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Comment by neonate | Hacker News Reader

What I don't understand about the "Uber can never be profitable" argument is, why can't they just raise prices until they're no longer selling at a loss? If the answer to that is, "because then demand would die", why doesn't that apply to taxis? Taxis make money. Why can't a better (in many people's opinion) service, with better tech, do at least that well?

Setting aside the other reasons to dislike Uber, there is obviously a valuable product there. I get that it has been subsidized by VC dollars in a land grab, etc., but saying it can never be profitable is saying it can never find a fair market value, and that doesn't make sense to me. What am I missing?

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Let me flip this around.

Non-governmental subsidized transportation infrastructure is and always has been a race to the bottom. Taxis are mostly only profitable with extremely low overhead and only servicing high traffic areas like Manhattan or other major metropolitan areas.

Uber's thousands of engineers and SF HQ disqualifies them from being low overhead anything.

In the 1890s in Chicago when massive subway and interurban train networks were built out by private business, they either failed financially or succeeded only by real estate speculation around where they built their lines. Eventually all of those lines were acquired by local governments or shut down. Mass transit lines in LA, NYC and around the country followed similar trajectories. Look up the Interborough Rapid Transit Company in NY, or Charles Yerkes and Sam Insull in Chicago.

These days modern suburban subdivision companies don't bother with creating mass transit, they just fund street construction and install public works lines like gas/sewer/water/electric, and let the city deal with the traffic and the inevitable deferred maintenance that clashes with their low tax philosophies.

This seems to me the salient part of your comment:

> Taxis are mostly only profitable with extremely low overhead and only servicing high traffic areas like Manhattan or other major metropolitan areas. Uber's thousands of engineers and SF HQ disqualifies them from being low overhead anything.

If I'm understanding correctly, the argument is that taxis are basically a shit business—bad enough to break the "software is eating the world" rule because they have such low margins that you can't pay a software team (or at least, not operate a marquee SV software company) and compete. Better tech isn't enough.

If that's true, that answers my question. I'm surprised if it's true, though. I didn't think the taxi business was that miserable, and I'm not sure how it squares with taxi medallions being the highest-performing investment of the 20th century (or some factoid like that which I read years ago).

They were in Manhattan. They weren't in SF, and they certainly weren't in, say, Urbana, IL.

You mean about medallions? That makes sense.

Have I characterized your argument correctly, more or less? If not, I'd like to know what I missed.

I think you got it. Pay a million dollars for a medallion, and then have the right to sit at Times Square or JFK and charge people $50 to drive them for 20 or so minute. The cabs are independent LLCs, so they're on their own for health insurance, 401k, etc. Mostly driven by immigrants, I think being a cabbie can be a tough job.

When he puts it like that, it makes me think Uber has a much better business model than I thought. Taxi efficiency is very heavily dependent on information - if you know exactly where the customers are, where the drivers are, and then can run shortest-path algorithms in real-time to match them up, you can save huge amounts of driver time waiting and finding customers. Figure you save an hour a day * 200 workdays/year * 200K taxi drivers in the U.S. and that's 40 million hours saved in the U.S. a year. At a rate of $10/hour, that's $400M/year. Then add in economies of scale from knowing where all the drivers and customers are, and a better brand and better customer experience from reducing wait times and transaction costs to get a taxi.

Is that worth $80B? I don't know, but I'd guess probably not. But it'd easily pay for a SF HQ and several thousand engineers.

Yes informational efficiencies for transportation at scale could easily be $80 billion worth of value to the world. The real question is whether Uber can capture that amount of value. And whether competition will drive the margins to zero anyways.

Or at least several hundred engineers. Does Uber really need several thousand engineers? It's kinda nuts to me, WhatsApp scaled to a billion with 50, you figure an order of magnitude more to deal with the fact that a large part of Uber is turning legal compliance into code.

When you read their stories about managing 10,000 microservices or whatever.. I don't want to trivialize their domain but it seems like a bit of empire building happened.

Not arguing that there isn't probably a level of bloat at Uber, but the complexity of Uber's product is a lot more than other commenters are implying here. Their ML platform alone seems like a monster: https://eng.uber.com/michelangelo-machine-learning-platform/

I think they have their own ML platform because they hired a lot of engineers, not because the business necessitated one.

> I'm not sure how it squares with taxi medallions being the highest-performing investment of the 20th century

Taxi medallions are an artifact of how NYC regulated its taxi fleet; other places may have had them but the investment factoid probably comes from NYC. Joe’s Cab in Peoria, IL probably doesn’t have a medallion worth $1 million to borrow against. And, of course, note: not all cabbies owned (or currently own) the medallions they drive under: many lease them or drive for a company that owns them, and has sat on them as a speculative asset for decades.

Source: went to school in NYC with plenty of cabbies’ kids. It’s not a job many people eagerly take.

Taxis are both a mediocre margin business, and typically cartel restricted. Many people here are likely familiar with the absurd stories of the NYC medallion prices from just before Uber took over (a million dollars for a taxi medallion, before Uber smashed the cartels, tanking the value of the medallions). NYC extracted $855m in medallion fees from just 2004-2014.

So how did the eg NYC medallions become so valuable? The taxi cartel bought into the (mostly unspoken) notion that the medallions represented a government guaranteed blockade on competition. For a city like NYC with rather epic taxi demand, a license to print even just 8% margins perpetually can be an enticing prospect (especially in an age of forever low interest rates). Then, instead, the city governments mostly allowed Uber and Lyft to continue to operate (after their initial move to operate first and seek forgiveness second), rather than shielding the taxi cartel from competition.

I know of no city in the US (although there may be some small towns) where taxi rates are not dictated by either state, county, or local laws. You cannot get a taxi for any rate other than the officially-sanctioned one. Unfortunately, this rate seldom has anything to do with the cost of gas, maintenance, depreciation, pandemics suddenly causing people to use more / less services, etc. This means that for the taxi industry, there are four chief ways of making more money (1) lobbying, which is effective but slow; (2) reducing costs in the extreme, which is also effective, but only to the extent that you are able to reduce your costs further by delaying repairs, doing it yourself, not offering refreshments, not providing great customer service, not developing apps, etc.; (3) working more hours, often in contravention of labor and safety laws. Also effective, but only if you're independent. (4) Breaking the law. A significant number of cab meters are illegally altered to charge more money than allowed by law.

Uber, for all its flaws, provided a service that was better than the taxi companies simply because they didn't require their contractors cut corners, cheat, or provide poor service to make money. People flocked to Uber because it was genuinely a better experience than the local taxi companies. I think in the long run, Uber will compete by becoming as expensive as (or more expensive than) local cab companies, and having a much smaller customer base.

> (4) Breaking the law. A significant number of cab meters are illegally altered to charge more money than allowed by law.

Do you have evidence of this claim, at least insofar as U.S. taxis are concerned?

Certainly the same method used by some unscrupulous gas stations. They added a device to the pump that electronically altered the cost i.e. skipping/adding x cents after y amount pumped. More than one Canadian station owner was nailed a few years ago for adding these devices to their pumps.

My google-foo skills haven't found the relevant story tho.

For taxis the device is called a "pulse multiplier" or "pulse divider". You can make them yourself if you have some basic electronics knowledge.

See this? http://www.taxicabelectronics.com/my_first_taxi.htm

They'll sell you a new taxi cab meter "preprogrammed with your rates". You swap the legit one out yourself. Install this bad boy. Charge whatever you feel like. When it's time for the annual inspection you swap it out for the regular taximeter and you're good to go. Taxi cab drivers share other tips like replacing the tires for k-value tests, swapping out the vss, or installing a "pulse divider" (Google taxi pulse divider / multiplier). Then there's good old-fashioned charging the wrong fare. Many cities have special fares depending on time, pickup / drop-off location, and cabbies will try to "accidentally" charge someone the wrong fare. I've even had taxi drivers show me their "special fares" programmed into their taximeters.

I present no evidence. I have been charged the wrong fare entirely too often in the days back before Uber. It's a real event that happens a significant proportion of the time, and that's not even to touch on the subject of pirate cabs.

This argument is akin to claiming that the availability of sawed-off shotguns implies that a "significant" number of people are buying them and shooting people with them. It's not a substitute for statistical evidence of use and lawbreaking.

Besides, "significant" is a classic weasel word - it could mean one, for all we know.

Yes. I weaseled so hard I literally said "I present no evidence." Thank you for pointing that out.

That made me laugh. Thank you for being a good sport. :-)

If we suspend the Uber/taxi comparison, and assume Uber is a new taxi-like service but better, therefore deserves a premium? I know I’d pay for that premium. Not everyone will, but I can’t be alone?

So that means the addressable market shrinks. Think premium black-car-only service; Uber’s roots). Why can’t such a service find demand/price equilibrium? I think it can, but not in a manner that can justify Uber’s “unicorn” valuation. And I think that’s at the core of Uber’s conundrum/identity crisis: it provides value, but with tech-company cost structures. However, it doesn’t deserve tech-company valuations because it’s just not as scalable — it’s tied to operating in the physical world, with physical constraints.

If the strategy is to burn cash, continue entrenchment, and eventually leapfrog to self-driving Ubers (mitigating the scaling/cost problem to an extent), then that’s a war of attrition. Fingers crossed.

What's premium about Uber ? My personal experience is that taxis are usually much more comfortable cars, they're allowed to drive in dedicated bus lanes, and they don't try to scam you by taking a longer route to rack an overcharge. The advantage and innovation of Uber is the app, but now taxi companies have one too. So what is it ?

My personal experience is taxis are less comfortable and I've only not been scammed by a taxi once (in the us), taxis are fantastic abroad, no idea why.

A large part of Uber is also the rating model. I don't know if taxis have that, but at least for LGBTQ passengers it makes a huge difference. You can't harass your passenger and keep a good rating.

One advantage I get from Uber is a single interface no matter where I am. I travel a lot. I won’t install an app for every city. Uber has taken away the pain of dealing with taxi companies in strange cities.

Unfortunately, it traded one kind of monopoly for another.

Ideally, Uber would have been an app and a network that taxi companies plug into.

Like Hailo?

This product existed, and was profitable until Uber drove them out of business with rides subsidised by VC money.

Taxis absolutely scam you and its harder to prove than an Uber with a digital record of the route taken.

Not so sure about the prevalence of longer route tactic. I’m sure it happens, but with the route plainly visible on the map, it’s hard to cheat here unless the driver is being a bully, which is a different class of problem.

As others have also mentioned below:

- Uber is global, and has a standard interface. I don’t have to fiddle with credit cards and the payment dance. It’s the de-facto global “taxi”. Kind of like the warm homey fuzz one feels at a Starbucks in a foreign land after enduring burnt coffee served in a styrofoam cup on a long flight. (Granted, a bourgeois American-centric view, but I hope it’s illustrative.)

- If you pay a premium (Uber Comfort and higher), the cars are better, the drivers are better (higher rated too), and one can communicate preferences such as temperature and conversation (no, thanks).

- Other long-tail uses: 7 passenger SUVs for large groups, lots of luggage, etc.

- I’ve tried using the taxi apps (Flywheel, etc.), and they’re atrocious/geographically limited. In some places the Uber app can now call taxis. Even then, I’ve never voluntarily wanted to call a taxi for the last decade or so. I especially like the Black Mirror vibe of drivers and passengers having a “rating”. ;)

Better cars and bus lanes aside, I've never seen an Uber driver do anything besides follow whatever route Google Maps, Waze, or Apple Maps suggested. Most of the drivers don't even really know the streets of the city they are driving in.

My complaint would be the exact opposite of yours: taxi drivers often have a few tricks up their sleeve while Uber drivers will follow Google Maps straight into a traffic jam.

What's premium is that you're faced with a better human being. You can easily tell when your driver is a random dude or a former taxi driver. Also, taxi drivers try to claim their credit card machine is broken. They'll tell you one fee then ask you for another at the end. They'll snatch the money out of your hand as you argue over the cost. It brings out some of the worst behavior in human beings.

Uber is a hassle-free experience and saves you from dealing with the one miserable human being you'll encounter that day. Stress has a price.

Drivers are rated and you can cancel if you're handed a bad one.

Maybe I'm missing something, but how would they rack an overcharge? From my experience I've never paid more than the fare calculated before the ride is even accepted by a driver. I haven't heard of any cases of overcharge, or seen any traces of dynamic pricing after the ride has completed, save from tips. Maybe I'm just lucky?

i have no idea what that guy is talking about. the price of an uber ride never changes after youve ordered it

I've had an overage charge once. The driver hadn't selected in the app that he'd dropped me off, and drove for about an hours afterwards. I messaged Uber about it when I saw the overage charge, and it was refunded about 30 minutes later.

It depends on where you are. Germany shut their attempts at ignoring all laws down quite quickly, their Uber Black service is just like any other cab, just with an app instead of a phone call.

They managed to drag our cab companies into the 21st century without even being active almost anywhere, so thanks for that ;)

But in South Africa? Taxis are extremely expensive cars that often look as if they’d fall apart any moment. Uber was/is cheaper, but I’d have taken them even otherwise. Most certainly a premium service.

Those taxi medallion returns were a con from small groups of insiders.[0]

[0]https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medall...

Drivers and vehicles are by far the biggest expense in operating a taxi service, not matching, ordering, and navigation. The only way Uber was ever going to make sense was if software could eat the drivers, but they effectively gave up on that and it's looking like it won't happen any time soon. We've already long had "better tech" for moving large numbers of passengers between popular destinations in a city: trains and buses. But they're still not profitable and require public investment. Uber as a public service could probably work, but then no one could get rich transferring wealth from late-stage investors to early-stage investors.

> taxis are basically a shit business

In efficient market ANY business must be a shit business. If you have high profits -- competitors should squeeze into your profits.

Same logic works for other low-margin businesses, e.g. restaurants, they just saturated their supply.

What about Japan, in which over 87% of rail passenger transits in three metropolitan areas are provided by private operators?

https://marketurbanism.com/2010/12/22/japanese-transit-and-w...

> or succeeded only by real estate speculation around where they built their lines

My understanding of how Japan transit is profitable (I live there and I'm interested on it quite a bit) is multi-sided, but the main difference is that train companies own (or are leased for free/cheap) the station areas. So they setup big malls and stores around the stations, that for the fact of being on a station are probably the most transited and profitable ones in the nation.

Some smaller but meaningful differences might be that Japan urban density is very high (small country, lots of mountains/forests), that there's a lot of public transportation traffic, that the train rides for employees are normally subsidized by the companies, etc.

Uber only has one HQ. Sure, it’s more expensive than a taxi service in city X, but Uber HQ and engineering service a very large area.

It doesn't require any special "engineering" to make a ride hailing app. I guarantee you could get an Uber clone out of a high school coding bootcamp weekend. It's really that simple.

"Dispatching" a message to a phone based on its location. Why would that need special software engineering? That's all open source stuff that's readily available. Certainly everything else Uber does (collecting money, ratings, etc) is all off-the-shelf stuff.

Just the whole abuse detection and handling part of it is vastly more complex than anything a coding bootcamp could handle.

But as usual the software isn't the biggest challenge. Building a driver and rider network at the same time is.

Abuse detection is more important at scale. If you have a local app servicing a single city, they're less of a target than Uber.

What abuse are you trying to detect? I can only see payment fraud, but that can be mitigated by requiring clear payment in advance (like a deposit) and/or payment methods where the fraud liability shifts to the bank (any payment card with 3D-Secure which is now the default in Europe).

Sometimes, drivers rob / assault / murder passengers and sometimes passengers rob / assault / murder drivers. Sometimes, you want to do background checks on people driving, and you want to have a way for a passenger to report something like "hey, my driver that dropped me off at my house has now been driving past my house at 2AM", and you want to make it possible to let a driver report something like "hey, my passenger threw up in my car".

Part of the profit in taxis is through medallion appreciation and rentals.

Taxi medallions are required to operate in a city. The supply is artificially constrained, creating a taxi cartel. But medallions are rarely owned by the drivers themselves, rather they're owned by the taxi company or an investor, and leased back.

Limited supply + lease -> rents

Plus the medallions can serve as collateral (as with any asset), or be bought and sold. If one entity controls enough of them, they can then influence taxi availability (and hence prices) within a region.

This hits the bigtime only in a few major cities, but is probably enough of a factor in taxi finances to warrant a mention.

(I'm not nearly as knowledgable about this as it may seem. Mostly some discussions in econ courses at uni and the stray article since. Uber did crash medallion prices though.)

(Stock exchange seats are another somewhat similar asset, and also staple of econ course discussions.)

> Uber's thousands of engineers

Why does Uber need a thousand engineers?

The first time I used Uber was 4 years ago. It felt like a complete product. I understand the constant need for expansion around the world requires engineering to scale up servers in multiple regions, but does that really take a thousand engineers? Do they really need thousands of people to handle the feature creep?

I'm just finding it hard to believe that there's enough work to do on a ride hailing app to keep thousands of engineers busy.

Because people won’t pay $25 to take a 15 min ride. They’ll just stay where they are, drive themselves, or coordinate a car pool with their friends.

Uber subsidies changed leisure for many folks. When it’s $6-10 for a ride, even middle class incomes don’t even think twice about it. But when the true price of the ride must be paid, those people won’t be a part of that economy.

And without those mass short rides to fill the gaps, there’s not enough “fat” rides to keep enough drivers on the road to keep the wait times low. So the product might exist, but it devolves to a taxi rate with a taxi wait, just done over an app.

That may be the best argument that I've heard so far, but after thinking for a minute, it sounds not like "Uber can never be profitable", but rather "the legacy taxi market is an upper bound on how big Uber can be in the long run". Couldn't that be profitable? That's still a pretty big market, even if middle-class people are no longer using it for 10-minute rides.

Yes, profitable, but Uber's valuation would tank if they were just scraping by on this kind of revenue with no hopes of automated driving or other things in the future to increase margins.

OK, in that case the answer is "Uber can be profitable". Probably true that their valuation would be lower but that's not the argument I hear people making.

What happened to WeWork is almost exactly the hypothetical scenario that you are describing for Uber.

Uber doesn't have the same risk profile. When demand drops for wework, they are still on the hook for longer term leases. When demand drops for uber, drivers eat the loss of fewer transactions. As long as they can keep their overhead in check (and this certainly isn't clear) then they should be be able to have an operationally viable business.

There is no hope of price competitive automated driving. It is ludicrous.

I think the key question here is profitable in what way. Can they be profitable in the sense of they made more money this year than they burned? For sure, turn down spending and turn up the prices. Can they be profitable in the sense of being in the green over the whole lifetime of the company, making a total profit over the large sums of money poured into the company? I'm not certain.

I'm asking the first question. I agree with you that even if the answer to the first question is, "yes, Uber can be profitable", the answer to the second question (can it generate a positive return for its investors) is in doubt. It's possible for a company to be a losing investment and yet still end up as a profitable business operationally.

I don't think "For sure, turn down spending and turn up the prices" is something that the people arguing "Uber can never be profitable" would agree with. They're arguing that this can't work, and therefore Uber is destined to go out of business once the investment billions dry up. I'm just asking why that is so, given that the taxi market is a thing, and that a lot of people like Uber better than taxis.

> I'm asking the first question. I agree with you that even if the answer to the first question is, "yes, Uber can be profitable", the answer to the second question (can it generate a positive return for its investors) is in doubt. It's possible for a company to be a losing investment and yet still end up as a profitable business operationally.

But then if we're admitting that Uber's unlikely to be profitable over its lifetime, why would anyone buy their stock?

That's really what people care about in these discussions. Its not "Will Uber be profitable this quarter?", its... "should I buy Uber stock?".

The last guy lost money on Uber stock and is trying to offload these shares / certificates onto someone else now. Will buying those shares at this current price (aka: very expensive: $81 Billion market cap) be worthwhile?

You can buy many other companies at much cheaper prices than that.

> That's really what people care about in these discussions. Its not "Will Uber be profitable this quarter?", its... "should I buy Uber stock?".

It's definitely not what I care about. I'm just a user, not an investor. What I care about is whether I'll still be able to use the service in the long run, albeit at higher prices.

Also, if that's what people making these arguments really care about, then I think it's misleading for them to be arguing that Uber can never be profitable and is destined to go out of business. That is not the same thing as being a poor stock market buy at current valuations, whether the latest round of investors will lose money, and so on.

Maybe you're not the target audience of the blogpost then?

The blogpost is pretty clear to be coming in from an angle of "stockholders" perspective.

> Uber didn't need self-driving cars – it needed us to think it would have self-driving cars. That way the company's Saudi owners could raise investment capital from subsequent "investors" (AKA "suckers") all the way up to the IPO, cash out, and walk away, whistling innocently.

> That's the bezzle at work – a dazzle op that keeps new money flowing in, convincing people that a pile of shit this big must have a pony beneath it. But as the years went by, the stories that Uber told us about its path to profitability got more and more fanciful.

The big gist of this entire blog post is "Hey Stockholders, I think you've been swindled by Uber's CEO". That's the thesis in a nutshell.

If you don't care about the stockholder perspective, that's fine and dandy. I'm not saying you should care. (I'm not a shareholder, so I certainly don't care very much). But... as someone who does participate in the stock market, I still find these stories fascinating. I probably will be buying stocks in the near future, so I do want to know about all of this drama going on in different companies.

There was a whole lot of some combination of self-delusion and grift going on around self-driving and not just with respect to Uber. Even if you made some very optimistic assumptions around the tech, I'm not sure it ever moved the cost needle as much as people assuming it made taxi rides almost too cheap to meter thought it would.

Uber can probably be profitable. Cut costs drastically. Focus on where the business can be profitable--which probably means effectively pulling out of non core urban areas. But it will clearly be a less good service for a lot of people.

And probably doesn't look a lot better than taxis for many people any longer.

And for not on demand and not price sensitive, there are always private cars as there have been all along in many areas.

Uber cannot take advantage of the economies taxi companies have in fleet purchase, in-house maintenance, commercial prices for parts, and fuel contracts. None of these scale well nationally, which is why there has never been anything more than small, regional taxi companies, even though they were possible 100 years ago.

Uber's overhead in misbelieving they are a software company rather than a taxi service has only added to the expense, not saved anything.

Because taxis rely on cheap fleets, centralized and cheaper maintenance, and volume fuel agreements, they simply don't scale.

I'm not convinced the gig economy taxi service can't scale--without depending on too many drivers who don't understand their costs. But it's not going to be cheaper than the alternatives, driver networks may not be much larger, and a lot of operations (including engineering) are probably going to be mostly outsourced to low cost areas.

The individual driver has no buying power to negotiate a lower price on cars, fuel, or maintenance and the big players are disincentivized to hand him one. The gig nature of the job means he pays consumer prices for everything while Uber skims off the top.

Uber is an attempt to mechanize the human aspect of driving by turning people into machines that produce for them. Unfortunately, in the fever dream that led to its creation, no one stopped to consider why "Big Taxi" wasn't a thing already.

Reminds me of some shrewd comments about the Airbus A380. If there really was as much of a market as Airbus thought why wasn't Boeing selling more 747's.

So yeah in the last 100 years why are there a couple of taxi companies in each large city. I think you are right the business doesn't scale beyond a certain point.

Anecdote: Friend said he and the people he was with tried getting an Uber and balked at the $50 price. Then one them had the bright idea to check a regular taxi, $15.

I think Uber showed the demand curve is there, given both the lowered price and lowered transaction costs. It is certainly possible that when the dust settles there exists a larger taxi/hailing industry than before, operating more efficiently.

> The individual driver has no buying power to negotiate This is true for the full-time driver, and certainly uber drivers have by in large become this in larger markets. But where I am, most drivers are still part-timer that do it for extra income on nights/weekends. In that case, their capital expenditures are already sunk costs, and they just need fuel+maintainance to balance out, which they can probably deal with at lower margins.

One can certainly imagine a world with app-dispatched taxis (already here) that is more efficient, with burst capacity from part-timers. That is probably a world with more taxi usage proportionally to the population than 20 years ago.

I think it's worth considering that Uber is the first nation-wide taxi service that we've ever seen, and they were only able to accomplish this via subsidy. Is it really possible to continue operation at that scale, while simultaneously losing their competitive edge versus local taxi companies? Why is it that no other taxi company has even come close to nation-wide? I don't think an app is sufficient to bridge that gap, and Uber doesn't have anything else to show in the innovation department.

It's a good question that I don't know enough about the taxi business to answer. However, it's also a pretty general/speculative argument, so not the strongest case for "Uber can never be profitable", especially since there are general/speculative arguments on the other side too. For example: economies of scale have worked in other industries, why can't that happen here? And: software-is-eating-the-world has generally been holding true, so why would this be an exception?

The three biggest reasons are centralized maintenance, fuel, and fleet costs.

Taxi companies negotiate the entire fleet purchase at one time and replace vehicles on a schedule (like rental car companies). Often, the fleet is all one brand and model. This makes it easy to hire one or two guys to work on all of them. You can also buy all your standard parts in bulk and you get commercial pricing for those. Fuel is also all bought from the same vendor on a contract.

Those agreements would be impossible for any gig worker to get. He is going to pay full price for the car, the maintenance, and the fuel. Gas stations aren't owned by oil companies; they're owned by individuals. So you'll never get national pricing on gas. Each taxi company negotiates with a particular owner (hopefully of several stations) in their area.

The final nail in the coffin (and the one that keeps it from going national, even if such agreements could be worked out for a group), is that car repair is local. You cannot operate a maintenance depot in Chicago that serves Houston. The further away the depot is from the points of service, the longer the car is out of service each time.

The "hub" nature of the taxi operation with all cars, staff, repair people, and parts in one place (and all maintained on the same schedule so fewer surprises), simply doesn't scale unless you have enough customers to build another hub.

BTW, this is the same reason there's no Del Taco in Texas (or your favorite fast food where you live). You have to have a certain number of restaurants to make the distribution hub and the truck trips worthwhile. There cannot be one isolated McDonald's somewhere that's profitable, just like there cannot be a "too small" taxi operation without a hub -- it won't be profitable. And building hubs in small cities without enough demand isn't profitable, either.

Hence, taxis don't scale.

There are plenty of national chains in various industries though, they just maintain ownership of multiple "hubs" and potentially get some economies of scale on national marketing.

There is no reason "a national taxi service" couldn't operate in the top 50 US metros, even if each metro managed local hub operations.

It’s also a market where you’re competing on margin. The winning ticket for the taxi market in North America was to stabilize taxi supply by the medallion system and have profits accrue to the drivers who owned the medallion and car (as they could charge rental fees to other driver).

There’s nothing to say that Uber/Lyft don’t stabilize near a similar dynamic.

In response to Uber we now have local taxi apps as well. Not sure how good they function, and of course, it’s a different app per place instead of one global app. But apparently, building the app for calling a taxi ride can be done quite cheaply.

Heck, there might even be a business for creating a white label taxi calling app.

You use Uber or Lyft or you don't get a ride. No one is using a taxi app; they're using the two big rideshare apps. That said, I used a taxi a total of a handful of times in my 30-something years prior to Uber/Lyft becoming a thing. Those handful of times were miserable experiences, including hours-long waits leading to no-shows.

Modern ridesharing services flipped the script. Livery services here in Minneapolis/St Paul are all over the rideshare apps and I am more often than note picked up by licensed taxi/limo service drivers instead of random Joes looking for extra dough (I'm sorry; I didn't realize it until after I typed it--it's staying).

---

I have come to rely on the expectation that rideshare will be available in whatever city I am in. On a recent vacation, there was exactly 1 rideshare vehicle available to pick up my family to go to the airport on a Friday morning at 6:30 AM and one available to get home at 12:30 AM on a Sunday night. These drivers were professional drivers. There were exactly 0 rideshares available on Hilton Head Island on the several occasions I looked and there were only a handful available in Savannah.

Ridesharing may be dead but this article is nothing but a very angry response to someone who hates the business model that actually fixed a VERY broken system. Whether or not those companies continue to exist, rideshare services have made it WAY more accessible to move around w/o having to rent cars, get stranded, etc.

Bring 'em on I say.

I've used Taxi apps, and have called taxis more than I've used Uber/Lyft in the past few years.

But the reason for this is because of surge pricing. The times I want a ride are when everyone else wants a ride, and we're all coming out of the same venue. Taxis offer much more affordable fares, and sometimes will even be parked outside waiting for the people exiting the venue.

Saying no one is using taxis is not true. Few people think to use them, but there are times when it is worth it.

The business model means nothing from a user experience point of view if the network effects needed to make it profitable don't work when the true cost of service is applied.

Uber, in its current pricing model, is unsustainable, period. You might be willing to pay an increased price for Uber's service, but you still need a minimum density of drivers to make the service not outrageously expensive.

Curb usage is pretty big in a number of metros.

> Because people won’t pay $25 to take a 15 min ride.

Maybe not routinely (like to work or the grocery store), but:

I will absolutely pay $35 to get to and from the airport, which is 15 minutes away from my home.

I will absolutely pay $20 for a 10 minute ride that takes me to a restaurant or bar where I plan on drinking enough such that I don't feel comfortable driving.

I was just in Manhattan a couple weeks ago and paid a taxi to drive 10 minutes, and it cost around $20 with tip. This pricing scheme seems to work fine for traditional taxis.

I'm not saying everyone will pay this much. Maybe Uber's addressable market when charging the true cost of a ride is much, much smaller than they think it is, and they need to rethink and restructure how they operate. Maybe users need to expect longer wait times for a car, and lower availability. But that doesn't mean they're doomed or that they have an impossible business. That's like saying "taxis with an app" is an impossible business, and I don't think anyone can make the case for that.

The special cases you bring up are scenarios where there's a significant externality offsetting the fare.

If I take a rideshare to the airport, I don't have to leave my car in expensive airport parking for several days until my return. That can pay for a significant markup on the trip charge.

If I take a rideshare to a bar, I'm trying to dodge a $10,000 DWI ticket.

If I use one intermittently in Manhattan, it's likely part of the "few people own a car in Manhattan" dynamic, which is tied in part to having to pay hundreds of dollars per month just for parking said car.

> but it devolves to a taxi rate with a taxi wait, just done over an app.

What's a "taxi wait"? Do people routinely wait longer for taxis than for Ubers? is that because of a lack of taxis there?

Depends on where, I guess. In busy places in Manhattan you'll likely wait under a minute for a taxi (and more for an Uber). In San Francisco you're likely to wait 20-40 minutes for a taxi (that may never come), versus 5-10 minutes for an Uber.

The taxi business does not extract out 30-40% of revenue away from the drivers and into the hands of software engineers who keep adding useless features to an overbloated app. (not the mention the investors and the executives)

Ok, let's say Uber is executing the software side of its business badly. Is the argument then "Uber can never be profitable unless it fixes its software business" (which could be true, but is a much weaker claim)? Or is it that "The cost of operating a software business is intrinsically so high that no matter how well Uber executes, it can never be profitable?" That would be a massive counterexample to software-is-eating-the-world. Usually it works the other way - tech eating non-tech, even though engineers are expensive.

Does tech eat non-tech, or do a handful of heavily invested companies selling at a loss beat out people who don't do that? Looking at the top 10 companies, three are in tech, tied with American Healthcare. 2 are finance, 2 are O&G. The internet fundamentally changed how companies do business, but really, what makes Uber a tech company -- their app? They don't sell their app. Anyone can have an app nowadays. They're a taxi company with a large network and good name recognition, and that's their key benefit.

Top 10 by what metric? By market cap the top 10 companies are [1]:

1. Apple

2. Microsoft

3. Amazon

4. Alphabet

5. Facebook

6. Tencent

7. Tesla

8. Berkshire Hathaway

9. TSMC

10. Alibaba

With the exception of Berkshire Hathaway, these are all tech companies. And a fair chunk of Berkshire Hathaway's market cap is Apple stock [2].

[1] https://en.wikipedia.org/wiki/List_of_public_corporations_by...

[2] https://markets.businessinsider.com/news/stocks/warren-buffe...

Going off the Fortune 500 earnings listing. Market cap is an indication of valuation, not an indication of how much business a company actually does.

So someone invented a slogan "software-is-eating-the-world" and you use it as an argument? Perhaps that slogan was invented as part of a huge hype cycle where some early success drove a gold rush type frenzy that has nothing to do with reality? Uber could only exists because very few people with way too much money decided it could be profitable. When you so few people are able to effect power on the world, you can see crazy irrational things happening. Funny thing is people are so blinded by their own technoptimist-freemarket ideology, that they work hard to rationalize random decisions made by people who happened to be rich because there happen's to be a large amount of black goo under their feet.

you are right, it is 50% or more...

learn the mediallion's history.... most of the yello cab drivers (at least in nyc), see a lot less than the 50% of the fare. That's why they are exclusively immigrants, as they are only the ones to put up with it.

1. Rent permit, 2.Rent Car. 3. Other fees...

For some reason there is the naive thinking that yellow cab drivers are owners of their cars or permits, which is not the case. A local mafioso, is getting more than half of each fare.

> A local mafioso, is getting more than half of each fare.

I mean, at least it’s staying local.

A lot of it is in the weakness of the gig model. If prices rise, then demand falls. But the lower demand is, the less likely people are to try and drive, so the more expensive it becomes to do rides. A significant chunk of their "overhead" isn't engineers, but marketing to get new drivers into their system. It's not stable. Turnover is very high. Because they don't have a stable workforce, their problems compound more quickly than in other business models. Surge pricing is what happens when there's not enough drivers. If you raise the base price, and now have lower demand and fewer drivers, you'll likely need to surge on top of that increased base.

You can imagine a taxi company with 20 cabs on the road has a fairly predictable supply. A gig model is always playing the odds. When there's too few drivers, Uber both misses customers and has to charge the customers extra to pay the drivers more. When there's too many drivers, Uber can probably charge less and meet all demand, but the drivers have a worse experience. This is not so bad when the overall level of activity is high, but is not good when the overall level of activity is low.

That is, it's much worse to have 5 drivers and 10 riders than it is to have 55 drivers and 60 riders.

tl;dr if you're charging high prices, you have a small, upper class target market. The gig model is suited to a mass market model.

> If the answer to that is, "because then demand would die", why doesn't that apply to taxis? Taxis make money.

Taxi licenses are an artificially constrained resource, which keeps prices high. As a result, taxis are typically only conveniently available in high-demand locations (among other ills).

There probably is a niche for ridehailing services as public infrastructure (or perhaps using a co-op model) running on open source software, but that excludes VC-fueld behemoths like Uber.

It isn't so much that Uber can never be profitable, it is that Uber could never be profitable enough to recoup the sunk costs and operate as an attractive publicly-traded company.

Plenty of companies show a profit and remain privately owned. They aren't hypergrowth companies. VCs don't invest in them, except accidentally.

There are, ironically, business models that would have justified some VC investment and led to decent outcomes with a market cap around $1-5B, but they are shaped completely differently, and would have produced much more modest returns.

> Taxi licenses are an artificially constrained resource, which keeps prices high

This is only true for some markets where there is a monopoly or a medallion system. Not all markets are like that, not even all markets Uber operate in. Some of the biggest are though.

Are you aware of any analysis on the quality/cost of taxi services in markets without an artificially constrained supply?

Uber is an application that helps drivers find passengers (not the other way around). They do not control the costs associated with operating a car service and so have no chance of engendering the productivity necessary to keep costs down. Their VC subsidized attack on the taxi industry has actually destroyed much of the productivity gains inherent in traditional car service companies who were able to scale car maintenance and other fees (now each individual driver has to manage their own costs).

Uber's only major contribution is an easily reproducible app and considerable market manipulation which it can no longer maintain. If Uber decided to charge what their failed system actually requires for profitability, it would be uncompetitive against traditional car services that actually have the capacity to scale the costs associated with car services.

their moat is that their app is now everywhere, which is worth something. So many other services have easy to copy apps, but it takes years for other apps to beat them. See Facebook, instagram, etc. A good app is really worth something.

Their only moat is capital which has been dwindling.

so Facebook could be beat by other apps? a good, popular app is a moat, for a while at least

I wouldn't assume all apps have similar competitive circumstances.

I wasn't either, I was saying you are discounting that apps can be a moat at all, and that you shouldn't

Facebook's moat is a network not an app.

Uber doesn't have the same network effect dynamics.

I don't switch from FB to another social network unless a bunch of my friends do.

As a consumer, it is very easy for me to install Lyft or Curb or $LocalTaxiApp and switch. There is very little brand loyalty.

As a driver is a harder, there is a burden to onboard to a given app service. But I've seen plenty of drivers with simultaneous lyft/uber signs, so I know they are doing it. And driver forums/social-networks are constantly talking about ways to maximize income, so if there is new app that is better many would try it, because they wouldn't need to abandon the older platforms just to try the new one.

Bootstrapping having both demand and supply is the hard problem of the two-sided market to scale. Riders and Drivers might try out an app easily enough, but they'll only stick with it if there is enough capacity to market-match (and some cost benefit over the other app-markets).

The inertia comes from the number of drivers too I guess

>why can't they just raise prices until they're no longer selling at a loss?

because competition exists. Same reason your local bakery can't sell bread at 50 bucks and make their owners millionaires. In a market economy you don't get to 'set prices' at arbitrary rates until you don't make losses.

Right-hailing companies have no differentiating features, there's dozens off them, they also have to compete with taxis, and if Uber was to raise prices someone else would eat their marketshare until they've got the same problem and they've all competed each other into the ground.

The entire flaw with the company is that building you an app that lets you hail a car isn't actually providing any surplus value to the tune of tens of billions of dollars and the only thing that keeps that illusion running is dumb Saudi money having nowhere to go

They are very close to being a monopoly in the US, and are certainly a duopoly. Predatory pricing for a decade to establish market share, and then raising prices once in duopoly status, would be a slamdunk antitrust case.

That's the legal reality. Plus the political one- the average Uber customer is middle to upper middle class in an urban area- i.e., the types of people that politicians actually listen to. Politically sympathetic, vote in very large numbers, have an outsized voice in the media, etc. Every media outlet in America would cover the price increase nonstop. If raising prices didn't result in an antitrust suit the very next day, I will eat my hat

I hear you, but that's also already a different argument involving complex externalities. I'm just asking why a better service with better tech* than taxis can't ever make money, when taxis do make money.

* I know not everyone agrees with this, but enough people do that it's clearer to put the argument this way.

I don't see what's the complex externality here- they can't raise prices significantly because they're legally prevented from doing so. 'The people with the guns & the legal monopoly on force forbid it' is pretty simple.

To my understanding the only people making non-poverty wages in the taxi business are owners who purchased 'medallions' decades ago- aka another governmental licensing restriction. I believe they frequently lease out the cars to drivers who make minimum wage or less. I'm not sure an individual taxi is necessarily profitable on a per-car basis

A better service with better tech than taxis can make money. The market for the necessary backend services ends up looking like some hybrid of the market for web hosting and the market for geospatial data and services hosting:

Mostly open source software.

Competition is largely on price.

Plenty of small entrants into the market, fewer big providers, lots of resellers.

Many of the 'apps' are white-label skins on the necessary backend services, others are self-hosting the infra. Some local governments operate these services as utilities.

So, the software opportunity looks a lot like Automattic (the makers of Wordpress software and operators of the wordpress.com hosting service), which is a privately held company and valued at $3B.

> would be a slamdunk antitrust case

If a not-profitable company is raising prices to not go out of business then idk how well that would play out in courts.

Would a court force uber to go out of business instead of raising prices?

The price raise would just be part of the evidence that the earlier low prices were anticompetitive dumping to monopolize and maintain a monopoly on the market, the remedy for illegally protecting the monopoly would probably not be prohibition on raising rates, though. Breakup or other remedies would be possible.

The market is not "ride hailing apps", it is personal transportation. Depending on where you live, the competition is trains, busses, biking, walking, company shuttles, or even moving closer to where you want to be.

If the cost of an Uber from the airport is too expensive, people won't just take cabs, they could also park in long term parking or have a friend drop them off instead.

Because taxi's don't have a bloated 'backend' corporate office where thousands of engineers are making $300-500k a a year, and a bevy of extremely elaborate offices in the most expensive parts of the world, London, SF, NY etc. They have the dispatch company which runs on a shoestring budget and the cabbies who are either owner operators or work for a cab company, they also don't have the tech that powers Uber/Lyft which allows anyone to hail a ride from their smartphone. [tradeoffs]

> they also don't have the tech that powers Uber/Lyft which allows anyone to hail a ride from their smartphone

Sure they do, as long as they just get an app built by a contractor and don't employ 5000 engineers building cool open-source infrastructure projects and unnecessary "growth" features.

Multiple taxi companies with ~200 cars in my city each have their own smartphone apps with all the features you actually need: ordering or scheduling a ride, GPS tracking, payment with credit card or business invoice.

Looks like these apps were last updated in mid & late 2020, but if it works you don't need a permanent tech team to keep the taxi business going.

You beat me to saying it. However, Uber could still compete by spinning off the majority of its software business (and they should!).

> why doesn't that apply to taxis? Taxis make money.

Wouldnt it "just" be because of the massive overhead that Uber has with the software engineers, support staff, execs, etc?

To be honest that’s all self inflicted. It may be painful to downsize to a sustainable model but these aren’t hard costs - at least not to the extent they exist now.

The question is whether a sustainable model's marginal utility over the regular old taxi business is sufficiently large to justify the entire endeavor.

(Note: what follows is a purely US viewpoint. I have no idea how these markets work in the rest of the world.)

Well, the thing about Taxi's was that they were available, at some times, in downtown business districts. If you wanted a taxi south of 70th St in Manhattan, congrats! If you wanted one in the Bronx you needed to get very lucky. If you wanted one in a typical suburb you had to call someone and talk on the phone to schedule a taxi to come get you with plenty of advance notice. It's something that was so inconvenient I only remember ever doing it to go to the airport. The number of taxis was such that in a busy central business district you had a pretty good chance of catching one (presuming you didn't look too 'scary') but pretty much anywhere else you would never see one.

Uber tried to change that fundamental fact of life by bringing many more drivers out there, so that it would never be more than a few minutes wait, even in the suburbs. This, of course, means much more competition for drivers. They tried to solve that by bringing many more riders out, which was where the massive subsidies come in: you can keep both sides of a two sided market coming out if they are getting big subsidies. It's when they tried to make the riders pay enough, and paid the drivers little enough, to be profitable that the drivers and riders stopped showing up. Presumably it will be profitable still in heavily trafficked areas, but the dream of Uber being a reasonable choice for transportation in suburbs of Des Moines seems like a failure.

>The number of taxis was such that in a busy central business district you had a pretty good chance of catching one (presuming you didn't look too 'scary') but pretty much anywhere else you would never see one.

I well remember being unable to get a taxi in 45 minutes of waiting at 19th Avenue and Judah in San Francisco's Sunset district, despite calling taxi companies' dispatch offices. Yes, it was Sunday, but it was also 2pm, and anyone who knows the area knows that 19th is a very, very busy street at all times because it is the de facto north-south route between the Golden Gate Bridge and the peninsula, in the absence of a true highway.

Now no one ever thinks of not being able to get a rideshare regardless of time or place, as long as the area isn't completely rural.

If an Uber costs the same as a taxi, it makes no difference.

I think the real product is in the dispatch app.

But it really only works if all the various cab companies subscribe to the same dispatch service. Every cab company having their own dispatch app doesn't work.

Basically, we don't need Uber, we need DoorDash, but for cabs.

> If an Uber costs the same as a taxi, it makes no difference.

It does for people like me, who prefer taking an Uber to dealing with taxi drivers pretending they can't take credit cards, the stress of figuring out how much to tip, and so on. I know that not everyone feels this way, but many do, and that certainly has some value. The question is whether it has enough value for Uber to be able to eventually make a profit.

Doesn't it apply to taxis? There weren't as many taxis as ubers, so they were more expensive and harder to get and took longer to show up.

If this was a purely artificial supply constraint (medallian monopolies and abuse, say), then that would be one path to Uber profitability.

If this was just a flexibility problem - where taxi driving full time as a requirement for drivers meant you couldn't hit peak demand without an unsustainable amount of idle time too - Uber could have a path there.

If it was a sort of "step change" demand function, where if you make it trivially available and cheap the growth in demand will be enough to offset the lower per-ride revenue, there's another potential path there.

But it's been a long time now for really none of those theories to pan out.

Price elasticity of demand. Uber’s market wouldn’t just shrink with higher (fair) prices; it would evaporate. Consumers are getting something for nothing and the Saudis are getting nothing for something. But the VCs and Kalenick probably did ok in this pyramid scheme.

https://en.m.wikipedia.org/wiki/Price_elasticity_of_demand

A local taxi service doesn't have the overhead of paying a share of thousands of developers to scale an algorithm that a dispatcher has in their head.

That old saying: "If it walks like a duck, quacks like a duck,...." is relevant here.

If it costs like a taxi, looks like a taxi, pays its drivers like a taxi, it's a taxi. It's not an 'Uber' - whatever that's supposed to mean.

Uber appealed to the riders because it was cheaper - now the costs are approaching taxi prices, what's the 'Uber' advantage?

Uber appealed to drivers because they could earn more money than it cost to run their vehicles - with lower driver-payments, what's the 'Uber' advantage?

So, if the costs are higher and the returns aren't there why drive for 'Uber' at all? Without the drivers, there's nobody to take the riders anywhere. Best to order a Taxi. At least you know that there is a taxi in the town, and it will get to you eventually.

On the other hand, if no Uber driver happens to feel like driving at the moment, you could be waiting for days until your trip happens.

I've always said that Uber is scam. Soaking the investors and drivers alike, while the 'management boys' skim the top and laugh all the way to the bank.

> what's the 'Uber' advantage?

Pickup from a map pin, dropoff to a map pin, driver follows traffic-aware navigation the whole way (like GMaps or Waze), payment automatically handled.

Cost was never why I preferred Uber/Lyft.

Pickup from a map pin, dropoff to a map pin

Traditional taxi services. "I don't know the name of it, but I'm in the big white building opposite the Night Market."

driver follows traffic-aware navigation the whole way

You haven't ridden in a taxi lately. I venture to say that a GPS of some description is standard in all taxis, including things like GMaps and Waze.

payment automatically handled.

Restriction to one form of payment. A Taxi can take cash, card, voucher, or can wait while you borrow money that you haven't got from somebody else.

I still don't see any 'Uber' advantage over a plain old taxi service.

Of course they can raise prices. But that doesn’t mean people will pay them.

I’ve noticed massive increases lately in Ubers prices. So have lots of other people. In response, people take fewer Ubers. As prices go up demand will go down.

Uber has massive fixed costs. Even if they maximize where supply meets demand (where they can make the most money) if it’s not enough to cover their fixed costs they won’t be profitable.

Uber needs to find a way to lower their costs or grow their users (raising prices doesn’t help) to hit a profitable break even point.

It’s been the VC money that has been subsidizing Uber prices for a while. That’s disappearing. Uber is also trying to expand into more spaces (Uber eats) to acquire customers. Maybe this will work but so far it’s not.

Sure it will. I had to take a regular taxi today. I couldn't convince the driver to give me a flat rate or quote to my destination but I needed to be home and taking the train would have been over an hour.

So, I got in the taxi thinking it would be around 60EUR (what an Uber usually costs). The taxi cost me over 100EUR to get home in 30 mins vs. 1 hour. I should have gotten an Uber but I was too exhausted to think of it and figured a regular taxi would be in the ballpark of an Uber.

Uber can give me a price before I even request a car. No taxi can do that atm and I don't think demand would go down because prices are increased.

If I knew it would have cost me 100EUR+ to be home in 30 minutes after spending all day in airports and planes, would I still have paid that much? I probably would've hesitated, but I think I'd still have pushed the button.

> I don't think demand would go down because prices are increased.

I disagree. Of course demand will go down as prices go up. It's quite literally the most basic principle of economics. Uber is not like a life saving pharmaceutical that people will pay any amount for - that is, an inelastic service. Consumers will absolutely avoid a service because it costs too much. Uber is no different. While people may still take Ubers, they'll take them less often. So Uber will still have reduced revenue.

> I couldn't convince the driver to give me a flat rate or quote to my destination

I'm from NYC, so granted our taxi fleet was well established well before Uber. One law established is a fixed cost to and from airports for cabs. Certainly this can be be replicated but yes, it's not something that can be immediately addressed and so Uber wins in this space (an upfront price).

To respond to your general message, yes, Uber is excellent in certain circumstances. This is one of them. Though I've also seen the reverse when traveling. Hoards of people waiting for an Uber, and plenty of taxis around.

As it currently stands, with prices going up, drivers' compensation going down, and Uber burning money, it's not likely sustainable. So Uber's future is at risk regardless of anyone's individual consumption

Maybe the company as it stands is so inefficient and cash burning that it can't actually compete with taxis. In that case a slimmed down Uber may be able to do so, but that would require a lot of blood to flow inside the company.

If the argument is not "Uber can never be profitable" but "Uber can never be profitable without a brutal corporate reorg", that's more plausible. But it's also a much weaker claim, no? Brutal corporate reorgs are a thing and I suppose that sometimes they even work.

All I know is that in the midwest, before Uber, there was maybe 1 taxi company near-ish (usually from a newarby town). You couldn't just call a ride- You'd have to look up the taxi company's number, schedule days in advance, and pay somewhere between $2-4/minute.

After Uber, you can get a ride even in less populated areas (almost) on demand. The price is definitely lower, but not significantly. But we went from only using a taxi to get to the airport (if you could find absolutely no one to drop you off) to being able to take one home from the bar or concert.

I think it might be a mistake of dividing the options into two camps, Uber and all other taxi companies, by now.. There are a LOT of IT solutions any taxi company can rent that gets them a lot (or most?) of the Uber features (except the brand name). Basically all of the IT you need including apps and call-center handling can be sourced in.

I guess tech is catching up with Uber and what they still have is a good brand and there is some confidence that you hopefully has a smaller risk of getting ripped off with them at least if you're a tourist in a new city.

Sure, the "sell dollars for $0.50" company can become profitable by raising prices to $1.10 after they wipe out the competitor who was selling for $1.00, but is that a good end result?

It's not, but that's a different argument.

They can but it also will reduce their business.

The problem is that the "solution to the system equation" might have a complex/imaginary solution as its only solution (i.e. the business is not viable at any product price or any company cost structure) which is actually pretty common for startups - it's one of the primary reasons why a start-up and its product can fail.

You're missing the fact that they have a pretty much limitless supply of capital, and _have still not been profitable_. It's not as simple as "just raise your prices." I would think that's pretty obvious. Why wouldn't all business just do that if it were that easy?

First, it is wrong for you to assume "the technology" actually brings any systemic efficiency gains.

Uber's Rides business has been EBITDA positive since the IPO.

It turns out if you shuffle all of the subsidies and promotions out of your cost center, it's pretty easy to show a profit.

Do you mean "adjusted" EBITDA or the real one?

When splitting out a segment it’s adjusted.

Over $1 billion in past 4 quarters. Rides prints money.

Wikipedia says they have 26,900 employees.

https://en.m.wikipedia.org/wiki/Uber

Uber the company has higher operating costs, and their service isn't better. The entire value proposition is "cheaper" and always has been.

This isn't true. "More convenient than hailing a cab" has also been a very large component of the value proposition. As has "knowing where the driver is on their way to you."

Cheaper is a big part, but not all of it by a long shot.

Nobody's mentioned that you can hail a taxi by walking out into the street and waving your hand in the air.

It's a fundamentally different service.

Before Uber was founded I lived Upper Market in SF -- and it was impossible to get a cab to come to my house. I would call and they just would never show up. I started calling and ordering multiple cabs in a shotgun approach to getting a cab. I travelled extensively and my flight was always early on Sunday Mornings (because I was crossing time zones and had to leave at such a time to consult all over)

The cabs still wouldnt show up, so I made friends with a bunch of personal Black-Car Drivers in SF and had their numbers directly and would coord trips from my house to SFO before hand (17 miles) - I would pay then a set fee including tip.

---

Once, I got a cab from my house to SFO and it was $65. for 17 miles, and a 30 minute wait.

I was flying from SFO to LAX. My plane ticket was $99.

450 miles, @~500 miles per hour or such. $99. 6AM Sunday. no waits, no hassle.

17 miles from House to SFO, @~30 MPH, 5AM sunday. 30 minute wait. $65 dollars. (2010/2011?)

---

Then Uber was born. I have never used a taxi in the greater bay area since.

Fuck taxis.

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That being said - Uber & Lyft are not without faults.

Uber was run by a C-Suite of douchebags. The product was valuable, but the culture was toxic.

That has not changed - rather than actually being a better company, they are simply constantly attempting to cover up for the fact that they are douchebags... and thus, their platform as a business model (the drivers) is collapsing.

----

Here is the biggest PR debacle with Uber that goes un-reported:

They attempted to have a lottery for a secret party night where you had to attempt to book a ride to this "party" and you may or may not be let in... and you had to keep trying and they would havea driver pick you up and deliver you to a secret party spot, with a special DJ and special drinks! YYAYAYA!

Well - not so fast punk.

The lottery was bullshit and had many problems where people were accpected, then the driver rejected them, and all sorts of other failures...

Then, (I was one of the "lucky winners") they were able to pick people up and rather than carrying them off to some super-cool-secret-party location, they had a mediocre half-assed "party" at Harlot in San Francisco -- where after going through the gauntlet of disorganized Uber Drop-offs (the drivers were just as confused as was the inept marketing group at Uber) you were still put into a line as if it were a regular lame club in SF.

They attempted to charge a cover, but backed down after people pushed back based on this "contest" to come to "secrete party"

Then the special drinks? They were $12/drink... You WON this lottery to go to harlot as if it were ANY other night in SF... the inside of the party was an utter joke - the uber employees were uber-douchebags; stomping around like they were in charge of some super important event and had no time to talk to you and what not...

But here was the worst part: Those fucking douchebags had ~1,000 people come to this club harlot, attempted to charge them for cover, then charged them the same price for everything as if it were any other night that one might go out, fight over getting a spot in the app lottery -- but when it came time to go home:

Uber didnt plan for that!

So they had 1,000 users standing on the sidewalk, EVERYONE LOOKING AT THEIR PHONE trying to schedule an Uber home...

These fucking morons didnt have the forethought to make a fucking ROUND-TRIP BUTTON in the app which said "pick me up here. Drop me off there. Pick me back up and take me back home at THIS TIME."

So their system crashed and all their coked-out "PR/SocialMedia" douchebags ran around unable to answer questions because they were too busy sucking their own PR dick.

Fuck Uber.

> it was impossible to get a cab to come to my house. I would call and they just would never show up. I started calling and ordering multiple cabs in a shotgun approach to getting a cab.

This was my experience in New Orleans as well. The taxis simply didn't service non-tourist areas.

Some friends and I had some fun while playing video games and barbecuing by calling 5-6 of the largest taxi services every 30 minutes for 6 hours. 50+ requests, not a single taxi showed up that day. Most said "the driver went there but no one came to the car". We were in the front yard most of the time.

My experience was worse; It turned out that the taxi dispatchers all talked with eachother, and after I had so many failed bookings and no shows -- and I was calling multiple cabs to come get me they black-listed me and told me specifically I was blacklisted for calling more than one cab -- to which I replied "BECAUSE YOU FUCKING DONT SHOW UP"

yeah - I have zero sympathy for cab drivers/cab companies.

To be fair half the time tourists go to the non tourist areas in a taxi they are trying to buy drugs and making a fool of themselves or worse

We lived there.

That was a pretty mild story considering everything Uber has reported, from Greyball to the Indian driver rape case, and sexual assault coverup in London...

Totally - the litanny of bullshit against uber is strong...

A friend of mine who was a stellar SRE/DevOps guy refused to comment on his tenure with uber simply saying "It was the most fucked up place I have ever worked" -- and he was a seasonsed SV vet at the time... and this was several years ago

Because they’re not taxis. When I call a real taxi company to pick me up at 4:30 in the morning for my flight, they’re going to be there. When I call Uber, who knows? My experiences were not good. I went back to taxis.

Or in Chicago… call up taxi company at 4:30x they promise to come. Never show. Call and ask where they are, they hang up on me. No recourse, miss flight.

I used to arrange rides for people to the airport as part of my job. My experience was that yellow cab was inconsistent, frequently would fail to arrive for morning pickups without notice, operators were consistently short/impatient, even events like calling for a cab and being told 10-15 minutes only to call back half an hour later to be told the same thing weren't uncommon.

Luxury towncar services however did the trick. This was before Uber/Lyft of course.

>Luxury towncar services however did the trick. This was before Uber/Lyft of course.

That's what I use exclusively. Would never trust a taxi where I live and certainly not Uber/Lyft to have sufficient network to pick me up. But my company is usually paying.

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