[HN Gopher] End of the line for Uber?
___________________________________________________________________
End of the line for Uber?
Author : Daishiman
Score : 194 points
Date : 2021-08-10 19:03 UTC (3 hours ago)
(HTM) web link (pluralistic.net)
(TXT) w3m dump (pluralistic.net)
| deanCommie wrote:
| I find the tone of the article a little uncharitable.
|
| Innovation is full of scenarios where visionary companies thought
| they could offer something at a loss, and then eventual
| improvements to technology/logistics/supply chain/process/etc
| would make the concept profitable.
|
| Whether it's Amazon offering free shipping, or Google offering
| OUTLANDISH (for the time) storage volumes for Gmail.
|
| I can definitely imagine that Uber's leadership genuinely
| believed that various economies of scale or technological
| innovations would allow them to be fully profitable in the long
| run.
|
| Same for Self-driving cars: When Uber was investing billions into
| it, it really looked like they were at the tip of the spear of
| innovation together with Google. People felt that Uber was
| actually BETTER Positioned for introducing self-driving
| technology than Google because they were focusing on adding
| extensions to existing cars, and they already had a built-in
| customer base using them for ordering point-to-point rides
| (Whereas Google/Waymo had to build out those capabilities
| themselves since)
|
| This is where my charity ends. Uber has not treated their drivers
| because it considers them completely fungible and replaceable.
| Everything to do with Public Transit is completely bang on - it's
| ludicrous to even imagine Uber participating here.
|
| And I buy the overall conclusion - in the long run we will look
| back at Uber and consider it a net loss for humanity's progress.
|
| But there is no getting around the pure delight of the original
| user experience - irrespective of pricing. And I'm willing to bet
| that the leadership did not consider it a con from the beginning,
| they really thought they could make a profitable business from
| this in the long run.
| Spooky23 wrote:
| Doctorow's schtick is to be a snarky know it all.
|
| I worked in government and started doing services procurements
| years ago. When I first started doing that, I was really taken
| aback by the cynicism of the procurement officers and
| attorneys. Then I did two or three engagements... and it makes
| sense.
|
| Similarly, I experienced the delight aspect on a trip where I
| paid $20 for a ride in a Mercedes SUV in Baltimore that would
| have been a $30 cab ride.
|
| The next time I used Uber, 5 years later, it was a 10 year old
| Odyssey with an Afghan guy who was illegally sub-letting
| somebody's Uber Driver account, and it cost $35 for a $20 cab
| ride.
|
| End of the day, all of these stories boil down the same thing.
| Commodity services are either luxury at a premium, or minimum
| viable level of delivery at a low price.
| pwdisswordfish0 wrote:
| > an Afghan guy
|
| Why is that relevant?
| Spooky23 wrote:
| It's pretty typical for recent immigrants to be exploited
| with grifty gigs like that.
| Daishiman wrote:
| > But there is no getting around the pure delight of the
| original user experience - irrespective of pricing. And I'm
| willing to bet that the leadership did not consider it a con
| from the beginning, they really thought they could make a
| profitable business from this in the long run.
|
| I have no doubt about the same. But the point isn't about what
| Uber was; it's about what Uber became, and how their over-
| promises turned into outrageous claims that snowballed into a
| completely unsustainable business.
|
| And while I do respect the spirit of the original app being a
| serious improvement over prior experience, truth is that
| nowadays even traditional banks and even government apps can be
| found that are just high-quality and show that you don't need a
| cutting-edge startup to have good service.
|
| I also believe that other entrepreneurs would have been able to
| plod a similar path without ripping off investors or
| mismanaging finances.
| subsubzero wrote:
| Uber can make money but it won't be pretty, some steps in order
| to achieve profitability:
|
| #1 Get out of all expensive metro areas(corporate offices) and
| embrace a full remote workforce.(sublease commercial buildings
| where applicable)
|
| #2 Raise rideshare fees, reduce driver income.
|
| #3 Retreat from un-profitable regions for ride-hailing, ie.
| moving out of rural markets.
|
| #4 Reduce engineering workforce that isn't focused on running the
| business.
|
| #5 Get out of the food delivery business, the margins are too
| small for the engineering/marketing effort.
| atlgator wrote:
| I really got used to ordering DoorDash during the pandemic. I
| hope they/Lyft don't follow Uber.
| 99_00 wrote:
| People took out loans to buy expensive taxi licences and were
| financially ruined by this speculation.
|
| And young professionals cheered the process on.
| slaw wrote:
| DiDi operates in Brazil under name 99. It is usually little bit
| cheaper for customer than Uber. At the same time DiDi pays more
| to the driver. How is DiDi profitable and Uber not? * Source
| mine, I talked to drivers and used both apps.
| nice_byte wrote:
| i don't understand. transportation and food service in the era
| before uber was literal shit. remember, if you couldn't use your
| own car, you had to subject yourself to horrible smelly
| "licensed" taxis with drivers that barely know the city, or go on
| a bus with some meth head tweaking out in the back. you had to
| get yourself up and _physically go_ to a restaurant if you didn't
| have time to cook yourself.
|
| now you can get a fast safe ride at any time of day and get the
| meal of your choice without having to go and sit around in the
| same room with a bunch of other losers like you. all at a
| moment's notice, through a nice convenient interface. and people
| have the gall to complain about this?
|
| UPD: to be clear - it doesn't matter that uber subsidizes
| rides/deliveries. they could stop doing that and jack up the
| price, but the alternatives are so dreadful that i doubt it would
| make me stop using them.
| nyghtly wrote:
| So you're saying that the only reason you didn't take a taxi
| everywhere before Uber was because the drivers are smelly? Well
| maybe you have money to burn, but most other people don't. If
| Uber charged what it really costs to operate their services,
| then you would see a massive drop in riders. It doesn't matter
| how much less smelly you think they are compared to taxi
| drivers.
| nice_byte wrote:
| pretty much yes.
|
| i used to live carless, and would need late rides on a
| regular basis. i was taking the fancy black lincolns in the
| days before uberX was introduced and pay ridiculous prices
| for them because uber was the only game in town - taxi
| services didn't need my money. it's not just that they were
| smelly or whatever - they were literally unavailable.
|
| quality of service matters. having to sit in a filthy car -
| if you can even get a hold of it - and help the driver
| navigate is not good quality service.
|
| there's demand for quick, convenient quality transportation,
| and uber fills it.
| spywaregorilla wrote:
| I think his article is pretty poor and just has a bone to pick,
| even if I agree with the overall thesis. Yes, Uber is losing a
| lot of money. But no, it's not broke, and it's not going to be
| broke for probably a number of years still.
|
| I thought this linked source was a bit better:
| https://www.nakedcapitalism.com/2021/08/hubert-horan-can-ube...
| 1helloworld1 wrote:
| I don't know why seemingly knowledgeable people like the author
| keep spewing bullshit about drivers losing money. I live in an
| immigrant community in NYC. Pretty much every other person in
| this community is a Uber driver. Some are very industrious and do
| not mind working long hours or working on weekends. Making more
| than 100k per year (after all expenses) is not unheard of.
| Daishiman wrote:
| How many working hours are they doing for that? How much will
| their cars last? Car rental companies keep cars generally for a
| year, are they factoring that in?
| stvswn wrote:
| The author is mixing political arguments related to public
| transit funding, unionization and classification of workers with
| an analysis of Uber's financials and strategy, and I think it
| weakens the argument.
|
| Travis understood that Uber doesn't deserve its multiple without
| self-driving cars, he thought it was such an existential problem
| that he conspired to launder trade secrets from Google in order
| to jumpstart his program. His reasoning, I think, was that Uber's
| business model precludes it from being the exclusive platform for
| drivers (because of their IC status), meaning that he could never
| raise prices past the point where it entices a new competitor,
| nor can he lower payouts to the point where drivers abandon Uber.
| Uber has to do the heavy lifting to convince local jurisdictions
| to allow ridesharing and then any newcomer can swoop in and
| compete if Uber gets too greedy. Uber's greatest asset is that
| it's first and has a massive userbase, but for a cheaper ride
| many would compare prices in a new app without much thought.
|
| This doesn't mean that it's not very helpful to consumers to have
| on demand ride apps! I'm glad they exist. I live in suburbia and
| the other day I had to travel to a train station that was about
| 20 miles away. Public transit would have meant an hour and 2 bus
| transfers, Uber got me there in 25 minutes for the same cost.
| Lots of criticism of Uber compares it to dense urban areas with a
| taxi fleet, but there weren't taxis here before Uber, there were
| only car services at much higher prices.
|
| From a consumer standpoint, we should be happy that these
| platforms exist at relatively low cost, we end up getting rides
| via a very convenient app for only a 25% markup on what the
| driver grosses per ride (less including tip) -- and that
| middleman fee is likely to continue to get squeezed.
|
| The author presumably gets that they are popular because their
| very popularity seems to be an issue -- it's argued that the
| public is less likely to want to invest in public transit when
| Uber is available. One can't also argue that the general public
| is ditching Uber. It's sort of a Yogi Berra argument -- "That
| place is so crowded no one goes there anymore."
| Animats wrote:
| Well, yes. Self-driving is how they got Softbank to convince the
| Saudi sovereign wealth fund to invest. Also, the Saudis have an
| interest in promoting fuel powered vehicle usage.
| searealist wrote:
| > it also victimized workers, riders, cities and restaurants
|
| > Uber's founding CEO Travis Kalanick - a fratty bro who created
| a culture of dishonesty, physical and sexual harassment and
| abuse, and criminality.
|
| > It's true! Khosrowshahi is a better human being than Kalanick
| (who, to be clear, is one of the worst people alive today).
|
| > But the problem with Uber wasn't that just that it was a rapey,
| crimey, crooked grift - the OTHER problem with Uber is that it is
| doomed, and only exists today because of accounting fraud.
| Khosrowshahi didn't fix that part. He's not going to fix that
| part.
|
| Clearly the author hates Uber so much that you cant really trust
| any opinion they have of their financials. You can tell this
| because they aren't attacking ride sharing as a whole or ever
| mentioning Lyft.
| [deleted]
| RONROC wrote:
| Looks like we found the Uber [vc, engineer, shareholder,
| intern].
| Daishiman wrote:
| They attacked the models of similar ridesharing services in
| Southeast Asia.
|
| The whole model in itself is a con and the author isn't shying
| away from that; he's just demonstrating that the biggest player
| is a particularly egregious offender.
|
| And sorry, but the fact that he has strong opinions doesn't
| mean that they're not backed by facts. You can be impartial and
| have strong opinions if the opinions are the obvious, logical
| conclusion that all the evidence brings out. If anything, I
| applaud the author for not pretending the modern media BS
| narrative of theres-two-sides-to-the-story, as if they had
| equal weight.
| searealist wrote:
| > They attacked the models of similar ridesharing services in
| Southeast Asia.
|
| Not really. Nothing more than mentioning keeping them on the
| book was a financial trick.
|
| > The whole model in itself is a con and the author isn't
| shying away from that; he's just demonstrating that the
| biggest player is a particularly egregious offender.
|
| I'm not sure what you mean when you say the author doesn't
| shy away from it. Not in this article. This only attacks
| Uber.
|
| > And sorry, but the fact that he has strong opinions doesn't
| mean that they're not backed by facts. You can be impartial
| and have strong opinions if the opinions are the obvious,
| logical conclusion that all the evidence brings out.
|
| When you adopt a tone of preaching to the choir don't be
| surprised when people think you are doing just that.
|
| > If anything, I applaud the author for not pretending the
| modern media BS narrative of theres-two-sides-to-the-story,
| as if they had equal weight.
|
| Do you also wish the modern media called companies "rapey" in
| articles meant to criticize financials?
| [deleted]
| srean wrote:
| I have often wondered if there are easy ways to invest easily on
| a 'patch'ed index fund, for example, NASDAQ_100 sans Uber. Of
| course one can buy the individual stocks in the patched index in
| the same proportions but that's going to be very expensive in
| terms of transaction costs (and general headache).
|
| @danhak For some reason I cant respond to you. I had put/call
| options in mind but shorting/longing would work.
| [deleted]
| keyanp wrote:
| The S&P 500 index already meets your needs. In order to qualify
| for the index a company must have positive earnings. This
| disqualifies a bunch of tech companies that may or may not ever
| succeed financially...
|
| See https://stockmarketmba.com/largeststocksnotinthesp500.php
| srean wrote:
| Ah thanks, I didnt realize S&P 500 had such a filter.
| gentschev wrote:
| Ride sharing as a whole isn't going away. It's better than
| calling a cab or whatever used to be. But I could see Uber and
| Lyft each ending up as $5-10 B software layers on top of driving,
| not $50-100 B ones.
| Apocryphon wrote:
| > Adjusted EBITDA profitability
|
| Hey, isn't that what WeWork was being valued with?
| RONROC wrote:
| Another compelling argument as to why the Silicon Valley
| experiment has failed so spectacularly (for most but not _you_ )
|
| Uber is the Chernobyl of corporate malfeasance. Just a steaming
| pile of shit, rotten from top to bottom.
| dang wrote:
| Ok, but please don't break the site guidelines like this. Maybe
| you don't owe Uber better, but you owe this community better if
| you're participating in it.
|
| " _Please don 't fulminate._"
|
| " _When disagreeing, please reply to the argument instead of
| calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be
| shortened to '1 + 1 is 2, not 3._"
|
| https://news.ycombinator.com/newsguidelines.html
| RONROC wrote:
| Sorry dang! Could of definitely left that last sentence out.
| dang wrote:
| Appreciated!
| kelnos wrote:
| > _I live in Burbank, where Ubers were never more than 5 minutes
| away. Now, a 30 minute wait is common - and the fare is
| comparable to the licensed taxi company, which is literally one
| app away from achieving feature parity with Uber._
|
| This sounds like the typical arrogant software developer
| declaring that they could build someone else's entire business
| during a weekend with a text editor.
|
| "Literally one app away" is exactly what was wrong with the taxi
| business before Uber and Lyft. And yet with 10 years to catch up,
| taxi apps -- many of them built specifically to try to compete
| with Uber/Lyft -- still suck.
| diebeforei485 wrote:
| At some level, why does it matter? They didn't make drivers buy
| useless medallions or anything like that. Companies fail all the
| time, some of them fail early, others may fail at a late stage.
| ppeetteerr wrote:
| Medallions had value in that they were seemingly protected by
| the municipality that issued it. Prior to Uber, a medallion was
| an asset that appreciated in value.
| northerdome wrote:
| Uber operates in almost every major US city today. It has
| overcome years of predictions it would fail. Yet I still can get
| an Uber in minutes almost anywhere in the country. Will it get
| more expensive? Probably. Is it a replacement for car ownership
| or transit? Definitely not. But Uber will live on. It's good
| enough to ensure sizable marketshare for the long term.
| vb6sp6 wrote:
| > It has overcome years of predictions it would fail
|
| If you kept getting billions in investment cash, you could
| could also keep a business that loses money each quarter going
| for years
| asdff wrote:
| Within minutes you say? You must have not used it very
| recently. My fastest time has been like 25 minutes with the
| recent lack of drivers.
| kelnos wrote:
| I guess it depends on where you are. In Honolulu a few weeks
| ago it would take 15 minutes just to confirm your ride, and
| then another 10-20 for the driver to get there. (Granted,
| they are also experiencing a massive tourist surge, greater
| than pre-pandemic levels.)
|
| In SF, I still see 5-10 minute driver arrivals from when I
| click the "request" button.
| nabla9 wrote:
| With -30% operating margin and -$2B operating cash flow it will
| not live on.
| mypalmike wrote:
| It's not a problem! I predict flooz will make a comeback and
| with some clever accounting, those negative dollar amounts
| can be changed into positive flooz.
| disgruntledphd2 wrote:
| How do you see them making a profit?
|
| Like, if you need to exclude stock based compensation (amongst
| other things) from your adjusted EBITDA metric, then you have
| problems with your business model.
| northerdome wrote:
| Raising prices. Even with higher prices they will still be
| relevant in much of the country where there is no credible
| alternative than to drive.
| djrogers wrote:
| > How do you see them making a profit?
|
| By raising prices. There is a point at which the market will
| bear the cost and Uber can make a profit. It won't be as
| cheap as it is now, and likely will be down in scale/volume,
| but that point does exist - the existence of taxis and all of
| their medallion cabal bs over the years proves it.
| timr wrote:
| Uber is already dramatically more expensive in NYC. It's to
| the point where, most of the time, it is
| smarter/faster/better to take a taxi, if you're paying
| attention. Most people still look at Uber first (if only
| because of muscle memory), but multiple times in the last
| few months I've watched someone do it and recoil from the
| sticker shock. Just this weekend, someone I knew was quoted
| $130 to get from Cobble Hill to the UES. Even if you're
| _almost completely price-insensitive_ , that's a trip that
| can be made in 45 minutes (~about the same as driving) for
| $3 in subway fare.
|
| I don't know what's going on with Uber in the rest of the
| world, but here, there can't possibly be any more margin to
| consume.
| northerdome wrote:
| NYC is exceptional. Manhattan is dense enough you can
| hail a cab on demand. The same can not be said for the
| rest of the country. Uber may never be competitive in
| Manhattan but they don't need to.
|
| In much of the country, a ten minute drive would take
| over an hour on public transit if you take infrequent
| headways into account. And that is when it is possible to
| take public transit.
| kelnos wrote:
| I think NYC is not a great example, as it's one of the
| few places in the US with a decently-good public transit
| system, and the density to support a large-enough number
| of taxis.
|
| In SF, Uber (and Lyft), despite the higher prices, is
| still much better than the alternatives for most trips. I
| suspect the same is true for many other places,
| especially for trips in/out/adjacent to a dense city.
|
| I'm thinking of things like when I visit my sister in
| Maryland. I fly into Dulles, get an Uber/Lyft, and I'm
| there in 25-30 minutes at a cost of around $35-40. I
| could take the new silver metro line into DC (pre-
| pandemic it wasn't finished, so you'd have to take a bus
| from Dulles to the nearest completed station), and then
| the red line back out, but then the trip is around 90
| minutes (plus getting my sister to drive me 8 minutes
| from the nearest metro station). Much cheaper, certainly,
| but orders of magnitude less convenient.
| sabarn01 wrote:
| In smaller cities it often took over an hour to get a cab
| before uber. The price was also insane.
| kelnos wrote:
| I never understood why stock comp was included in EBITDA. How
| does stock comp actually cost the company money? All it
| really does is dilute existing investors, no?
| CPLX wrote:
| The post certainly has a plausible and understandable narrative,
| but I have no insight into Uber's financials.
|
| I do however use Uber and Lyft constantly, all over the country
| and world, and the contrast between the services today and a a
| year or two ago is _stark_.
|
| Pricing is often 4-5x what I used to expect for the same trip,
| sometimes with wait times of 30-40 minutes, even in non-peak
| times in central business districts.
|
| As a regular user who just happened to be in 9 different cities
| over the past three weeks (I'm in the conference business) it's
| really clear something really severe is going on with these
| companies right now and their service level is in free fall.
| MaxfordAndSons wrote:
| I noticed it in a large tourist-destination US city recently.
| You literally could not get an Uber from the airport (which is
| not at all far from the city center). Instead, drivers have
| formed an informal co-op, negotiating prices and dispatching in
| person or by phone. Basically an uncredentialed taxi service,
| that the city was looking the other way on because someone has
| to do it, and people still won't use the traditional taxis out
| of a habit - they go to the ride share pickup area, try to call
| an Uber or Lyft, can't, and then go to the grey market option
| out of desperation.
| tunesmith wrote:
| We noticed it while traveling recently, too - same family-visit
| trip we've made several times before, but this time there every
| single leg had at least one driver cancellation, sometimes two,
| and very inaccurate estimates of wait time.
| okareaman wrote:
| I get the same vibe from Uber (which I outlined here:
| https://news.ycombinator.com/item?id=27788509) as I did from
| working for an internet company before the dot com bubble burst
| that was all show to raise money from investors.
| neonate wrote:
| What I don't understand about the "Uber can never be profitable"
| argument is, why can't they just raise prices until they're no
| longer selling at a loss? If the answer to that is, "because then
| demand would die", why doesn't that apply to taxis? Taxis make
| money. Why can't a better (in many people's opinion) service,
| with better tech, do at least that well?
|
| Setting aside the other reasons to dislike Uber, there is
| obviously a valuable product there. I get that it has been
| subsidized by VC dollars in a land grab, etc., but saying it can
| _never_ be profitable is saying it can never find a fair market
| value, and that doesn 't make sense to me. What am I missing?
| dbt00 wrote:
| Let me flip this around.
|
| Non-governmental subsidized transportation infrastructure is
| and always has been a race to the bottom. Taxis are mostly only
| profitable with extremely low overhead and only servicing high
| traffic areas like Manhattan or other major metropolitan areas.
|
| Uber's thousands of engineers and SF HQ disqualifies them from
| being low overhead anything.
|
| In the 1890s in Chicago when massive subway and interurban
| train networks were built out by private business, they either
| failed financially or succeeded only by real estate speculation
| around where they built their lines. Eventually all of those
| lines were acquired by local governments or shut down. Mass
| transit lines in LA, NYC and around the country followed
| similar trajectories. Look up the Interborough Rapid Transit
| Company in NY, or Charles Yerkes and Sam Insull in Chicago.
|
| These days modern suburban subdivision companies don't bother
| with creating mass transit, they just fund street construction
| and install public works lines like gas/sewer/water/electric,
| and let the city deal with the traffic and the inevitable
| deferred maintenance that clashes with their low tax
| philosophies.
| hosh wrote:
| What about Japan, in which over 87% of rail passenger
| transits in three metropolitan areas are provided by private
| operators?
|
| https://marketurbanism.com/2010/12/22/japanese-transit-
| and-w...
| neonate wrote:
| This seems to me the salient part of your comment:
|
| > Taxis are mostly only profitable with extremely low
| overhead and only servicing high traffic areas like Manhattan
| or other major metropolitan areas. Uber's thousands of
| engineers and SF HQ disqualifies them from being low overhead
| anything.
|
| If I'm understanding correctly, the argument is that taxis
| are basically a shit business--bad enough to break the
| "software is eating the world" rule because they have such
| low margins that you can't pay a software team (or at least,
| not operate a marquee SV software company) and compete.
| Better tech isn't enough.
|
| If that's true, that answers my question. I'm surprised if
| it's true, though. I didn't think the taxi business was quite
| that miserable, and I'm not sure how it squares with taxi
| medallions being the highest-performing investment of the
| 20th century (or some factoid like that which I read years
| ago).
| adventured wrote:
| Taxis are both a mediocre margin business, and typically
| cartel restricted. Many people here are likely familiar
| with the absurd stories of the NYC medallion prices from
| just before Uber took over (a million dollars for a taxi
| medallion, before Uber smashed the cartels, tanking the
| value of the medallions). NYC extracted $855m in medallion
| fees from just 2004-2014.
|
| So how did the eg NYC medallions become so valuable? The
| taxi cartel bought into the (mostly unspoken) notion that
| the medallions represented a government guaranteed blockade
| on competition. For a city like NYC with rather epic taxi
| demand, a license to print even just 8% margins perpetually
| can be an enticing prospect (especially in an age of
| forever low interest rates). Then, instead, the city
| governments mostly allowed Uber and Lyft to continue to
| operate (after their initial move to operate first and seek
| forgiveness second), rather than shielding the taxi cartel
| from competition.
| maxk42 wrote:
| I know of no city in the US (although there may be some
| small towns) where taxi rates are not dictated by either
| state, county, or local laws. You cannot get a taxi for any
| rate other than the officially-sanctioned one.
| Unfortunately, this rate seldom has anything to do with the
| cost of gas, maintenance, depreciation, pandemics suddenly
| causing people to use more / less services, etc. This means
| that for the taxi industry, there are four chief ways of
| making more money (1) lobbying, which is effective but
| slow; (2) reducing costs in the extreme, which is also
| effective, but only to the extent that you are able to
| reduce your costs further by delaying repairs, doing it
| yourself, not offering refreshments, not providing great
| customer service, not developing apps, etc.; (3) working
| more hours, often in contravention of labor and safety
| laws. Also effective, but only if you're independent. (4)
| Breaking the law. A significant number of cab meters are
| illegally altered to charge more money than allowed by law.
|
| Uber, for all its flaws, provided a service that was better
| than the taxi companies simply because they didn't require
| their contractors cut corners, cheat, or provide poor
| service to make money. People flocked to Uber because it
| was genuinely a better experience than the local taxi
| companies. I think in the long run, Uber will compete by
| becoming as expensive as (or more expensive than) local cab
| companies, and having a much smaller customer base.
| gauravjain13 wrote:
| If we suspend the Uber/taxi comparison, and assume Uber is
| a new taxi-like service but better, therefore deserves a
| premium? I know I'd pay for that premium. Not everyone
| will, but I can't be alone?
|
| So that means the addressable market shrinks. Think premium
| black-car-only service; Uber's roots). Why can't such a
| service find demand/price equilibrium? I think it can, but
| not in a manner that can justify Uber's "unicorn"valuation.
| And I think that's at the core of Uber's conundrum/identity
| crisis: it provides value, but with tech-company cost
| structures. However, it doesn't deserve tech-company
| valuations because it's just not as scalable -- it's tied
| to operating in the physical world, with physical
| constraints.
|
| If the strategy is to burn cash, continue entrenchment, and
| eventually leapfrog to self-driving Ubers (mitigating the
| scaling/cost problem to an extent), then that's a war of
| attrition. Fingers crossed.
| ajnin wrote:
| What's premium about Uber ? My personal experience is
| that taxis are usually much more comfortable cars,
| they're allowed to drive in dedicated bus lanes, and they
| don't try to scam you by taking a longer route to rack an
| overcharge. The advantage and innovation of Uber is the
| app, but now taxi companies have one too. So what is it ?
| dnautics wrote:
| My personal experience is taxis are less comfortable and
| I've only not been scammed by a taxi once (in the us),
| taxis are fantastic abroad, no idea why.
| mcculley wrote:
| One advantage I get from Uber is a single interface no
| matter where I am. I travel a lot. I won't install an app
| for every city. Uber has taken away the pain of dealing
| with taxi companies in strange cities.
|
| Unfortunately, it traded one kind of monopoly for
| another.
|
| Ideally, Uber would have been an app and a network that
| taxi companies plug into.
| dbt00 wrote:
| They were in Manhattan. They weren't in SF, and they
| certainly weren't in, say, Urbana, IL.
| neonate wrote:
| You mean about medallions? That makes sense.
|
| Have I read your argument correctly, more or less?
| eschulz wrote:
| I think you got it. Pay a million dollars for a
| medallion, and then have the right to sit at Times Square
| or JFK and charge people $50 to drive them for 20 or so
| minute. The cabs are independent LLCs, so they're on
| their own for health insurance, 401k, etc. Mostly driven
| by immigrants, I think being a cabbie can be a tough job.
| nostrademons wrote:
| When he puts it like that, it makes me think Uber has a
| much better business model than I thought. Taxi efficiency
| is very heavily dependent on information - if you know
| exactly where the customers are, where the drivers are, and
| then can run shortest-path algorithms in real-time to match
| them up, you can save huge amounts of driver time waiting
| and finding customers. Figure you save an hour a day * 200
| workdays/year * 200K taxi drivers in the U.S. and that's 40
| million hours saved in the U.S. a year. At a rate of
| $10/hour, that's $400M/year. Then add in economies of scale
| from knowing where _all_ the drivers and customers are, and
| a better brand and better customer experience from reducing
| wait times and transaction costs to get a taxi.
|
| Is that worth $80B? I don't know, but I'd guess probably
| not. But it'd easily pay for a SF HQ and several thousand
| engineers.
| dnautics wrote:
| Or at least several hundred engineers. Does Uber really
| need several thousand engineers? It's kinda nuts to me,
| WhatsApp scaled to a billion with 50, you figure an order
| of magnitude more to deal with the fact that a large part
| of Uber is turning legal compliance into code.
| MichaelZuo wrote:
| Yes informational efficiencies for transportation at
| scale could easily be $80 billion worth of value to the
| world. The real question is whether Uber can capture that
| amount of value. And whether competition will drive the
| margins to zero anyways.
| anonAndOn wrote:
| Those taxi medallion returns were a con from small groups
| of insiders.[0]
|
| [0]https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-
| medall...
| woodruffw wrote:
| > I'm not sure how it squares with taxi medallions being
| the highest-performing investment of the 20th century
|
| Taxi medallions are an artifact of how NYC regulated its
| taxi fleet; other places may have had them but the
| investment factoid probably comes from NYC. Joe's Cab in
| Peoria, IL probably doesn't have a medallion worth $1
| million to borrow against. And, of course, note: not all
| cabbies owned (or currently own) the medallions they drive
| under: many lease them or drive for a company that owns
| them, and has sat on them as a speculative asset for
| decades.
|
| Source: went to school in NYC with plenty of cabbies' kids.
| It's not a job many people eagerly take.
| boh wrote:
| Uber is an application that helps drivers find passengers (not
| the other way around). They do not control the costs associated
| with operating a car service and so have no chance of
| engendering the productivity necessary to keep costs down.
| Their VC subsidized attack on the taxi industry has actually
| destroyed much of the productivity gains inherent in
| traditional car service companies who were able to scale car
| maintenance and other fees (now each individual driver has to
| manage their own costs).
|
| Uber's only major contribution is an easily reproducible app
| and considerable market manipulation which it can no longer
| maintain. If Uber decided to charge what their failed system
| actually requires for profitability, it would be uncompetitive
| against traditional car services that actually have the
| capacity to scale the costs associated with car services.
| make3 wrote:
| their moat is that their app is now everywhere, which is
| worth something. So many other services have easy to copy
| apps, but it takes years for other apps to beat them. See
| Facebook, instagram, etc. A good app is really worth
| something.
| j4kp07 wrote:
| Taxi companies are not in the ride-sharing industry. They are
| in the vehicle leasing industry.
| pbreit wrote:
| Uber's Rides business has been EBITDA positive since the IPO.
| karpierz wrote:
| It turns out if you shuffle all of the subsidies and
| promotions out of your cost center, it's pretty easy to show
| a profit.
| bern4444 wrote:
| Of course they can raise prices. But that doesn't mean people
| will pay them.
|
| I've noticed massive increases lately in Ubers prices. So have
| lots of other people. In response, people take fewer Ubers. As
| prices go up demand will go down.
|
| Uber has massive fixed costs. Even if they maximize where
| supply meets demand (where they can make the most money) if
| it's not enough to cover their fixed costs they won't be
| profitable.
|
| Uber needs to find a way to lower their costs or grow their
| users (raising prices doesn't help) to hit a profitable break
| even point.
|
| It's been the VC money that has been subsidizing Uber prices
| for a while. That's disappearing. Uber is also trying to expand
| into more spaces (Uber eats) to acquire customers. Maybe this
| will work but so far it's not.
| withinboredom wrote:
| Sure it will. I had to take a regular taxi today. I couldn't
| convince the driver to give me a flat rate or quote to my
| destination but I needed to be home and taking the train
| would have been over an hour.
|
| So, I got in the taxi thinking it would be around 60EUR (what
| an Uber usually costs). The taxi cost me over 100EUR to get
| home in 30 mins vs. 1 hour. I should have gotten an Uber but
| I was too exhausted to think of it and figured a regular taxi
| would be in the ballpark of an Uber.
|
| Uber can give me a price before I even request a car. No taxi
| can do that atm and I don't think demand would go down
| because prices are increased.
|
| If I knew it would have cost me 100EUR+ to be home in 30
| minutes after spending all day in airports and planes, would
| I still have paid that much? I probably would've hesitated,
| but I think I'd still have pushed the button.
| bern4444 wrote:
| > I don't think demand would go down because prices are
| increased.
|
| I disagree. Of course demand will go down as prices go up.
| It's quite literally the most basic principle of economics.
| Uber is not like a life saving pharmaceutical that people
| will pay any amount for - that is, an inelastic service.
| Consumers will absolutely avoid a service because it costs
| too much. Uber is no different. While people may still take
| Ubers, they'll take them less often. So Uber will still
| have reduced revenue.
|
| > I couldn't convince the driver to give me a flat rate or
| quote to my destination
|
| I'm from NYC, so granted our taxi fleet was well
| established well before Uber. One law established is a
| fixed cost to and from airports for cabs. Certainly this
| can be be replicated but yes, it's not something that can
| be immediately addressed and so Uber wins in this space (an
| upfront price).
|
| To respond to your general message, yes, Uber is excellent
| in certain circumstances. This is one of them. Though I've
| also seen the reverse when traveling. Hoards of people
| waiting for an Uber, and plenty of taxis around.
|
| As it currently stands, with prices going up, drivers'
| compensation going down, and Uber burning money, it's not
| likely sustainable. So Uber's future is at risk regardless
| of anyone's individual consumption
| majormajor wrote:
| Doesn't it apply to taxis? There weren't as many taxis as
| ubers, so they were more expensive and harder to get and took
| longer to show up.
|
| If this was a purely artificial supply constraint (medallian
| monopolies and abuse, say), then that would be one path to Uber
| profitability.
|
| If this was just a flexibility problem - where taxi driving
| full time as a requirement for drivers meant you couldn't hit
| peak demand without an unsustainable amount of idle time too -
| Uber could have a path there.
|
| If it was a sort of "step change" demand function, where if you
| make it trivially available and cheap the growth in demand will
| be enough to offset the lower per-ride revenue, there's another
| potential path there.
|
| But it's been a long time now for really none of those theories
| to pan out.
| leephillips wrote:
| Because they're not taxis. When I call a real taxi company to
| pick me up at 4:30 in the morning for my flight, they're going
| to be there. When I call Uber, who knows? My experiences were
| not good. I went back to taxis.
| brianwawok wrote:
| Or in Chicago... call up taxi company at 4:30x they promise
| to come. Never show. Call and ask where they are, they hang
| up on me. No recourse, miss flight.
| burnished wrote:
| I used to arrange rides for people to the airport as part of
| my job. My experience was that yellow cab was inconsistent,
| frequently would fail to arrive for morning pickups without
| notice, operators were consistently short/impatient, even
| events like calling for a cab and being told 10-15 minutes
| only to call back half an hour later to be told the same
| thing weren't uncommon.
|
| Luxury towncar services however did the trick. This was
| before Uber/Lyft of course.
| ghaff wrote:
| >Luxury towncar services however did the trick. This was
| before Uber/Lyft of course.
|
| That's what I use exclusively. Would never trust a taxi
| where I live and certainly not Uber/Lyft to have sufficient
| network to pick me up. But my company is usually paying.
| samstave wrote:
| Before Uber was founded I lived Upper Market in SF -- and it
| was impossible to get a cab to come to my house. I would call
| and they just would never show up. I started calling and
| ordering multiple cabs in a shotgun approach to getting a cab.
| I travelled extensively and my flight was always early on
| Sunday Mornings (because I was crossing time zones and had to
| leave at such a time to consult all over)
|
| The cabs still wouldnt show up, so I made friends with a bunch
| of personal Black-Car Drivers in SF and had their numbers
| directly and would coord trips from my house to SFO before hand
| (17 miles) - I would pay then a set fee including tip.
|
| ---
|
| Once, I got a cab from my house to SFO and it was $65. for 17
| miles, and a 30 minute wait.
|
| I was flying from SFO to LAX. My plane ticket was $99.
|
| 450 miles, @~500 miles per hour or such. $99. 6AM Sunday. no
| waits, no hassle.
|
| 17 miles from House to SFO, @~30 MPH, 5AM sunday. 30 minute
| wait. $65 dollars. (2010/2011?)
|
| ---
|
| Then Uber was born. I have never used a taxi in the greater bay
| area since.
|
| Fuck taxis.
|
| ---
|
| That being said - Uber & Lyft are not without faults.
|
| Uber was run by a C-Suite of douchebags. The product was
| valuable, but the culture was toxic.
|
| That has not changed - rather than actually being a better
| company, they are simply constantly attempting to cover up for
| the fact that they are douchebags... and thus, their platform
| as a business model (the drivers) is collapsing.
|
| ----
|
| Here is the biggest PR debacle with Uber that goes un-reported:
|
| They attempted to have a lottery for a secret party night where
| you had to attempt to book a ride to this "party" and you may
| or may not be let in... and you had to keep trying and they
| would havea driver pick you up and deliver you to a secret
| party spot, with a special DJ and special drinks! YYAYAYA!
|
| Well - not so fast punk.
|
| The lottery was bullshit and had many problems where people
| were accpected, then the driver rejected them, and all sorts of
| other failures...
|
| Then, (I was one of the "lucky winners") they were able to pick
| people up and rather than carrying them off to some super-cool-
| secret-party location, they had a mediocre half-assed "party"
| at Harlot in San Francisco -- where after going through the
| gauntlet of disorganized Uber Drop-offs (the drivers were just
| as confused as was the inept marketing group at Uber) you were
| still put into a line as if it were a regular lame club in SF.
|
| They attempted to charge a cover, but backed down after people
| pushed back based on this "contest" to come to "secrete party"
|
| Then the special drinks? They were $12/drink... You WON this
| lottery to go to harlot as if it were ANY other night in SF...
| the inside of the party was an utter joke - the uber employees
| were uber-douchebags; stomping around like they were in charge
| of some super important event and had no time to talk to you
| and what not...
|
| But here was the worst part: Those fucking douchebags had
| ~1,000 people come to this club harlot, attempted to charge
| them for cover, then charged them the same price for everything
| as if it were any other night that one might go out, fight over
| getting a spot in the app lottery -- but when it came time to
| go home:
|
| Uber didnt plan for that!
|
| So they had 1,000 users standing on the sidewalk, EVERYONE
| LOOKING AT THEIR PHONE trying to schedule an Uber home...
|
| These fucking morons didnt have the forethought to make a
| fucking ROUND-TRIP BUTTON in the app which said "pick me up
| here. Drop me off there. Pick me back up and take me back home
| at THIS TIME."
|
| So their system crashed and all their coked-out
| "PR/SocialMedia" douchebags ran around unable to answer
| questions because they were too busy sucking their own PR dick.
|
| Fuck Uber.
| runnerup wrote:
| > it was impossible to get a cab to come to my house. I would
| call and they just would never show up. I started calling and
| ordering multiple cabs in a shotgun approach to getting a
| cab.
|
| This was my experience in New Orleans as well. The taxis
| simply didn't service non-tourist areas.
|
| Some friends and I had some fun while playing video games and
| barbecuing by calling 5-6 of the largest taxi services every
| 30 minutes for 6 hours. 50+ requests, not a single taxi
| showed up that day. Most said "the driver went there but no
| one came to the car". We were in the front yard most of the
| time.
| samstave wrote:
| My experience was worse; It turned out that the taxi
| dispatchers all talked with eachother, and after I had so
| many failed bookings and no shows -- and I was calling
| multiple cabs to come get me they black-listed me and told
| me specifically I was blacklisted for calling more than one
| cab -- to which I replied "BECAUSE YOU FUCKING DONT SHOW
| UP"
|
| yeah - I have zero sympathy for cab drivers/cab companies.
| subsubzero wrote:
| Because taxi's don't have a bloated 'backend' corporate office
| where thousands of engineers are making $300-500k a a year, and
| a bevy of extremely elaborate offices in the most expensive
| parts of the world, London, SF, NY etc. They have the dispatch
| company which runs on a shoestring budget and the cabbies who
| are either owner operators or work for a cab company, they also
| don't have the tech that powers Uber/Lyft which allows anyone
| to hail a ride from their smartphone. [tradeoffs]
| ProblemFactory wrote:
| > they also don't have the tech that powers Uber/Lyft which
| allows anyone to hail a ride from their smartphone
|
| Sure they do, as long as they just get an app built by a
| contractor and don't employ 5000 engineers building cool
| open-source infrastructure projects and unnecessary "growth"
| features.
|
| Multiple taxi companies with ~200 cars in my city each have
| their own smartphone apps with all the features you actually
| need: ordering or scheduling a ride, GPS tracking, payment
| with credit card or business invoice.
|
| Looks like these apps were last updated in mid & late 2020,
| but if it works you don't need a permanent tech team to keep
| the taxi business going.
| jimbob45 wrote:
| You beat me to saying it. However, Uber could still compete
| by spinning off the majority of its software business (and
| they should!).
| BLanen wrote:
| First, it is wrong for you to assume "the technology" actually
| brings any systemic efficiency gains.
| spywaregorilla wrote:
| A lot of it is in the weakness of the gig model. If prices
| rise, then demand falls. But the lower demand is, the less
| likely people are to try and drive, so the more expensive it
| becomes to do rides. A significant chunk of their "overhead"
| isn't engineers, but marketing to get new drivers into their
| system. It's not stable. Turnover is very high. Because they
| don't have a stable workforce, their problems compound more
| quickly than in other business models. Surge pricing is what
| happens when there's not enough drivers. If you raise the base
| price, and now have lower demand and fewer drivers, you'll
| likely need to surge on top of that increased base.
|
| You can imagine a taxi company with 20 cabs on the road has a
| fairly predictable supply. A gig model is always playing the
| odds. When there's too few drivers, Uber both misses customers
| and has to charge the customers extra to pay the drivers more.
| When there's too many drivers, Uber can probably charge less
| and meet all demand, but the drivers have a worse experience.
| This is not so bad when the overall level of activity is high,
| but is not good when the overall level of activity is low.
|
| That is, it's much worse to have 5 drivers and 10 riders than
| it is to have 55 drivers and 60 riders.
|
| tl;dr if you're charging high prices, you have a small, upper
| class target market. The gig model is suited to a mass market
| model.
| CalChris wrote:
| Price elasticity of demand. Uber's market wouldn't just shrink
| with higher (fair) prices; it would evaporate. Consumers are
| getting something for nothing and the Saudis are getting
| nothing for something. But the VCs and Kalenick probably did ok
| in this pyramid scheme.
|
| https://en.m.wikipedia.org/wiki/Price_elasticity_of_demand
| abdullahkhalids wrote:
| The taxi business does not extract out 30-40% of revenue away
| from the drivers and into the hands of software engineers who
| keep adding useless features to an overbloated app. (not the
| mention the investors and the executives)
| ardit33 wrote:
| you are right, it is 50% or more...
|
| learn the mediallion's history.... most of the yello cab
| drivers (at least in nyc), see a lot less than the 50% of the
| fare. That's why they are exclusively immigrants, as they are
| only the ones to put up with it.
|
| 1. Rent permit, 2.Rent Car. 3. Other fees...
|
| For some reason there is the naive thinking that yellow cab
| drivers are owners of their cars or permits, which is not the
| case. A local mafioso, is getting more than half of each
| fare.
| ceejayoz wrote:
| > A local mafioso, is getting more than half of each fare.
|
| I mean, at least it's staying local.
| neonate wrote:
| Ok, let's say Uber is executing the software side of its
| business badly. Is the argument then "Uber can never be
| profitable unless it fixes its software business" (which
| could be true, but is a much weaker claim)? Or is it that
| "The cost of operating a software business is intrinsically
| so high that no matter how well Uber executes, it can never
| be profitable?" That would be a massive counterexample to
| software-is-eating-the-world. Usually it works the other way
| - tech eating non-tech, even though engineers are expensive.
| freeone3000 wrote:
| Does tech eat non-tech, or do a handful of heavily invested
| companies selling at a loss beat out people who don't do
| that? Looking at the top 10 companies, three are in tech,
| tied with American Healthcare. 2 are finance, 2 are O&G.
| The internet fundamentally changed how companies do
| business, but really, what makes Uber a tech company --
| their app? They don't sell their app. Anyone can have an
| app nowadays. They're a taxi company with a large network
| and good name recognition, and that's their key benefit.
| jonas21 wrote:
| Top 10 by what metric? By market cap the top 10 companies
| are [1]:
|
| 1. Apple
|
| 2. Microsoft
|
| 3. Amazon
|
| 4. Alphabet
|
| 5. Facebook
|
| 6. Tencent
|
| 7. Tesla
|
| 8. Berkshire Hathaway
|
| 9. TSMC
|
| 10. Alibaba
|
| With the exception of Berkshire Hathaway, these are _all_
| tech companies. And a fair chunk of Berkshire Hathaway 's
| market cap is Apple stock [2].
|
| [1] https://en.wikipedia.org/wiki/List_of_public_corporat
| ions_by...
|
| [2]
| https://markets.businessinsider.com/news/stocks/warren-
| buffe...
| koolba wrote:
| Because people won't pay $25 to take a 15 min ride. They'll
| just stay where they are, drive themselves, or coordinate a car
| pool with their friends.
|
| Uber subsidies changed leisure for many folks. When it's $6-10
| for a ride, even middle class incomes don't even think twice
| about it. But when the true price of the ride must be paid,
| those people won't be a part of that economy.
|
| And without those mass short rides to fill the gaps, there's
| not enough "fat" rides to keep enough drivers on the road to
| keep the wait times low. So the product might exist, but it
| devolves to a taxi rate with a taxi wait, just done over an
| app.
| neonate wrote:
| That may be the best argument that I've heard so far, but
| after thinking for a minute, it sounds not like "Uber can
| never be profitable", but rather "the legacy taxi market is
| an upper bound on how big Uber can be in the long run".
| Couldn't that be profitable? That's still a pretty big
| market, even if middle-class people are no longer using it
| for 10-minute rides.
| Etheryte wrote:
| I think the key question here is profitable in what way.
| Can they be profitable in the sense of they made more money
| this year than they burned? For sure, turn down spending
| and turn up the prices. Can they be profitable in the sense
| of being in the green over the whole lifetime of the
| company, making a total profit over the large sums of money
| poured into the company? I'm not certain.
| neonate wrote:
| I'm asking the first question. I agree with you that even
| if the answer to the first question is, "yes, Uber can be
| profitable", the answer to the second question (can it
| generate a positive return for its investors) is in
| doubt. It's possible for a company to be a losing
| investment and yet still end up as a profitable business
| operationally.
|
| I don't think "For sure, turn down spending and turn up
| the prices" is something that the people arguing "Uber
| can never be profitable" would agree with. They're
| arguing that this _can 't_ work, and therefore Uber is
| destined to go out of business once the investment
| billions dry up. I'm just asking why that is so, given
| that the taxi market is a thing, and that a lot of people
| like Uber better than taxis.
| ghaff wrote:
| Uber can probably be profitable. Cut costs drastically.
| Focus on where the business can be profitable--which
| probably means effectively pulling out of non core urban
| areas. But it will clearly be a less good service for a
| lot of people.
|
| And probably doesn't look a lot better than taxis for
| many people any longer.
|
| And for not on demand and not price sensitive, there are
| always private cars as there have been all along in many
| areas.
| dragontamer wrote:
| > I'm asking the first question. I agree with you that
| even if the answer to the first question is, "yes, Uber
| can be profitable", the answer to the second question
| (can it generate a positive return for its investors) is
| in doubt. It's possible for a company to be a losing
| investment and yet still end up as a profitable business
| operationally.
|
| But then if we're admitting that Uber's unlikely to be
| profitable over its lifetime, why would anyone buy their
| stock?
|
| That's really what people care about in these
| discussions. Its not "Will Uber be profitable this
| quarter?", its... "should I buy Uber stock?".
|
| The last guy lost money on Uber stock and is trying to
| offload these shares / certificates onto someone else
| now. Will buying those shares at this current price (aka:
| very expensive: $81 Billion market cap) be worthwhile?
|
| You can buy many other companies at much cheaper prices
| than that.
| neonate wrote:
| > That's really what people care about in these
| discussions. Its not "Will Uber be profitable this
| quarter?", its... "should I buy Uber stock?".
|
| It's definitely not what I care about. I'm just a user,
| not an investor. What I care about is whether I'll still
| be able to use the service in the long run, albeit at
| higher prices.
|
| Also, if that's what people making these arguments really
| care about, then I think it's misleading for them to be
| arguing that Uber can never be profitable and is destined
| to go out of business. That is not the same thing as
| being a poor stock market buy at current valuations,
| whether the latest round of investors will lose money,
| and so on.
| dragontamer wrote:
| Maybe you're not the target audience of the blogpost
| then?
|
| The blogpost is pretty clear to be coming in from an
| angle of "stockholders" perspective.
|
| > Uber didn't need self-driving cars - it needed us to
| think it would have self-driving cars. That way the
| company's Saudi owners could raise investment capital
| from subsequent "investors" (AKA "suckers") all the way
| up to the IPO, cash out, and walk away, whistling
| innocently.
|
| > That's the bezzle at work - a dazzle op that keeps new
| money flowing in, convincing people that a pile of shit
| this big must have a pony beneath it. But as the years
| went by, the stories that Uber told us about its path to
| profitability got more and more fanciful.
|
| The big gist of this entire blog post is "Hey
| Stockholders, I think you've been swindled by Uber's
| CEO". That's the thesis in a nutshell.
|
| If you don't care about the stockholder perspective,
| that's fine and dandy. I'm not saying you should care.
| (I'm not a shareholder, so I certainly don't care very
| much). But... as someone who does participate in the
| stock market, I still find these stories fascinating. I
| probably will be buying stocks in the near future, so I
| do want to know about all of this drama going on in
| different companies.
| ghaff wrote:
| There was a whole lot of some combination of self-
| delusion and grift going on around self-driving and not
| just with respect to Uber. Even if you made some very
| optimistic assumptions around the tech, I'm not sure it
| ever moved the cost needle as much as people assuming it
| made taxi rides almost too cheap to meter thought it
| would.
| bloodyplonker22 wrote:
| Yes, profitable, but Uber's valuation would tank if they
| were just scraping by on this kind of revenue with no hopes
| of automated driving or other things in the future to
| increase margins.
| neonate wrote:
| OK, in that case the answer is "Uber can be profitable".
| Probably true that their valuation would be lower but
| that's not the argument I hear people making.
| mimixco wrote:
| Uber cannot take advantage of the economies taxi companies
| have in fleet purchase, in-house maintenance, commercial
| prices for parts, and fuel contracts. None of these scale
| well nationally, which is why there has never been anything
| more than small, regional taxi companies, even though they
| were possible 100 years ago.
|
| Uber's overhead in misbelieving they are a software company
| rather than a taxi service has only added to the expense,
| not saved anything.
|
| Because taxis rely on cheap fleets, centralized and cheaper
| maintenance, and volume fuel agreements, they simply don't
| scale.
| ghaff wrote:
| I'm not convinced the gig economy taxi service can't
| scale--without depending on too many drivers who don't
| understand their costs. But it's not going to be cheaper
| than the alternatives, driver networks may not be much
| larger, and a lot of operations (including engineering)
| are probably going to be mostly outsourced to low cost
| areas.
| nyghtly wrote:
| I think it's worth considering that Uber is the first
| nation-wide taxi service that we've ever seen, and they
| were only able to accomplish this via subsidy. Is it really
| possible to continue operation at that scale, while
| simultaneously losing their competitive edge versus local
| taxi companies? Why is it that no other taxi company has
| even come close to nation-wide? I don't think an app is
| sufficient to bridge that gap, and Uber doesn't have
| anything else to show in the innovation department.
| neonate wrote:
| It's a good question that I don't know enough about the
| taxi business to say anything about. However, it's also a
| pretty general/speculative argument, so not the strongest
| case for "Uber can never be profitable", especially since
| there are general/speculative arguments on the other side
| too. For example: economies of scale have worked in other
| industries, why can't that happen here? And: software-is-
| eating-the-world has generally been holding true, so why
| would this be an exception? I don't know the answers.
| lumost wrote:
| It's also a market where you're competing on margin. The
| winning ticket for the taxi market in North America was to
| stabilize taxi supply by the medallion system and have
| profits accrue to the drivers who owned the medallion and
| car (as they could charge rental fees to other driver).
|
| There's nothing to say that Uber/Lyft don't stabilize near
| a similar dynamic.
| [deleted]
| spockz wrote:
| In response to Uber we now have local taxi apps as well. Not
| sure how good they function, and of course, it's a different
| app per place instead of one global app. But apparently,
| building the app for calling a taxi ride can be done quite
| cheaply.
|
| Heck, there might even be a business for creating a white
| label taxi calling app.
| garciasn wrote:
| You use Uber or Lyft or you don't get a ride. No one is
| using a taxi app; they're using the two big rideshare apps.
| That said, I used a taxi a total of a handful of times in
| my 30-something years prior to Uber/Lyft becoming a thing.
| Those handful of times were miserable experiences,
| including hours-long waits leading to no-shows.
|
| Modern ridesharing services flipped the script. Livery
| services here in Minneapolis/St Paul are all over the
| rideshare apps and I am more often than note picked up by
| licensed taxi/limo service drivers instead of random Joes
| looking for extra dough (I'm sorry; I didn't realize it
| until after I typed it--it's staying).
|
| ---
|
| I have come to rely on the expectation that rideshare will
| be available in whatever city I am in. On a recent
| vacation, there was exactly _1_ rideshare vehicle available
| to pick up my family to go to the airport on a Friday
| morning at 6:30 AM and one available to get home at 12:30
| AM on a Sunday night. These drivers were professional
| drivers. There were exactly 0 rideshares available on
| Hilton Head Island on the several occasions I looked and
| there were only a handful available in Savannah.
|
| Ridesharing may be dead but this article is nothing but a
| very angry response to someone who hates the business model
| that actually fixed a VERY broken system. Whether or not
| those companies continue to exist, rideshare services have
| made it WAY more accessible to move around w/o having to
| rent cars, get stranded, etc.
|
| Bring 'em on I say.
| milkytron wrote:
| I've used Taxi apps, and have called taxis more than I've
| used Uber/Lyft in the past few years.
|
| But the reason for this is because of surge pricing. The
| times I want a ride are when everyone else wants a ride,
| and we're all coming out of the same venue. Taxis offer
| much more affordable fares, and sometimes will even be
| parked outside waiting for the people exiting the venue.
|
| Saying no one is using taxis is not true. Few people
| think to use them, but there are times when it is worth
| it.
| alkonaut wrote:
| > but it devolves to a taxi rate with a taxi wait, just done
| over an app.
|
| What's a "taxi wait"? Do people routinely wait longer for
| taxis than for Ubers? is that because of a lack of taxis
| there?
| kelnos wrote:
| Depends on where, I guess. In busy places in Manhattan
| you'll likely wait under a minute for a taxi (and more for
| an Uber). In San Francisco you're likely to wait 20-40
| minutes for a taxi (that may never come), versus 5-10
| minutes for an Uber.
| [deleted]
| kelnos wrote:
| > _Because people won't pay $25 to take a 15 min ride._
|
| Maybe not routinely (like to work or the grocery store), but:
|
| I will absolutely pay $35 to get to and from the airport,
| which is 15 minutes away from my home.
|
| I will absolutely pay $20 for a 10 minute ride that takes me
| to a restaurant or bar where I plan on drinking enough such
| that I don't feel comfortable driving.
|
| I was just in Manhattan a couple weeks ago and paid a taxi to
| drive 10 minutes, and it cost around $20 with tip. This
| pricing scheme seems to work fine for traditional taxis.
|
| I'm not saying _everyone_ will pay this much. Maybe Uber 's
| addressable market when charging the true cost of a ride is
| much, much smaller than they think it is, and they need to
| rethink and restructure how they operate. Maybe users need to
| expect longer wait times for a car, and lower availability.
| But that doesn't mean they're doomed or that they have an
| impossible business. That's like saying "taxis with an app"
| is an impossible business, and I don't think anyone can make
| the case for that.
| [deleted]
| l33tman wrote:
| I think it might be a mistake of dividing the options into two
| camps, Uber and all other taxi companies, by now.. There are a
| LOT of IT solutions any taxi company can rent that gets them a
| lot (or most?) of the Uber features (except the brand name).
| Basically all of the IT you need including apps and call-center
| handling can be sourced in.
|
| I guess tech is catching up with Uber and what they still have
| is a good brand and there is some confidence that you hopefully
| has a smaller risk of getting ripped off with them at least if
| you're a tourist in a new city.
| webmaven wrote:
| _> If the answer to that is, "because then demand would die",
| why doesn't that apply to taxis? Taxis make money._
|
| Taxi licenses are an artificially constrained resource, which
| keeps prices high. As a result, taxis are typically only
| conveniently available in high-demand locations (among other
| ills).
|
| There probably is a niche for ridehailing services as public
| infrastructure (or perhaps using a co-op model) running on open
| source software, but that excludes VC-fueld behemoths like
| Uber.
|
| It isn't so much that Uber can never be profitable, it is that
| Uber could never be profitable enough to recoup the sunk costs
| and operate as an attractive publicly-traded company.
|
| Plenty of companies show a profit and remain privately owned.
| They aren't hypergrowth companies. VCs don't invest in them,
| except accidentally.
|
| There are, ironically, business models that would have
| justified _some_ VC investment and led to decent outcomes with
| a market cap around $1-5B, but they are shaped completely
| differently, and would have produced much more modest returns.
| alkonaut wrote:
| > Taxi licenses are an artificially constrained resource,
| which keeps prices high
|
| This is only true for some markets where there is a monopoly
| or a medallion system. Not all markets are like that, not
| even all markets Uber operate in. Some of the biggest are
| though.
| tootie wrote:
| A local taxi service doesn't have the overhead of paying a
| share of thousands of developers to scale an algorithm that a
| dispatcher has in their head.
| ceejayoz wrote:
| Sure, the "sell dollars for $0.50" company can become
| profitable by raising prices to $1.10 after they wipe out the
| competitor who was selling for $1.00, but is that a good end
| result?
| neonate wrote:
| It's not, but that's a different argument.
| bena wrote:
| If an Uber costs the same as a taxi, it makes no difference.
|
| I think the real product is in the dispatch app.
|
| But it really only works if all the various cab companies
| subscribe to the same dispatch service. Every cab company
| having their own dispatch app doesn't work.
|
| Basically, we don't need Uber, we need DoorDash, but for cabs.
| neonate wrote:
| > If an Uber costs the same as a taxi, it makes no
| difference.
|
| It does for people like me, who prefer taking an Uber to
| dealing with taxi drivers pretending they can't take credit
| cards, the stress of figuring out how much to tip, and so on.
| I know that not everyone feels this way, but lots do, and
| that certainly has some value. The question is whether it has
| enough value for Uber to be able to eventually make a profit.
| [deleted]
| api wrote:
| Maybe the company as it stands is so inefficient and cash
| burning that it can't actually compete with taxis. In that case
| a slimmed down Uber may be able to do so, but that would
| require a lot of blood to flow inside the company.
| neonate wrote:
| If the argument is not "Uber can never be profitable" but
| "Uber can never be profitable without a brutal corporate
| reorg", that's more plausible. But it's also a much weaker
| claim, no? Brutal corporate reorgs are a thing and I suppose
| that sometimes they even work.
| thebigman433 wrote:
| > why doesn't that apply to taxis? Taxis make money.
|
| Wouldnt it "just" be because of the massive overhead that Uber
| has with the software engineers, support staff, execs, etc?
| tracedddd wrote:
| To be honest that's all self inflicted. It may be painful to
| downsize to a sustainable model but these aren't hard costs -
| at least not to the extent they exist now.
| Daishiman wrote:
| The question is whether a sustainable model's marginal
| utility over the regular old taxi business is sufficiently
| large to justify the entire endeavor.
| mandevil wrote:
| (Note: what follows is a purely US viewpoint. I have no idea
| how these markets work in the rest of the world.)
|
| Well, the thing about Taxi's was that they were available, at
| some times, in downtown business districts. If you wanted a
| taxi south of 70th St in Manhattan, congrats! If you wanted one
| in the Bronx you needed to get very lucky. If you wanted one in
| a typical suburb you had to call someone and talk on the phone
| to schedule a taxi to come get you with plenty of advance
| notice. It's something that was so inconvenient I only remember
| ever doing it to go to the airport. The number of taxis was
| such that in a busy central business district you had a pretty
| good chance of catching one (presuming you didn't look too
| 'scary') but pretty much anywhere else you would never see one.
|
| Uber tried to change that fundamental fact of life by bringing
| many more drivers out there, so that it would never be more
| than a few minutes wait, even in the suburbs. This, of course,
| means much more competition for drivers. They tried to solve
| that by bringing many more riders out, which was where the
| massive subsidies come in: you can keep both sides of a two
| sided market coming out if they are getting big subsidies. It's
| when they tried to make the riders pay enough, and paid the
| drivers little enough, to be profitable that the drivers and
| riders stopped showing up. Presumably it will be profitable
| still in heavily trafficked areas, but the dream of Uber being
| a reasonable choice for transportation in suburbs of Des Moines
| seems like a failure.
| deft wrote:
| Uber the company has higher operating costs, and their service
| isn't better. The entire value proposition is "cheaper" and
| always has been.
| compiler-guy wrote:
| This isn't true. "More convenient than hailing a cab" has
| also been a very large component of the value proposition. As
| has "knowing where the driver is on their way to you."
|
| Cheaper is a big part, but not all of it by a long shot.
| hash872 wrote:
| They are very close to being a monopoly in the US, and are
| certainly a duopoly. Predatory pricing for a decade to
| establish market share, and then raising prices once in duopoly
| status, would be a slamdunk antitrust case.
|
| That's the legal reality. Plus the political one- the average
| Uber customer is middle to upper middle class in an urban area-
| i.e., the types of people that politicians actually listen to.
| Politically sympathetic, vote in very large numbers, have an
| outsized voice in the media, etc. Every media outlet in America
| would cover the price increase nonstop. If raising prices
| didn't result in an antitrust suit the very next day, I will
| eat my hat
| vineyardmike wrote:
| > would be a slamdunk antitrust case
|
| If a not-profitable company is raising prices to not go out
| of business then idk how well that would play out in courts.
|
| Would a court force uber to go out of business instead of
| raising prices?
| dragonwriter wrote:
| The price raise would just be part of the evidence that the
| earlier low prices were anticompetitive dumping to
| monopolize and maintain a monopoly on the market, the
| remedy for illegally protecting the monopoly would probably
| not be prohibition on raising rates, though. Breakup or
| other remedies would be possible.
| neonate wrote:
| I hear you, but that's also already a different argument
| involving complex externalities. I'm just asking why a better
| service with better tech* than taxis can't ever make money,
| when taxis do make money.
|
| * I know not everyone agrees with this, but enough people do
| that it's clearer to put the argument this way.
| hash872 wrote:
| I don't see what's the complex externality here- they can't
| raise prices significantly because they're legally
| prevented from doing so. 'The people with the guns & the
| legal monopoly on force forbid it' is pretty simple.
|
| To my understanding the only people making non-poverty
| wages in the taxi business are owners who purchased
| 'medallions' decades ago- aka another governmental
| licensing restriction. I believe they frequently lease out
| the cars to drivers who make minimum wage or less. I'm not
| sure an individual taxi is necessarily profitable on a per-
| car basis
| webmaven wrote:
| A better service with better tech than taxis can make
| money. The market for the necessary backend services ends
| up looking like some hybrid of the market for web hosting
| and the market for geospatial data and services hosting:
|
| Mostly open source software.
|
| Competition is largely on price.
|
| Plenty of small entrants into the market, fewer big
| providers, lots of resellers.
|
| Many of the 'apps' are white-label skins on the necessary
| backend services, others are self-hosting the infra. Some
| local governments operate these services as utilities.
|
| So, the software opportunity looks a lot like Automattic,
| the makers of Wordpress software and operators of the
| wordpress.com hosting service, which is a privately held
| company and valued at $3B.
| dbt00 wrote:
| The market is not "ride hailing apps", it is personal
| transportation. Depending on where you live, the competition
| is trains, busses, biking, walking, company shuttles, or even
| moving closer to where you want to be.
|
| If the cost of an Uber from the airport is too expensive,
| people won't just take cabs, they could also park in long
| term parking or have a friend drop them off instead.
| zby wrote:
| Oh - why it always needs to be so one-sided? When we don't like
| something than everything in the article needs to be a
| condemnation if we like the subject than there is only prise.
|
| In this particular article: if Uber is losing money by
| subsidising rides - then people get cheaper rides than they could
| otherwise have. But that also article suggests that Uber
| victimizes riders. That does not compute. Yes - it is
| anticompetitive and possibly without Uber we would have something
| else that could potentially be better - but also without it we
| would not have all those cheap rides and all those valuable
| things that the riders did because of the cheap transportation.
| That all subsidising in bad in the sense of disrupting normal
| market forces - but it is a stretch to declare the riders to be
| victims here.
| Daishiman wrote:
| The article was super clear why it victimizes riders: it hides
| the real total cost of ownership of a vehicle for commercial
| purposes and targets potential drivers who are not savvy enough
| to understand that.
| zby wrote:
| I thought riders mean passengers - what you elaborate on is
| divers?
| vntok wrote:
| Surely after a few months of driving you get a pretty good
| sense of actual costs and revenue. Yet many drivers keep
| driving for much longer than a few months, even when they
| lease their cars.
|
| Maybe they find a benefit in the relationship?
| Daishiman wrote:
| In my experience even small-scale commercial fleets have a
| really bad understanding of their cost of ownership.
|
| Cost of ownership has huge variance. A surprisingly large
| number of people have no idea when to do an oil or brake or
| battery change. Small accidents can change your cost
| equation dramatically. Random crap like hitting a pot hole,
| a hailstorm or someone scratching your car while parallel
| parking can trivially drain a month's salary.
|
| It is very difficult to foresee these expenses unless you
| have an extremely consistent driving experience, and given
| that most of the drivers are not doing this professionally
| and don't have great numeracy skills, many will be in
| trouble.
| ceejayoz wrote:
| > Surely after a few months of driving you get a pretty
| good sense of actual costs and revenue.
|
| The wear and tear on a new car may not become apparent for
| years.
| ceejayoz wrote:
| The rider victimization part comes later, when they've knocked
| the sustainably-priced competitors out of the market.
| underseacables wrote:
| WHAT sustainably priced competitors? Taxis? Great. Back to
| running up the meter, ignoring me when it rains, and have
| mercy if you are disabled or have a dog. Taxis are what
| created Uber. When regulators run Uber out of business it's
| back to Taxis.
| alkonaut wrote:
| > Back to running up the meter, ignoring me when it rains,
| and have mercy if you are disabled or have a dog.
|
| Why is this argument always coming up? "Uber does good
| stuff because the competition (taxis) suck"?
|
| If there is a good taxi market, then there are excellent
| taxi companies. I book one on an app, I see where it is, I
| pay in the app. I did for a decade. _What 's the problem?_
| The problem is that there was a medallion system in some
| cities, that make taxis suck. The solution to bad
| regulation _obviously_ can 't be having a company just
| circumvent it.
|
| To Judge the profitability of Uber, look at how it does in
| every citi where there is _good_ competition. Because any
| city can do that, with the flip of a switch. Just
| deregulate taxis and Uber is a taxi company among others.
| kelnos wrote:
| > _The solution to bad regulation obviously can 't be
| having a company just circumvent it._
|
| And yet it turns out that was the solution for many
| cities. Because otherwise I didn't see those bad
| medallion systems changing.
| asdff wrote:
| What is ironic is I've had uber drivers do just about all
| of that in recent history. Want to go to the airport? The
| 15 drivers circling nearby on the map ignore you since its
| too long of a drive, the one driver going the opposite
| direction on the freeway 10 miles away from you snipes your
| ride, and now you wait 25 minutes for them to circle almost
| blindly around the city and hope they don't cancel on you
| and make you have to repeat the entire process while trying
| to make a flight on time. Then airport rides are apparently
| special and now cost $80.
| kelnos wrote:
| Just as counterpoint, I've gone to and from the airport
| (SF<->SFO) four times in the past month, and each time I
| got a car within the normal amount of time I'd expect.
| ceejayoz wrote:
| As an example, there's a meal app called ChowFun that
| charges restaurants a monthly fixed service fee instead of
| UberEats/Grubhub's abusive 30% commissions. It's just as
| user-friendly and I don't feel like shit for using it.
|
| There's room for a sustainable middle ground, IMO.
| vineyardmike wrote:
| I think the claim is that it victimizes them by suppressing
| demand for public transit and other services (bike lanes, etc)
| that might form to fill in the needs.
|
| (i don't necessarily agree, but i understand the argument)
| mullingitover wrote:
| At least in the case of LA Metro, _using_ public transit
| suppresses demand for public transit.
| runawaybottle wrote:
| The riders are the only ones that won hand over fist. I can get
| a cab anywhere within minutes. This used to not be the case.
|
| Will Uber be profitable? I don't really care, they improved
| society, period.
| asdff wrote:
| >I can get a cab anywhere within minutes.
|
| This isn't the case anymore. There is a shortage of drivers
| and no one wants to work for the prices offered by uber and
| lyft anymore. I had a friend try and visit me who lived like
| 5 miles away. 5 million people living in my city so its no
| slouch in terms of ridership and size of the uber and lyft
| networks. Three drivers cancelled rides on him before they
| picked him up, it took him like 45 minutes before a driver
| finally appeared. You pretty much have to reserve a ride in
| advance if you have something important, there is no telling
| how long it will take before drivers pick up your ride or
| finally show up.
| oarsinsync wrote:
| > _I can get a cab anywhere within minutes. This used to not
| be the case... they improved society, period._
|
| They added an extra convenience to your life, and made your
| life better. This may or may not be true for a lot of
| passengers. It may or may not be true for a lot of drivers.
|
| It's a stretch to call that an improvement to society, when
| the only example cited is a minor convenience improvement,
| that only the upper 50% of the society you live in can afford
| to use regularly.
| zanellato19 wrote:
| On the long run, they helped put laws in place that eroded
| even more labor power, they setback public transit, they
| increased traffic in a lot of places, because why ride with
| friends when you can take an Uber? They added a small
| convenience to a bunch of peoples lives, but they certainly
| didn't make society better.
| tschellenbach wrote:
| What's up with people standing on the sidelines, not contributing
| and claiming that everything is negative.
|
| Lambda school is bad, SpaceX is bad, Tesla is bad, Airbnb is bad,
| Uber is bad. It's this endless negativity.
|
| Can anyone really argue that taxi companies were somehow better
| than Uber? How is improving people's mobility ever a bad thing.
| It's even more environmentally friendly than people buying and
| driving their cars. This article both complains that drivers
| don't make enough AND that investors sponsor their rates.
|
| There are definitely things I don't like about Uber, but this is
| a little crazy.
| dzonga wrote:
| taxis don't have to be expensive. yeah, in NY and other US cities
| they're due to artificial constraints. currently, in Taipei TW.
| taxis dirt cheap. one thing that helps is public transport is
| everywhere and hence taxis have to be compete.
|
| so yeah, for taxis to be available cheaply, public transit has to
| be everywhere which we know in the US won't happen due to
| suburban sprawl.
| daxfohl wrote:
| So where exactly do the financials go south? How can taxi
| services survive but Uber can't? Does the same logic apply to
| airbnb vs hotels?
| nyghtly wrote:
| Taxis charge more.
|
| And if Uber had their way, then all the taxi companies would go
| out of business because Uber is so much cheaper. And then Uber
| would raise their prices up to what the taxi companies were
| charging. It worked for WalMart. It worked for Amazon.
| Unfortunately for Uber, I think they may have missed their
| window. People aren't starry-eyed about tech like they used to
| be.
| [deleted]
| cameronh90 wrote:
| So according to this, Uber is ripping off the drivers, riders and
| investors - with no path to profitability. So where is the money
| going? Is the claim that it's just so poorly managed that it's
| all being blown on overpriced tech salaries?
|
| Incidentally, how is it that hyperscale tech companies such as
| Uber and Deliveroo are struggling to turn a profit on proven
| business models, while charging more to both the customer and
| provider? Isn't tech and scale meant to make it cheaper?
| mypalmike wrote:
| A good chunk of money has flowed among investors from greater
| fools to lesser fools.
| Spooky23 wrote:
| It costs about $0.56/mi to run a midsize car for an individual
| without a driver.
|
| A legitimate, licensed, insured car in livery service probably
| costs more like $2/mi just to operate the car and pay the
| driver.
|
| Think about how NYC Cabs are operated vs Uber. The cab is a
| fixed asset with operating expenses, and many cabs get rented
| 24/7 to maximize the return on asset. With Uber, the vehicle is
| a _consumable_ and the business is to lease time from
| contractors who don't understand accounting, and both the
| company and driver is losing money.
|
| I don't think the investors are getting ripped off. They own an
| international network that has value, and have more money than
| they know what to do with!
| majormajor wrote:
| I think the only way the argument that they're ripping off
| riders makes sense is if you look at it as a long-term thing:
| by burning money to give riders unsustainable prices for years,
| they sabotaged any more-realistic alternatives to improve
| mobility.
|
| I'm not sure I buy that, personally. I don't think riders are
| victims. Uber to me has always looked like a way to subsidize a
| bunch of cheap rides for riders with some wildly-optimistic
| "one day this will be profitable and we'll be the biggest name
| in the space" plan. Even self-driving cars didn't seem like the
| answer - that's a massive investment in a vandalism magnet,
| like the scooter companies but dozens of times more expensive
| (maybe running a scooter business helped them realize this?).
|
| The problem with trying to profit off "scale" with something
| like Uber is that the service still has to be delivered one-on-
| one. Things like Uber Pool are the closest they can get to
| scale, but suffer from a "why am I paying for this" problem as
| the experience suffers and the cost can't be _that_ low (since
| their base rate is artificially low already).
| Eric_WVGG wrote:
| I buy it. It's predatory capitalism, cut and dried. They're
| reshaping the marketplace.
| vineyardmike wrote:
| what marketplace? Didn't the invent it? Taxis are only
| available in a few places and not cheaply.
|
| I lived in Cleveland and i tried a taxi once. It was $100
| to get to airport from within city limits. It was a 2 hour
| wait.
|
| Uber basically invented usable taxis there.
| jareklupinski wrote:
| for a while, I thought the founders/VCs truly believed they
| were creating a loss-leader for an eventual network of self-
| driving cars, and would slowly transition the fleet from human
| to robot drivers, but keep prices the same to finally get to
| black
|
| fingers crossed
| onlyrealcuzzo wrote:
| > Is the claim that it's just so poorly managed that it's all
| being blown on overpriced tech salaries?
|
| I think that's the main argument.
|
| Uber had ~$17Bn revenue on ~1.44Bn trips in 2020 per quarter.
| That's ~$12 per trip.
|
| Salaries are >$7Bn. That's about $1 per trip. Add in the
| marketing and server costs - and it's close to $3 per trip -
| without profit. Then they're going to want a >10% profit margin
| (another $1). When >50% of trips are only a few miles and <$9 -
| that's a lot of overhead - not even including Visa's ~6% cut.
|
| The Taxi company was happy to just get a 10-20% cut. Uber needs
| a 40% cut to break even.
|
| As New York is showing - you don't need to spend >$14Bn per
| year on an app. Uber's app is pretty awesome - but riders
| aren't going to pay a 30% premium to use it. And driver's (of
| equal quality) definitely aren't going to take a 50%+ pay-cut
| to make up the difference.
| vineyardmike wrote:
| > Salaries are >$7Bn
|
| Corporate salaries??
| kelnos wrote:
| > _Uber 's app is pretty awesome - but riders aren't going to
| pay a 30% premium to use it._
|
| When the alternative is the traditional taxi experience? Hell
| yes I am going to pay a 30% premium to avoid that.
| disgruntledphd2 wrote:
| Because money is so cheap, that investors are literally burning
| cash up in search of growth.
|
| Uber has never made any sense to me as a business (since 2016),
| and it's crazy how long it's lasted.
| reidjs wrote:
| If you've ever not owned a car and lived somewhere with poor
| public transport, Uber makes a lot of sense.
|
| It sucked having to rely on friends, family, and especially
| yellow cabs.
|
| I'm not saying Uber is the best company or business model,
| but ride sharing makes total business sense to me.
| Ntrails wrote:
| I lived in all sorts of properly rural places with no
| public transport of any meaningful kind. If you needed a
| cab you phoned a minicab office and an operator would give
| you a time slot.
|
| The only thing changed by uber is that the minicab operator
| is now an app, and pricing is less predictable
| stvswn wrote:
| That experience isn't true in my experience. I was in
| college pre-Uber in an area unserved by public
| transportation and it was common knowledge that you
| cannot schedule a cab and expect them to actually come,
| and when they did you could expect a very tense price
| negotiation accompanied by indignation about where you
| wanted to go.
|
| To push back on taxi apologia elsewhere -- Years later I
| lived in Philadelphia during the cab era and the city
| passed a law that the cabs needed to accept credit cards,
| but the cabs wouldn't unlock their doors unless you
| promised to pay cash. Even still, they'd often ask where
| you wanted to go and speed away if you said the wrong
| thing. Around the same time, in D.C., there was a "zone
| system" where cab fares were set around how many zones
| the cab traveled through, and so every rider got used to
| knowing the tricks cabs would play to go out of their
| ways to enter and exit unnecessary zones and surprise you
| with a high bill. They also had the right to pick up
| additional passengers whether you liked it or not. In NYC
| it was common knowledge that you just can't expect a cab
| to take you to the outer boroughs.
| nyghtly wrote:
| Uber makes sense to riders at subsidized prices, but it
| stops making sense once they start charging what it
| actually costs to provide that service. The reason we don't
| take taxis everywhere is because they're expensive and
| infrequent. Creating an app to handle dispatch didn't
| magically change this reality. The hardest parts of
| operating a taxi service (maintaining a fleet of vehicles,
| hiring and retaining drivers) have not gotten any easier,
| except in the case of Prop 22, which is an unfair advantage
| for Uber compared to other transportation providers.
| reidjs wrote:
| Even if the prices doubled overnight it would still make
| sense for my main uses: an on-demand designated driver or
| rides to/from the airport.
|
| That said, I realize I'm financially better off than many
| people and would prefer to have safe, affordable, and
| widespread public transit.
| MichaelZuo wrote:
| I agree the premium Uber services will always be in
| demand in every big city. UberX is their loss leader to
| entice customers, and generate nice growth numbers.
| nemothekid wrote:
| > _So where is the money going?_
|
| To drivers AIUI. The "fair" value a driver should make is $1.
| Uber is paying them $0.7 and charging the customer $0.5. That
| said, I'm not sure how valid OP's assessment is without also
| considering Lyft/Didi/Grab. If Uber's business model is
| ultimately untenable, every company should be in trouble
| dwater wrote:
| Following the links to Hubert Horan's reports, it looks like
| Lyft is even worse financial shape:
|
| "Uber's continuing operations had a GAAP net margin of
| negative 38% while Lyft's was negative 49%."
| https://www.nakedcapitalism.com/2021/08/hubert-horan-can-
| ube...
|
| I guess Doctorow doesn't want to waste space commenting on
| the also-rans.
| mysterEFrank wrote:
| this is so biased it has no place on hacker news
| [deleted]
| joshstrange wrote:
| > I live in Burbank, where Ubers were never more than 5 minutes
| away. Now, a 30 minute wait is common - and the fare is
| comparable to the licensed taxi company, which is literally one
| app away from achieving feature parity with Uber.
|
| I'm not an Uber apologist in the slightest but why is it that
| apps for the alternatives still suck? In a similar vein a
| delivery co-op app launched in my area semi-recently and I tried
| their app and it's absolute garbage. I've done minor app
| development and while I'm not great at it, I don't think you need
| millions (or billions in Uber's case) of dollars to create
| something on-par. Honestly you could pair me with a good designer
| and for the price of 1 year of pay I have doubt it could be
| built.
| wwweston wrote:
| It's a good question. Not too long into the rideshare explosion
| I tried a couple of apps that were more or less interfaces for
| yellow cab services. Definitely a weaker experience: longer
| wait time and not as much information (real or perceived) about
| what was actually happening in the dispatch-pickup process. And
| it cost more too.
|
| I could accept the higher cost as just part of fairly pricing
| out ride service, but the weaker experience was a hard pill to
| swallow.
| idreyn wrote:
| If you're referring to the Driver's Cooperative in New York
| City, they'll take you up on that offer for $72k:
| https://drivers.coop/jobs
| [deleted]
| joshstrange wrote:
| That salary is joke for what they are looking for and it
| becomes and even sicker joke when they want the person to be
| in NY/SF.
| jareklupinski wrote:
| > Bachelor's degree or technical bootcamp preferred
|
| to be fair they're not shooting for Principal FAANG
| engineers either
| joshstrange wrote:
| I mean I'm not at a FAANG or even close to one but I make
| /well/ over that and live in a LCoL area as well.
|
| $72K/yr to build an app/website/platform from the ground
| up is absurd IMHO.
| Spooky23 wrote:
| Because they don't add value. Uber has a thousand engineers.
| Joe's Taxi has zero.
|
| The people who are focused on the app crap use Uber and avoid
| the cab that is 10 feet away.
|
| The restaurant crap is even more ridiculous. It literally takes
| the customer 5x more time to order a pizza on an app. I'll call
| and say "Hi, I'm Spooky23, two cheese pizza and garlic knots"
| and I'm done.
| gruez wrote:
| >The people who are focused on the app crap use Uber and
| avoid the cab that is 10 feet away.
|
| Clearly not because of other features like ease of payment,
| or reviews
|
| >The restaurant crap is even more ridiculous. It literally
| takes the customer 5x more time to order a pizza on an app.
|
| Clearly not because of discoverability (both in terms of
| restaurant and the menu), or being able to confirm that the
| order was correctly placed.
| charrondev wrote:
| IDK at least with dominoes I hit 1 button.
|
| It remembers the last few orders I made (so I can repeat
| one), and I don't need to spell out my delivery address, area
| code, leave instructions of how to use the apartment buzzer,
| etc (because it remembers the previously written
| instructions).
|
| But ordering delivery didn't need a shakeup like taxis did.
| If your average taxi driver (at least in my Montreal), wasn't
| a scumbag trying to hit every red light or closed road on the
| way to run up the meter, and feigning that their card scanner
| (debit/credit/Interac ) was broken at the end to save 50
| cents of transaction fee and avoid paying their taxes on the
| income then they wouldn't have taken the city by storm.
|
| Even when they were actively banned by the province they were
| most of the rides I'd see people taking. Of course the
| government came around to Uber once they realized that
| drivers wouldn't be pushing cash to be paid under the table
| anymore.
|
| Today I would rather take an Uber, even at a 50% premium
| because the experience is better.
| ceejayoz wrote:
| > The restaurant crap is even more ridiculous. It literally
| takes the customer 5x more time to order a pizza on an app.
| I'll call and say "Hi, I'm Spooky23, two cheese pizza and
| garlic knots" and I'm done.
|
| This depends _heavily_ on the restaurant.
|
| (The app potentially wins, too, if have a recurring order
| saved to your favorites. My family tends to have the same
| fairly complex sushi order and I can re-order it in a click.)
| oceliker wrote:
| > This depends _heavily_ on the restaurant.
|
| And on the type of pizza. Cheese pizza is easy enough. :)
|
| Regardless, as an international student with an accent, I'm
| very sure I'll never order a pizza over the phone.
| vineyardmike wrote:
| > with an accent
|
| Apps can be so much more accessible for people
| Spooky23 wrote:
| Agreed. There are def good use cases. The sushi one is a
| good one. Starbucks is another great example of where it
| just works.
|
| But I would say _many_ places, esp fast /casual service
| places are just trying to shave some labor and make it
| difficult to not buy combo meals, etc.
| NonContro wrote:
| You can buy white-label 'Uber' apps from software companies
| all around the world now.
|
| Just google 'white label Uber', there are plenty of results.
|
| The payments can be outsourced too, to Google or Apple pay,
| including in-app. Since they represent a physical service
| there's also no app store commission.
| mustacheemperor wrote:
| >why is it that apps for the alternatives still suck
|
| Agreed, here in SF Uber and Lyft have both become considerably
| slower, more expensive, and less reliable over the last
| weeks/months.
|
| A friend suggested the YoTaxi SF app, which is an app for
| ordering local licensed taxis. You can pick your start and
| endpoint and order a car just like Uber. Great! Except you
| can't tip the driver via the app, so the reviews are mostly
| negative where reviewers explain they arrived at their
| destination only to be shaken down for cash or venmo by the
| driver, potentially for the full cost of the trip because "that
| app doesn't work, I won't get paid."
|
| I would love to stop using rideshare. I urgently want to,
| because several times recently I've nearly been late because of
| issues - for example on a recent trip after I waited 10
| minutes, my driver flew past my exit on the highway and
| canceled my ride before reporting me for "health and safety
| violations" so they would not be penalized for the missed trip.
| But my alternatives are either to utilize multiple intermodal
| transfers across the bay area public transit system, typically
| more than doubling the length of the trip, or to deal with the
| taxi system. I'll use public transit when I can but for
| example, the trip I took yesterday was 22 minutes by car and 1
| hour 5 minutes by public transit - assuming my bus transferred
| on time. I just don't have 45 +/- 15 extra minutes each way
| every time.
| disgruntledphd2 wrote:
| Honestly, I'm pretty anti-Uber for a variety of reasons, but
| having experienced the cab services in SF a bunch of times, I
| _completely_ understand why so many people there like it.
| bink wrote:
| I've taken cabs all over the world and I have to say one of
| the most terrifying experiences I've had was in SF in the
| 90s. We were absolutely flying up and down those hills with
| just some measly brake pads to save us (and the
| pedestrians).
| sabarn01 wrote:
| Its so much better than taxis in even smaller cities. In
| Louisville to get a taxi took at least an hour uber made it
| minutes. I agree uber was investor subsidized but it was a
| good thing for a lot of people in smaller cities.
| dbt00 wrote:
| The real problem in SF is that it is just a fairly small
| city, so a lot of the big city things you'd expect from
| NYC/LA/Chicago just aren't there.
| jiert wrote:
| Additionally, the public transportation infrastructure
| designed to deal with the topography of the city has
| become nothing more than a tourist attraction, rather
| than a way to traverse the city.
| hash872 wrote:
| As Ben Thompson of Stratechery explains, Uber is a two-sided
| market- it has sufficient liquidity of both riders & drivers.
| Any new app would have to sign up tens of thousands of drivers
| to be even remotely competitive, and that would cost tens of
| millions of dollars in promos, marketing, etc. The first time
| someone tries UberClone and the driver is 30 minutes away,
| they'll close the app and never use it again. No VC is
| interested in financing all that for a very low margin
| business. Uber and Lyft have all the drivers and have all the
| riders- being unprofitable is actually a moat
| asdff wrote:
| You already have taxi companies with drivers. Yellowcab
| actually makes their own app.
| vineyardmike wrote:
| > Yellowcab actually makes their own app.
|
| I would never use this since i have the uber app first.
| webmaven wrote:
| _> being unprofitable is actually a moat_
|
| That only works as a business if the moat is a loss-leader
| for some other product or service.
| lukifer wrote:
| I suspect the over-capitalization (Ponzi cash) of mainstream
| tech giants results in a brain-drain of the best talent from
| more sustainable/ethical alternatives (not just in tech, but
| also design, product management, etc).
| chasing wrote:
| Sounds like a business opportunity...
| toxicFork wrote:
| I have a theory that Uber's making a killing, but making sure
| that they don't look profitable on paper so that they don't have
| to pay taxes.
|
| I haven't done any research and I don't really care, it's just
| fun to consider.
| dyingkneepad wrote:
| The CEO and other execs are definitely making a killing out of
| it. That's all that matters. If the ship sinks they'll gladly
| jump out of it and move on to the next thing.
| sharadov wrote:
| The pandemic was the nail in the coffin for Uber. How is Lyft
| doing?
| spats1990 wrote:
| the report cory refers to covers lyft as well.
| https://www.nakedcapitalism.com/2021/08/hubert-horan-can-ube...
| i submitted it before i realised this "end of the line" post
| was on the front page.
| [deleted]
| puranjay wrote:
| If there is ever a proper market crash, I feel that most of these
| startups built on endless VC-supplied liquidity and unfavorable
| unit economics will just wither away.
| jffry wrote:
| A much better link, from the second tweet in the chain, is
| https://pluralistic.net/2021/08/10/unter/#bezzle-no-more
|
| This is the same thing but all put on one page instead of broken
| into a long series of tweets.
| Kiro wrote:
| I must be the only one who prefer to read it as short tweets.
| dang wrote:
| Changed from
| https://twitter.com/doctorow/status/1425139419195998213.
| Thanks!
| bern4444 wrote:
| One question I have is, what is Uber doing with all their
| engineers? Most of us are engineers as well. So we all understand
| maintenance, monitoring, feature development, tech debt etc.
| Technology products rarely can just be 'let alone' and left
| operating successfully.
|
| But they have over 2,000 engineers. That's a massive amount. Are
| there new features in development? New services? New
| capabilities?
|
| From a consumer perspective I haven't see anything new in a
| while. Are they all focused on growth in new cities, towns, and
| countries supporting local peculiarities? Is Uber going through a
| rewrite to align on a technology stack to support future
| features? What are those features?
|
| My old job was building out a (new) streaming service, so it was
| all about feature development, launching in new countries,
| supporting local payment methods etc.
|
| Now I work on building APIs for a different company with which
| other developers can integrate.
|
| Both are focused on building and maintaining new and existing
| features as well as growth. Just what the heck is Uber doing with
| its 2,000 engineers?
| seoulbran wrote:
| I've been curious about that as well
| underseacables wrote:
| Uber, Lyft, it seems regulators are intent on pushing up prices.
| Maybe to bring back taxis?
| [deleted]
| sharadov wrote:
| They can't be profitable even after taking 50% of the driver's
| earnings! They deserve to die.
| paxys wrote:
| I have been reading some version of this article for 10 years
| now. Yet Uber and Lyft and the entire "sharing" economy is
| surviving and thriving. Reading this article you'd be convinced
| that Uber is going to end tomorrow and all the investors who
| collectively value it at $80B are idiots.
___________________________________________________________________
(page generated 2021-08-10 23:01 UTC)