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Comment by austenallred | Hacker News Reader

> The long-term winners will be companies like Flywheel that recognize this and focus on providing that service to existing operators, much like payment processors.

I don't think this creates a very big moat - that's essentially what Uber started out as (dispatch for private driving companies that already existed); they started letting anyone drive in order to meet demand.

If all the services are interchangable (and now, at least for ridesharing, it seems like they are), the winner will be the app that's used by default.

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Uber is different than Homejoy.

You would use the same house cleaning professional over and over again but you will likely never ride with the same Uber driver again. This means that the Homejoy house cleaner can bypass Homejoy but the Uber drivers/users can't do without it.

> you will likely never ride with the same Uber driver again.

In theory, having your "own" driver would not be a bad thing. But the main difference is in scheduling.

With taxis and Uber, you want a car to show up in 10 minutes at any time of the day without advance booking. This requires a large pool of drivers on standby and a middleman to handle the communication.

A cleaner can visit pretty much any time during the week, and is usually pre-booked for every week indefinitely into the future. This doesn't need a middleman, since you can arrange the details directly.

Defaults can change really quickly. Unlike Facebook Uber has basically zero network effect between cities. So, a competitor can win one or two small cities and just keep growing.

Consider there are only 40,000 taxi drivers in New York.

All it takes is for a company to find the top 5-50% of Uber/Lift drivers in a city offer them a minimum income of a few k/month assuming they take A% of rides and work y hours and boom instant driver network. Sure, doing it now when Uber is flush with cash is a bad idea, but after it pop’s there is no way they can stay competitive without paper thin margins long term.

If Uber "pops" it will be because the ride sharing industry died. There is no scenario where Uber becomes MySpace to a competitor.

There is no scenario that's rather optimistic of you.

Don't get me wrong there currently very popular and profitable so they don't need to worry about a Pets.com style crash. However, the barriers to entry are relatively low just look at Lyft. Eventually investors are going to want to get their money back, so they either start issuing dividends or face a hostile takeover.

>and profitable

Are they? Everything I've read indicates that they are not.

http://www.bloomberg.com/news/videos/2015-06-30/uber-loses-m...

Actually, everything I've read says they are in mature cities. Leaked numbers say they're stupendously profitable in their oldest markets: nyc, sf, etc. They are losing money overall because they subsidize drivers when they move into new markets. But the key is always to look at existing markets.

The quickest numbers I could find were leaked in 2014.

   est yearly rev run rate  city
   =======================  ====
   $212+mm                  sf
   $312 mm                  nyc
   $141 mm                  dc
   $150 mm                  chicago
   =======                  =======
   $815 mm                  total

http://www.businessinsider.com/uber-revenue-rides-drivers-an...

edits: made table

I guess the larger question is how do drivers respond when their rates get dropped after a market is mature. I imagine the answer is different depending on the market.

Those above cities are, I believe, post rate drops. Also other leaked numbers have said Uber continues to grow. My guess is driver happiness doesn't impact Uber's business much; our economy seems to generate enough desperate people that they have a nearly never ending stream of people willing to drive for $5/hour (a reasonable estimate of an UberX driver's true net comp.)

Seems like much of that short-term profit would easily be negated by increased frequency of maintenance due to wear-and-tear on driver vehicles.

Saying the barriers to entry or low is completely uninformed. The incumbent has a massive advantage in driver/rider liquidity that is nearly impossible to overcome. Lyft is the perfect example in that it still massively trails Uber in every one of its markets despising having very deep pockets and for many, a more attractive product.

IMO, Lyft's mistake is attacking more than one market at the same time. Spending 100M to just get NY is a good investment and there are far smaller cities out there with lower barriers to entry. Further, if you can demonstrate that Uber only raises rates after they show up you can build up a lot of hate in the driver’s community.

AKA: Uber pays a lot to get ex: NYC and LA drivers, wins both markets, lowers payouts to make money. New competitor shows up in NYC so Uber dramatically raises rates in NYC and not LA. Then, before that competitor moves to LA a lot of drivers are going to get pissed there stuck with low rates. Basically, by attacking one city, Uber is forced to either raise rates in all its cities’ which it can't afford or piss off all their drivers.

> There is no scenario where Uber becomes MySpace to a competitor.

Sure there is - the IRS says their drivers are employees and they need to provide multiple years worth of backpay/benefits. Any competitor that's been doing that already wins.

It's debatable whether the ride sharing industry can survive if drivers are classified as employees (which is why Uber and others are working on self-driving cars).

It's not debatable; there are plenty of companies that do it already.

If they play it smart Uber will never die, but I've seen lots of companies fail because a competitor showed up and forced them into a vicious cycle of cutting quality to keep profits up, which drove out customers, etc.

If the good drivers stop working for Uber because Uber is squeezing them, for example, Uber may get a reputation for having poor drivers.

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