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This is called disintermediation. In short, unless you can convince at least 51% of the drivers to join your platform in a very short period of time, your offer

This is called disintermediation. In short, unless you can convince at least 51% of the drivers to join your platform in a very short period of time, your offering will be inferior (longer ETAs, lower earnings per hour for drivers) due to the network effect. As times go on, your drivers will leave the inferior platform. This is assuming that your app is at least good as Uber's.

notahacker 11y ago
There's no reason to suspect that consumers (or indeed drivers) will only use the one service though. Consumers are focused more on specific availability than average availability, and just because Uber has more drivers doesn't mean they won't sometimes only be able to offer the second quickest time and lowest price to a person waiting in a specific place. Provided there are enough drivers to ensure that it's worth consumers' while checking their app, the service can remain viable. Traditional telephone-booked taxi services usually aren't local monopolies.
amelius 11y ago
But can't drivers be part of more than one platform?
gadders 11y ago
I can see the Kayak-style apps that aggregate across Uber, Lyft etc being written now.
aianus 11y ago
There's not much of a network effect with taxis. Someone's going to build a free aggregator so you can see which local service has the closest car and it will become a commodity.
- viscanti 11y ago
  The network effect was just explained above. The more drivers on the system, the shorter the ETAs. The shorter the ETAs, the more riders want to use that system. The more riders on the system, the less downtime between each ride for drivers. New entrants have to subsidize the market (pay drivers more than they make and give riders steep discounts) in an attempt to catch up. Recent reports about Lyft burning hundreds of millions of dollars in a relatively short amount of time, without gaining much market share most places, shows just how high of barrier there is. Hailo pulled out of all of North America this year for similar reasons. It's just really expensive to try to subsidize your way to competing with the network effect.
  - sharemywin 11y ago
    from what I understand drivers still get on both systems. hard to call someone a contractor if they can't work for other companies.
    - viscanti 11y ago
      Well, there's a difference between being able to work for multiple systems, and having all or nearly all drivers actually doing that. Is there anything to suggest that all or nearly all drivers actually do that? In SF i see most uber drivers exclusively driving for Uber (but most lyft drivers seem to be on both systems). That's an admittedly small sample size, so is there some evidence that isn't accurate?
      - sharemywin 11y ago
        the idea that it's a winner take all market is crazy to me. it's too big a market and too many people to sell the service. Can't be long before priceline, expedia etc gets in on the game. if lyft let sellers set pricing wouldn't that offer better pricing to win over that segment of customers. If Uber is able to transition to driveless cars that might be different.
      - aianus 11y ago
        You don't need the drivers working for multiple systems, you just need the users to be using an aggregator that connects to multiple providers, like Kayak or Expedia do for flights. Once the user is blindly choosing between providers based solely on price/ETA then the established companies have no advantage anymore and the margins will go to zero just like the airline industry.

notahacker 11y ago

There's no reason to suspect that consumers (or indeed drivers) will only use the one service though. Consumers are focused more on specific availability than average availability, and just because Uber has more drivers doesn't mean they won't sometimes only be able to offer the second quickest time and lowest price to a person waiting in a specific place. Provided there are enough drivers to ensure that it's worth consumers' while checking their app, the service can remain viable. Traditional telephone-booked taxi services usually aren't local monopolies.

amelius 11y ago

But can't drivers be part of more than one platform?

gadders 11y ago

I can see the Kayak-style apps that aggregate across Uber, Lyft etc being written now.

aianus 11y ago

There's not much of a network effect with taxis. Someone's going to build a free aggregator so you can see which local service has the closest car and it will become a commodity.

viscanti 11y ago
The network effect was just explained above. The more drivers on the system, the shorter the ETAs. The shorter the ETAs, the more riders want to use that system. The more riders on the system, the less downtime between each ride for drivers. New entrants have to subsidize the market (pay drivers more than they make and give riders steep discounts) in an attempt to catch up. Recent reports about Lyft burning hundreds of millions of dollars in a relatively short amount of time, without gaining much market share most places, shows just how high of barrier there is. Hailo pulled out of all of North America this year for similar reasons. It's just really expensive to try to subsidize your way to competing with the network effect.
- sharemywin 11y ago
  from what I understand drivers still get on both systems. hard to call someone a contractor if they can't work for other companies.
  - viscanti 11y ago
    Well, there's a difference between being able to work for multiple systems, and having all or nearly all drivers actually doing that. Is there anything to suggest that all or nearly all drivers actually do that? In SF i see most uber drivers exclusively driving for Uber (but most lyft drivers seem to be on both systems). That's an admittedly small sample size, so is there some evidence that isn't accurate?
    - sharemywin 11y ago
      the idea that it's a winner take all market is crazy to me. it's too big a market and too many people to sell the service. Can't be long before priceline, expedia etc gets in on the game. if lyft let sellers set pricing wouldn't that offer better pricing to win over that segment of customers. If Uber is able to transition to driveless cars that might be different.
    - aianus 11y ago
      You don't need the drivers working for multiple systems, you just need the users to be using an aggregator that connects to multiple providers, like Kayak or Expedia do for flights. Once the user is blindly choosing between providers based solely on price/ETA then the established companies have no advantage anymore and the margins will go to zero just like the airline industry.