The notion that Lyft is significantly better is untrue. Lyft actually created the "ride sharing" portion of both apps (UberX emulated Lyft's model). Lyft didn't get regulatory approval either. Both have been ejected from Austin and other cities.
I think the unit economics work out, but perhaps not to the level their current valuation suggests. I think Lyft could have been successful if it had not been outspent/out-VC-raised by Uber. Lyft was the original innovator of the true ride sharing segment. Uber at the time was a broker/dispatcher for commercial limousines.
Yes. I agree. This is the qualification that was needed as to not make an overstatement.
If I have a choice, I don't take Uber.
Edit: Not just better rate, but better economic advantage. Money + Time. I'm not too rigorous about the precise trade off, but ideally, I will act as to maximize my utility frontier.
There is a difference between social / moral value judgments versus economic value judgment. For me, I commented on the social value judgments, but act on the economic one, unless of course the economic one is immoral. There is nothing immoral in me taking an Uber ride. I said "I'm not saying Uber or any private company MUST care", because to suggest otherwise is saying Uber HAS to act to some social value, rather than to their economic advantage.
Edit: I'll take a ride in Uber's self driving car, too. As long as it's "subsidized" at some attractive enough price. By that, I mean they pay me. What that threshold price is, I don't know, but I know it exists.
Edit 2: I love eating McDonald's. I will not boycott and refrain from eating chicken mcnuggets, even though I know their workers are being paid minimum wage. These are macroeconomic issues that I, cynically, lack the influence to affect. However, at a micro level, I give tips to employees at fastfood restaurant. I gave a $20 cash tip to this particular Uber driver, too. That's against Uber rules. That's also against what I just claimed about being economically maximizing. I don't consider the tip as part of my expense for some service / good, and rather just helping people out in general.
Not for yourself. But there are many people who love to have portraits of themselves on the walls, especially if the artist has a knack for that business ...
(This 'selfie' thing didn't come out of nowhere at all, to think of it ...)
I don't buy that argument. By that logic no taxi service could ever work out. It might not work out at the current price levels, but once they squashed all competitors they're free to raise their prices (similar to what Amazon does).
Maybe regular taxis aren't that bad after all...
Sure, you can't just copy uber's app. But building a simple app with basic functionality isn't that expensive. And people will mainly decide by price.
Their only chance to ever make back the losses is the self driving business. If it works out they could be very profitable. If it doesn't, I don't believe that they'll ever make back the investments.
Amazon is actually a good example. They also haven't really made back the investments. They're still not very profitable. Maybe they never will be, who knows. As long as enough investors believe in them they can comfortably afford this style.
They have, they are, and they will.
I agree :
(1) SOME taxi service has to exist. By "work out", we mean profitable, if not non-negative
(2) the unit economics of Uber at the current prices are not profitable / sustainable
(3) The deca-unicorn valuation is based on Uber's revenue as a monopoly.
To ask Sam Altman's question: "If you win, will you stay the winner?"
In the case of Amazon, I can imagine a world where a retailer simultaneously satisfying (1) (profitability) and (3) (monopoly) can continue to exist. Amazon have logistical advantages and the largest catalog of products. It will be hard for a startup to de-thrown hypothetical monopoly Amazon. Hypothetical monopoly Amazon will reap monopoly profits, but demand for retail goods is not suddenly going to disappear.
Hypothetical Uber monopoly will reap monopoly profits per transaction. But will demand for taxi services remain as high as in the current environment of subsidized taxi prices? I'm sometimes able to land a 3-4 mile Uber pool ride in San Francisco for just $3. I have a feeling Uber is not making money here, and these prices are not sustainable, unless of course, someone invents Unicorn fuel * ahem *. This is comparable to public transit prices. If Uber monopoly starts charging unsubsidized and profitable rates, I will reduce my usage by an order of magnitude, if not two. Particularly in situations where public transit is a substitute good. 3 years ago, before moving to San Francisco, I lived just fine without ever using a Taxi. I used public transit to the airport, or got a lift from a friend. Being in San Francisco where subsidized Uber is so cheap, why WOULDN'T I use it? Taxi service is a price sensitive good, and I can live without taxi services 99% of the time.
What characteristics of Uber will allow it to remain a monopoly? Technology? Intellectual Property? Network effects? Lower costs than competitors? Autonomous vehicles? Or something else?
- Network Effects - if I'm using a taxi service, I don't really care if my friends or family use it. Network effects will definitely make me try it out, but ultimately it will be based on price.
- Intellectual Property / Technology - I don't mind making a phone call, rather than using a fancy app, if making a phone call to a cab company saves me money versus a monopoly
- Lower Costs - Will Uber's economy of scale allow them to get gasoline at a significantly lower cost than competitors? Or buy cars and maintenance at discount? Or what other cost advantage will monopoly Uber have?
- Intellectual Property / Technology - Maybe Uber's dispatching system is better than the competitor. What's to stop Google from calling along and integrating a comparable dispatching system?
- Autonomous Vehicles - Are Uber's autonomous vehicles at Level 4 autonomy?
What's to stop a local low-tech taxi cab company from coming along and offering profitable, sustainable, and most importantly (relatively) attractive non-monopoly prices?
YES. I live 10 feet away from the garage. I've noticed over the past few months that they've been ramping in typical startup fashion: hockey stick growth.
After reading about Lyft's CEO, a narrative of "nice guys finishing last", I started realizing how unscrupulous Uber is. Sadly, cut-throat businesses win.
I recently took an Uber ride, where the driver was an un-retired man in his 70s. He recently just abandoned his failing dry clean business. This one hits close to home for me, because my parents are approaching their 70s, holding on to a failing dry clean business, too. For me, hardworking people like this, with arguably bad business acumen, are counter example to the notion of "if you're poor, it's because you didn't work hard enough." Before the dry clean business, the Uber driver ran a deli business, but that was a failure, too. No doubt he possesses an entrepreneurial spirit, albeit he probably shouldn't. I can't fault him for not being smarter. He proceeded to tell me about his idea to create a website where people upload images of their face, at different angle, and can get a custom printed 3d figurine, that he would hand paint them. I didn't have the heart to tell him that as someone in the top 1% income bracket of 20-something year olds, who consistently blows money on expensive toys / gadgets / dinners, I would never spend $300 bucks on a custom painted figurine. See, he was an artist before coming to America. He said "I want to be an artist before I die. I was too busy making a living when I came to America".
Uber gave this man a job. That's good. But he's being paid near minimum wage. To achieve that, he has to work 12+ hour days to acquire the bonuses that Uber uses to incentivize their drivers to become addicted. These are the kinds of risk Uber induces on its drivers, customers, and other people on the road. The sad reality is, he's going to be displaced from this minimum wage job by automation, much earlier than people expect. Uber doesn't care. I'm not saying Uber or any private company MUST care. I'm just illustrating how a company's values permeates itself, and precipitates to individuals' livelihoods.
I recently read an article about the unit economics of Uber. It doesn't work out. Uber, in it's current form is based on leveraging free VC money to subsidize and incentivize somewhat artificial demand. It's predatory monopolistic tactics. They won't be able to live up to their unicorn IPO valuation hype. They NEED to expand into other domains. Recently, Uber acquired an A.I. startup, which I think is an indicator of this. Alternatively, they can fix the unit economics equation to be profitable. Autonomous vehicles is the purported answer. This VC and unicorn valuation environment, I believe, is resulting in this kind of hastiness, at the increased risk of human lives.