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Comment by georgeplusplus | Hacker News Reader

I don’t understand how people don’t get this.

Taxi companies are profitable and they have employees, a fleet, garages.

Uber is not profitable and does the same job as a taxi company. Doesn’t something seem wrong here?

The reason drivers love Lyft is they pay more. They ph more because Lyft takes a bigger loss than Uber to stay competitive. That business model won’t last so Uber will outlast Lyft and then finally be on the road to profitability once the stupid Lyft price war ends.

I’m baffled by people who think Uber cant make money. there’s no logic at all in that thought process. They also ignore the huge rnd cost uber is footing for self driving tech.

I’m confident The sell off has nothing to do with kalanick spiting Uber and everything to do with him wanting to divest his interests so he can work on his other project

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Uber is literally having the same business model of subsidizing rides, which loses them a lot of money. This is not even tied to simply being competitive with Lyft - its also to incentivize users to choose them over taxis. You really thing that upping their prices is going to a simple decision and people will just keep using them because of what? Just out of habit?

I've never understood why anyone who applied a bit of critical thinking ever thought Uber or Lyft would be profitable. It's been over 10 years and they're still hemorrhaging billions of dollars, but clearly wild profits are just around the corner.

If you want to know what business model to look at to see how Uber and Lyft will end up, look at the airline industry. Paper thin margins (and that's assuming they're profitable at all), required a government bailout, one of the few industries consistently declining in a historical market surge - many of the airline companies will go bankrupt again when there's even a whiff of a recession.

If the unit economics don't make sense, then you just lose more money by scaling. And that's exactly what Uber and Lyft are doing - they are literally losing billions of dollars every year. They aren't building infrastructure. They aren't building a brand anymore (their brands are diminishing over time instead of strengthening). They're just sucking what money they can out of their failing business model as the ship slowly sinks.

I already addressed why your argument doesn’t hold up and why Uber must subsidize rides. It’s literally what my entire post is about.

> Taxi companies are profitable and they have employees, a fleet, garages.

They’re only profitable because of regulatory capture. The government gives them a monopoly and limits supply.

If they offered unlimited medallions, taxis would lose money too.

Even against a government backed cab monopoly, Uber still has more market share in key markets like NYC. That’s kinda my point why the bear narrative doesn’t hold up.

Would they still have more market share if they weren't selling a dollar for fifty cents?

They said the same about Amazon and it’s earnings for almost 10 years, it was false then and it’s false now.

The big questions with the ride sharing business model are A) what is demand once prices are no longer subsidized, and then B) how does that compare to the current valuations? I think whoever wins the race will have a nice business as a taxi replacement, but these investments were sold as the future of transportation, not as a replacement for taxis.

> Uber is not profitable and does the same job as a taxi company.

Taxi companies tend to own their fleet (and in some cases their licenses / medallions). The profit comes from return on capital invested. Uber does the same job as someone on the phone line at a taxi company.

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