Uber is fueled heavily by subsidies. I took an Uber pool to work, set price of $25. I was the only one picked up, but due to traffic it took ~1hr. The total price that the driver saw was ~60. Someone paid that driver the $35, and it wasn't me, it was Uber (venture capital). That is purely subsidizing and artificially lowering prices.

Underfilled pooling is not a great example though-- filling in load shortfall on pooling is a very efficient way to spend money, because you need to build the load, uber needs to only profit on average, and even if there was no subsidy at all there would occasionally be underfilled cars.

For all you know they did five other trips like yours but with three passengers and your "subsidy" was paid by them; and in exchange uber got a happy passenger and driver which will continue to support their business in the future.

"Subsidies for Uber's drivers are responsible for the majority of the company's losses globally, [head of finance] Gupta told investors"

https://www.bloomberg.com/news/articles/2016-08-25/uber-lose...

Uber only uses subsidies when trying to break into new markets to expand. If they stopped expanding, they would become profitable rather quickly.

Many of their losses were due to the turf war in china, which is now over. They have a 20% stake in Didi now, which will almost certainly recover their losses.

>> Uber only uses subsidies when trying to break into new markets to expand. If they stopped expanding, they would become profitable rather quickly.

Are you sure that's true? That sounds like the marketing speak that Travis K. spouts, but I wouldn't be surprised if that weren't the whole truth. Like any other "startup", you can claim to be profitable pretty easily -- you just have to find a hand-wavy way to qualify that ("if you exclude debt and operating expenses we're net margin profitable!").

> 1. Uber/Lyft don't own the cars. They are leveraging car owners capital

In Singapore they tried out the model to own cars because car ownership is pretty low here in general ~10%. They bought cars at a massive scale. This model seems to be working for them and they have expanded this model to other countries. Check out Lion Car Rentals. 100% Uber owned.

> The network effect is huge!

For now. Network effect requires connecting two populations: drivers-passengers (Uber, Lyft). Sellers-buyers (eBay, Amazon Marketplace). Etc.

As soon as self driving cars arrive, the Uber/Lyft network effect evaporates. Anyone with capital will be able to field a fleet of self driving taxis.

The lower fare is because they are not even trying to make a profit.

Disagree, they are profitable in many territories already. Check your facts.

Those "many" territories are not enough to prevent them from losing billions of dollars per year.