Hacker News Reader

Comment by oneloop | Hacker News Reader

Can anyone make a rational argument why uber-type companies are winner takes all?

Precedents. EBay, Amazon, Facebook and Google pretty much did take it all in their respective core markets. Uber and their investors seem to be taking a similar market capture as a given, freyr (your parent post, if I'm not mistaken) was questioning that. For reasons we seem to agree with.

What might still move uber from a fluent market into a winner takes all position some day would be a shift to their own fleet, either driverless or with employees. That would then be real investment and as such would be much harder to match by a newcomer than the day to day underselling they are currently doing to artificially to balloon themselves up.

The network effects come from the driver side of the market. If you have all the drivers, then you have the quickest pick-up/most availability which means best passenger experience and then most customers. This in turn means best utilization for drivers, so you get more drivers etc etc etc.

Network effect usually implies some kind of lock-in. Unless Uber is willing to go exclusive and qualify the drivers as employees, getting more drivers out on the road also means getting more Lyft and Gett drivers on the road, as most will just have multiple apps running.

It's hard to switch between apps. I've asked all my drivers the same question, and they all say that it's more trouble than it's worth because at least in the Bay Area, there work is constant as an Uber driver.

I feel like almost every über I see has a lyft sticker too. The UX of switching apps seems like a minor inconvenience given that most of them use waze to navigate anyway.

Sure, but pretty much every Uber driver I've encountered also drives for Lyft and there doesn't appear to be any mechanism by which Uber can prevent that.

Uber is actively developing ride experiences like UberPool and UberHop that link multiple riders together in ways that can avoid a driver's car ever being empty. If the car isn't empty, they can't turn on Lyft.

Lyft Line does the same. As far as cars not being empty, during non-peak hours the streets of San Francisco are filled with Uber cars driving around with no passengers. I guess Uber Eats or whatever is supposed to fix this. No passenger? Stick a salad in the passenger seat.

Only until a point, the point of diminishing returns. If an Uber turns up in 5 minutes and an Ola in 6, that's not a significant difference. Similarly, if I have to pay ₹130 for Uber and ₹140 for Ola, that again doesn't matter.

And there are other factors. If a competing service let me choose what model of car turns up (say among nearby ones), I may pick that. After all, a big advantage of these over owning a car is that you can try different models.

I don't think the winner takes all, any more than restaurants are winner take all though in theory restaurants also benefit from higher utilisation, less food wastage, negotiating power over suppliers, etc, as the number of patrons increases. That hasn't led to there being only one restaurant in each neighborhood.

I think you're right that there's more of a critical mass requirement than real network effects.

However, I think uber pool/lyft line require a much higher critical mass of users to be effective than the basic lyft/uber services and there may not be enough users to fund more than one of those in some (many?) metro areas.

You tend to coalesce into a few big brands when you sell a commodity with little differentiation.

Also, just as cabs did, über will erect regulatory barriers to entry for smaller players.

Reply on news.ycombinator.com