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Comment by lacker | Hacker News Reader

It's too bad that this whole article never touches on the basics of Uber's business model, like how much money they lose on each ride, how much funding they have to ride out the current economic climate, the crazy fact that Uber Eats is now a larger part of Uber's American business than the drive-me-somewhere Uber business, and so on.

I don't see how Uber's business model is doomed. If Uber and Lyft are forced to be less efficient, they will raise prices. Yes, their business would shrink. But how could they be forced out of business entirely - would people go back to using taxis?? At the very least, Uber could charge the same price as taxis and be superior to taxis because an Uber actually shows up when you want one.

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There is nothing Uber/Lyft do that any urban taxi company cannot do just as good if not better. The taxi companies also have better economics when it comes to their fleet (you can expect states to start mandating that gig drivers be paid some additional amount for vehicle depreciation any day now...) At the end of the day Uber/Lyft will be just another taxi company, albeit with a less professional set of drivers.

> At the end of the day Uber/Lyft will be just another taxi company, albeit with a less professional set of drivers.

What city do you ride taxis in? Because the taxis I've ridden have spanned a range of tolerably annoying to downright abysmal experiences. Uber/Lyft drivers have unequivocally been more friendly, punctual, and professional. No taxi company I've seen can manage to make a halfway decent app or even guarantee that a driver will show up within an hour of me needing one.

Even if Uber/Lyft become the same price as taxis, I'll take Uber/Lyft any day over a traditional cab company.

I‘m always surprised when I read such statements because I never made such poor experiences with taxis in Europe or Asia.

I think what you are describing is a problem that is very US-specific and it doesn‘t mean taxis are that bad everywhere in the world.

I've taken taxis in many European cities. It's universally a miserable, sketchy experience.

European taxis are the absolute worst for trying to wiggle out of accepting your credit card. Ever time I get in a European taxi I know I have a fight on my hands.

It depends on the country and city - here in Ireland the taxis are almost always a class act. My local taxi company allows payment via smartphone and even sends you the invoice via SMS or email if you need it as a business expense. I've even had a driver turn off the metre and show me around once he realised I was new to the city.

And tipping, although appreciated, is not at all mandatory like in the states.

German taxis are great.

In my experience they get evasive and rude when you try to pay with a card.

The most universal issue with taxis around the world is safety. How do I know whether a taxi driver is going to take me to my destination, or drive me to an alley and mug me?

Apps like Uber are a major safety improvement over taxis. If I get out of an airport and need a ride, I can either hop in a taxi and pray I get to my destination safely, or I can take an Uber and have a paper trail of who picked me up and where I went.

> There is nothing Uber/Lyft do that any urban taxi company cannot do just as good if not better.

Well they can't seem to manage to be come when you ask them to, to be clean, or to have a basic standard of politeness. Until recently they didn't manage to accept cards, and many seem to still greatly resent it, and they still can't manage to provide nice apps.

So I'm super skeptical that they can do it as good as Uber, let alone better.

It's like Uber's been so good for so long now that people have forgotten how offensively bad normal taxis are.

This may apply to the US, not necessarily to the rest of the world.

I‘m from Europe and I‘ve never felt the need to use UBER. Taxis and public transport over here are sufficiently good.

I got in a taxi at Brussels airport once. Fortunately the previous week I'd had issues with a Washington DC cab driver refusing a credit card, and had the wherewithal to check he took them before we left. He didn't.

The less said about the awful black cabs in London the better. Rarely take a taxi in London, but if I have a lot of bags I will, and it's not going to be a black cab.

Don't have this issue with Uber, it gives me a rough price (which is pretty accurate IME). I can count on one finger the issues I've had (driver didn't turn up at Nairobi airport, claimed he'd been arrested, had to book another one)

I've had issues in Beijing with taxis - thinking back I suspect the main issue is that Uber just didn't exist in Beijing.

> This may apply to the US

I'm not from the US. I'm from Europe.

Taxis in every European city I've ever been to have been fundamentally consumer-hostile. They refuse to accept your card (illegally in some cases), their vehicles are filthy, and their customer service skills are offensive. It's like every ride I take with them is some kind of personal inconvenience for them.

> There is nothing Uber/Lyft do that any urban taxi company cannot do just as good if not better.

This has been true for the decade that Uber has been in operation yet no urban taxi company has built anything even close to a comparable app or experience.

There were a few, like Flywheel, but the whole Uber business model is propped up on big money providing utterly unsustainable subsidies to riders. Nobody wants to pay what it actually costs to provide the service as evidenced by the fact they've been unable to raise prices. Once they run out of money to set fire to, there won't be an Uber.

Butts in seats is a strictly commodity business, whoever charges the least gets the ride. Just like airlines. The difference is airlines are roughly equivalently efficient, but Uber and Lyft are strictly less efficient than taxis.

I'm not convinced that ride shares are unsustainable. The average fare I've paid is certainly greater than the cost of paying the driver's wages and gas for the vehicle.

The difference should more than make up for the cost of maintaining an app in the long term so I don't see any reason that some company can't eventually be profitable in this space.

Flywheel was (still is?) a too little too late attempt by taxi companies to stay relevant and as far as I remember, it didn't even work very well.

> The average fare I've paid is certainly greater than the cost of paying the driver's wages and gas for the vehicle.

If that's the case then why do they have a -81% GAAP margin? [1]

[1] https://www.nakedcapitalism.com/2020/08/hubert-horan-can-ube...

I have to imagine it's because of marketing and R&D.

If they dramatically reduced both of those things, I don't see why they couldn't run a more modest and profitable business.

Correct, however, as part of their marketing expenses, they include the discounts they offer riders to use their service, which reinforces my point.

Uber/Lyft offer a better service. Most importantly is reviews/ratings of drivers and riders. But also things like real time tracking of incoming ride, frictionless payments, even just inputting you destination in a map instead of explaining to someone (which is a huge plus when traveling to foreign countries.)

Sure taxi companies _could_ implement these features but so far they have not. Probably because the type people who are attracted to running taxi companies are not the same kind of people attracted to disruptors like Uber/Lyft.

From my personal experience I have a pleasant taxi ride 5-6 times out of 10 and a pleasant Uber ride closer to 9 out or 10. Even if the prices were the same I'd likely still choose Uber/Lyft.

I have traveled a lot. In all of my travels, I use Uber unless I'm forced to use a local option. Here's why:

1. Integration with mapping allows me to ensure I'm actually be taken to the place I want to go and not "taken for a ride". This is especially important when I don't speak the local language well or at all.

2. I can pay in a way which does not expose my payment method to the driver (credit card skimmers, muggings). I also can always pay with a card via the app, rather than having to struggle to find a driver who will accept a card payment or who won't extort me after the fact with "the machine is broken".

3. I can track my trips in a way which makes it easy to expense them, something that is a pain to do with taxi receipts (if you can even get them to give you one).

4. I have some idea of what I'll be paying in advance and am more resistant to being overcharged.

5. When I request a ride, someone actually shows up and I have a meaningful ETA for their arrival.

If you've never left your part of the world to travel elsewhere it may be difficult to understand just how frustrating, unsafe, and unfair the experience of using a taxi in most of the world is, but Uber even at the same price is a many many many times better experience. I hate taxis and avoid them at all costs. In places without Uber, I strongly preference public transport even for very long rides, because taxis are usually worse. I preference public transport everywhere when it's good, but there are many parts of the world with bad public transport and even worse taxi services.

> At the end of the day Uber/Lyft will be just another taxi company, albeit with a less professional set of drivers.

I haven't been to a country yet where "professional taxi driver" was a benefit. What made Uber great was that the drivers were nice people, doing it as a temporary / side job in a car that they were taking care of personally, and not a professional cheater in a smelly 20 old, rarely washed car.

But Uber is "everywhere" so when travelling you don't have to download additional apps, ask someone to call a taxi for you or hail one in the streets. You also don't have to deal with payments or risk being ripped off.

The tech or overhead on Uber can't be that expensive so I really don't see why they shouldn't be able to pay decent wages and make profit.

Again, I always have to mention this. Go to any country where you don't speak the native language and uber/lyft/grab(SEA) are 10x better than taxis. No haggling. No getting in the taxi for an agreed price and then the driver deciding it should be more. No attempts to sell you their "tour".

Never had a problem with taxis in Germany and Europe in general, Taiwan, Japan or Hong Kong.

It tells more about the country you‘re in than taxis in general if it’s so easy to get ripped off for using basic transport services.

> It tells more about the country you‘re in than taxis in general if it’s so easy to get ripped off for using basic transport services.

But I don't have these problems in any country with Uber. Uber solves the problem.

Congratulations on only visiting developed countries I guess?

no scam fixed pricing instead of opaque complex regulated pricing for whatever country you are in ?

Please don’t assume taxi services are as bad outside the US as they are in the US.

I have used taxis in many countries in Europe and Asia and never was ripped off.

On the contrary, I always had very good experiences.

Try getting a taxi in Bangkok as a foreigner. Likely end up being ฿250 regardless of how far you go.

> Please don’t assume taxi services are as bad outside the US as they are in the US.

You're the only person assuming anything - you're assuming everyone you reply to is in the US.

Uber and Lyft have strictly worse unit economics than taxi companies because taxi companies pool their fleet rentals and insurance -- something Uber in the existing model simply could not do. To obtain the same net revenue, Uber would have to charge more per ride than a taxi company.

> because an Uber actually shows up when you want one.

When Uber starts to face its economic reality, I predict the first thing to go will be service in my neighborhood.

Uber has been subsidizing rides everywhere in the city. Which means that my neighborhood is excessively cheap given the low demand. I've paid $14 for what would cost $35 in a taxi.

When Uber stops subsidizing this, it means that fewer people will use it and fewer cars will be in the area. That means drivers would have to drive an extra 10-15 minutes to get to me. That's a lot of driving time without getting paid, and drivers don't like that. That's why taxis never came to my house, pre-Uber.

It still doesn't make sense at higher prices. Pre-Uber, I would pay limo services $60-$100 just to ensure someone showed up. That's not something most people would pay to use regularly. That $14 price can't jump to $60 and still get many customers.

So when the cuts come, I just imagine that my neighborhood will just go back to they-don't-show level service like I used to get with Yellow Cab. And I expect to just start seeing "nothing available, sorry" in the app, resorting to arrangements with limo companies again.

I recommend the Naked Capitalism series on Uber's economics. [1] It's a 23-part series that goes back years, but the most recent one I linked you from a few months ago should be a good starting point.

"Uber announced a first half 2020 GAAP loss of $4.7 billion with a GAAP net margin of (-81%). Uber’s “official” full year 2019 result was a GAAP loss of $8.5 billion with a (-60%) margin, but these were based on problematic accounting that makes it impossible to evaluate Uber’s financial performance properly over time."

"Uber has now lost $23.2 billion in the past four and a half years."

"Nothing has happened to change the fact that after ten years, riders have always been fundamentally unwilling to pay prices that would cover Uber’s actual costs, that Uber was always less efficient than the traditional taxis it drove out of business, that its only “efficiency improvement” was to push driver compensation to minimum wage levels, and that its growth depended entirely on unsustainable predatory subsidies."

Yep, that's not a good business alright.

[1] https://www.nakedcapitalism.com/2020/08/hubert-horan-can-ube...

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