Re:Uber S-1
by SilasX on Thursday April 11, 2019 @06:20PM
(#19639855)
In VC parlance, a "moat" means something much more than just needing money to enter the market, but an insurmountable barrier even with a lot of money.
[ Parent
| on HN ]
The network effects are the moat, and it would take a lot of money to disrupt that.
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.
A moat has nothing to do with the venture’s current rank, and network effects (as above) are much weaker, what with drivers able to drive for multiple services, the ability to start a service in niche markets (eg wingz and airport rides), and the ability of customers to get a new app and probe multiple wait lists. Austin was able to sustain an extremely fragmented market when Uber left.
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.