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This article is built on the premise that Uber "won," but fails to define winning or back up this premise with facts. Does winning mean beating its competitors

by freyr 11y ago

This article is built on the premise that Uber "won," but fails to define winning or back up this premise with facts. Does winning mean beating its competitors? In San Francisco, at least, this doesn't seem clear at all. Most people I meet -- both drivers and passengers -- prefer Lyft to Uber because they claim it has better technology, a better brand image, better treatment of employees (correction: drivers), and fewer instances of creepy and offensive behavior from its top management. Does winning mean expanding faster than its competitors? This rests on the VC assertion that Uber is playing in a winner-take-all space. The fact that they can't starve out the competition on their home turf challenges this assertion. Unless they can put up artificial barriers once they enter new markets, they might just be clearing the way for their competition. Or does winning mean transforming from a VC-fueled startup to a self-reliant profitable company? Once again, no facts in the article, but they did recently claim they'll be profitable in the U.S. in Q2 2016 (although losing $1B/year in China) [1]. But unless they can differentiate in terms of price or service (which, my experience, they've failed at), this isn't necessarily a sustained win. [1] http://fortune.com/2016/02/18/uber-profitable-us/ http://fortune.com/2016/02/18/uber-profitable-us/

karussell 11y ago
Yeah, I really think that the treatment of employees, drivers (they are no employees!), partners etc. will crucial for their success. And I see this only partially fulfilled.
ProblemFactory 11y ago
> This rests on the VC assertion that Uber is playing a winner-take-all game. They certainly seem to be playing a winner-take-all game, by heavily subsidising rides when they first launch in a new city. But it seems questionable to conclude that taxi services really are a winner-take-all market. Many Uber drivers I see have multiple phones, running multiple taxi apps at the same time. And most people I know have at least two apps in their phone. I usually check three (Uber, an European one, and a local one in my city) before making an order. There are some network effects to taxi services - customers want a car fast, and drivers want to find fares fast. But there are no switching costs for either side, so these network effects can be distributed over more than one platform.
- freyr 11y ago
  Yes, I meant to say that the VCs are asserting it's a winner-take-all game. And, yes, Uber is playing a winner-take-all strategy, which I agree is questionable.
- pbreit 11y ago
  Like pretty much everything else in life, most riders and drivers have a preference that gets most of their usage.
  - adevine 11y ago
    True, but with switching costs so low, if your friend told you "I love Uber, but service X costs $1 less and it's the same drivers", most people would switch in a heartbeat.
- caseyf7 11y ago
  Yes, if Google and Apple thought it was a winner-take-all game, they would be throwing a lot more money into it.
danieltillett 11y ago
Uber has actually created the market for new competition to enter. Since they can't stop their drivers from driving for a new competitor, all any new competitor needs to enter the market is an app and a lower price / bigger split with the drivers. Given any new competitor will not be carrying the capital costs of building the network in the first place they will be able to outcompete uber. The eventual winner is going to be the consumer as the market becomes a profitless commodity service. I have to say that I am surprised that uber didn't use the driver lawsuits to lock up their network. If the drivers were employees then they could have prevented them from driving for other services.
- skewart 11y ago
  > If the drivers were employees then they could have prevented them from driving for other services. This. I feel like this doesn't come up often enough in discussions about whether drivers should be considered employees or not. A lot of people seem to think that making drivers employees would be better for the drivers and have no effect on passengers. But as soon as drivers become employees it's game over for Lyft or any future competitor, and Uber's monopoly will let them push driver comp as low as possible. As long as Uber and other companies have to work to attract drivers and passengers they'll take a lower cut for themselves.
  - danieltillett 11y ago
    It certainly seems unusual from my perspective to create a network that others can use at no cost to compete against you. The drivers’s lawsuits could have been a great opportunity to negotiate employment contracts with excellent terms for Uber. There must be more to this than I can see, but it does look strange.
  - mavhc 11y ago
    Surely Uber's reason to exist is to be ready to take over as soon as robocars are good enough. In a world where taxis are cheaper than owning a car, the winner is the one with the software and userbase that can organise the most journeys efficiently, offering discounts to merge rides, running buses and trains when enough people want to go from the same A to the same B
fullshark 11y ago
Yeah I feel like everyone thinks the spoils of the ride sharing fight is a future network of automated vehicles which should be lucrative, but is a long way from now. Yahoo looked like the winner of the search engine war once upon a time.

by freyr 11y ago

karussell 11y ago

Yeah, I really think that the treatment of employees, drivers (they are no employees!), partners etc. will crucial for their success. And I see this only partially fulfilled.

ProblemFactory 11y ago

> This rests on the VC assertion that Uber is playing a winner-take-all game. They certainly seem to be playing a winner-take-all game, by heavily subsidising rides when they first launch in a new city. But it seems questionable to conclude that taxi services really are a winner-take-all market. Many Uber drivers I see have multiple phones, running multiple taxi apps at the same time. And most people I know have at least two apps in their phone. I usually check three (Uber, an European one, and a local one in my city) before making an order. There are some network effects to taxi services - customers want a car fast, and drivers want to find fares fast. But there are no switching costs for either side, so these network effects can be distributed over more than one platform.

freyr 11y ago
Yes, I meant to say that the VCs are asserting it's a winner-take-all game. And, yes, Uber is playing a winner-take-all strategy, which I agree is questionable.
pbreit 11y ago
Like pretty much everything else in life, most riders and drivers have a preference that gets most of their usage.
- adevine 11y ago
  True, but with switching costs so low, if your friend told you "I love Uber, but service X costs $1 less and it's the same drivers", most people would switch in a heartbeat.
caseyf7 11y ago
Yes, if Google and Apple thought it was a winner-take-all game, they would be throwing a lot more money into it.

danieltillett 11y ago

Uber has actually created the market for new competition to enter. Since they can't stop their drivers from driving for a new competitor, all any new competitor needs to enter the market is an app and a lower price / bigger split with the drivers. Given any new competitor will not be carrying the capital costs of building the network in the first place they will be able to outcompete uber. The eventual winner is going to be the consumer as the market becomes a profitless commodity service. I have to say that I am surprised that uber didn't use the driver lawsuits to lock up their network. If the drivers were employees then they could have prevented them from driving for other services.

skewart 11y ago
> If the drivers were employees then they could have prevented them from driving for other services. This. I feel like this doesn't come up often enough in discussions about whether drivers should be considered employees or not. A lot of people seem to think that making drivers employees would be better for the drivers and have no effect on passengers. But as soon as drivers become employees it's game over for Lyft or any future competitor, and Uber's monopoly will let them push driver comp as low as possible. As long as Uber and other companies have to work to attract drivers and passengers they'll take a lower cut for themselves.
- danieltillett 11y ago
  It certainly seems unusual from my perspective to create a network that others can use at no cost to compete against you. The drivers’s lawsuits could have been a great opportunity to negotiate employment contracts with excellent terms for Uber. There must be more to this than I can see, but it does look strange.
- mavhc 11y ago
  Surely Uber's reason to exist is to be ready to take over as soon as robocars are good enough. In a world where taxis are cheaper than owning a car, the winner is the one with the software and userbase that can organise the most journeys efficiently, offering discounts to merge rides, running buses and trains when enough people want to go from the same A to the same B

fullshark 11y ago

Yeah I feel like everyone thinks the spoils of the ride sharing fight is a future network of automated vehicles which should be lucrative, but is a long way from now. Yahoo looked like the winner of the search engine war once upon a time.