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Comment by panarky | Hacker News Reader

> Does it, though?

It absolutely takes tremendous capital expenditure to build the network. Uber has an accumulated deficit of $20 billion precisely because they subsidized both drivers and riders to build the two-sided network.

It doesn't have to be winner-take-all. A duopoly in most medium to large cities is perfectly viable. But you won't see dozens of competitors because the drivers and riders would wait too long for a match in a sparse network.

Unless the ride-share commodity can be differentiated some other way, it would take large subsidies for a long time to make much of a dent in Uber.

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> It absolutely takes tremendous capital expenditure to build the network.

It's like breaking trail: It's a whole lot of work for the person in front, but it's damn easy for everyone else.

Uber, being first mover, had to spend great heaping piles of money convincing people to become rideshare drivers in the first place. Because they had to sell people on the idea of driving folks for a living, and then get them to buy new cars that meet their standards, and then train them on how to be a rideshare driver, and all that fun stuff.

Everyone else just needs to convince a group of people who have already bought the car and learned how to drive it that it's in their interest to hedge their bets. Which, given how Uber has historically treated its drivers, is something that requires approximately zero convincing.

> It absolutely takes tremendous capital expenditure to build > the network.

I always think some Uber drivers shall copy Uber and run a non-profit version of Uber to compete on pricing. What can prevent this?

Have you seen RideAustin? https://rideaustin.com

Love it. That's how it should be. Drivers should get max possible cut of the fares while the network operator works as a non-profit.

100B pump/dump is a scam. Think about all the indices-tracking-ETFs/Funds that will pick up this overpriced stock(our hard earned 401ks). Sigh. Silicon Valley should not have pumped up what was originally a good idea. This has a high chance of ending badly

What funds are those specifically? Certainly not the S&P 500. The Russell 3000, but they don’t have a choice.

The point of investing is deciding what you believe in (financially speaking)! If you don’t like Uber, make some money on it! You can’t short in an IRA, or sell naked options, but you can sell futures or buy put options. All of these would express a bearish sentiment on Uber. So don’t feel like you sre being screwed, go make some alpha!

For the record I agree with you, and will short Uber the day it IPOs. I’ve already made some good money on shorting Lyft and expect I’ll do well on the same strat with Uber.

Uber is a non-profit version of Uber. They made a 10% loss last year. So a non-profit (assuming they intend to at least break even) would actually need to pay the drivers less.

That’s an amusing proposition but a true non-profit could have more advantages like tax breaks and volunteer staff.

I think the intent of the parent's question was to say why can't a group of drivers get together and create a ride sharing app that is jointly shared by all the drivers and just gives all the money to the drivers, hence taking no profit (rather than the more formal term 'non-profit' which has the tax implications like you say.)

Besides, companies only pay taxes on profits, so loss making companies don't pay any tax either. (And usually have some kind of ability to carry forward losses to reduce future tax bills)

Why would anyone work voluntarily for what would essentially just be a company that gave all it's profits to the drivers but expected them to work for free. Volunteers tend to work for causes they believe in for some ethical or moral reason, and while I sympathize with the drivers like I'm sure many do I doubt many would work for free so someone else can earn more.

> volunteer staff

Why would some people work for free so that drivers can earn more or riders could pay less?

Uber racked up a $20 billion cumulative deficit by subsidizing both drivers and riders.

Even if you cloned the Uber app and had people volunteer to do customer support, you'd still wind up with a service where riders pay more, or drivers earn less, or both.

That works for BlaBlaCar [0] that's true carpooling, without drivers trying to make a living on the platform. Riders pay less and drivers get paid less.

But if Uber is losing $4 billion a year at the current prices, it's hard to see how there would be a sustainable market where drivers make more and riders pay less.

[0] https://en.wikipedia.org/wiki/BlaBlaCar

You don’t pay tax if you don’t make money.

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