Assume this is true.

It's not exactly a market with a high barrier to entry. I have trouble seeing how, even if they put everyone out of business, it wouldn't just pop up again pretty much instantly.

Heck, some other vc firm would probably just fund that

So what exactly is the downside to this?

It seems like subsidizing the price of breathing air.

(and they couldn't do something like put everyone out of business, then buy all the medallions, stop anyone else from competing, because the second they put everyone out of business, now they will have the fun spectre of massive antitrust issues for everything they do!)

So what am i missing here?

I'm not saying much more than I'm actually saying. Uber subsidizes fares. Those subsidized fares are putting pressure on cab companies. When we ask ourselves how we feel about cab companies being squeezed, we should consider that this isn't a natural state of affairs; it's a distortion of the market by speculators, and probably can't stay this way.

I'm probably in the minority, but Uber's fares aren't what make me prefer them over traditional cabs. The up-front pricing, which limits scams, is a huge plus. And the lack of ability for drivers to discriminate against minorities/destinations is also a huge step forward.

Even if Uber eventually raises prices to what cabs currently charge, it will still be a massive improvement. The schadenfreude I feel when seeing cab drivers struggle has little to do with their prices and more to do with the abusive antics they made us put up with when they had a monopoly.

In my experience in Houston/Austin Uber is a superior product.

Uber pick up times 15-30 minutes. Taxi pick up times 30 minutes - 6 hours(bad neighborhoods)

Never dealt with a rude Uber driver. Routinely dealt with rude Taxi drivers(usually not to me but to my wife)

I'm not friends with anyone who was sexually harassed or assaulted in an Uber but plenty of them were sexually harassed/assaulted by Taxi drivers.

Uber doesn't charge up front. You get a suggested fare, but the actual fare isn't guaranteed to be in those bounds.

Uber drivers also aren't guaranteed to go the optimal route. More and more Uber drivers seem to ask me what route they want me to take (which given I usually use Uber when abroad means my answer is almost always - whatever the GPS says).

If/when self driving cars come in, obviously these problems will disappear...

Maybe it depends on the city but in Toronto and SF the rate is guaranteed unless you tell the driver to take a longer route or make stopovers or you change the destination mid trip.

(I'm a part time Uber driver and I'm familiar with the menu options for disputing a fare due to stopovers or strange route requests)

The bit about minorities is pretty tenuous. For instance, in Chicago, Uber's service and fares maps cut off the south side of the city; if you undertook a map of white people and where white people want to go in Chicago, you'd end up with that map.

"Uber's service and fares maps"

Are you referring to a literal service and fares map that exists somewhere on Uber's website? If so, I'd love to see it.

Sure, but cab medallion prices are a function of the artificial scarcity created by their existence in the first place. If you removed venture capitalist subsidies, but kept Uber and Lyft in business (companies who do not artificially constrain the supply of their drivers), the impact on medallion prices would be the same.

I'd also like to know what drivers make in NYC cabs (individual and vis a company) vs Uber vs Lyft, both gross and adjusted for car/fuel costs.

I've lived in some cities where Uber drivers were mostly former taxi drivers who made more with Uber, but I've also lived in places where Uber cut driver income over several years and none of the people I rode with started out as Taxi drivers (and therefore couldn't tell me if the income was comparable).

I agree, Uber doesn't have a great track record of playing fair.

It's really hard to tell because Uber's released data is kind of sketchy [1] and there isn't good aggregate data for the taxi market. You can look at individual stories like [2], though. Anecdotally, if you want to do it full-time, taxis used to pay significantly more, mostly due to tips, lower maintenance costs, and more efficient rides. Competition from Uber and Lyft have depressed taxi income recently, though, so it's no longer clear which is objectively better.

[1] http://www.huffingtonpost.com/2015/01/22/uber-drivers-pay-st... [2] https://skift.com/2015/08/03/taxis-vs-uber-in-nyc-according-...

From an opinion piece in 2012 — http://www.nytimes.com/2012/05/26/opinion/they-are-taxis-not... — drivers made around $113/12 hour shift after paying the rental fee (also $113). There was a related news article around the same time (this was in discussion of a fare hike) but I can't find it.

Typically drivers who rent a taxi rent by the shift and must pay their rental fee upfront. There are ghost fleets of taxis queued up at garages in Brooklyn and Queens since so many drivers have dumped medallion cabs for driving for Uber/Lyft/etc.

Not the article I was looking for but from the Atlantic in 2012: http://www.theatlantic.com/national/archive/2012/05/hidden-c...

Uber doesn't have driver incentives nor any competition in Toronto and it's still less than half the price of a cab.

Because Uber are trying to corner the market, and switch over to lower cost driverless cars. They'll get us used to using the app, getting data on where people want to actually go, and then switch to automated cars because it will be easier and cheaper to do so.

VC subsidy or no, a car service with the medallion capital cost will end up costing more than one without.

Really? Aren't Uber drivers paid a % of the ride cost. So they are not being subsided. And I know Uber are not profitable but I imagine they could be the day they want to. The cost of infrastructure they maintain would be fairly low when they move from a growth to cash-cow strategy.

Seem to me VC's are subsidising expansion within new markets and ventures, not the rides and this 60% figure is misleading.

The problem is the prices are artificially low, and if Uber suddenly pulled out the subsidies on rides there's no guarantee ridership wouldn't drop significantly (especially in markets where Uber and taxis are still in fierce competition).

(And by artificially low, I mean rides are being sold where the driver is paid more than the passenger paid, with VC money covering the rest)

Are drivers paid more that they earn? Maybe in a couple of newer, high competition markets like china but I dont believe this is the case across the majority of the world.

Right now anyone can get something like 50$ of free rides for starting anywhere, and even after that I've taken rides where the driver told me how much they were paid and it was more than what I paid.

As long as all the cab companies are put out of business, I'm okay with it.