Comment by gtowey | Hacker News Reader

Comment by gtowey | Hacker News Reader

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> The most obvious reason I can think for not flipping the switch is there is none. Still very curious when, if ever, the market will care.

This is exactly correct. If they could have, it would be profitable by now.

A lot of these large tech companies simply act as wealth transfer vehicles, enriching a few key players. When private, the insane valuations drive ever larger VC funding rounds with early investors cashing out with money from later rounds. Leadership teams take home millions in compensation and equity. All of them have a huge incentive to keep the fiction going.

By the time the company goes public, the last rats leave the sinking ship with public money and the company is now a zombie. Everyone left is just scavenging the scraps leftover until a few unlucky souls are left holding the bag.

The thing is I can't convince myself that this is meaningfully different than a classic ponzi scheme. I guess because they have a "product" and and a revenue stream. But their business is basically selling $1.00 for $0.90 -- no surprise that their volume is insane.

As a former employee, I think this is exactly what happened. A handful of people made out big while keeping up appearances. The closer you get to the executive-level, the faster the turnover rate. I've never seen that before in ~10 companies I've worked with. The internal game is maintaining confidence to subordinates while quietly selling your stake. The external game is also all about maintaining confidence, using "adjusted EBITDA". But the GAAP numbers don't lie.

They aren't just scamming the investors, they are scamming the drivers. Most drivers barely break even (if even that) driving for these services, but they are starting to catch on. It's not worth it for drivers, so there aren't enough drivers, so the customer experience is getting worse. If they paid well enough to actually compensate for the wear and depreciation on the driver's car, and also compensate the driver for his labor, they would be even less profitable.

> They aren't just scamming the investors, they are scamming the drivers.

I agree. And this is one of the reasons that their path to profitability is impossible. Since they often cite their large customer and driver acquisition campaigns as the thing they can cut to start taking profits when they have scaled enough.

The truth is that they can't stop that spending, they need a constant stream of new drivers (suckers) to keep things going. If they stop the spend, the drivers go away.

This is such a frustratingly common take. I want to believe it but I have met so many Uber drivers with 5000+ rides who, when I ask, say they enjoy the job. I really cannot imagine these people are these for the pleasure of driving. They're making money. Maybe, probably, likely, not lots, but they are certainly at the very least making ends meet.

My last driver on vacation said he was on his 3rd vehicle over 7 years of driving with Uber. I imagine if he's still going, he's doing more than "breaking even".

> My last driver on vacation said he was on his 3rd vehicle over 7 years of driving with Uber.

I see lots of people argue that drivers don't understand depreciation, but you talk to these drivers who have been doing it for years across multiple vehicles, and they're still doing it. It seems like people want them to be exploited, so they feel justified in saying the big tech companies are bad, and it's really easy to just ignore the reality that there are many of these multi year multi vehicle drivers out there who are still doing it and say they like it and are making money. If drivers were actually losing money, you wouldn't expect to find nearly as many multi year drivers as you do.

> If drivers were actually losing money, you wouldn't expect to find nearly as many multi year drivers as you do.

That might be an oversimplification too. That suggests at least some drivers are finding it worth sticking with, absolutely. There could be systemic reasons there are others who give it up in 6mo or whatever. The ration may be interesting also.

It would be particularly interesting in how many people are maintaining a one income household with it, without other sources of income.

It may be an oversimplification but it seems like it might be challenging to classify how long someone intends to drive. Someone might drive for 6 months and leave because they were able to find full time work. I'm inclined to say that's a success and was something they were able to quickly and easily start doing while they were looking for someone else. Maybe someone else drives nights and weekends to save up for a wedding or some other one off expense and then quits. That's probably also considered a success. Simply looking at average length of work doesn't really tell us what their intent was.

I bring up the surprising number of multi year drivers because if you believe what you read online, you'd imagine that Uber is stealing from people who don't understand what depreciation is and that no one could still be doing it on their second or third vehicle. That appears not to be the case and there are numerous counter examples that disprove it. That doesn't seem to stop people from still arguing that Uber is somehow exploiting everyone.

> That appears not to be the case and there are numerous counter examples that disprove it.

My point was that the existence of said counterexamples doesn't prove anything very strong, only that clearly Uber isn't only stealing from people who don't understand depreciation, etc.

In order to actually understand what is going on, you'd need to have a broad survey (and yes, that should include people like your hypothetical). It would look something like a uniform sampling over drives (not trips) as a starting place.

Average length doesn't prove anything, but it should be clear that I wasn't suggesting it did.

Best case you are making like $20/hr. It beats a burger flipping job but not by much. In n Out starts you at $18/hr and actually provides benefits. Factor in the wear on the car, lack of a career trajectory (managers at in n out do well), and you paying for health insurance yourself, maybe it doesn't actually shake out too nice. These are uber drivers after all, who work in a field that's hard to gleam solid info about from online search engines with all the SEO spam around ridesharing topics, not accountants who are taking all these external costs into account when they calculate their actual take home pay.

https://www.gobankingrates.com/money/jobs/uber-and-lyft-driv...

Just my anecdata, but I have had two friends do work through Uber. Both had lost their jobs suddenly but thankfully had a second income through a spouse. The draw in both cases was cash in pocket now while they find something else. It was easy enough since they could almost set their schedule and they weren't looking for benefits, climbing a ladder, or becoming a premier uber driver. External/long term costs were not even a thought, even when they knew better.

I'm curious too, so did I found some data. Here are the assumptions:

- Toyota Camry Hybrid LE (about $30k to get entry-level, new)

- Driving 35 hrs / week at an average speed of 35 mph, 48 weeks of the year

- A couple thousand personal miles

- Deprecation at that rate over 3 years is about $11k

- Average Uber driver income of $0.83 / mile

Ends up with:

- Running costs of $0.16 / mile (insurance, fuel, maintenance)

- Depreciation costs of $0.06 / mile

- Total per-mile cost of $0.22 / mile

- Net per-mile income of $0.83 - $0.22 = $0.61 / mile

That's about $35,868 / year "take home."

But, it's also a best-case scenario (no major accidents, no periods where you can't work, no injuries, about the best car you can get for this kind of gig, you have the cash or credit to buy it new and you can easily sell it after 3 years). I suspect that depreciation amount to be a little low, since the calculators don't factor in Uber-driver levels of usage.

And of course, that's 1099 income. No benefits, no health insurance. If your auto insurer finds out you're a professional driver, your rates will likely go up. If you have an accident and they find out, they may void your policy.

It isn't a great gig but I have to admit that it is net-positive.

Sources:

- https://drivingpress.com/how-much-can-you-make-driving-for-u... - https://afdc.energy.gov/calc/

I think the hope is that you are buying a used but reliable vehicle. But I know the used car market isn't what it was. And unfortunately some markets have a hard limit for vehicle age (for carrying passengers, not food deliveries)

Ideal situation is using a vehicle you have anyway so you're only incurring the additional usage-costs and not modifying your vehicle age-costs.

I thought Uber (at least) had supplemental auto insurance coverage for when you're driving a passenger, but that's probably market-specific too (and then you're on your own personal insurance for everything else).

They are doing both. Taking excessive cut from those actually providing the service and also overpromising and lying to investors. While running an over bloated over paid organisation on other levels...

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