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Maybe I'm misunderstanding the author's point but I kinda disagree that Uber has created a 'network'. To me, it's more of a commodity service. My use of Uber

Maybe I'm misunderstanding the author's point but I kinda disagree that Uber has created a 'network'. To me, it's more of a commodity service. My use of Uber doesn't really increase it's value for other users. At least compared to something like Facebook where network effects are obvious. I also think it's too early to call the game. They're doing well but again, with a commodity service, it doesn't take much to fall behind. I see the logical end game here as more of a marketplace where I can request a ride and anyone can bid for for the job.

the_mitsuhiko 11y ago
> I kinda disagree that Uber has created a 'network'. I agree with your disagreement. In particular because the network effect means that it's hard to go from facebook to somewhere else because the services are useless if your friends are not on it. Both drivers and customers of uber already use competing services.
- elmigranto 11y ago
  Well you kind of do contribute to Uber's value for others by using it and not other service, but not as significantly as with social networks. You use an app, drivers see there is a demand for it, more drivers, better service, you ever so slightly increased Uber's value against its rivals. This is true for every service, only the value of individual contribution differs: huge for facebook, pretty big for "real life" businesses (uber, airbnb), quite minor for "online only" (non-multiplayer videogames).
Dwolb 11y ago
Your use of Uber does increase value for other users. Every incremental user increases the probability that someone will need a ride at any given moment, allowing fewer drivers to profitably service an increasing geography. This means better service, on average, for the network. Another benefit is every incremental passenger increases the utilization of the current assets, spreading fixed asset costs around to more rides.
- stale2002 11y ago
  Yup, I. Economics this is called a "two sided market" network
hueving 11y ago
Your use encourages more drivers, which makes it more useful to other riders, and so on. It would be very hard for another ride sharing company to get involved now because there would be no incentive to use yet another app unless the company subsidizes rides or something to entice both users and drivers.
- prostoalex 11y ago
  Unless the drivers are in an exclusive relationship with Uber, increase in supply of Uber drivers usually leads to increases across the board, as drivers just run multiple apps. Drivers set out to maximize their own utility, not Uber's.
  - danieltillett 11y ago
    This is what surprised me about Uber's recent efforts to not have their drivers become employees. I was expecting them to use the lawsuits to extract favourable terms from the drivers and lock them into exclusive employment contracts. If they had done that their network would be hard to break, but as it stands now any new competitor is one app away from entering the market.
    - prostoalex 11y ago
      I think they figured they can extract that via market terms, such as bonuses for those driving X+ hours weekly (where X is a fairly large number) or never-ending chain of orders in UberPool.
      - danieltillett 11y ago
        Sure if they can keep the drivers at near 100% capacity then this would work, but this is hard to do. A small competitor can piggyback off their network at low cost and be hard to dislodge. It is difficult to extract monopoly profits with an open network.
clay_to_n 11y ago
Two different effects of creating a network: for Facebook, you see network effects creating lock-in for users - nobody wants to leave because everyone's on it. For Uber, the network effects make the experience better as the network grows - with more drivers, more riders use it, and vice versa. We often use "network effects" to refer to word of mouth growth and user lock-in, but I think Uber's advantage is still a network effect - just a different one.

the_mitsuhiko 11y ago

> I kinda disagree that Uber has created a 'network'. I agree with your disagreement. In particular because the network effect means that it's hard to go from facebook to somewhere else because the services are useless if your friends are not on it. Both drivers and customers of uber already use competing services.

elmigranto 11y ago
Well you kind of do contribute to Uber's value for others by using it and not other service, but not as significantly as with social networks. You use an app, drivers see there is a demand for it, more drivers, better service, you ever so slightly increased Uber's value against its rivals. This is true for every service, only the value of individual contribution differs: huge for facebook, pretty big for "real life" businesses (uber, airbnb), quite minor for "online only" (non-multiplayer videogames).

Dwolb 11y ago

Your use of Uber does increase value for other users. Every incremental user increases the probability that someone will need a ride at any given moment, allowing fewer drivers to profitably service an increasing geography. This means better service, on average, for the network. Another benefit is every incremental passenger increases the utilization of the current assets, spreading fixed asset costs around to more rides.

stale2002 11y ago
Yup, I. Economics this is called a "two sided market" network

hueving 11y ago

Your use encourages more drivers, which makes it more useful to other riders, and so on. It would be very hard for another ride sharing company to get involved now because there would be no incentive to use yet another app unless the company subsidizes rides or something to entice both users and drivers.

prostoalex 11y ago
Unless the drivers are in an exclusive relationship with Uber, increase in supply of Uber drivers usually leads to increases across the board, as drivers just run multiple apps. Drivers set out to maximize their own utility, not Uber's.
- danieltillett 11y ago
  This is what surprised me about Uber's recent efforts to not have their drivers become employees. I was expecting them to use the lawsuits to extract favourable terms from the drivers and lock them into exclusive employment contracts. If they had done that their network would be hard to break, but as it stands now any new competitor is one app away from entering the market.
  - prostoalex 11y ago
    I think they figured they can extract that via market terms, such as bonuses for those driving X+ hours weekly (where X is a fairly large number) or never-ending chain of orders in UberPool.
    - danieltillett 11y ago
      Sure if they can keep the drivers at near 100% capacity then this would work, but this is hard to do. A small competitor can piggyback off their network at low cost and be hard to dislodge. It is difficult to extract monopoly profits with an open network.

clay_to_n 11y ago

Two different effects of creating a network: for Facebook, you see network effects creating lock-in for users - nobody wants to leave because everyone's on it. For Uber, the network effects make the experience better as the network grows - with more drivers, more riders use it, and vice versa. We often use "network effects" to refer to word of mouth growth and user lock-in, but I think Uber's advantage is still a network effect - just a different one.