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?
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).
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.
I did take ubers/friends to the rapid all the time.
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.
Corporate salaries??
When the alternative is the traditional taxi experience? Hell yes I am going to pay a 30% premium to avoid that.
One of Uber's main contributions is changing this dynamic.
Uber has never made any sense to me as a business (since 2016), and it's crazy how long it's lasted.
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.
That said, I realize I'm financially better off than many people and would prefer to have safe, affordable, and widespread public transit.
The only thing changed by uber is that the minicab operator is now an app, and pricing is less predictable
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.
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
"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.
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!
fingers crossed