trip to
San Francisco by Taxi from Redwood City is about $105. Via Uber it is about
$150 (presuming no Surge Pricing) - Lyft/UberX charge me about $40-$55
(depending on wait time). And, unlike a Taxi, I get almost immediate service,
by a courteous and professional driver eager for good feedback. As a 15 year+
user of taxis on the peninsula, and having taken Lyft/UberX around 100 times
so far - I get a much more enjoyable experience in Lyft/UberX than I ever did
in a taxi, some of who _did_ know the area, but many of them just confused
new-arrivals to the Bay area in dangerous vehicle that had me fearing for my
life.

~~~
jonemo
I didn't realize RWC-SF is only $50 on UberX, maybe I should try that some
time! The only experience I have made with taxis around here is meeting them
on the road as cyclist, and that's enough to never want to be inside one.

One thing that speaks for taxis is that they are insured for commercial
transport of people so if I get hurt in one, it is likely that I get
compensated. How does this work for UberX/Lyft where people use their personal
cars?

------
maxk42
They absolutely have not. Lyft is far cheaper and the experience has been
better for me.

~~~
TeMPOraL
If the services are pretty much equivalent, and the only thing left to compete
on is price and/or some vague elements like experience, isn't this basically a
textbook case of commodity?

------
baddox
Based on my own personal comparisons in San Francisco, I would mostly agree.
Most of the differentiation relevant to me is the app itself. I still mostly
use Sidecar, solely because it has the easiest workflow of choosing pickup and
destination. I also agree with the article that this is a good thing for
riders.

~~~
toleavetheman
I'm glad to see Sidecar mentioned. I too live in SF and use all of these apps,
and Sidecar has been my first goto for years. It's odd that Lyft and Uber seem
to get all the press. When Lyft got really obnoxious with the mustaches and
fist-bumps, my order of checking for rides was: Sidecar -> Flywheel -> UberX
-> Lyft.

~~~
hueving
I think it's because sidecar is significantly smaller than the other two. It's
in <=10 cities or so IIRC.

------
jusben1369
Recruiting drivers from each other: So if Google heavily recruits sw
developers from Apple or Facebook does that mean Google and Apple are
basically the same company? Did someone tell Amazon yet that you don't want to
be a commodity? I'm ok being the number 1 in a commodity market if the
opportunity is to make 10 cents on every mile anyone ever travels on the road?

Not really sure what the point of the article is given this is transportation
the actual "thing" (getting from point a to point b) creates commoditization.
But there are sooo many ways to use technology and service to then
differentiate and then win. And this is an industry in such a early/nascent
state.

------
jeffmanu
The sharing economy has a common core I.e uber,Lyft,airbnb. Social currency
and brand equity will make one win over the other. What customers remember to
say about the brand is what will make someone remember to either open their
uber or Lyft app the next time they need a ride. If I were in charge of their
marketing id invest heavily in product placement for at least a year.

------
rokhayakebe
The fact that these companies are working extremely hard to recruit each
other's drivers means they are the same companies. Otherwise they would focus
on some other core competency.

Google does not need to tell you they are better than another search engine.
Use it once, and decide.

------
encoderer
Assuming Uber goes public in the near future (and I believe it will), I
wouldn't be surprised to see them buy Lyft. Who knows. Lyft could IPO before
that happens, but I would bet on it happening. See also: Seamless & GrubHub,
Zillow & Trulia

~~~
zak_mc_kracken
Whatever happens, it's very likely that only one of them will go public.

And given how indistinguishable both have become and how non-sticky their
service is, it wouldn't surprise me if the very existence of two competitors
that are so similar makes it impossible for either one of them to reach the
kind of profitability that's a requirement for IPO's.

Kudos for disrupting the taxi industry, which was in dire need of a kick in
the butt, but I think both companies are about to discover that profitability
is a lot harder to achieve when you have competitors who can run a business
that's 100% a clone of yours.

The simple fact that most drivers are working for both Uber and Lyft should be
a red flag for any savvy investor.

~~~
encoderer
> Whatever happens, it's very likely that only one of them will go public.

Your analysis of the IPO situation could use another look. I personally think
it's very likely both companies will go public -- or Uber will snap up Lyft
before it has the chance. While it's pretty reasonable to think there would be
a "profitability requirement", a look at tech IPOs dispells that myth. Look at
the recent ones, the ones from a few years ago, the 20 year old ones from the
90s, doesn't matter which period you look, you'll find scores of unprofitable
companies.

Recently Go Pro and Twitter went public. Neither, I don't think, are
profitable. Of the 4 companies I mentioned in my comment, I don't think any
are profitable consistently though perhaps Zillow has been recently. Amazon
went public 20 years ago and is still not profitable.

Neither of these companies need to turn a consistent profit in order to IPO. I
imagine they both already have sales high enough to pass the chickenshit
threshold. That's all that counts.

~~~
zak_mc_kracken
Fair points, we'll see how things unfold. I still stand by my claim that at
most one of them will go public. After that, either that one will buy the
other one or one of them will fade (probably the one that didn't go public).

------
revelation
Might as well treat them as that, then. I envision an app called _RideMETA_
that orders you a cab from each and cancels on whichever doesn't arrive first.

It's all about the customer and raw, capitalist competition as they keep
telling us.

~~~
prostoalex
> I envision an app called RideMETA that orders you a cab from each

Such app has been built, promoted, denied access and subsequently shut down
[http://techcrunch.com/2013/06/02/corral-
lyft/](http://techcrunch.com/2013/06/02/corral-lyft/)

~~~
revelation
Well, part of the whole _commodities_ thing is that the ones being turned into
commodities don't want to be.

But in true capitalist fashion, Travis would be proud, we of course can't
allow them.

~~~
mseebach
There's no theory of competition that expects incumbents to allow their own
infrastructure to be used against them.

But you're right, if the article is correct, we should expect Uber and Lyft to
fight tooth and nail to provide the better product for consumers, which is the
beauty of competition. They do all the work and take all the risk, we get
almost all the benefit. Both companies seem uniquely placed to have exactly
zero chance of capturing regulatory favours.

~~~
anjc
It's not necessarily a competition thing though, is it. Intermediaries sit on
top of them, rather than competing. And they rise in many industries because
they can provide value that suppliers can't. In the travel industry, consumers
want (for example) the cheapest rates on elements of holidays, hotels etc. So
price comparison sites happened. Suppliers can't do anything about this in
terms of competition, because the intermediary has a value proposition that
the suppliers can't offer which the market wants, and the suppliers want the
sales anyway.

With ride sharing, consumers presumably want the cheapest, quickest, cleanest
fleet. I doubt fist-bumps really factor in to the experience. Suppliers can
improve their fleet, improve their drivers and so on, using their own
perspective as a guide. Aggregators can offer the cheapest, quickest, cleanest
fleets to the market without having the limited perspective. They get a better
view of the market through this too, potentially adding value to the whole
supply chain.

Incumbents don't have to allow their own infrastructure to be "used against
them", but they will, because this is what the market wants.

------
adamio
I think taxi's are naturally commodities.

Uber and Lyft are basically dispatch and payment processors. Similar perhaps
to a credit card processor.

~~~
sitkack
This is where they are heading, they want to be the Visa of personal
transportation (and more).

------
georgeecollins
Uber is a good business, but valuing it at $18 billion seems absurd to me. You
can't price businesses as though they will have incredible growth without some
discount for the risk involved. One of the risks is competition.

~~~
afafsd
> You can't price businesses as though they will have incredible growth
> without some discount for the risk involved. One of the risks is
> competition.

I'm just gonna go ahead and assume that the investors understand this basic
principle perfectly well, you're not being cleverer than them by disagreeing
on the valuation, you're just using different assumptions about how incredible
the growth could be and how large the risks are.

If Whatsapp can sell for $18 billion I don't see why Uber can't. Uber, after
all, has an actual business model and income stream.

~~~
npkarnik
Whatsapp is a paid service and was profitable (probably highly highly
profitable)

