> There is no scenario where Uber becomes MySpace to a competitor.
Sure there is - the IRS says their drivers are employees and they need to provide multiple years worth of backpay/benefits. Any competitor that's been doing that already wins.
It's debatable whether the ride sharing industry can survive if drivers are classified as employees (which is why Uber and others are working on self-driving cars).
There is no scenario that's rather optimistic of you.
Don't get me wrong there currently very popular and profitable so they don't need to worry about a Pets.com style crash. However, the barriers to entry are relatively low just look at Lyft. Eventually investors are going to want to get their money back, so they either start issuing dividends or face a hostile takeover.
Actually, everything I've read says they are in mature cities. Leaked numbers say they're stupendously profitable in their oldest markets: nyc, sf, etc. They are losing money overall because they subsidize drivers when they move into new markets. But the key is always to look at existing markets.
The quickest numbers I could find were leaked in 2014.
est yearly rev run rate city
======================= ====
$212+mm sf
$312 mm nyc
$141 mm dc
$150 mm chicago
======= =======
$815 mm total
I guess the larger question is how do drivers respond when their rates get dropped after a market is mature. I imagine the answer is different depending on the market.
Those above cities are, I believe, post rate drops. Also other leaked numbers have said Uber continues to grow. My guess is driver happiness doesn't impact Uber's business much; our economy seems to generate enough desperate people that they have a nearly never ending stream of people willing to drive for $5/hour (a reasonable estimate of an UberX driver's true net comp.)
Saying the barriers to entry or low is completely uninformed. The incumbent has a massive advantage in driver/rider liquidity that is nearly impossible to overcome. Lyft is the perfect example in that it still massively trails Uber in every one of its markets despising having very deep pockets and for many, a more attractive product.
IMO, Lyft's mistake is attacking more than one market at the same time. Spending 100M to just get NY is a good investment and there are far smaller cities out there with lower barriers to entry. Further, if you can demonstrate that Uber only raises rates after they show up you can build up a lot of hate in the driver’s community.
AKA: Uber pays a lot to get ex: NYC and LA drivers, wins both markets, lowers payouts to make money. New competitor shows up in NYC so Uber dramatically raises rates in NYC and not LA. Then, before that competitor moves to LA a lot of drivers are going to get pissed there stuck with low rates. Basically, by attacking one city, Uber is forced to either raise rates in all its cities’ which it can't afford or piss off all their drivers.
If they play it smart Uber will never die, but I've seen lots of companies fail because a competitor showed up and forced them into a vicious cycle of cutting quality to keep profits up, which drove out customers, etc.
If the good drivers stop working for Uber because Uber is squeezing them, for example, Uber may get a reputation for having poor drivers.
