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I had the same reaction when I rode UberPool from the south bay into SF (a 45 minute ride) for just under $18, and nobody else pooled with me. How could this be

I had the same reaction when I rode UberPool from the south bay into SF (a 45 minute ride) for just under $18, and nobody else pooled with me. How could this be fair to the drivers? So I asked the driver how much he was getting for the trip. I believe he said something like $50. Fortunately, he wasn't getting shortchanged. Later, someone pointed out to me that Lyft and Uber are aggressively competing right now. It seems that Uber might be artificially deflating its prices to try and kill the competition, or discourage new companies from even entering the market. If they do manage to kill Lyft, you can be sure they will raise their prices again.

Analemma_ 10y ago
Margaret Thatcher once said "The problem with socialism is, you eventually run out of other people's money", which makes it ironic and humorous that Uber, the poster child of Valley Objectivism, has basically the same problem with their "price dumping funded by VCs" model.
- leereeves 10y ago
  The strategy, of course, being to make their competitors run out of other people's money first.
- Nashhhh 10y ago
  The key difference being that in the case of Uber, those VCs and investors gave their money voluntarily.
  - orblivion 10y ago
    One can still run out of voluntarily obtained money.
    - baddox 10y ago
      Obviously that's true, but it's not really relevant to the intended meaning of Thatcher's (obviously oversimplified) quote.
  - hkmurakami 10y ago
    Presumably (hopefully) the socialist government for this hypothetical nation would have been voluntarily put in place by the voting public.
    - throwaway991199 10y ago
      LOL. Go look at Europe. The answer to that is a definite hell-no.
      - huac 10y ago
        Socialists have historically been some of the biggest proponents of democracy. You're probably trolling, but it'd be amusing to know which countries you think have socialist governments in place by force.
        the_watcher 10y ago
        Maybe democratic socialists. But the track record of explicitly socialist nations is pretty much the exact opposite of pro-democratic. There's a decent argument that those governments were coopted by corruption and never actually turned into true socialist governments, but that's also a flaw in the system, as it relies on humans to not act in their own best interest across the board.
        randomgyatwork 10y ago
        There is also a difference between state-capitalism and socialism, many of the socialist / communist examples we have are actually state-capitalism.
        pjlegato 10y ago
        Perhaps you have heard of the People's Democratic Republics of East Germany, Poland, Romania, Hungary, Yugoslavia, Latvia, Lithuania, Estonia, Czechoslovakia, and Albania? Socialism was imposed by a foreign occupying army. Or take the Soviet Union itself. The democratically elected Provisional Government was overthrown by force. Even the socialists-only Constituent Assembly election was simply voided and ignored by the Bolsheviks when they overwhelmingly lost. Your claim is empirically false. Socialism has historically been imposed involuntarily at gunpoint in almost all cases where it has achieved any measure of real power. Moreover, once established, its show elections are a farce, with only pre-selected Party approved candidates allowed to win. You will no doubt reply that none of this was done by "real" socialists, and that <insert your favorite sub-sub-branch of socialism here> are the only "real" socialists. This is the "No True Scotsman fallacy".
  - tedunangst 10y ago
    Voluntarily, but not without expectation of recompense. At some point the monopoly will start focusing on another source of money...
    - argonaut 10y ago
      The entirety of capitalism is voluntary transactions with expectation of recompense. I'm not sure what your point is.
      - tedunangst 10y ago
        When you run out of other people's money, you start looking for other other people's money.
  - refurb 10y ago
    More importantly, it's not my money. I could care less if they lose it all. Now taxes, that's a different story.
  - tim333 10y ago
    You could argue the VCs in fact gave other people's money - investors money, possibly including your pension - to Uber.
- r00fus 10y ago
  Price dumping is the precursor to monopoly/cartel which then results in unassailable market barriers to entry and consequently large premiums. If you're paying too little, you've got to expect that situation is not sustainable - either that good deal withers, or the vendor's lock on their customers means they can raise prices arbitrarily.
  - maerF0x0 10y ago
    It might not be the customer they squeeze though. Could be the drivers.
forgetsusername 10y ago
>for just under $18, and nobody else pooled with me. How could this be fair to the drivers? So I asked the driver how much he was getting for the trip. I believe he said something like $50 Quite the business model. I wonder if they really believe they're earning goodwill at the rate of an Andrew Jackson per ride?
- laksjd 10y ago
  If they can kill the competition they can then crank the prices back up and profit of this for years and years. It feels slightly 'evil' but it does make business sense, especially if they know they can outlast their competitors.
  - Vraxx 10y ago
    I'm not so sure I agree. If you crank up the prices, a lot of users who are users because of those prices will just stop being users. You don't exactly have a good way to lock users into it, so this strategy doesn't seem as effective. I imagine that the most locked in user will be one that sold their car to solely ride uber, and they can just go get a car if the the cost analysis tips more in favor of the car. "Worst" case for this user is they need to buy a vehicle, slighly better but still bad case, they pay more, but less than owning a vehicle but still reaped years of low low prices.
    - niftich 10y ago
      As you say, there is no effective way for them to lock users in, but they don't need to. They can outspend and outlast Lyft to make them run out of cash and/or devalued to the point where they can acquire them and shut them down. At that point, any (future) new entrant to the market will face a steeper uphill battle than Lyft did. In the process, they may lose some customers to real cars or public transit, but they'll remain the only player in this space.
      - ethanbond 10y ago
        No they won't face a steeper uphill battle. They'll have a much easier time: legislation will be clearer, drivers will already be driving for uber so installing another app is trivial, riders will already be familiar with app-hailed rides and so installing another app is trivial.
tomtang0514 10y ago
This happened in china before with didi and kuaidi. User used to get discounts like 10 yuan off the first ride every day. And the result is those two companies merged. But with competition law here in US I'm curious to see what's going to happen.
slg 10y ago
> It seems that Uber might be artificially deflating its prices to try and kill the competition, or discourage new companies from even entering the market. Or they are just trying to tread water until they can remove drivers as a cost. If Uber can use VC money to pay current driver and then use more VC money to purchase a self driving fleet, they just have to wait it out until their current prices become profitable.
benologist 10y ago
Full loads have been offsetting partial loads all along for airport shuttles, trains, buses, cargo, planes etc, the maths is probably in Uber's favor even without having to compete with Lyft.
jbrambleDC 10y ago
so i suspect they are trying to kill of Lyft, then replace drivers with autonomous driving and keep the prices relatively constant by having loyal customers join in on a subscription model like pool pass and use it as your daily commute. I am actually already taking Pool, with pool pass every day in DC for $1.00 per ride, $30 up front fee. Only way this is sustainable is to eventually replace drivers. Also to really have high customer volume and keep occupancy high they have to keep prices relatively close to a metro fare.
- revelation 10y ago
  So they are building a worse rail?
  - linkregister 10y ago
    More like the last mile to stem the gap in coverage by Metro. Metro will always beat surface streets within downtown.
    - jbrambleDC 10y ago
      This is actually unclear. A lot of our metro systems are held together by crumbling infrastructure (like DC) and are becoming extremely slow, delayed and rely on unsafe tracks. To make matters worse a lot of competing jurisdictions are cutting public funding to maintaining the system. A commute from Vienna, VA to Metro center in DC has regularly been taking 1.5 - 2hrs. 3 years ago that trip was 45 min. its still about 30-45 min by car. The only real benefit to public transit at this point is that it allows you to dodge the cost of parking your vehicle for a day while you are at work. But Uber has figured out other ways to successfully allow people to dodge that cost. With Uber pool my commute takes roughly the same time as metro, is door to door, and now cheaper and in many ways safer than taking the metro.
jordonwii 10y ago
> It seems that Uber might be artificially deflating its prices to try and kill the competition That is indeed the case: http://www.seattletimes.com/business/technology/will-ride-hailings-cheap-fares-persist/ http://www.seattletimes.com/business/technology/will-ride-ha...

Analemma_ 10y ago

Margaret Thatcher once said "The problem with socialism is, you eventually run out of other people's money", which makes it ironic and humorous that Uber, the poster child of Valley Objectivism, has basically the same problem with their "price dumping funded by VCs" model.

leereeves 10y ago
The strategy, of course, being to make their competitors run out of other people's money first.
Nashhhh 10y ago
The key difference being that in the case of Uber, those VCs and investors gave their money voluntarily.
- orblivion 10y ago
  One can still run out of voluntarily obtained money.
  - baddox 10y ago
    Obviously that's true, but it's not really relevant to the intended meaning of Thatcher's (obviously oversimplified) quote.
- hkmurakami 10y ago
  Presumably (hopefully) the socialist government for this hypothetical nation would have been voluntarily put in place by the voting public.
  - throwaway991199 10y ago
    LOL. Go look at Europe. The answer to that is a definite hell-no.
    - huac 10y ago
      Socialists have historically been some of the biggest proponents of democracy. You're probably trolling, but it'd be amusing to know which countries you think have socialist governments in place by force.
      - the_watcher 10y ago
        Maybe democratic socialists. But the track record of explicitly socialist nations is pretty much the exact opposite of pro-democratic. There's a decent argument that those governments were coopted by corruption and never actually turned into true socialist governments, but that's also a flaw in the system, as it relies on humans to not act in their own best interest across the board.
        randomgyatwork 10y ago
        There is also a difference between state-capitalism and socialism, many of the socialist / communist examples we have are actually state-capitalism.
      - pjlegato 10y ago
        Perhaps you have heard of the People's Democratic Republics of East Germany, Poland, Romania, Hungary, Yugoslavia, Latvia, Lithuania, Estonia, Czechoslovakia, and Albania? Socialism was imposed by a foreign occupying army. Or take the Soviet Union itself. The democratically elected Provisional Government was overthrown by force. Even the socialists-only Constituent Assembly election was simply voided and ignored by the Bolsheviks when they overwhelmingly lost. Your claim is empirically false. Socialism has historically been imposed involuntarily at gunpoint in almost all cases where it has achieved any measure of real power. Moreover, once established, its show elections are a farce, with only pre-selected Party approved candidates allowed to win. You will no doubt reply that none of this was done by "real" socialists, and that <insert your favorite sub-sub-branch of socialism here> are the only "real" socialists. This is the "No True Scotsman fallacy".
- tedunangst 10y ago
  Voluntarily, but not without expectation of recompense. At some point the monopoly will start focusing on another source of money...
  - argonaut 10y ago
    The entirety of capitalism is voluntary transactions with expectation of recompense. I'm not sure what your point is.
    - tedunangst 10y ago
      When you run out of other people's money, you start looking for other other people's money.
- refurb 10y ago
  More importantly, it's not my money. I could care less if they lose it all. Now taxes, that's a different story.
- tim333 10y ago
  You could argue the VCs in fact gave other people's money - investors money, possibly including your pension - to Uber.
r00fus 10y ago
Price dumping is the precursor to monopoly/cartel which then results in unassailable market barriers to entry and consequently large premiums. If you're paying too little, you've got to expect that situation is not sustainable - either that good deal withers, or the vendor's lock on their customers means they can raise prices arbitrarily.
- maerF0x0 10y ago
  It might not be the customer they squeeze though. Could be the drivers.

forgetsusername 10y ago

>for just under $18, and nobody else pooled with me. How could this be fair to the drivers? So I asked the driver how much he was getting for the trip. I believe he said something like $50 Quite the business model. I wonder if they really believe they're earning goodwill at the rate of an Andrew Jackson per ride?

laksjd 10y ago
If they can kill the competition they can then crank the prices back up and profit of this for years and years. It feels slightly 'evil' but it does make business sense, especially if they know they can outlast their competitors.
- Vraxx 10y ago
  I'm not so sure I agree. If you crank up the prices, a lot of users who are users because of those prices will just stop being users. You don't exactly have a good way to lock users into it, so this strategy doesn't seem as effective. I imagine that the most locked in user will be one that sold their car to solely ride uber, and they can just go get a car if the the cost analysis tips more in favor of the car. "Worst" case for this user is they need to buy a vehicle, slighly better but still bad case, they pay more, but less than owning a vehicle but still reaped years of low low prices.
  - niftich 10y ago
    As you say, there is no effective way for them to lock users in, but they don't need to. They can outspend and outlast Lyft to make them run out of cash and/or devalued to the point where they can acquire them and shut them down. At that point, any (future) new entrant to the market will face a steeper uphill battle than Lyft did. In the process, they may lose some customers to real cars or public transit, but they'll remain the only player in this space.
    - ethanbond 10y ago
      No they won't face a steeper uphill battle. They'll have a much easier time: legislation will be clearer, drivers will already be driving for uber so installing another app is trivial, riders will already be familiar with app-hailed rides and so installing another app is trivial.

tomtang0514 10y ago

This happened in china before with didi and kuaidi. User used to get discounts like 10 yuan off the first ride every day. And the result is those two companies merged. But with competition law here in US I'm curious to see what's going to happen.

slg 10y ago

> It seems that Uber might be artificially deflating its prices to try and kill the competition, or discourage new companies from even entering the market. Or they are just trying to tread water until they can remove drivers as a cost. If Uber can use VC money to pay current driver and then use more VC money to purchase a self driving fleet, they just have to wait it out until their current prices become profitable.

benologist 10y ago

Full loads have been offsetting partial loads all along for airport shuttles, trains, buses, cargo, planes etc, the maths is probably in Uber's favor even without having to compete with Lyft.

jbrambleDC 10y ago

so i suspect they are trying to kill of Lyft, then replace drivers with autonomous driving and keep the prices relatively constant by having loyal customers join in on a subscription model like pool pass and use it as your daily commute. I am actually already taking Pool, with pool pass every day in DC for $1.00 per ride, $30 up front fee. Only way this is sustainable is to eventually replace drivers. Also to really have high customer volume and keep occupancy high they have to keep prices relatively close to a metro fare.

revelation 10y ago
So they are building a worse rail?
- linkregister 10y ago
  More like the last mile to stem the gap in coverage by Metro. Metro will always beat surface streets within downtown.
  - jbrambleDC 10y ago
    This is actually unclear. A lot of our metro systems are held together by crumbling infrastructure (like DC) and are becoming extremely slow, delayed and rely on unsafe tracks. To make matters worse a lot of competing jurisdictions are cutting public funding to maintaining the system. A commute from Vienna, VA to Metro center in DC has regularly been taking 1.5 - 2hrs. 3 years ago that trip was 45 min. its still about 30-45 min by car. The only real benefit to public transit at this point is that it allows you to dodge the cost of parking your vehicle for a day while you are at work. But Uber has figured out other ways to successfully allow people to dodge that cost. With Uber pool my commute takes roughly the same time as metro, is door to door, and now cheaper and in many ways safer than taking the metro.

jordonwii 10y ago

> It seems that Uber might be artificially deflating its prices to try and kill the competition That is indeed the case: http://www.seattletimes.com/business/technology/will-ride-hailings-cheap-fares-persist/ http://www.seattletimes.com/business/technology/will-ride-ha...