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Uber and Lyft Investors Are Looking for Signs of a Détente (bloomberg.com)
53 points by buboard 76 days ago | hide | past | web | favorite | 105 comments

> Uber complicates the analysis somewhat. Its third-quarter operating loss is estimated to be $4.96 billion. Yes, you read that right. The figure accounts for costs related to the initial public offering

Not familiar with all this, can someone ELI5 what are the "costs related to the initial public offering" ?

You have to pay the investment banks for underwriting, pay the stock exchange for listing, pay for the "roadshow", probably have some additional labor costs on your side and probably some other costs that I'm not aware of.

Why do you think investment bankers paddle IPOs so much? Like sure, they take underwriting risks, but they also set the IPO price, so they control the demand. In other words, imagine if you have 100 pieces of gold. I come to you and tell you: I guarantee to sell this gold for you. You don't know the price until (a day before) I sell it. You still have to pay for my services.

okay, but 5Bn seems a bit excessive

It's the total loss for the quarter.

Also underwriting costs should be proportional to the IPO value.

> probably some other costs


The article mentions Lyft included similar costs last quarter and this is what they said: "Net loss for Q1 includes $894 million of stock-based compensation and related payroll tax expenses, primarily due to RSU expense recognition in connection with our initial public offering."


At least they seem to have had a lot of marketing folk that were laid off shortly after the IPO

Uber eats is their golden egg. I think it was Stripe's Collison who said that their cohort of businesses - stripe, lift, uber et al - need to first build out their ecosystems then once done, a plethora of other business opportunities will emerge and that's where the profits will emerge from. For instance what uber eats is to uber, atlas and radar are to stripe.

Sure, but how long will people pay $10 to have a $5 hamburger delivered to them?

That takes 30 minutes to deliver and is cold.

Forever, once said people realise that a $5 bottle of wine costs $20 in the restaurant.

That is not a problem. Even discounting people too wealthy to care about cooking, a city usually has plenty of people who, on a given day, don't have time or energy to cook a meal.

Problem is, you should've paid $15 for this to even make sense, but here $5 comes from investor subsidies. Eventually the money runs out and the scheme collapses, until next company can convince next round of investors to again try selling $10 bills for $5.

On top of this classic delivery places mainly sell cheap pizza and Chinese food that have high margin for food. This subsidies the delivery and makes it profitable even when people don’t order drinks.

Further, the radius of delivery tends to be smaller allowing a driver to make more deliveries per hour lowering costs.

Probably as long as you have young affluent urbanites who grew up expecting they could get anything delivered to them or done for them without getting up from a computer.

We had these services before even in 2000. They failed then when the VC money run out, what has changed so much now?

Not that much.

And food delivery in cities has been around long before the Web. Not sure having brochures from the local pizza places and chinese restaurants and making a phone call is all that different from doing it at a computer.

It isn't; it's only slightly more convenient from user's POV. But it offers an opportunity for a middleman to insert itself between the restaurants and the people making orders.

Mapping services are cheap, mobile internet is ubiquitous and everyone has a smartphone.

Yeah the tech ecosystem is buying their own services out of the wages paid by the same companies, on a cloud of of VC cash.

It's hilarious that people think goods delivery is going to be a money maker. It's ruthlessly competitive.

True but not everyone does it well. Almost everyone sucks at it - long waits, poor selection in terms of product range and sometimes even apps that simply don't work as intended. It's going to take a large player with a wide network to get it done well. There are so many players in the space who've closed shop and will continue to do so. Only a few (2 or 3) will stay put and actually get the job done.

Food delivery is ubiquitous in my country (its cheaper than cooking for me, if you account time wasted). it is free, at 0 extra cost compared to the in-store menu (actually in store costs more) - there's just a minimum cost the order must have. I dont think the ubereats model is scalable in america.

> Food delivery is ubiquitous in my country (its cheaper than cooking for me, if you account time wasted).

Any chance you use dabbawalas? I saw that on BBC and it was such an amazing informal logistics network.

Here's my ignorant perspective as an outsider to SV:

Starting with the late 90s, techies (good people, smart people, people who built things) got rich in a new, very fast way. Whether they were early investors in Netscape, employees of Microsoft, or one of the many who started companies which were then bought by giants, the result is that they came into money so big that they literally had it to burn.

After the "how many Ferraris can I own" phase wore off, they continued doing what they loved - building and being involved in tech projects. This resulted in more financial successes, and more money.

Early windfalls put them into new positions as investors. And frankly, by investing in a selection of start-ups, the outcome was almost certainly that at least one investment would pay off 1000x or more. This created more money.

However, in many cases, these gains were artificial. The stock market creates play money which big companies can use to buy smaller companies, thereby "increasing" their perceived value - and thus their stock price, and thus their ability to go buy more. This is not sustainable, because eventually there isn't something big enough to buy to keep up the appearance of growth and increased value.

My favorite example of this was WorldCom https://en.wikipedia.org/wiki/MCI_Inc. MCI, for those old enough, was once a booming telco with the strongest internet backbone in the US. The got bought by a little Southern US company run by an aggressive CEO - Bernie Ebbers, who learned that acquisitions paid for with stock would increase the "value" of the company, which would increase the future buying power of the stock. I enjoyed a brief and completely ineffectual period of employment with MCI-Worldcom and got to see the dysfunction of the collection of gathered companies. Unfortunately for Ebbers, it was getting difficult to find companies big enough to buy that would make a measurable increase in perceived value. Sprint was the last big target, but that sale was blocked by the US because it would have created an internet monopoly. MCI-WC happily offered to buy Sprint without their internet component, but Sprint rejected that. Once the deal was off, the drag of poorly integrated companies all under one umbrella slowed the MCI-WC train to a stop. Then the investigations began, and we know how that turned out.

I see this repeating, but starting with the early tech-millionaires. They have so much money, and they seek similar % returns, so they're willing to dump more money into more ambitious (or asinine) projects. But as those of us outside the madness can see clearly, it won't work.

That's not to say that new ideas should get investment, and that's not to say that 1/10 success rate is bad. But keeping some sense is important, and it really appears that the "successful SV investors" have totally lost their sense. In the end, they won't be hurt; the foolish stock market investors will, as usual. They follow trends, they buy into unicorns when they're allowed to, and they usually come out losers.

I would like to see a real shift in behavior from the current tech investment system. First, the supposed race to returns which causes some companies with a good idea to make terrible short term decisions (under pressure from VC partners) needs to stop. That is just a screwing and fleecing of other people which only serves the VCs. Second, if a company cannot become profitable in a few years (depending on the type of product/service), then the investment should stop or the company should make a huge pivot. Third, that VC money should be distributed more widely across education. There are a lot of very talented, motivated young people who could do great things if given some opportunities.

I'm not quite sure I understand the use of the word "Détente" in the title. Is this a détente between Uber and Lyft regarding ride pricing strategies? Or becoming less competitive towards each other?

The same mutual funds own large portions of both Uber and Lyft. So while no one has proven any sort of anti-competitve collusion, I suspect investors may be pressuring both companies to scale back the direct competition.

That was the obvious meaning I took away. But the article didn't discuss that angle at all. So I'm not sure what the headline is trying to say.

This is not a sustainable company. Autonomy will not save it in time. The VC rounds and lying are over, it's valuation will continue to plummet. This is classic America for you. New startup comes in and undercuts regulated businesses (taxis) forcing them out of business. Then the VC money runs out and you find out their business was unsustainable. The only way Uber will stay afloat is to raise rates. Now we have the same rates we did before with cabs but none of the nice regulations on them, and none of the decent paying jobs. Good thing a bunch of investment people got rich though. America is still great!

The jobs weren't decent before. Cabbies were underpayed independent contractors who had to pay to work, by renting medallions from people like Gene Freidman (NYC's "Taxi King", now under prosecution).

Many reports of the lives of cab drivers, much too old to be PR submarines for Uber, tell the story: https://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-d...

Uber is not a good company, and I'm hoping they go away now that we have competitors. But this idea that they ruined the working conditions of drivers is just propaganda.

Uber didn't fix life for drivers; they just changed it. It is still a relatively low paying, sucky job.

The only thing Uber did that is worth admiring is fixing the "get a ride" situation. Skirting regulation is not ok if you believe in rule of law. If the law is bad, then money can be spent to improve that law. Uber's approach (and Airbnb's, for a long time) just shifts problems around. Yes, there are some benefits for some people for some time, but it is not the way society and civilization should behave.

Microsoft did this for years in the 90s. They would steal technology and then pay the occasional pittance of court judgement to the rightful owners. meanwhile, they gained dominance by some degree of theft.

All these companies are just proving that laws don't matter if you have enough money. That kind of system is, as we say, unsustainable. If left to continue its course, it will result in some of the tech-dystopian societies which make for fascinating dark books and movies.

> Skirting regulation is not ok if you believe in rule of law. If the law is bad, then money can be spent to improve that law.

I don’t want to snark on that idealism, but it is noteworthy that this didn’t happen. Instead everyone suffered in silence about horrible taxi systems until Uber changed everything.

> I don’t want to snark on that idealism, but it is noteworthy that this didn’t happen.

In some places in the US. And whatever improvements happened, were only side effects. The problem with Uber is that they applied the same disregard for law to every market they entered; it was never about improving things, it was about anticompetitive behavior sustained by investor money and moving fast enough to stay inside local regulators' OODA loops.

> The only thing Uber did that is worth admiring is fixing the "get a ride" situation

Every time someone says that I'm reminded of a pre-uber taxi driver telling me a "funny" story how a previous customer said he'll complain about some issue - "But what will he do? I'm just a contractor renting a radio. He can call the office all he wants."

Now we've got driver ratings. And the drivers are concerned about them. And I'm happy that giving a terrible/unsafe ride 1 star will have some impact.

Fair enough; but that is a side effect, and a rather obvious feature given that Amazon had already proven the value and importance of user ratings (even if they are largely fake now). Also, I wonder how the rating system was working for the people who were victims of assault or crime by an Uber driver in some countries...

There was little question that the existing taxi system was bad, but Uber didn't roll in to right the wrongs, it rolled in to "disrupt" and take the market.

Which technology did Microsoft steal?

The specific one I remembered was Stacker, the disk compression app. https://en.wikipedia.org/wiki/Stac_Electronics#Microsoft_law...

I remember there being others, but the only one I can find right now is related to Spyglass (which you could argue was not theft, but was instead breach of contract or deception) https://en.wikipedia.org/wiki/Spyglass,_Inc.

There were other stories in the 90s, but now I can't find them (so they may have been just stories). Regardless, and considering some of the other practices of MS in the 90s and 2000s, Microsoft was a very different company from the one some of us actually like and respect now.

The problem with competition is the fracturing in the market. It's just as painful to install 6 taxi apps as it was to call 6 taxi companies and see when they could get you a ride. More so, it's really frustrating when the drivers are running 2 (or more) apps and it says "will be with you in 2 minutes" when they're clearly finishing a job on another platform.

What it needs is an open source system that stitches them all together, but let's the drivers choose whatever company they want. I use one app, every company has the chance to make money, drivers go with what works for them.

But I think that's about as realistically as me only needing one subscription to watch all the TV and film I actually want to see.

> What it needs is an open source system that stitches them all together, but let's the drivers choose whatever company they want. I use one app, every company has the chance to make money, drivers go with what works for them.

This is a general problem - for taxis, public transportation services, ordering food, e-commerce, movie streaming services, etc. Companies fracture the market on purpose, in hopes of exploiting the inconvenience of managing multiple service subscriptions or accounts.

What we need is some pressure[0] to force companies to relinquish the user interface. In a perfect world, all these services would be consuming API calls, and would be independent of the actual means users use to place orders. There should be a separate market for services, and a separate market for interfaces to those services.


[0] - which probably would have to be regulatory, since it goes against the short-term interest of any company.

Do you remember what Google did to Yahoo!? Using the government is an authoritarian way to achieve your goals. It's fascist by definition. It is very disturbing to read stuff like this. Patience is a virtue; I'm sorry free enterprise (and liberty, in general) is not fast enough for you. The ends do not justify the means, no matter how great your intentions.

> It is very disturbing to read stuff like this.

Like what? Like the footnote about pressure likely needing to be regulatory, because there's literally no way the market will do the right thing on its own?

> Patience is a virtue; I'm sorry free enterprise (and liberty, in general) is not fast enough for you.

It's more that it never happens when it should. Proper balance is achieved - if at all - when a piece of technology becomes boring so commercial entities don't care, because they're busy balkanizing a newer technology. So yes, it takes too long, human lives are too short, and I'd like the world to move to the point where new technologies aren't kept in perpetual state of sucking until they're bled dry of profits.

> The ends do not justify the means, no matter how great your intentions.

Come on, we're not talking about killing people here, just about discouraging greedy behaviour. Also, what you consider "fascist" I'd consider leveling the playing field and allowing smaller actors to participate. At the very least, I'd like to see legal protections around IP and terms of service weakened, to promote what EFF calls "adversarial interoperability".

There should be just one public transport world-wide app to which local regulators can plugin their markets. Just like there is a global banking system, which allows people to send money across borders.

I don't mind many apps - perhaps that's even a good thing, I can choose the one with the UX that works best for me - but they all need to work from the same system. The app I use has a chance to get any taxi from all the connected systems.

There should be many apps, and there should be many services, and apps and services should be separate markets. This way you could choose the UX that works for you and use it to consume services you want. IMO, a situation in which you're e.g. forced to use Uber only through Uber's app should not be allowed.

Yes, exactly this. I'd like the same with TV and film as well!

One thing I've noticed over the years, is your propensity toward forcing other people toward your preference using the government. You are welcome to that view in your country (i.e. European), but that is so anti-American and illiberal that it's simplly not a universal truth. All countries do not need to operate in the same command-and-control way. We need diversity in governance.

The USA is not some 'blood and soil' country with a history of aristocracy. We subsidize the national defense and drug R&D costs of your entire continent. Freedom lovers of all ethnicities recognize America's unique nature as the sole proponent of freedom, and they flock here.

> One thing I've noticed over the years, is your propensity toward forcing other people toward your preference using the government.

In my defense, it does not come from some innate desire to boss people around. The reason I mention governments often is simple: in a problem of prisonner's dilemma nature (so-called "coordination problem"), where a bunch of actors make rational decisions in their short-term interest at the detriment of everyone's long-term interest, the only way to force coordination and realize the long-term benefits is to have an external party enforcing the coordination, by penalizing the choice of short-term benefits.

You'll observe that a lot of problems in the society have this nature, and usually the solution is government or other body that can set the rules recognized by all involved parties (and dispense punishments for breaking them). This is the classical solution to prisonner's dilemma (a mob boss punishing snitches), overfishing (regulatory body dispensing quotas), etc.

It's not about what's European or American. It's about effective solutions to problems. In our times, we know enough about the dynamics of people interacting with each other at scale to recognize some common failure modes, like coordination problems, and ways to solve them.

>It's not about what's European or American.

In fact, it is. We have very different ideas about how to achieve outcomes (i.e. Old World vs. New World) we commonly share as goals. I absolutely disagree that "the solution is government." Europe hasn't achieved GDP growth over 1% for 20 years, and one has to wonder if it's because they over tax their middle class.

I do not discount your sovereignty, only your right to assert it over our sovereignty. One size does not fit all, and many Americans are being fooled by the subsidies others receive.

I appreciate your civility, and contributions to HN over the years, but also recognize the unAmerican nature of your ideas. What concerns me is that your ideas are infecting our young people.

I recommend Democracy in America written by Tocqueville in ~1840. It's available for free on the internet.


> I appreciate your civility, and contributions to HN over the years, but also recognize the unAmerican nature of your ideas. What concerns me is that your ideas are infecting our young people.

Call that payback for American ideas infecting whole generations on the "old continent" :). My generation grew up watching US television shows.

Seriously though, HN may hosted by a US company, but the community is thoroughly international. Ideas from all around the world are present here, and are free to mix. That's, in my opinion, for the better. Neither Europe nor the US are perfect places, so one shouldn't be too attached to their current form and tradition. I believe that the job of each generation is to try and make the world better for next generations, and that involves exploring ideas to see if some may work better than the status quo.

BTW., while you say I have European perspective, and I can't deny having some European bias by virtue of living there, the ideas I'm pushing I developed reading American thinkers. I really don't read much of our "domestic" stuff, and probably 90+% of my media and knowledge consumption is American. So you may be surprised that many of the things I say are already considered by people in your country. They're not "European" in nature.

If I can take this chance to infect your mind with another idea, consider this: as an American, you care about your freedom (particularly the so-called "negative liberty"). But the free market doesn't care about your freedom at all. It cares about profits, and optimizes very strongly for that. It's not guaranteed that letting the market maximize profits unencumbered also maximizes the liberty of US citizens. The market doesn't care, and will just as happily give you liberty as it will take it away.

Can you eat Kinder Surprise eggs yet?

This idea that the US is somehow specially "free" is more mythology than reality. We mostly have different regulations, that's all.

I've frequently upvoted your comments over the years, as I don't understand Portugal or its culture (didn't you use to talk about ERP systems?). I appreciate the Old World, but do not care to replicate it. As it is frequently pointed out, America is quite young. We got to "wipe the slate clean." We do not have this European "blood and soil" shit, and despite popular rhetoric, had nothing to do with the foundation of slavery.

More government = less freedom, by definition. We need diversity in governance (maybe a citizenship swap?).

We've got SWIFT, SEPA, CIPS, whatever Iran ends up using, whatever Russia may come up with (extended NSPK?), WorldRemit, ... It's not all great and unified yet.

If there was a public transport system with SWIFT coverage, I believe most ppl would be happy. Part of the fragmentation comes from sanctions - this would affect any international system, either established by a company or an international regulation. Getting banned from several such systems is a good reason to play by the rules and not get sanctions.

6 taxi apps are actually far easier and more reliable than 6 phone calls.

Sure, and one is far easier than six.

It's fascinating to watch how a company without any high margin business, insane losses and zero assets to their name balloons to a 80 billion evaluation, all on the promise of some vague future business model that does not exist at all. It's genuinely mad.

> It's fascinating to watch how a company without any high margin business, insane losses and zero assets to their name balloons to a 80 billion evaluation, all on the promise of some vague future business model that does not exist at all. It's genuinely mad.

That is the exact description of Amazon in the 90s though.

Not in the same scale. Amazon had accumulated $0.9bn in losses by the end of 1999. Uber lost that much last quarter alone.

For investors it's just buying a lottery ticket driven by FOMO. For traders it's just another trading vehicle; the underlying enterprise is irrelevant.

You realize you just perfectly described the entire Silicon Valley venture capital funded tech industry, right?

No. Software businesses have very high gross margins, because the cost of goods sold rounds to zero. They can be losing money because of high fixed costs, but there's an obvious way out where you grow sales to the point where the margin covers fixed costs, and then it's all gravy from there.

Uber does not have unit economics like this.

I really don't think I did. Facebook was cash flow positive after two years, Uber is a decade old. And at the heart of Silicon Valley tech lies the ability to leverage technology and network effects to scale. The biggest driver of costs for Uber are it's ride hailing expenditures, which is to say driver costs, insurance, carrier costs sales and marketing, all of which more or less grow linearly with the entire operation.

They're not really a tech company at all, they're an oversized taxi business that redistributes money from investors to software developers and executives.

Hm. Not sure I agree here. I think the rates will increase but the fundamental technology of dispatch is probably more efficient than “cruising” as cabs normally do.

I’m making no claims on how profitable either company will be but I think they have added value to the transportation industry that isn’t artificial.

Disclaimer: I work at Lyft.

Cab companies have had the dispatch model way before uber even existed (My dad was a taxi driver when I was growing up)

Not in the same way however as the GP meant I don’t think. Most cabs get most of their fares from cruising and getting flagged down whereas Uber / lyft get zero of their fares that way. He’s saying the modern dispatch only method is more efficient and I suspect in this regard he’s absolutely right.

That’s how most cabs get their business in the US perhaps. I have only ever gotten cabs via booking (phone and app) or simply going to a taxi line at a hotel or airport. I never hailed a cruising taxi in Europe. I don’t even know how to tell an occupied one from a free one here (if it’s even possible). Getting a cab via an app I have done for ten years now.

To be clear, in my original comment the language I should have used instead of cruising was probably "idle time searching for a fare". Waiting in a hotel line, airport queue etc. are all inefficient and would fall under my definition of cruising.

Ah that's really interesting. Well that is a huge difference between the US and Europe I suppose. It really differentiates about how you think about cabs.

The ride hailing tech is not rocket science and it is commoditised. Self driving is the end game here but the ride hailing companies are not in this game. Here in Asia, Grab/Gojek etc has diversified into payments, food delivery, massage etc which brings some semblance of sustainability.

I am sceptical about that though. It’s a copy of the China model of super apps but that’s a way different market. South East Asia isn’t one (pretty unique) country. It’s a whole range of countries, cultures, history, languages, economies, you name it. A super app that does everything for everyone is a bit like Yahoo! in the mid 90s. Might work okay in the beginning but as the markets mature, why bother with one app instead of specialist expert apps.

It’s just good ol’ fashion business of building a brand, trust, loyalty and customer base, then taxing other businesses to sell to them on your platform. But I think the real players in this meta-game are Apple and Google.

It's a mixed bag. Taxis are mostly not so great, regulated or not.

Personally I'm fine with Uber/Lyft costing about what taxis do. I admit I don't use them much though and almost exclusively for business.

Maybe it was inevitable that this had to become about competing on price, but these services would have been attractive to many even if they hadn't undercut cabs because cabs are so often horrible.

Regulated taxis are quite solid in many European countries, so it can be done.

It's a mixed bag. Sure, they're great in London. In a lot of southern and central Europe, not so much.

If you define great as memorizing the streets absolutely. The cab driver test for London is very intense. However cabs in London are unusually expensive compared to most cities and as much of a tourist hub as London is, most cabs don’t take credit cards.

If I’m ever in London and need a quick cab I’ll always choose Uber. It’s a “good enough” knock off and way cheaper. There isn’t a ton of value in memorizing the city streets in the age of smartphones and google maps anymore.

Disclaimer: had a London cabbie really take me “for a ride” from heathrow and took a very poor route on purpose. Almost 90 quid later I was not a happy camper.

They have to take credit card by law now, though many of them will come up with various stories and excuses to not do it. Usually threatening to report them to TfL will suddenly make the machines work.

That is great to know. My experience with them was a few years ago (2016 or 2017, I forget). I've not used "proper" cabs in the UK since then and visit at least once per year.

What central European countries are you referring to?

Hungary, Czech Republic...

Regulated taxis absolutely _suck_ in every EU country I visited (which is most of them). Even when they aren't fleecing an unsuspecting tourist, they are way overpriced and service isn't great. I cheer for the day they all go out of business.

Then short lyft and uber or buy put options on them

Ppl have been saying this for years now. They said the same ting about tesla as far back as 2010 and the stock has increased 10x since then. They said the same about amazon a decade ago. Not saying that Uber is like Tesla or Amazon but that the media's track record at predicting this sort of stuff is really poor. People underestimate the ability of these companies to raise money and turn things around.

Uber can keep raising moeny by selling more stocks or selling debt. There is a lot of enthusiasm still about it, similar to Tesla.

>Uber can keep raising moeny by selling more stocks or selling debt. There is a lot of enthusiasm still about it, similar to Tesla.

The point of a company isn't to raise money or to generate enthusiasm, it's to generate profit, and on that front exactly none of those businesses have turned anything around, and the only thing the media got wrong was underestimating how generous softbank is in playing lender of last resort.

Turn what around? Tesla and Uber both offer a great product priced well below its actual costs, in a world awash with capital (so much so that there are trillions in negative yielding debt). This thinking that at some point the unit economics will magically turn around is the error.

I mean... if drivers aren’t in the picture it might work, no?

That said, the odds of that happening any time soon or that Uber / Lyft are the first to do it are pretty low - but markets can be irrational for a long time!

Not where I’d put my money, but plenty of folks have more than me to burn up.

> I mean... if drivers aren’t in the picture it might work, no?

Driver wages are a cost to Uber, but the drivers supply the cars, so they're also a source of working capital. A driverless taxi company would save on the wages, but would have to put up all the capital for the cars itself. This is not a slam dunk.

And yes, Uber is a bit more complicated because they often finance drivers' purchases of cars. But since they make money doing that, you can't make Uber more profitable by taking that out of the equation!

But on the gripping hand, we are not going to get replacement-level self-driving cars within the next decade, so whether Uber could make money with such cars just doesn't matter.

You know that, I know that, but is that the model investors are using and how long will they throw money at it before it becomes obvious? A conundrum.

That’s the thing that bothers me with the whole sharing economy. Uber’s mission wasn’t even a bad one. Let’s do something about the cruft in the (San Franciscan) taxi industry and offer a better service. Unfortunately they had to grow exponentionally. So, offering a better product wasn’t enough. It had to be cheaper too. Though even paying drivers no salary and not needing taxi medallions there still was no good way to undercut them on prices unless they poured investor billions like a Ponzi scheme into the fold. More and more money was needed as more and more rides were subsidised as the company grew.

It will be interesting to see what happens now that investor money won’t flow freely post-IPO and how much prices can be raised until passengers jump onto the next subsidise scheme. Grab in Singapore is the exact same story. More and more billions put into a market that already has a solid taxi industry.

It seems a shame to waste a nice term like "sharing" on this. How about "gig economy" instead?

> the cruft in the (San Franciscan) taxi industry

You're probably right. San francisco's problems - or even america's are not "the entire world's problems"

How is Airbnb doing, profit-wise? It seems as if they could make money since they are paying a property owner, not a person driving around.

How much money is there for a middleman in a $100 transaction in a regulated industry? Some but not a ton.

A lot. Look at the hotel industry, the middlemen are the ones making all the money

> same rates

No problem. Cabs still suck compared to ride apps. It's not even a comparison that's fair to make under your stated conditions. That I can summon a ride at any time, any place and have a near accurate estimate of the cost so I can plan ahead and not have to negotiate with the driver (happens sometimes) is way better anyway.

If your cab can’t be hailed with an app, tracked to arrival, provide an estimate, pre paid etc - then the problem is that the cab regulators and cab companies in that particular city are bad. It’s certainly not something inherent to taxi, it’s just that in some cities with outdated regulation (for example most US cities it seems) the service sucks and hasn’t improved in years. Where I live there is no difference between taxi and Uber. For example, I could hail my taxis with an app ten years ago (note: before Uber even existed!).

> Where I live there is no difference between taxi and Uber.

That's one of the problems that ride apps solve - ubiquity of service. No matter where you go in the world - and I come from a very remote place so I should know this - uber is there and it sometimes even delivers food for less than a dollar and in about 1 hour!!!

Taxis on the other hand don't always have apps and can't bring you goods like food.

> Now we have the same rates we did before with cabs but none of the nice regulations on them, and none of the decent paying jobs.

I ride with rideshare/taxi 10+ times per week for work, I try to make all 10 of those rideshare. I'll keep doing it if Uber starts to cost more than taxi.

Every time I have to get in a taxi, I'm reminded why it was so easy to disrupt in the first place. Shitty cars, rude drivers, 'broken' card machines, drivers have no idea where to go and inexplicably try to avoid using GPS. Taxi driver picked me up from the airport in my home city and tried to take me on a 20+ min out of the way route until I told him I'm going to my fucking house. 'Oh sorry I thought this way is quicker because of the traffic'. This doesn't happen with rideshare, and drivers are usually much nicer. I'm happy to pay extra for that.

People who keep saying that the only thing Uber did was undercut the existing taxi industry, have no clue what they're talking about.

In addition, Lyft and Uber now integrate directly with corporate expense reporting systems which saves me time by avoiding the need to do manual data entry after a trip.

Next one up: E-scooters

The saving grace for tech is that Uber is "not a real tech company"

Marazan 76 days ago [flagged]

YoU JuST donut UnderSTand Their BusyNEss MODEL!!111one!

Could you please stop posting unsubstantive comments to Hacker News?

The current headline "Uber and Lyft Investors Are Looking for Signs of a Détente" isn't really touched on in the body of the article.

But it seems obvious that Uber and Lyft need to both raise their prices--with of course no collusion involved /s. That does get into the question, as the article, touches on of what happens to the market for these services if you double (or whatever) what they cost. Presumably fewer riders which means longer waits, fewer areas where the density makes them viable, etc.

So higher prices/worse service. I think these would still work in cities for when people would have historically taken taxis. Probably works less well for casual use and when people are using to replace public transportation or car ownership on a daily basis.

A problem with Uber and Lyft as investments is that the barriers to entry aren't that high. In London recently I've been using Kapten and Bolt rather than Uber as they are both similar services with VC funded special offers. If Lyft/Uber raise prices the competitors will probably flood in. Some great deals on Kapten/Bolt by the way - 15 minute journeys for like £2.

That's fair. There's certainly a race to the bottom aspect to the whole business. But, surely at some point, funding undifferentiated businesses to lose money when you know they'll have to raise prices sooner or later (at which point they're just like everyone else) can't continue forever. I know a lot of VCs are stupid, but that stupid?

Maybe we just end up with Taxis 2.0. Mostly local businesses with a very low cost structure.

Or maybe someone like Google provides an almost free (commission wise) app service for drivers. A bit like providing Android against iOS et al.

i posted it with the title "Ubers lossed will be $4.5B" or something. not the title of the article but it's what grabbed my eye on twitter

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