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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 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.

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.