Does it, though? Every driver I've talked to basically drives for "all of them". Several told me they try to find whatever apps are local for driving and they setup those alone with Uber and Lyft and simply take whatever pays the most / is more frequent.
Uber's software and network are solid but I don't think there is a whole lot of loyalty there. Anyone who can drive a wedge into a spot in their business could slowly erode it, IMO.
Now, they're too big to die quickly or anything like that. But it doesn't seem impossible at all to me.
Nobody holds an allegiance to Lyft or Uber - they pick whichever is currently a better deal for both driving and riding. Uber's recent loyalty program is the first thing that slightly moves this in favor of continuing to use Uber, but it's only a little incentive. Large swings in price still favor switching.
Their only moat comes from being able to undercut competitors with VC money in any market they appear in until the competitor is dead and Uber can then raise prices to be profitable.
It's probably a winner take all market. A SDC competitor would be a threat, but I'd be both impressed and surprised if Google could pull that off.
If you're a business traveler, you can Uber out of most airports without having to install the local application, and business customers are less price sensitive than local customers in general.
Definitely agree with your point about nobody having an allegiance for local rides, and it's not clear if Uber can defend against hyper local upstarts at scale.
That's not exactly true: I use Lyft exclusively because have anti-loyalty against Uber because of their greater level of past unscrupulous behavior and scandals.
Keybase could be this.
The main way to get people in would be a focus on event scheduling relying on twilio and sms for including users that don’t have accounts.
Make it cheap but not free ($1/month for people with more than 25 contacts) and advertise no ads or tracking ever.
Also having up to date contacts to stay in touch. Phone numbers and addresses change and it’s hard to know when that happens (and currently most people don’t put this on FB).
I’d want something simple.
what did you mean?
Not setting up your own locally hosted diaspora node.
FWIW I deleted fb 3 years ago.
I heard the same from drivers. It's the ultimate replaceable commodity. Drivers jump ship on an instant and so do I as user. I don't care if it's Lyft, Uber or anybody else.
I just don't see how Uber can maintain said network on the long run and still be profitable, not something I'd put my money in.
What Uber is doing would generally be described as predatory pricing on other sectors. On sufficiently unregulated markets such is Uber's it's extremely risky, no anti-trust legislation is needed to trump it, just a continuously low entry barrier, including lax regulation. For a more concrete, though only related example (rather than speculation as to Uber's future) see Dow's history.
It absolutely takes tremendous capital expenditure to build the network. Uber has an accumulated deficit of $20 billion precisely because they subsidized both drivers and riders to build the two-sided network.
It doesn't have to be winner-take-all. A duopoly in most medium to large cities is perfectly viable. But you won't see dozens of competitors because the drivers and riders would wait too long for a match in a sparse network.
Unless the ride-share commodity can be differentiated some other way, it would take large subsidies for a long time to make much of a dent in Uber.
It's like breaking trail: It's a whole lot of work for the person in front, but it's damn easy for everyone else.
Uber, being first mover, had to spend great heaping piles of money convincing people to become rideshare drivers in the first place. Because they had to sell people on the idea of driving folks for a living, and then get them to buy new cars that meet their standards, and then train them on how to be a rideshare driver, and all that fun stuff.
Everyone else just needs to convince a group of people who have already bought the car and learned how to drive it that it's in their interest to hedge their bets. Which, given how Uber has historically treated its drivers, is something that requires approximately zero convincing.
I always think some Uber drivers shall copy Uber and run a non-profit version of Uber to compete on pricing. What can prevent this?
Besides, companies only pay taxes on profits, so loss making companies don't pay any tax either. (And usually have some kind of ability to carry forward losses to reduce future tax bills)
Why would anyone work voluntarily for what would essentially just be a company that gave all it's profits to the drivers but expected them to work for free. Volunteers tend to work for causes they believe in for some ethical or moral reason, and while I sympathize with the drivers like I'm sure many do I doubt many would work for free so someone else can earn more.
Why would some people work for free so that drivers can earn more or riders could pay less?
Uber racked up a $20 billion cumulative deficit by subsidizing both drivers and riders.
Even if you cloned the Uber app and had people volunteer to do customer support, you'd still wind up with a service where riders pay more, or drivers earn less, or both.
That works for BlaBlaCar [0] that's true carpooling, without drivers trying to make a living on the platform. Riders pay less and drivers get paid less.
But if Uber is losing $4 billion a year at the current prices, it's hard to see how there would be a sustainable market where drivers make more and riders pay less.
100B pump/dump is a scam. Think about all the indices-tracking-ETFs/Funds that will pick up this overpriced stock(our hard earned 401ks). Sigh. Silicon Valley should not have pumped up what was originally a good idea. This has a high chance of ending badly
The point of investing is deciding what you believe in (financially speaking)! If you don’t like Uber, make some money on it! You can’t short in an IRA, or sell naked options, but you can sell futures or buy put options. All of these would express a bearish sentiment on Uber. So don’t feel like you sre being screwed, go make some alpha!
For the record I agree with you, and will short Uber the day it IPOs. I’ve already made some good money on shorting Lyft and expect I’ll do well on the same strat with Uber.
For the riders, Uber Rewards and Uber Cash (that actually forces you to reload if you have below whatever your current ride costs) also make the product quite sticky and make the rider less inclined to take other options on margin.
Small economic tools like these that exploit our psychological biases (e.g. loss aversion, gamification) may go a long way in protecting the moat in this commoditized, competitive environment, and Uber seems to be ahead so far.
(Of course, whichever player comes out with SDCs wins the whole pie)
But how many have they _stopped_ driving for?
If Lyft and Uber are so easily exchangeable, why is Lyft is still a minority in the US while spending more money?
There's something more interesting here.
So unless the incentives are massive, a driver will always look for the next ride by any means necessary. It's nearly never worth it to "wait for a better option".
Uber has a shallow moat around an ugly castle.
What I don’t understand with the gig economy is why the gig workers organize and cut out the platforms.
Do the drivers need uber/Lyft? Do renters need Airbnb? Let these companies take on VC build the tech platform, launch, verify the market...then fuck them, leave them holding their own bag while the workers ride off in the sunset.
Besides the Founders and VCs, who wouldn’t love to wake up tomorrow morning and read about all the uber drivers organizing, launching their own platform and getting equity?
They would need someone to do all the legal/compliance work, validate drivers, handle marketing, handle payments, detect and combat fraud, resolve disputes, and the million other things you don't think about when you use the service.
No Uber drivers are exclusive. In the US I see tons of cars with Uber AND Lyft stickers on. In SEA it was extremely common the same drivers had the Uber AND Grab app installed (before Uber gave up).
Bing is just a click away from Google.
Hulu is just a click away from Netflix.
My local grocery store is just one block away from a different grocery store.
Exclusivity isn't required to defend a large network. People are creatures of habit, and it would take a big innovation in the service or massive subsidies to dismantle that network.
None of those describe a 'moat'. Something like Facebook is a moat. Instagram. A messaging app. Anything where your participation increases the value of the whole offering and hence you'll be locked in, else you lose a lot of value (e.g. from all the contacts you made in the aforementioned networks)
It doesn't take tremendous concentrated capital, though. A bunch of independent regional competitors can fight for each city / country separately. Uber has a leg-up with short-term tourists, who already have their app installed, but for regular users, anyone with a decent app and some ad money can be a competitor.
Given Uber's financials, this still reads to me as, "Nobody in the world can burn money anywhere near as fast as we can."
It's not inconceivable that they could get into the black, but a year-over-year adjusted EBIDTA loss that's getting larger instead of smaller, and a revenue as a percentage of gross bookings that's doing the same, says that they've got no better idea than I do of how to make that actually happen.
Merely being ahead of competitors isn't a moat, it would have to be something that makes "entering into serious competition" difficult for any new entrants. Uber already lacks the monopoly power to raise prices significantly because of competition from Lyft and local providers.
TNCs do experience network effects, but it's nothing like e.g. operating systems or social networks.
No competitor can catch up without heavily subsidizing both drivers and riders. If no competitor is willing to spend billions to steal 20% of the market, then that's a pretty effective moat.
Any given market can't sustain more than a 2 or 3 rideshare services because splitting the network makes it too sparse for drivers and riders to match within a few seconds or minutes.
Uber has the #1 or #2 spot in virtually every market. That's an economic moat if I ever saw one.
I hope your read that link, which concurs that being number 1 by a large margin is not itself a moat. A patent on the key technology is a moat. The unwillingness of everyone to switch is a moat. “They’re number 1” is not a moat.
Ola in India, Didi in China... both are expanding internationally.
If Lyft somehow manages to offer riders consistently cheaper fares (say, 50% off the Uber fare for 1 month) people will switch in droves.
That's exactly what it would take.
A tremendous capital expenditure, sustained over time, to dismantle Uber's network of drivers and riders.
25% off would probably do the trick.
If there is significant regulation, like airport partnerships, that could be a good moat. Just like the taxis had
Their platform is a commodity to both drivers and riders. I haven't met a driver who only drives for Uber. Uber provides no incentives for loyalty to drivers, like actual employment as employees. As a user, I have no loyalty to Uber, either.
The network of drivers would be rendered obsolete by SDC
If the operation doesn't make an economic profit, and if there isn't sufficient moat to defend the operation until it can become profitable, then I agree with you it's not worth anything.
But in fact, Uber does have a massive moat -- its network of drivers and riders in thousands of cities around the world. No competitor is even close.
It takes tremendous capital expenditure to build that network, and it will take tremendous capital expenditure to neutralize it.
It remains to be seen if Uber can make an economic profit, but with an operating loss of just 10% of gross revenue, it's not at all inconceivable.