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I don’t see much network effect with Uber. I see a liquidity effect, to a degree, but the barriers of entry are low on both supply and demand side. To the exte
by mwsherman 11y ago
I don’t see much network effect with Uber. I see a liquidity effect, to a degree, but the barriers of entry are low on both supply and demand side.
To the extent Uber has a network effect it’s O(n) at best. I don’t have a connection to other Uber users. I like that there are enough users to make it worth the drivers’ while – again, liquidity, not network.
On Facebook, network effect is probably O(n^2). The connections exist and themselves have value.
- tommoor 11y agoUber Pool and Lyft Line are now the majority of rides in SF, not sure about other cities - but there is definitely a network affect there
- toomuchtodo 11y agoSF is not the rest of the world.
- tommoor 11y agoyou don't say. I'm sure this is the way it will go in any location with high enough density to get the network effects
- toomuchtodo 11y agoNetwork effects for ridesharing are overstated. Its a commodity that'll race to the bottom. It already occurs in markets where both Uber and Lyft are present.
- aetherson 11y agoSource?
- tommoor 11y agoFrom August: http://www.forbes.com/sites/ellenhuet/2015/08/18/inside-lyfts-and-ubers-carpooling-quest-uberpool-lyft-line/ http://www.forbes.com/sites/ellenhuet/2015/08/18/inside-lyft...
- viscanti 11y agoI guess I don't see how liquidity effect and network effect are different here. If there aren't enough riders then there aren't enough drivers. If there aren't enough drivers then pickup times are too high and the service dies. It really comes down to how important pickup times are.
- bryanlarsen 11y agoThe ultimate test for a monopoly is if the monopolist could raise prices significantly and not lose significant business to competitors. I don't think Uber could pass that test.
- askafriend 11y agoIf you can get rides with Uber instantly versus waiting 20-30mins with the competition, then Uber can raise prices a bit and not lose many customers. People are impatient and Uber has already trained a vast audience that you click a button and get a car in 10mins or less. Once you get used to it, you won't settle for an inferior network where you have to wait 2x or 3x for a couple bucks less.
- mosquito242 11y agoI think the keyword is significantly. If Uber tripled or quadrupled their prices, I think they'd be fairly vulnerable to regional competitors. Even an increase of 1.5x seems like it'd be hard to pull off. Speaking anecdotally, I know for sure that I'd use a cheaper alternative to save $5 even if it took an extra 10 min.
- arockwell 11y agoLyft Line recently added this option. You can wait 10 extra minutes to save a few dollars.
- steven2012 11y agoUber keeps dropping their prices, not raising them.
- gotrecruit 11y agoi'm not too sure what you're getting at with the use of big-o notation here. what exactly are you saying is being "upper bounded"?