They are providing value and I'm a casual user myself. However the consumer price right now is arguably unsustainable against the stated quote above. To survive both of them are going to have to raise prices
Anyway, drivers make more than enough. After glancing at Uber’s books, it looks like they spent literally a billion dollars on advertising. They also do a a lot of research. Uber could easily run its ride sharing service with room for profit if it wanted to cut back in other areas.
Ride sharing is totally economically viable as a business and it is better than traditional dispatch in almost every way. Companies like Uber aren’t going anywhere. To say that Uber is worthless is flat out wrong. Overvalued or levered or invested-in, yes maybe. But ride sharing is solid. The only thing that could change it is self driving cars.
I don't have any data but this wouldn't surprise me in the least.
You're taking a bunch of people who really aren't that interested in running a business, just in making ends meet. It's not surprising that they won't do the kind of critical analysis that running a profitable business entails.
My first ever Uber ride was in an almost brand new BMW. Really nice car, but I have no idea how you can make money driving Uber with a vehicle that expensive. As a side gig for extra cash a couple hours a day in a high-density area? I can see that. But doing it full time with all the additional wear and tear on the vehicle? No way.
Judging from the comments I see on /r/freelance, I believe many freelancers/gig workers would prefer to be employees because they really don't enjoy doing the work that they are.
Look, you don’t need a paper or a PhD to understand this:
When I was driving, I got paid roughly 60c per mile and then got more for time, a one time fee and tips. But baseline 60c per mile. It costs 20c to 25c per mile to drive a Toyota Corolla. Yes, that includes all expenses. It’s the cost of insurance and gas and the cost of buying a new car when the old one is at end of life. Nobody is losing money doing this. It isn’t rocket science.
Which very likely is the vast majority of drivers. Subtract those and we're back to ordinary cab, pizza delivery levels of service. Probably less.
To know whether they could fall back to "just" competing for riders and only operate their core business is something that is not determinable from their released financials. How much engineering is true R&D (self-driving and the like) vs what would be required to run their core ride hailing platform? How much of their marketing spend is in established cities ("Coca Cola" type ad spend) and how much is to launch new cities or incentives to balance the development of the 2-sided market in new cities ("priming the pump" type of spend)?
I think Uber is a constellation of [small] profit-making businesses (most cities that have reached scale) and [large] loss-making businesses (select geographies and R&D efforts).
Goes off to see just how prevalent real ridesharing is on the platforms
Usually you ride with at least one other person, and it’s not unusual to have 3-4 passengers if it’s a third row suv.
I enjoy shitting on Uber also, but there is a grain of genuine innovation in the mountain of crap.
Expanding further, How about a taxi-app you and I could sit down and hack out? How much value-add is there in an Uber or Lyft vs what we could do?
That may be why there aren't an increasing number of Uber and Lyft drivers here, but the taxi companies are expanding.
I have never seen a non-app taxi service do this, and it's a real genuine technology enabled value add. Is it 50 billion bucks worth? Probably not. But it isn't 0 either.
> I have never seen a non-app taxi service do this
What do you mean by a non-app taxi service? All of the taxi companies here have apps that work pretty much the same as Uber and Lyft's.
That's true, and this isn't an argument for the bad things they do, but they did force the taxi industry forward a few decades. Prior to Uber/Lyft, taxis in most areas were outright hostile. I had called to schedule a taxi ride the day before and had them no-show. It was so common for taxis to feign their credit card machine didn't work that it was outlawed (but still done)--they preferred cash to avoid reporting and fees. Hailing taxis in most cities isn't permitted. Minimum distance requirements have caused me problems (been refused or been treated hostilely even when offered to overpay or overtip). Those things are never an issue anymore.
In addition, they've also made it much easier to track down lost items left behind or to dispute incorrect fares or taking longer routes.
The incentives in place with taxis alone didn't address these things.
Those things, in addition to having consistency when traveling between cities and countries, sounds like a reason to have stickiness to one service. McDonalds is popular even though it's not a great meal and people could eat anywhere.
McDonald's is popular, at least this is what I was told in business courses, because people like familiarity and they know when they get a meal at a McDonald's it's going to be mostly the same everywhere. Uber doesn't really enjoy that. They do enjoy that it is a unified app and service no matter where you are, they have that going for them for a certainty, but they do not have control over their drivers to the level at which McDonald's has control over their franchisees. That's down to the fact their drivers are independent contractors, although it likely couldn't work any other way. It might be moot since the service is the same, getting from point A to B, so the part people want stays the same.
I would almost be inclined to see it as Uber being more valuable for their management of driver reputations than the software they provide, really. They set a standard, and hold drivers somewhat accountable to that standard, which is something that a more 'open' solution would make very difficult or impossible to do.
Like McDonalds, at least for travelers (or, well, me) having the app already installed and setup with a form of payment is huge. I've visited cities, like Austin, when they didn't have Lift/Uber and figuring out their "local service" was rough. You've landed at an airport and likely don't have great service. To seek and download and register a new app is a big burden. It's also why using a credit card internationally is much less hassle than getting local currency.
"Apps" and "services" are ubiquitous, but incumbents are pretty terrible at them. Large organizations like Apple, Playstation, or Obamacare have had rocky launches of services--they had more incentives to polish things later. Often those services would go down completely Christmas morning. Many apps like my local bank or library, have terrible apps. That's how I imagine legacy or regional taxis responding to Uber.
It's been over a decade and a lot of those features weren't that novel at the time. I've heard of a few cities internally having decent apps, but it hasn't been that wide spread. Maybe that will change?
I see no reason to think that those two companies couldn't be quite profitable in their core businesses in their established cities. (I think they already are.)
That said, their valuations in the market are comically/insanely/unjustifiably high, but that's quite different from saying they "add no value".