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Uber is profitable in many of its mature markets. This is while charging less than half what you would pay a legacy taxi service, while paying drivers more than

Uber is profitable in many of its mature markets. This is while charging less than half what you would pay a legacy taxi service, while paying drivers more than they would make at the same. This is the direct byproduct of strong network effects on both the supply/demand side, paired with operational excellence on their part. Self driving cars would bring the marginal cost down even further, but they have built a stunningly good business with or without a quantum leap in automation. The same probably isn't true for many other Uber-for-X companies, particularly those with underwater unit economics.

exelius 11y ago
Yeah; Uber had a unique opportunity because the taxi business was stuck in the 20th century and had a bad case of regulatory capture as a result. That said, in Uber's more "mature" markets you're starting to see a lot of the problems that caused the taxi business to regulate in the first place: too many drivers, no way to guarantee steady revenue as a driver, etc.
- hueving 11y ago
  The purpose of the industry isn't to provide steady revenue to drivers. That's a non issue that will be solved by drivers quitting when the price gets too low.
  - pbreit 11y ago
    That's not quite true. Regulation frequently aims to smooth out the booms and busts and I would argue that happens in the current taxi industry.
    - BurningFrog 11y ago
      Regulation is marketed by nice sounding goals like that, while it is actually motivated by protecting the established players and keeping competition out.
      - Daishiman 11y ago
        Yes, all regulations, all the time, and so much evidence to boot!
      - pbreit 11y ago
        Either way, it smoothes out the booms and busts.
        hueving 11y ago
        There isn't really any correlation between smoothness of booms and busts and regulation. Quite frequently regulation causes massive swings because it prevents the market from pricing risk correctly (e.g. The affordable housing act leading to banks not needing to care about mortgage payback risk).
lifeisstillgood 11y ago
Uber is profitable in many of its mature markets. This is while charging less than half what you would pay a legacy taxi service, while paying drivers more than they would make at the same. What? Seriously? Are you saying that say the cost of a "medallion" is more than twice the cost of all other costs in a taxi service? Can you give any examples?
- wxs 11y ago
  Wouldn't the statement also be consistent with an increased percentage of car time with a passenger? That is, if all other costs were equal, and occupied time per driver-hour doubled despite per-ride profit halving?
- DMac87 11y ago
  This doesn't seem that unreasonable - weren't/aren't medallions over $1M in NYC, which is a factor more expensive than labor, fuel, or maintenance of a vehicle...
  - exelius 11y ago
    Yep, and they were all effectively owned by banks who leased them to cab drivers on a per-shift basis. Your cab driver has to pay ~$150 (I don't know the actual number) per day to drive a cab, so until he makes that $150 back he is losing money. If you had to do this every day, knowing there is a chance you might lose money by going to work, well, you'd be a pretty miserable human being -- just like most NYC taxi drivers.
- DanielDent 11y ago
  In Vancouver (Canada), until recently the market price for a "medallion" was $800,000-$1,400,000. Taxis are often unavailable when you want one. A significant portion of the taxi fare does not got to the driver - it goes to the person they are renting the taxi/medallion from. Uber briefly entered the market using licensed limousine drivers. They were pushed out because we have a crazy rule that limousine rides can't cost less than $80-90 - the only reason for that rule is so that limousines don't compete with taxis. It's insane.
Pxtl 11y ago
Uber's success has nothing to do with their technology and everything to do with the fact that they straight-up ignored the regulations on their industry by claiming to operate in a different one. The taxi-industry is overregulated and corrupt, so Uber created a "car service" that works exactly like a taxicab.
- cortesoft 11y ago
  It doesn't work just like a taxicab. I can't hail an Uber on the streetcorner by raising my arm.
  - Bjartr 11y ago
    I wonder if you could mount one phone in the windshield of an Uber driver's car that could recognize a flashing light pattern from a held aloft cellphone of a person who needs a ride, such that the backend system routes that user's request to that driver. So the actual 'reservation' is functionally identical to how it is today, it just so happened to be facilitated by line of sight. Although honestly this becomes legal masturbation as it's quite clear the intent is one of circumvention.
  - jcater 11y ago
    In most places, you don't hail a cab on the streetcorner by raising your hand. In most US cities, you call dispatch.

exelius 11y ago

Yeah; Uber had a unique opportunity because the taxi business was stuck in the 20th century and had a bad case of regulatory capture as a result. That said, in Uber's more "mature" markets you're starting to see a lot of the problems that caused the taxi business to regulate in the first place: too many drivers, no way to guarantee steady revenue as a driver, etc.

hueving 11y ago
The purpose of the industry isn't to provide steady revenue to drivers. That's a non issue that will be solved by drivers quitting when the price gets too low.
- pbreit 11y ago
  That's not quite true. Regulation frequently aims to smooth out the booms and busts and I would argue that happens in the current taxi industry.
  - BurningFrog 11y ago
    Regulation is marketed by nice sounding goals like that, while it is actually motivated by protecting the established players and keeping competition out.
    - Daishiman 11y ago
      Yes, all regulations, all the time, and so much evidence to boot!
    - pbreit 11y ago
      Either way, it smoothes out the booms and busts.
      - hueving 11y ago
        There isn't really any correlation between smoothness of booms and busts and regulation. Quite frequently regulation causes massive swings because it prevents the market from pricing risk correctly (e.g. The affordable housing act leading to banks not needing to care about mortgage payback risk).

lifeisstillgood 11y ago

Uber is profitable in many of its mature markets. This is while charging less than half what you would pay a legacy taxi service, while paying drivers more than they would make at the same. What? Seriously? Are you saying that say the cost of a "medallion" is more than twice the cost of all other costs in a taxi service? Can you give any examples?

wxs 11y ago
Wouldn't the statement also be consistent with an increased percentage of car time with a passenger? That is, if all other costs were equal, and occupied time per driver-hour doubled despite per-ride profit halving?
DMac87 11y ago
This doesn't seem that unreasonable - weren't/aren't medallions over $1M in NYC, which is a factor more expensive than labor, fuel, or maintenance of a vehicle...
- exelius 11y ago
  Yep, and they were all effectively owned by banks who leased them to cab drivers on a per-shift basis. Your cab driver has to pay ~$150 (I don't know the actual number) per day to drive a cab, so until he makes that $150 back he is losing money. If you had to do this every day, knowing there is a chance you might lose money by going to work, well, you'd be a pretty miserable human being -- just like most NYC taxi drivers.
DanielDent 11y ago
In Vancouver (Canada), until recently the market price for a "medallion" was $800,000-$1,400,000. Taxis are often unavailable when you want one. A significant portion of the taxi fare does not got to the driver - it goes to the person they are renting the taxi/medallion from. Uber briefly entered the market using licensed limousine drivers. They were pushed out because we have a crazy rule that limousine rides can't cost less than $80-90 - the only reason for that rule is so that limousines don't compete with taxis. It's insane.

Pxtl 11y ago

Uber's success has nothing to do with their technology and everything to do with the fact that they straight-up ignored the regulations on their industry by claiming to operate in a different one. The taxi-industry is overregulated and corrupt, so Uber created a "car service" that works exactly like a taxicab.

cortesoft 11y ago
It doesn't work just like a taxicab. I can't hail an Uber on the streetcorner by raising my arm.
- Bjartr 11y ago
  I wonder if you could mount one phone in the windshield of an Uber driver's car that could recognize a flashing light pattern from a held aloft cellphone of a person who needs a ride, such that the backend system routes that user's request to that driver. So the actual 'reservation' is functionally identical to how it is today, it just so happened to be facilitated by line of sight. Although honestly this becomes legal masturbation as it's quite clear the intent is one of circumvention.
- jcater 11y ago
  In most places, you don't hail a cab on the streetcorner by raising your hand. In most US cities, you call dispatch.