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Comment by waynecochran | Hacker News Reader

But Uber is horribly in the red financially. They disrupted a poorly ran industry, but didn’t produce anything that truly raised the economy… that’s the point.

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That's Uber's problem though. Essentially their billionaire investors subsidized car rides for lots of people. Maybe it'll work out for Uber in the long run. Maybe not.

It will work out for them when/if they have destroyed the competition, that's the point. And in any case the founders are still billionaires.

This game is over. There is no way uber is getting a monopoly on taxi service. The popularity of uber has had the wrong effect: taxi companies are getting apps now, and other ridesharing companies are trying to get a piece of the action. There will not be a monopoly except in the places that are truly unprofitable to service.

This is a good effect for the economy though. The customers are benefiting from it. Not so great for Uber though.

Are there any slide decks or investor material out there that confirm this is the business model? I hear it all the time on HN but it just doesn't make sense. The barrier to entry in the taxi market is too low. You can't kill off competition and start monopoly pricing. The competition will always reappear.

I think it might be kept implicit, so investors will not start questioning it.

I think the logic is to own the portal to taxis and become a gatekeeper, by being the only app that the user has installed for hailing taxis. So the barrier to entry becomes large because you have to convince people to install your app.

That barrier to entry starts breaking down when the ride hailing apps are integrated via an "ad" in the users' default mapping app.

There's still a speed-bump, but it isn't as jarring.

> but didn’t produce anything that truly raised the economy… that’s the point.

Utterly false. They produced people taking way more rides. More rides = more people going out to different places.

It's not like people would be stuck in the house otherwise. It's just that people would have taken public transport, their own car, or went by foot or bicycle before. I'm very skeptical of this claim that Uber increased mobility.

It’s hard to get empirical evidence for the general claim that Uber increased mobility after adjusting for substitution effects from walking etc. However, I think one can make the case from economic intuition that price reductions generally increase consumption in a category of normal goods.

E.g - a reduction in the price of wheat will increase food consumption even after accounting for people switching from other crops. Conversely, an increase in the price of Lego will reduce the amount of toys the average child gets, even after adjusting for the substitution to action figure etc.

They produced a ton of taxi rides, surely that's worth something?

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