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Uber Revenue Growth Slows, Losses Persist as 2019 IPO Draws Near (bloomberg.com)
199 points by schintan 5 months ago | hide | past | web | favorite | 278 comments

Maybe because I'm outside the unicorn bubble I can't see the magic, but I find something very warped about a business strategy that combines stratospheric valuation, intentional regulatory non-compliance, perpetual capital injections, service misrepresentation, and unprofessional corporate behavior... and results in massive financial losses year after year.

When I try to balance the elements, it frankly looks like an enormous grift. Some key early investors have probably made out really well, but at what cost to others involved?

Not that the taxi industry didn't need disruption - it desperately needed a modern ride calling and fare estimating feature. But being well regulated and having to compete with a maverick service that simply ignored rules meant that the taxi industry lost while Uber gained.

Drivers for Uber have come out losers as well, earning much less than expected.

Passengers did well at first, but surge pricing and eventual regulatory costs eroded that gain as well.

Late investors? The jury is still out on them, but likely they will be losers too.

Who won?

>Maybe because I'm outside the unicorn bubble I can't see the magic, but I find something very warped about a business strategy that combines stratospheric valuation, intentional regulatory non-compliance, perpetual capital injections, service misrepresentation, and unprofessional corporate behavior... and results in massive financial losses year after year. >When I try to balance the elements, it frankly looks like an enormous grift. Some key early investors have probably made out really well, but at what cost to others involved?

I think you're way too pessimistic here:

(1) A whole industry of rent seekers (medallion owners) was mostly run off

(2) The taxi experience in cities other than NYC, Chicago, and SF got a million times better. Before Uber in a city like Nashville you call for a taxi and maybe one shows up at some point. Since Uber you can reliably get a ride whenever you want. And that's not even talking about discrimination.

(3) Uber caused a dramatic decline in drunk driving. Likely because of (2)

(4) It allowed people to make some money with a flexibility that traditional jobs don't offer

For me, Uber/Lyft has definitely had the biggest positive impact on my life out of any tech company in the last decade. The only close competitor would be Android/iPhone. I don't know if Uber is worth the ~60 billion that they were last valued at, but they definitely fill a legitimate role.

> The taxi experience in cities other than NYC, Chicago, and SF got a million times better. Before Uber in a city like Nashville you call for a taxi and maybe one shows up at some point. Since Uber you can reliably get a ride whenever you want. And that's not even talking about discrimination.

That is a good point I hadn't considered until now.

I remember back in my college days in Champaign, IL right before Uber's debut, I would have to call three separate cab companies a day ahead of time and then the day of to get a ride to the airport, and only one would maybe show up.

I ended up befriending an Ethiopian cab driver that was really kind and responsible and only then this challenge came to an end.

As a recent UIUC grad, it takes a few minutes to get an Uber there now.

Glad to hear a confirmation that what GP is talking about has had that positive impact as it sounds like Uber solved a genuine problem that existed there. :)

What do you mean by, "and only then this challenge came to an end."? You simply stopped calling him?

They mean: only after befriending the cab driver did the challenge of getting to the airport become easy.


> The taxi experience in cities other than NYC, Chicago, and SF got a million times better.

It wouldn't be fair to NYC and Chicago to compare them to SF. In my mind, the completely horrible broken experience of the SF taxi system was what created Uber & friends. I've been living in SF pre-Uber and having moved from a big city, the taxi system just drove me nuts, I could not understand why it was that fucked up. If it were as good as it is/was in NYC, prob we would've never seen Uber.

The part I really disliked about the NYC cabs is that you never knew how much it going to cost you. And similarly the driver never knew where they would have to go. With Uber, both parties have this information ahead of time.

Huge improvement.

I went to NYC for the first time about 20 years ago. I was looking for a cab from JFK to midtown. A limo driver said he'd take me for $30 (more or less -- I don't exactly remember). I had no idea really if that was a good price, but I remember thinking, "at least I know what the price will be," and I took his offer.

I was under the impression that Uber does not reveal the destination of the customer until they have picked them up. Is that not correct?

For trips over a certain length (maybe 45min) they get more information about that kind of length

> The part I really disliked about the NYC cabs is that you never knew how much it going to cost you.

For black cab service, yes, you did. For medallion (yellow) cabs, it's always metered (except for the airport flat rate).

How much did you take Chicago cabs? It wasn’t great. Broken seat belts. Cabby talking on speakphone entire trip. Skip stop lights. A few extra turns to add some distance.

The worst part of the medallion story was how the industry tricked the driver's into investing back into the medallion scheme, thereby becoming small time exploiters the next generation of drivers (n=2) and in any case winding up with often negative assets when the inflated price cratered. Meanwhile the owners of say ticker TAXI and their trust fund kids are probably doing just fine

I lay most of the blame for this with the NYC TLC for restricting medallions in the first place. The real way to reduce congestion is use fees, and it puts a natural cap on the number of taxis. Ideally, the fees are used on improvements to mass transit.

My take away from Uber and Lift was restricting the number of cabs was a mistake. Would have been better off all around to actually just partially subsidize them. And make buses/subways free.

I get a lot of flack for that position, my response is we heavily subsidize private cars.

buses and subways don't have to be free to be awesome. In fact I suspect subsidization and political control of them is part of the problem. One of the world's best public transport systems, singapore, is at least partially privatized (it once was fully privatized, and arguably system quality is going down) - and it has the lowest fares I've been on.

I’d agree with Uber making a big positive impact, but without the iPhone, there is no Uber. I’m not sure many remember the challenges to ordering a taxi/booking a ride pre-Uber. The problem though is it is very much like the airline industry pre 2014. It is a challenging business model with a lot a capital and resources required to make it work. Ironically, Travis probably could have sold Uber Eats to Amazon now and the self driving car unit to GM! But, a pre-ipo company probably doesn’t have a great initial business model when they feel that it is necessary to pivot from it.

I used to call Uber in the early 2010-2012 days on my Blackberry by texting my current location. Worked great even without an app.

Yep! You can see the option in this cache of the site from January 2011:


Interesting. I didn't know that. I wonder if there was any 00's era startup that tried to create a taxi hailing service prior to the app store developing? My gut says the iphone/app alongside location data was critical for widescale adoption.

>but without the iPhone, there is no Uber.

An Uber company that still took calls but actually accepted a cross street in downtown seattle would still be a million times better the yellow cab's "Sorry, but we can only dispatch to a full street address"

I think about this all the time. I spent 2008-2016 in several countries outside of the US. Before I left it was incredibly difficult to be a socially active and employed adult without a car unless you lived in a major metropolitan area with a good public transit system. Taxis were around but totally unaffordable for more than a few trips on the weekend while drinking.

When I moved back my drivers license had expired and since I live in a different state now I will have to take the driving test all over again. I've been here for almost three years now and I never bothered buying a car because I can get anywhere in town for less than $15 within a few minutes of requesting a ride. My monthly rideshare costs are about $450, which is comparable to the cost of owning a car. There are some inconveniences but it has totally changed how I get around and where I choose to live.

I agree. This is even more true in countries other than the US, so ironically, places far away from the unicorn bubble.

I travel a lot internationally, and in so many countries I have been able to just get out of the airport, open my app, and hop on a ride—it's fascinating and amazing what a revolution it has been in barely 5 or so years.

Just like everything with Uber this is hooey. (3) does not appear to be true. https://www.thegeneralautoquotes.com/resources/uber-affectin... (2) may be true but only because Uber is subsidizing its expansion with a mountain of capital. It can't actually sustain the expanded driver pool, which also makes driving unliveable for individual drivers.

From your cite:

>Based on our main findings, along with the above summary of the general habits of people who use rideshare services, the data seems to suggest (emphasis on “seem”) that many rideshare customers are opting to hail a ride home after an evening at the bar or club, rather than risk driving intoxicated.

This is what people have historically done when they are drunk, it is not a new behavior invented by Uber.

It's not what people typically did because taxis were not generally available in most US cities. You couldn't rely on a taxi coming to pick you up at your home nor rely on one being there when you wanted to leave.

Nevertheless there are other options, such as calling a friend, taking the bus, walking, etc. It's not clear that Uber resulted in people who would otherwise have been drunk drivers instead calling a cab. People who drunk drive presumably don't arrive at that choice because of a minor inconvenience.

Any source for #3? I'd be curious you read these statistics.

Progress won. It is infinitely easier, more affordable, transparent, convenient, and the overall experience of riding uber is hands down better than any Taxi experience I've ever had by a an extremely long shot, anyone I've spoken to agrees. Sure there are still improvements, but all in all, as a frequent user, I have to say getting a ride is hands down better with uber than before it.

Well it's easy to produce "progress" when you're willing to operate with massive losses fueled by other people's money. Take any customer experience that sucks and inject billions of dollars into it and lo and behold the experience improves mightly.

It's a little like saying the theater-going experience has been improved thanks to MoviePass.

This is an incredibly shortsighted view of Uber if you're being serious. MoviePass doesn't alter the end experience of watching a movie at all, but Uber significantly changes the experience of getting a ride. I'm sure most people would agree that even if they had to pay the same price as a cab, they would prefer the Uber experience over the old model.

MoviePass makes going to the movies far more bearable, for expensive ticket prices have long made theaters not worth going for a long time.

If Flywheel and similar taxi apps were priced the same as ride-sharing apps there would be greater competition with Uber and Lyft.

I can't speak to that, I didn't invest in UBER or follow its financials. I just enjoy the huge convenience and overall greatly improved experience they have provided me over using taxis, so that is the answer I provided.

Absolutely! Even in cities like Bangalore, far away from SV but still big, Uber (and Ola) created a new market altogether. In Bangalore for instance, hiring a taxi was an amazingly painful experience; in terms of lack or convenience as well as exorbitant price. Until Uber/Ola came along I had hired a taxi maybe 5 times in 9 years. Since then I've almost stopped using my cars. Uber/Ola has become my daily commute as well as for any errand etc.

Another aspect that's not discussed much is the drastic reduction of cognitive load. Earlier moving around in a city would require lot of planning - route planning, parking etc,. All of that is now a thing of history. And don't get me started on how ridiculously inefficient is car ownership and how mentally and physically taxing commute driving is!

>Progress won

That's a unnecessarily simple reading of this situation, don't you think?

No. I think I’m practical terms this is the major impact on the world, the rest of this thread is window dressing.

I found perhaps a dozen other taxi / ride hailing apps when I was making my own proof of concept.

Lyft's innovation was "regulatory arbitrage".

Uber's innovation was burning investor money.

There are times when I've pondered, "Gee, what could have happened if I had finished that POC?" But I don't think I would have ever thought to break the law, burn investors, or exploit drivers.

Passengers won, since most rides were (or still are) subsidized from venture capital raised by the company. It's almost like a wealth distribution of it's own, through the value of on-demand transportation.

You could also talk about how it disrupted the taxi medallion market, which was an older solution to the trust problem of getting into a car with a stranger, but for many cities that wasn't really in need of disruption, just optimization.

Passengers win for now, not necessarily won for good.

Do you think the public markets are going to allow Uber to keep bleeding this much cash year over year?

Prices will go up on consumers just as Uber has completely dominated the market and effectively has no competition. They’ll be able to charge whatever they want.

Who cares? Markets are fluid and dynamic.

Passengers won for a while, and may keep winning, but nobody expects them to win to perpetuity just like nobody expects a market to remain static. If anyone is going to end up worse than before ridesharing, it's the people who put the money into the VC funds propping up the market.

Everyone except owners of taxi medallions and maybe Uber investors and taxi drivers won. Black people who could actually now get a taxi won. People who wanted to reserve a car and have it show up on time won. People who wanted service in places taxi drivers didn’t want to go won.

Taxi regulation was so comprehensively captured and rider hostile, and this was true for so long, that there was never any reason to believe it would improve. If all Uber achieved was coming close to burning that entire industry structure to the ground Uber is a massive boon to everyone who wants a ride and doesn’t want to deal with lying, cheating, lying, racist taxi service.

> the taxi industry didn't need disruption - it desperately needed a modern ride calling and fare estimating feature

What about areas that had little to no taxi dispatch service before Uber/Lyft?

And what about regions where supply of cab driving licenses was artificially constrained?

Or where drivers:

- could refuse service based on factors like customer's race without repercussions.

- accept nothing but cash as payment.

- take the "scenic" route when they realize you're from out of town.

I'm not happy about the way Uber got here but I also don't want to go back to the world before it.

The consumers won.

Before Uber, traveling abroad in another country meant getting scammed by taxi drivers. After Uber, there is now a safe, trustworthy, and familiar mode of transportation when in a foreign place.

Note: Lyft is only domestic.

Precisely this. I'm an expat and have lived abroad for the last 10 years. Uber has made my life more simple and less stressful when traveling. No longer do I have to figure out how to book a cab at an airport after landing, or how much it really should cost me. I no longer have to hail a taxi on the street and be charged 5x what a normal fair would be because of the color of my skin or the accent in my speech.

Uber has revolutionized transport in all of the areas it has disrupted. Bad comes along with the good, but for consumers, the good outweighs the bad (at least for now while the prices are VC subsidized).

Incredibly useful point. It's easy to look at these companies through the U.S. lens but they have changed the game for international travel as well.

I definitely won! An early driver (2009), I'd just quit a low pay postdoc job, and 1.5x'ed my take home pay. Since I was a Lyft driver, Uber gave me a crazy signing bonus including 50 hours a week at 40 an hour (I found the farthest Starbucks in the service area and worked on coding katas). At the end of the year when I got my 1099 I calculated that Uber lost $8k on me, which is about as much as I put in the crypto currency markets around that time...

I certainly won. In my city of 400,000 we only had one unreliable cab company, Uber is much better than the alternative. Uber Eats also destroys the previous delivery service that was around. They're a really valuable service to me

Riders won big. The ability to order a car and get a ride in minutes is now engrained into society. Who can imagine major metros in the US without ride share? The continued capital injections and subsidized prices have been great for consumers.

One needs to include in their calculation of winning and losing whether their private data means anything to them.

Uber, for example, sucks from your phone access to your camera, all of your contacts, your location at all times, your microphone at all times, and the ability to dial or text from the phone itself.

At the same time, all of the people in your contacts have their privacy productized as well, involuntarily and silently.

The ride isn't the product. The riders are.

You can order an Uber from Maps and don’t have that problem.

Only if your device has Uber installed on it AND you are logged into the Uber app. By then, they already have all your data, and that ride is fully linked with your other usage. And as a bonus, Google also now has those details added to youf dossier.

It's sad how easily people can be duped transparently.

If you don't have Uber installed, Maps doesn't even show you the option.

Ah my bad I just vaguely remembered having this option when I was in Vienna, I guess I must have had Uber installed at that time.


Are you sure you’re outside the bubble? Because the taxi industry could have done with some improvement, but it didn’t “desperately” need “disruption”. People got from a to b just fine, and drivers got paid.

The only thing that desperately needs disruption is the destructive influence SV has on societies that were doing just fine before its “disruption”.

Don't know where you've been getting taxis, but they were literally one of the worst services anywhere I've ever been to. Prague: ton of documented defrauding of customers, taxi drivers making little money otherwise, fights over stations, literally mafia stuff. London: You know how everyone is lovely and polite, say in restaurants? Not so in London taxis, you'd hardly get a hello, drivers would always purposefully drive you as long as possible to make the most amount of money, etc etc

It was heavily unionized and the only people winning were at the top of unions, everyone else was losing. Yes, it desparately needed disruption.

London is one of the last cities I would complain about taxis in—and one city where I don’t use Uber. (Not that I use a lot of cabs because the transit system is good.)

Are you the one in a bubble? The taxi industry was an absolute mess outside a few select cities—at least here in the US.

Not sure how all three of drivers, Uber's profit, and passengers could all be losing. I think passengers are making out quite well atm. I haven't owned a car since Uber has been around, and get chaffeured around at a super affordable price.

Most of the Uber drivers I speak with are also doing better than if Uber didn't exist. (Naturally, if they didn't believe that, they wouldn't be driving for Uber still, but even as I engage halfway deeply into how it's going for them, most of them seem to genuinely understand the costs and have good reason to believe they're being made [sometimes much] better off by driving for Uber.)

That strategy works, even on public market - check Tesla.

Lance Armstrong

Uber is getting more expensive with time as they try to consolidate losses. For my commute to work nowadays Express Pool costs the same as UberX did a year ago. And of course express pool includes overtly long sight seeing detours and dangerous pick up/drop off points. This is getting prohibitively expensive and I plan to switch to an electric scooter + public transit in a few months.

This is a good summary of the VC economy: Use it as long as it is subsidized by VC Money, then switch back to whatever you used before.

Also the part about one VC passing the buck to the next, allowing them all to benefit reputationally from asset inflation - until the bubble pops. Then only the last ones holding the bag lose.

Edit: VC is actually not passing to VC, but larger investment funds like PE.

In the case of unicorns that don't meet expectations, it's usually the employees who were compensated in stock or options left holding the bag, since investors try to lock in preferred payout.

That only works if the VC money runs out before your alternative goes out of business. A company with enough reserves killing local competition by undercuting it so much that everyone trying to compete has to lose money isn't unheard of.

> Express Pool costs the same as UberX did a year ago

This is very unlikely.

I could see it if op is including discounts. Uber and Lyft for me go thru cycles of heavy promos followed by dry spells.

I highly recommmend the electric scooter. So fast and so fun. I got this one:


I had that scooter and used it for my daily commute for a couple of years. The first time I hit a pothole, I shattered my clavicle and had to call an ambulance. The second – and last – time I hit a pothole, I broke my humerus in two places but was was able to take a Lyft to the emergency room. I completely lost the use of my right hand for a couple of months because swelling pinched off the nerves. Extremely inconvenient for someone who works in front of a computer.

I would strongly recommend that you not ride an electric scooter. Consider the diameter of the wheels. If you hit any pothole or rail or anything which has a lip higher than HALF the diameter of that little wheel, you're going to go flying over the handlebars. If you ride it every day for months or years, you're going to crash, no matter how careful you are, at least on SF streets.

I don't understand why you went back to using a scooter, if you were so clearly able to diagnose the dangers, and had one fairly severe injury. Why not switch to a commuter bike (the ~1 ft wheel foldable ones)?

Also, separate question, my understanding is that potholes are mainly formed by freeze/thaw cycles -- weather not typically found in SF. Have you lived in Chicago or NYC? Can you contrast the pothole density between those three cities?

After the first time, I thought it was a one-off and that I could avoid further injury by being more careful. After the second time, I realized that was foolhardy.

Potholes in asphalt can be caused by pressure from tires too. I've never tried biking or scootering in a different city so I can't compare the quantity of potholes.

Or, a bicycle. You can get a good one on craigslist for a hundred bucks if you're patient. You may get a bit sweatier but you'll get an exercise ;)

Or, there's no hills, and you go your own pace, and it's fine.

Having tried both I do feel bicycles are safer - those tiny scooter wheels shake me to pieces.

Another thing I like about bikes is that it can be really therapeutic to perform your own tweaks, maintenance and repairs. Yesterday fitted new break pads and it’s such a pleasure to ride and is satisfying as hell.

If it stops raining sometimes in the next year or two I'll give it a try!

Hah, we're opposites. I always get frustrated trying to do it the right way and end up hacking it together shittily

I built an electric bike from an inexpensive normal bike + Bafang motor. Total cost <$1000. I have never been happier with a vehicle. This is really the best of all worlds.

Oh snap, got a blog post or anything? Would love to kick a motor on to help on the incline home.

There are a million tutorials online, just google "bafang tutorial"; I found this video informative https://www.youtube.com/watch?v=jf6BMf28ats but again, there are many many others.

One point important mentioning though is that once you put a motor on the bike you kind of have to use it all the time, because 1/ you lose the front derailleur, 2/ motor + battery weight around 6-8 kg, and 3/ the engine is always engaged.

It's possible to use the bike with zero assistance, on flat ground, if you need it (for example if the battery dies), but it's not something you want to do all the time.

So, it's not really a sport anymore. Yet it's extremely pleasant.

Also: you can buy Bafang motors on Aliexpress or Alibaba; I find sellers on Alibaba much more professional, and most will agree to sell just one item.

> the engine is always engaged

This isn't true, I misspoke. The engine isn't always engaged, it has a freewheel mechanism, but it's not as smooth and friction free than if there was no motor.

The usability of the bike with the motor off rests on the size of the plate you choose; if you want to be able to ride the bike easily without the motor you should select a small plate (<=42T probably).


Haha. Just to offer some more insight, I started taking Uber everyday because it was cheaper than car ownership and I am happy with that decision so far. However, now the math has changed and therefore I am considering other options. My job has decent pay to be honest. Most of my colleagues drive a Tesla for example. But, I am trying out the whole FIRE thing and not escalating my lifestyle unnecessarily.

I would normally agree but the difference could be around $5 each way for 250 work days a year. A few thousand dollars a year is quite a lot.

Cars cost more than that. If I had a choice between a second commuter car or $200/month of ubering, the ubering would be cheaper. Car ownership in the bay is something like this:

* $100-500/month car payment or depreciation

* +$100/month in gas

* $60-120/month in insurance

* $100/month in amortized maintenance costs

= $360/month minimum base cost

And if you work/live in SF or need to go over the bridge:

* $100-200/month in parking space rent

* $100/month in toll bridge costs

Plus adhoc parking costs as you use your car.

Wow. My costs: 300€/month payment which includes insurance. 60-80€ a month for gas. And mind you it’s expensive there ~1.2€/liter ~30€/month mainatence. 2/3 of it comes down to change and storage of winter/summer tires (winter tires are mandatory).

I said amortized maintenance, so when you have to replace that $300 part and pay $100-$300 in labor to do it, that is part of the bill spread over a year. To me repairs are an inevitable part of car ownership, so I put in the maintenance category. Not just replace your oil and swap your tires type maintenance. Maybe a year or two you'll have no repairs, then get a $1500 repair bill because a water pump broke, and some asshole who breaks your car window to steal nothing, leading to $2000 of 'surprise' repair costs that year.

Also if you buy a used car for $15k, then sell it 5 years later for $9k, that is equivalent to a $100/month car payment, which I call car depreciation.

My numbers do include repairs, which was 0 euros. I also have an insurance which would cover asshole scenario.

If you are regularly commuting via Uber you are doing a lot of things wrong.

Why? If it’s an alternative to owning and parking a car in a city, it seems like something that could be a rational decision especially in the absence of good transit options.

In any city where the economics of car vs uber work out in favor of uber, then necessarily the economics of train + bus vs uber work out in favor of train + bus.

That’s clearly false unless you value your time at $0

Bus + train is much faster than Uber, for example in NY. You’d take an Uber in order to have the luxury of riding alone or with a small group instead of a crowd, or because you have a large suitcase, but absolutely not because it’s faster. This is no different than the same tradeoff for taxis.

And the context of this subthread is about Uber as a full solution for commuting. So my original claim still holds. If things like always riding alone or always transporting luggage are impacting your daily commute decision and making you believe that paying the premium for Uber is cost effective, then necessarily it’s even more cost effective for you to buy and maintain your own car, and satisfy those unusual commute preferences in a way that amortizes the costs of operating your own car even in a dense urban area.

Disabled people who are unable to operate a vehicle need to work too. Sometimes jobs are too far for public transportation to be an option. What should they do instead?

? Been doing it for years

It's perfectly okay to tell someone to buy a cheaper car or one that's better on gas. Car owners spend thousands more than they need to commute to work.


Seriously? I’d argue that kicking a $5 per day Starbucks habit is hardly a sign that you need to make a career change. It seems a lot closer to plugging a mindless money leak if it’s just something you do by default.


It’s not about some random $5 charges. It’s about money spending habits that, to use the current meme, don’t bring you joy and collectively can add up to a considerable amount of money.

What do you mean by this?

Any charges made against any payment card or account that you don’t recognise should be swiftly investigated.

If a bad actor charges a bunch of cards a few dollars each, and some portion of them don’t investigate / dispute the charge that could net them quite a sum.

A comment like this reflects being part of the privileged 10%, probably even more like top 1-2%. Many are not that privileged and will never have the opportunity or chances to reach that. In the grand scheme of things it's more like luck, then anything else.

It reflects how distant some are from reality of majority of people. 5 * 2 * 5 * 4=200. For many 200 dollars per month can be a quite significant cut in their paycheck. Recurring and continuous costs like these are exactly what makes the difference

This is where you are wrong.

Anyone in the western world workforce has the opportunity or chances to change that. This is not a privilege. And certainly not luck.

I agree that for many, $200 a month is significant. That's why I'm saying - don't try to save $5, try to MAKE $5 (and much more).

There are so many ways to make money these days, you don't even need "proper" education, luck, access, none of that.

But you do need mindset and will. Most people choose to be complacent. Their mind doesn't see beyond the 9-5, beyond the concept of being a mere employee. They rather spend hours per day watching dumb Netflix content, Twitch crap, gaming, whatever it is that people do other than GROW. Just about anyone can spend a few days watching Youtube and teaching themselves the ins and outs of such things as Facebook ads, Shopify, Dropshipping, Social media management, and of course... Clickfunnels. Anyone can pick this up. You don't need to be a PhD or CS major. In fact, those are often times a hindrance. IF people only spent half the time they waste on Twitch with consuming actual knowledge - they would not care if a Starbucks cup was $5, or $50.

> dangerous pick up/drop off points

Dangerous in what way? By what measure?

> public transit

How does the previous danger measurement compare to your average ride on public transit?

I have had pick up points on ramps of highways which I am describing as dangerous. As you can see this is not a danger I would face on public transit.

Today I missed getting picked up by an Uber. I think the driver must have waited like 30 seconds before giving up. Still, it was my bad.

He apparently accepted the ride before cancelling it, because the pickup and drop-off addresses were different. I got a $6.50 charge instead of the normal $5.00 cancellation charge. I wrote into Uber about it, and instead of refunding me $1.50 they refunded to full $6.50 amount.

Sometimes my Uber fares are super cheap. I paid $3.00 to go a mile in snowy weather in Denver the other day. It was a shared ride but nobody picked up.

I think Uber is spending lots of money, and could probably make their numbers better by tightening up. They'd lose some of my rides, but probably less than half of them. In more than half of them public transportation is inconvenient or unavailable for the full route (the last mile problem is relevant to me).

Has happened to me, I was uber pissed. The Uber driver waited less no more than 2mns Max.

It's fairly rude to make them wait at all. They're not being paid while they're waiting for you.

When you order an Uber, you are buying an included 2 minutes of wait time plus the option to pay by-the-minute for wait time thereafter. This is part of the contract. One way you can tell is that if they wait 90 seconds for you and then you cancel, you get a bill for ~$5.

Shared rides (Uber Pool) is different. In that case, you're making other riders wait and, unlike the driver, there's no reasonable way to compensate them for the time. Thus, being late is rude.

It's entirely possible for something to be both legal and rude. In some jurisdictions, passers-by (e.g. hikers) have right-of-way on private land, yet not saying "hello" to the farmer whose land you're on would still be rude, should you cross paths.

I argued it isn't rude because it is part of your purchase, not because it is legal.

Part of the purchase as defined by the contract, not common courtesy.

Contracts are legal devices, but they correspond to agreements between humans that have moral meaning. I am entering into an agreement with the driver when I book and Uber, and the terms of our (moral) agreement are reflected in the legal contract. It's not rude to take advantage of something you've bought.

> Contracts are legal devices, but they correspond to agreements between humans that have moral meaning

You've succinctly distilled the differences informing our perspectives - in my opinion, the contract sets the floor: following the letter of the law (or contract) is necessary, but not sufficient for common human decency. YMMV.

I don't claim that contracts or law are either necessary or sufficient for common human decency.

If one could reliably order an Uber that would be great. But no way Im waiting outside in -10C while the app lies about someone about to pick me up.

More accurate pickup times would really help. I've rushed outside numerous times after being given a 2 minute ETA. Pretty much every time I end up waiting outside for 5-10 more minutes after the ETA changes to a longer time.

If I knew the ETA was accurate, I would be more vigilant about being roadside at the correct time.

I have never had an Uber arrive as fast as the estimate. Usually takes about twice as long as app displays when requesting the ride.

Also, there is absolutely no recourse if a driver starts driving in the opposite direction of you. I had a 3 min estimate, then driver drove 15 mins away. Called driver and he had the audacity to ask me to cancel the trip (so I'd still be charged). Was 30 minutes late and had to contact support to get the cancellation fee waived. Uber used to be the faster way to get to work than walking/bussing, but no more.

In Lyft you just cancel when the driver is late and Lyft automatically voids the penalty fee before charging you. And I hope they give an internal demerit to the driver.

This happened to me days ago and I wasn't charged for the cancellation, as far as I can tell. Not sure if it's because I called and cancelled sooner, there's no reason to wait to call if you see them driving the wrong way. Either that, or they detect a driver not making progress towards the pickup location when they decide whether to charge for the cancellation.

Could you not stand near the door once you saw the Uber was getting close? I always head to the door once it is getting close and wait for them inside.


Or just pay them for waiting.

Somebody is going to wait for somebody. When you order the Uber, you don't know exactly when it will arrive, so if you don't want to make the driver wait, you have to go to the curb ahead of time and wait there. The implicit assumption is that the driver's time is more valuable than yours.

I would very much like to have an option for the driver to simply be fairly compensated for their waiting time so that if I want to leave at 12:00, I can order it at 11:45, and they'll just wait until I'm ready to go. Higher end traditional car services will often show up half an hour or more before the scheduled time so that they can be absolutely sure to be ready when their customer wants to go. It would be nice to be able to get this level of service from Uber (for a fair price) without the driver being upset about waiting.

  an option for the driver to simply be fairly compensated for their waiting time
Like a tip, you mean?

It should be an option to pay for them to wait in a way that’s fair to the driver. There are valid reasons for a few minutes wait. For example, getting picked up from a train station in bad weather.

Maybe i'm in an a/b pool, but uber charges me if I make them wait longer than 2 minutes.

So yes, they are being paid. And even so, it wouldn't be so much of a concern if uber just paid drivers fairly.

1mn-2mn wait is rude? What world do you live in?

If you are downtown and set your pickup spot to a place that doesn't have a loading zone and thus they have to put their hazards on and block traffic, then yes.

Why make a driver wait?

Because they're waiting for me a 3 minute walk away from the location where I requested they pick me up?

If you picked a spot where it's possible to stop, then not coming to your pickup is grounds for a low rating.

Yeah, a lot of them don’t stop at the location you requested.

Over the long run, at least in the U.S. it seems like Uber/Lyft are edging towards a comfortable duopoly. Usually their prices move in lockstep (each has insights into the other company's prices through email receipt intelligence, credit card intelligence, webscraping, etc.). And their services are fairly exchangeable. For either one to win there needs to be either a massive cost advantage or some sort of stickiness factor – which neither have. Will be fun to follow the '19 IPO season with Postmates on the horizon and DoorDash fat with Softbank money

> comfortable duopoly

I don't think they have hit true market dynamics yet (rides are subsidized), so comfortable might be a strong word here.

Do you have a source for the ride subsidization? My understanding is that for mature markets they're making a decent profit; their losses from subsidies are from new markets, or new initiatives in existing markets (Pool, Eats etc).

There have been a number of "Uber is cheaper than taxis because they are losing money" newspaper articles, but they usually point to the loss of the company as a whole.

I don't think there's clear metrics into market and price performance because they're still privately traded, and changing consistently.

> Uber/Lyft are edging towards a comfortable duopoly

A duopoly the likes of which not seen since that of Yellow and Checker.

I would not call it comfortable since both are bleeding money every year. In addition, Waymo, Cruise etc. are all trying hard to put robot taxi's on the road. When that day comes, it will be interesting.

I suspect car companies will move in at that point to disintermediate the ride companies, possibly spinning up subsidiaries using fleet purchasing to get around their dealership networks.

It's just as easy to rent a self-driving Camry from Toyota.

Oh and then there's the thing where Google and Apple and probably a hundred startup hopefuls scraping APIs will try to disintermediate them at the device.

Waymo has robot taxis on the road already.

don't discount the ability for either company to build that stickiness. They know this is important.

Think credit cards, collaboration with last-mile transportation (Uber + Bird), discounts on restaurants, things of that nature. They can and are working towards building more of a brand ecosystem.

That's what they are both trying to do but I just don't see the big breakthrough there yet. Even Ridesharing + X (e.g. bikes or scooters) they are moving the same direction. really curious to see how this plays out – pretty exciting from a spectator perspective.

certainly exciting!

Restaurants are the most price-sensitive, tight-margin business you can think of. Groupon was a famous disaster for them.

Who is going to pay for these discounts? Uber's investors?

Until the money runs out.

It's a race to either profitability or the death of the opposition, at which point subsidies disappear and prices rise, so does Ubers cut of the fares.

They can't really raise prices because otherwise local taxi companies will start again.

once you knock out the current infrastructure it is hard for some one to reenter and compete. And in some locations they may lose but on the whole they would maintain 85%+ market share and set the prices. Local firms would know they are operating almost with permission of e.g. Uber, because Uber (or whoever wins) could set local prices lower to put the firm out of business again. This time however the subsidy would be by higher prices across the rest of their market.

And this will last until... self-driving cars enter the picture and bankrupt them both.

Given the amount Uber has spent on self driving cars, I doubt they'd let themselves get replaced.

Given the money the entire industry has spent on self driving cars and gotten little reward for, I don't think anyone is getting replaced for a very long time.

Uber has spent a lot of money on Self Driving car (remember the Otto fiasco ?) and is hypothetically the least advanced of them all!

Yes, from the looks of it, they are well behind in self-driving tech. If it’s inevitable that self-driving will bankrupt them, why would anyone invest in them at all?

The two scenarios I can see are

1). That their ride-matching platform will still play a role in a self-driving world. However, I think a worst case for Uber is Waymo gets there first and then Google can almost trivially replace Uber with their own matching platform.

2.) They acquire a startup that has a successful direct self-driving play.

Either way, the economics of their core offering changes drastically. I have a hard time believing investors in Uber aren’t pricing this in at least somewhat accurately.

There's always the possibility of 3) No one achieves sustainable self-driving in the short to medium term.

Also, uber has no assets. Are they going to add the overhead of an autonomous car fleet in every city on top of their already crazy cash burn rate?

I don't see how this business model even works.

That's a ton of time. Self-driving cars are decades out.

There's a time limit on this. 10years later, it's much easier to clone Uber's business and recruit the same drivers (Uber's desert for not hiring drivers as proper employees)

I think uber’s rewards program will be successful and boost sales. I’ve switched all of my business meals and longer rides to Uber for this alone. Other food delivery services don’t offer a clear kickback. Lyft has a nice but poorly thought out program that gives you $5 in personal credit for every 5 business trips no matter how short.

The fact that you were apparently able to do what you did is a perfect indicator for the problem behind that "sales boost": it is a straw fire. And a very expensive one.

How fast will you be gone once the nice rewards give way to price increases necessary to reach a sustainable business covering expenses, let alone profitability?

I wont switch. 80% of my ubers get expensed. Keep me fat and happy with rewards, and I'll keep expensing it regardless of the cost, which doesnt really effect me, only our controller.

So now Uber's competitors just have to market to your controller, which is in fact easier than marketing to everyone at your company.

Harder than it seems. AmericanExpress had outsized market share in the corporate travel market for about 30 years, even though it never struck me as a superior product to Visa-based cards.

Not sure who they hypnotized to establish that edge, but it became strangely durable.

For the longest time, American Express offered companies the best control over how corporate cards were used, and the best integration to financial software like Oracle/SAP/Concur.

It always seemed very strange to me that it's legal for company-expensed credit card purchases to generate individual, personal rewards for the card holders. (And these awards aren't even taxed?) Something feels underhanded about it, though I can't put my finger on it.

The theory of why normal credit card rewards aren't taxable is that they are a discount. OTOH, if it's a corporate expensed card or purchase, but the discount goes to the employee, it seems that either:

(1) the “reimbursement” for the full cost isn't all bona-fide reimbursement, since you are getting reimbursement for more than you paid after the discount, and therefore should be taxed like any other compensation from your employer, or

(2) The rewards you get in that case simply aren't discounts, and should be taxed as normal, but not employment compensation, income.

(These differ, because #1 has payroll tax implications that #2 does not, as well as the income tax implications.)

The fact that neither of these send to happen is either a legal loophole with no strong theory or just an administrative failure.

It’s mostly (with some exemptions) formal policy from the IRS. I suspect the real justification is that a lot of these things are hard to value, the numbers are small in the scheme of things, and compliance would be very low. It actually makes a lot of sense not to put a rule in the books everyone would ignore.

That makes sense, more of an administrative optimization around thw current conditions than an administrative failure.

OTOH, that makes it an unstable thing to build a business model on expanding, since the more significant it becomes with entities other than credit card firms exploiting it as a marketing and loyalty tool, the less it remains the case that it is efficient to let it slide.

See also airline and hotel reward programs, etc. Basically it stays below the level where it starts to look like a kickback and it’s not totally unreasonable for heavy business travelers to get some perks in exchange for lots of time away from home.

Originally this was a trusteeship problem: the card-holders were the named beneficiaries of points schemes, but the cards belonged to the company.

So there's a pile of points growing, which must be accounted for in the balance sheet, but which are essentially worthless to the company. And being a trustee is a legal hassle nobody wants to deal with if they can avoid it.

So the companies just hand those points and rewards over to the employee contractually, which dissolves the trust (since the employee now beneficially owns and legally owns the points). Much easier. And you can spin it as benevolent generosity to boot.

(Of course, I am not a lawyer.)

I can see the add now "Save 4% on negligible travel costs for the low low price of pissing off your traveling employees who are generating million in revenue"

It's not worth our controllers time to worry about something so insignificant.

Would anyone really care that much. If my company told me to use Lyft over uber or reversed it wouldn't cause any duress. I just need to get from the airport and back or whatever, its hard to have a preference here.

Without status everything is fungible. That changes drastically as your status on any given provider goes up.

Making me take anything but United means no business class upgrade, making me take anything but Uber means im waiting way longer to be picked up from anywhere, making me not stay at SPG means no room upgrade or check-in/checkout perks.

You don’t seem to understand that ride hailing service with Lyft is better quality than Uber. Nicer drivers, shorter wait times, better prices, cleaner cars, more premium experience and you get to associate with a company that’s not tacitly defending rapists or sanctioning disturbing violations of consumer privacy.

I mostly use Lyft and don’t really see a big difference with Uber. But I agree with your basic point. Status tends to be more valuable to me than any points. The flip side of that is it’s not worth unnatural acts to stay at a particular hotel chain if it’s net more comfortable and convenient to book elsewhere.

And at most companies the employees will just keep finding reasons to use their preferred service so long as any price disparity isn’t too great.

I don't know what to say about this because as a lifelong value investor I cannot accept the valuation of Uber based on it's earnings. But the same logic held me back from investing in Facebook and Google, which did not make any sense to me at the moment of their IPO. How do I decide what Uber's earnings will be in five years?

Warren Buffett's advice on this is simple. If he doesn't understand it, he doesn't invest. No matter what the rest of the world thinks.

He famously missed the dot com boom. And in the middle of it, gave a private speech about exactly why, about how few of those companies were likely to be around in a few years even if the internet were exactly as successful as hoped for.

He was widely derided as being behind the times, out of date, and so on for a couple of years. But looking back now, he looks prescient.

If you are a value investor and don't understand how to value it, don't invest.

And it's not like he just flat out didn't invest all the money he wasn't putting into Geocities and Lycos. He was just putting it into other things, mostly stuff that was less the hot new thing, and therefore less in demand, and therefore more favorably priced.

I don't think he regrets his conservatism. From 1990 through now, BRK.A is up 4,200%, while the NASDAQ composite is up only 1,500%.

No, he doesn't.

But as https://alphaarchitect.com/2016/10/10/value-investing-got-cr... points out, it looked rather different when Berkshire lost 44% while the NASDAQ gained 145%. Buffett stood by the strength of his reasoning. But the rest of the world didn't.

Until some years later when it did...

The way to reconcile this is to compare it to poker - the way to gauge your performance is not by the final outcomes, but by how good your decisions were. Worrying about missing the boat on exceptional investments like Facebook and Google is irrational if your overall investment strategy is sound. It's just not worth it to second-guess yourself for folding pre-flop if your hand only turned into a winner on the river.

I'm not an investor, no experience, just want to voice my 2c.

- facebook and google sure, but how many are there of those who didn't make it?

- sounds like a fear of missing out.

- Buffet didn't invest in Microsoft because he didn't "get it". His idea, I believe, is: "it's ok to pass on investments". He's looking for "sure things".

Personally, I think the entire thing is ridiculous. 120B ? for what? 2 of my friends are uber drivers and hate every second of it, that's worth that kind of money? or the fact that they have an app. What do they have?

Market share? As soon as somebody gives me the same or slightly less price, I'll push a button on that app instead. Why didn't they go public for so long? Are they trying to rescue their investments now? I don't know. Don't care.

It's not the type of product I would miss. it's just a taxi.

Don't forget that Uber is in the autonomous driving business. They burnt through cash to get market share, because when self driving becomes a thing, they'll have a huge swing in margins/profits as self driving will get rid of their greatest expense (human drivers).

Which self-driving car business would you bet on: One that's sinking most its capital into developing its self-driving technology, or one that's sinking most its capital into subsidizing drivers' incomes, and needs to do so simply to stay alive?

If Uber really, really believed that self driving was such a sure thing for them, their optimal strategy would be to wind down the rideshare business, the food delivery business, and all its other businesses that aren't self driving, so that it could redirect its mountains of capital toward developing self driving even sooner. Because as soon as cars that really can operate fully autonomously hit the scene, it's not going to matter who was incumbent in the rideshare space or how dominant they are. The company with the self driving cars will take over just about as quickly as they can manufacture new cars.

The fact that they're not playing it this way implies that they're not so confident that they're well positioned to be first past the post with self-driving cars. Which means we probably shouldn't be, either.

I believe Rodney Brooks when he says that autonomous cars are much farther away than some predict. Not in five years anyway.

> Don't forget that Uber is in the autonomous driving business.

Or, at least, has spent a lot of money failing to be in that business.

> They burnt through cash to get market share, because when self driving becomes a thing, they'll have a huge swing in margins/profits as self driving will get rid of their greatest expense (human drivers).

Established relationship with human drivers and the acquisition cost to overcome that is a big part of Uber’s moat, which is potentially erased when self-driving from anyone but Uber is real.

They are far, far behind in autonomous driving business. They tried to catch up, by being super reckless, and they killed a person.

Using self driving car to justify their valuation is very risky - it's huge project, tons of competition, no idea about when it could even become a product, etc.

Uber is also in the flying taxi business.

Alternately, Uber attaches their public messaging to external hype cycles and, in fact, is just a taxi business.

I can't speak as to what Uber's earnings will be 5 years from now, but I can recommend Stratechery by Ben Thompson as a way of understanding tech company's 'moats'. And how they're qualitatively different from moats enjoyed by other monopsonies in lower-tech eras

Is Uber really a tech company? Sure they do some R&D on the side, but they are first and foremost a mostly unlicensed taxi company with a ride-hailing app - I think the proper term is "e-hailing company".

I've been thinking about this too. I think you are betting on whether or not they are still just getting started. I'm thinking about self driving cars and how much growth can happen there if they crack that nut.

When Facebook IPO'd did they already have the self serve ad product rolled out? I believe Google did not and if you could imagine that future then it might have been easier to see a bright future. I didn't see Android coming until the iPhone came out as another example.

Google and Facebook are ubiquitous outside the US, as well. Uber faces a lot more competition such as Lyft, Grab, Ola, Didi, GoJek. Also each one of these competitors has acquired a piece of the market. Google and Facebook were also easier to scale since they are purely software pursuits. Uber on the other hand has to deal with driver protests and government labour regulations and taxi licensing.

Well, a more apt comparison for Uber would be Amazon.

  at the moment of their IPO
Is a case of Facebook, you were wise to not buy at the IPO, given that their share price dropped almost in half in the subsequent months.

Yeah but I guess what I am trying to say is the tools I ahve used miss certain situations.

I don't think this is a reflection of Lyft taking market share...more likely that the ridesharing industry has just matured.

I remember getting so much joy out of requesting an Uber back in the earlier days. Nowadays I get about as much joy out of Uber(pool) as using the bus, sometimes less because the wait time has increased so much.

There is definitely an element of the competition heating up. Lyft has been steadily gaining market shares in the U.S. over the past couple of months/years. Hovers around 30% to 35% now, depending on the source.


Not surprising. I have both apps and since they both give you the price upfront, I just choose whichever one is cheaper assuming wait times are similar.

UberPool Express has some things in common with the bus, although I’ve still never been slapped in the face by a homeless man in an Uber.

I get a bus twice a day in London and not once has this or even the thought of this come into my head.

I can totally anticipate this happening in SF.

One time in SF on the subway I saw an ostensibly homeless woman go up to a random man and demand his sweater. When he refused, she tried to physically tear it off of him. He had to sort of kick and shove her away until he could get away.

Ouch and sorry.

have you ever seen your neighbor get dragged running and hanging out of the passenger side window by an angry uber driver? have you had someone slap you who is not homeless? i have.

i get that you want to equate homeless folks on transit with violence but you did a really bad job of it.

I’m just describing an event that happened to me.

There are a lot of problems with Uber, but one thing it’s not is the cheapest and most convenient climate-controlled shelter for the city’s destitute mentally ill.

> "...it’s not is the cheapest and most convenient climate-controlled shelter for the city’s destitute mentally ill."

i can appreciate this point, but you're still insinuating that destitute people are bad, rather than realizing the complexity of the human condition as embodied in that other living being.

why not try to find and express some empathy, or even just some sympathy, for these folks? is there any gain for you to further put them down this way? are you so afraid of the homeless that you need to make sure random people on the internet don't associate an anonymized you with them?

After being assaulted by that stranger I thought about him a lot:

1) He probably has been abused and harmed many times, perhaps in his childhood.

2) He probably expects the worst from people, and thinks that everyone is out to get him.

3) He may be suffering from schizophrenia and literally thought I was attacking him somehow (I was sitting across from him with earbuds in reading a kindle).

4) Becuase there is not enough housing to go around here, the standards are higher, in terms of having an agreeable personality/job skills/overall shit-togetherness to secure a place to live, whether by earning a salary or staying on a friend’s couch or in a homeless shelter.

5) Feedback loops mean that once you are homeless, you suffer a lot and all of the above issues probably get worse.

My personality is such that I end up caring about and loving people that I spend time around or think about a lot. But I’ve learned the hard way that even if you love someone, you need to look out for yourself when trying to help them.

And to expand on that a bit:

It seems that transit in the Bay Area serves multiple purposes.

1) Getting you from point A to point B.

2) Mobile climate-controlled shelter for homeless people.

My claim is that purpose 1 is at odds with purpose 2. I’m all for solutions to the problem of not enough shelter. I don’t think the SFMTA is the solution, or if it is, then we should accept that companies like Uber are going to take its market share for purpose 1.

thanks for adding this depth to your experience.

Ah yes. The hill to die on is definitely masking the volatility of the homeless.

This guy wasn't even making a generalization.

Saudi Arabia owns 10% of Uber and executes people for being gay.

Funny to think that this is just one of the many reasons not to use Uber.

Yes, let's ask individuals to constrain SA's influence by not using Uber, when the US and many European governments continue to support them.

One must be stuck in the 50s to think that individual buyers have any power over corporations.

> Of the $11.4 billion in net revenue the company generated in 2018, $3 billion came in the last three months of the year, up only 2 percent from the previous quarter.

To what degree does Uber's main business have seasonality? Are people going more places when it's nicer out in the Northern hemisphere?

Here in SF, I notice surge pricing is at it's worst when it's cold or raining. Bad weather seems to compel people to order a car instead of walking or dealing with public transit. I know it does for me.

I'd expect it to be positively correlated with nice weather in tourist destinations, because more people would be in town at all. I'd expect it to be inversely correlated in major urban centers, because the number of people needing to get around will have less seasonal variability, and walking, waiting for a bus and riding a bike are all relatively more attractive options when it's not gross outside.

Pretty big overlap between tourist destinations and urban centers.

There is, but, percentage-wise, the seasonal swing to the number of people in town is much bigger for Traverse City, MI than it is for New York, NY.

The discussion was about Uber's overall revenue. I imagine a far larger percent of their revenue comes from NYC tourists than Traverse City tourists. Traverse City gets about 3.5 million tourists a year [1] compared to 63 million for NYC [2].

[1] https://www.record-eagle.com/news/local_news/tourism-region-...

[2] https://nycfuture.org/research/destination-new-york

People go more places, but they're more likely to walk.

This is if my two options are walking or staying dry/warm in a car.

The biggest days are going to be holidays...NYE and Halloween are probably #1/#2.

I'm not sure any one day is super important, but I honestly just don't know.

Is 1 or 2 spikes in a season that lasts months going to carry you, especially when supply is limited?

Many industries (e.g. shopping) strongly depend on the seasonality spikes.

> Are people going more places when it's nicer out in the Northern hemisphere?

Every winter India witnesses a massive influx of westerns to its popular beach holiday locations of India (Goa, Pondicherry, etc.,). Similarly to the hill-stations of north India during summer.

What is Uber's long term moat/pricing power? To compete in a local market you just need to sign up 5000 or so drivers. At a $5 signup bonus that costs like $25,000. You can just be the third app, most drivers already swap between Lyft/Uber. You could even form a drivers cooperative and just give all the charges to drivers (like farmers do).

Regulatory capture seems like the only real route to sustainable profits with their existing main product. What they really need is something where they are the only one or two legal providers for a locale.

A different model of what they are doing is using their massive revenue growth (not profit) to raise money to fund a search for real pricing power with food delivery, shared bikes, and Uber freight.

> "...you just need to sign up 5000 or so drivers. At a $5 signup bonus that costs like $25,000."

that's nowhere near the cost of acquisition for a driver. having worked on driver acquisition, i can tell you it's hundreds of dollars, not $5.

Sure, but neither have a guaranteed cash signup bonus. They have guaranteed first month earnings and bonuses per ride.

Uber trying to raise it's fees is an invitation for someone else to jump in with lower fees and compete. You don't need any kind of national reputation, taxi companies never did. You can just compete city by city.

That is lack of pricing power.

Not trying to be rude, but can you explain your credibility a little further? I'm sure it would be interesting and add to the discussion.

Uber and Lyft businesses are a marketplace that benefits from the effects of scale: when lots of drivers and customers are present, supply and demand are near each other and balance out nicely. It also suffers from the chicken and the egg problem in new cities being launched: there's no driver close-enough in order to ensure low latency for new orders.

To mitigate that, Uber and Lyft heavily subsidize launches in new cities by pre-signing up drivers well ahead of initial demand, to ensure low minute order fulfillment. This is done by giving drivers activity bonuses in the initial new-city market formation stage, no matter the actual orders. This ensures order low latency fulfillment for early adopters in new locales, which leads to customer satisfaction, word-of-mouth advertisement and soon enough full marketplace formation (and lock-in).

If you were trying to compete with Uber in New York City, the main problem you would have is that you'd need a lot of capital to have hundreds/thousands of drivers to ensure order fulfillment on average under 5 minutes by having a driver as close as possible to any new order being placed.

Convincing people (using money) to stay idle despite lack of initial order demand (until the marketplace is formed) takes more than $5 per driver.

It's a very local market though isn't it? You just have to be better (cheaper, faster, nicer) than them in your city to win that city. People don't even really travel that much, and when they do, and the guidebook said "use Careem in the middle east", well then they would.

I'm not that guy and don't have the credentials, but none of rideshare or food delivery apps pay out $5 for a referral. If they could, they would. In the earliest days, there were even 4 digit incentives for getting into driving for Uber.

People aren't desperate enough to hustle for $5. Even $200 is low. I'd consider that the minimum to even have a program worth running.

i worked with a number of on-demand companies (ridehailing, delivery, home services, etc.) helping them fill their supply-side funnels. as others have pointed out, it doesn't take much exposure or expertise to realize that the supply side of a marketplace can be expensive. of course retention also highly influences the cost.

This page [1] was the first search result and contains many mentions of hundreds of dollars. It easily costs them millions of dollars in each market they enter.

[1] https://ridesharecentral.com/uber-sign-up-bonus

not that it necessarily changes your argument, but the signup bonuses that uber / lyft offer are significantly higher than $5 (closer to $1k), and are structured in such a way to ensure you're not dual-apping.

"A different model of what they are doing is using their massive revenue growth (not profit) to raise money to fund a search for real pricing power with food delivery, shared bikes, and Uber freight."

I suspect this isn't far from the truth.

Totally agree about the higher sign up bonuses.

Though they are really offering higher driver pay for a limited time on signup. To compete I'd just offer that higher driver pay all the time by taking less fees than Uber. Not correcting you or anything, just embroidering.

Over 10 years or so, this devolves into the taxi business, which without medallions is very low margin. [1]

[1] https://www.forbes.com/sites/lensherman/2017/12/14/why-cant-...

Here's a restatement of what I'm trying to say, the details seem to distract.

Grocery stores, restaurants, and taxis (especially without medallions) are famously low margin, highly competitive business. [1]

Single passenger ride hailing looks a lot like a low margin business.

[1] https://www.forbes.com/sites/lensherman/2017/12/14/why-cant-...

>At a $5 signup bonus that costs like $25,000. You can just be the third app,

Uber can offer those drivers $10 not to switch and their capital will last longer than yours.

I’m not sure they even can do that. Maybe incentive drivers to drive with them but contractually preventing them from driving elsewhere starts smelling a lot like full time employement.

Sure right now. But long term? They don't seem to have any kind of moat at all.

They can't actually do that because it messes with the contractor thing, but they can do what they are doing with the rewards for a certain amount of availability.

But still I could just halve the amount I take from the transaction and give it to drivers. That's surely better for the drivers.

Moat is about them having a long term advantage that makes it hard to compete against them. Lots of capital isn't enough in 2019.

Long term it seems like the restaurant business, where most are just scrounging for minimal profits all the time.

>Sure right now. But long term? They don't seem to have any kind of moat at all.

They also have the moat of providing a reasonably good service with network effects. How would you come in and beat the Uber/Lyft duopoly? They can copy any innovation you come up with and have the capital to beat you in a price war.

Businesses where you burn capital on price wars are low margin businesses.

(1) Low margin is probably OK given the enormous market Uber/Lyft will share.

(2) They won't actually have to burn capital. No one is going to get into a price war they obviously can't win.

1) We totally agree, ride hailing is a low margin business.

2) Yes! As long as Uber/Lyft act like low margin businesses no one will compete with them. This means they have no pricing power.

Not really. Driver are already nonexclusive, this is just adding one more entity.

Time to add, "starting an uber competitor" to the Hacker News Weekend Projects™ list.

For all the lip service that's paid to "free market capitalism" I chuckle that the first question always is "How quickly can we get to a moat so we don't have to compete with anyone." Whether it's a monolopy, vendor lockin, network effect, high customer leave burden or any of the other number of methods.

And, I'm not knocking that that how business works, I just think we probably acknowledge that many businesses have little interest in actual market competition and letting the best overall product win. Free markets are discussed and desired in theory, but people don't really want free competition in practice.

It's more of an "emilinate burdens on me as a business, but don't make me actually compete" economic system.

I once read that Michael Porter, in Harvard's Business School, looked over the fence into the Economics department, took what they said about monopolies, and repackaged all of the downsides of monopolistic behaviour into "Strategy".

I heard this 30+ years ago in a business strategy class so it's probably true.

If they are ultimately successful, branding will be part of it. Everyone knows about Uber and thus many people have the app on their phone.

Furthermore, having a large network of riders and drivers enables lower wait times and better carpooling utilization.

Like others have said, getting drivers is much more costlier than 5$. Another bigger aspect is maintaining drivers and riders on your platform. Maintaining platforms is much harder than people give credit (e.g. netflix).

Notice how Netflix has rushed to create content?

If they hadn't, the entertainment companies would have just taken all their profits.

I don't know what Uber's equivalent moat is, but they are desperate to find it.

Thinking about self driving cars I think the experience in the vehicle will be a potential differentiator.

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