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What's really interesting, and I think what's unclear is this: what's costs these services so much that they can't turn a profit?

Their costs, other than taking a haircut on the ride, doesn't seem entirely clear, or obviously large.

A 2017 number says Lyft completes about 360 million rides per year. For fun, let's say they make $1 per ride, are they really not able to run their front-end operations with around 1,000 employees? (assuming an employee costs about $250k-300k/yr)?

That seems crazy to me, but I don't know what hidden costs there are. From an outside PoV it appears they need to run a more or less static website, about 4 smartphone apps with some back-end routefinding and accounting systems.

What am I missing?




Last I looked at Uber's financials, 90-95% of their expenses was driver earnings. And then you have operating expenses that includes employees, promotions, r&d, regulatory fees, marketing, support, new investments etc.

Uber's margin is probably under 5% which simply isn't enough.


You were looking at the wrong numbers, or you didn’t understand if those were the conclusions you came to.


AWS/Google Maps/Foursquare etc. bills probably add up.

Customer service - Uber seems to have decided it's cheaper to just allow a few no-questions-asked refunds for cancellations than actually getting humans involved every time

Office space (in SF!) to hold all those employees

"some back-end routefinding" becomes hideously complex once you factor in:

- real-time road closures

- lyft line matching

- traffic modelling

- time-of-day turn restrictions

- normalizing data from various regional map providers

- routing itself is NP-hard


I'd guess you're underestimating the cost per employee by about half, is one factor.


If your cost per employee is approaching half a million dollars or more on average, you've probably messed up somewhere.

If you're a taxicab company and your non-driving staff is making that, you've definitely screwed up somewhere.


Which is why I expect massive layoffs at uber/lyft, they have too many employees for the simple things they do.


Lyft charges $2/ride plus some wiggle around discounts and surge pricing.




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