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Uber has taken $12B of capital, broken the regulatory regimes and opened the drive-for-hire markets, marketed the benefits of drive-for-hire and ride-sharing to

Uber has taken $12B of capital, broken the regulatory regimes and opened the drive-for-hire markets, marketed the benefits of drive-for-hire and ride-sharing to drivers and consumers, and helped drivers finance vehicles – but now there seems to be no barrier to entry for any competing service except writing an app. I'm happy to let VCs pay for my comfortable daily ride to work but I don't see how this is sustainable...

methehack 10y ago
I have long held the same position. The only thing I can think is that the pricing is based on an estimate of what will be sustainable once self-driving cars are used instead of drivers. Uber is, in fact, launching self-driving already in, wait for it...Pitsburgh. http://www.bloomberg.com/news/features/2016-08-18/uber-s-first-self-driving-fleet-arrives-in-pittsburgh-this-month-is06r7on http://www.bloomberg.com/news/features/2016-08-18/uber-s-fir... So, maybe that's the deal.
foobarqux 10y ago
A new entrant would have an undifferentiated product (and no drivers)
twblalock 10y ago
> but now there seems to be no barrier to entry for any competing service except writing an app. If that's true, why isn't Lyft doing well?
- ianferrel 10y ago
  Because Uber is outcompeting them on VC subsidies. The point of the parent is: How does Uber turn all these subsidies into an actual profit someday? It's easy to undersell your competitors when you're burning money. Once the VC dries up, how does Uber compete with any other entrant?
  - serge2k 10y ago
    If Uber grows to a point where they can set their prices to get a reasonable profit margin. If their competitors can't really undercut and make money then they have to rely on VCs who are willing to burn cash to help a competitor grow. But why a VC do that? `
    - llamataboot 10y ago
      True sometimes, not at all other times. Or else we would all still be using Friendster. I agree in this case there are significant barriers to entry and that once Uber captures the market they will likely have it all the way through to self-driving taxis (10 years?), but there's some VCs out there that like to fund the underdog under hopes that it can leapfrog and then got the overpour of an already existing market that has learned that a technology exists (whether that be the technology of logging on and seeing what all your friends did today or the expectation that you could press a button on your phone and have a driver show up at your door in 5 minutes)
tuna-piano 10y ago
1. This exact program they're launching helps build a barrier (subscription) 2. Uber Pool requires a large number of drivers and customers to make it work. This is a real network effect and benefit, as having 2-3 customers in a car is more efficient than 1. This requires having other customers on a similiar route. 3. Customers want the closest car to them, meaning the company with the most cars gets a benefit 4. There are driver and customer acquisition and switching costs
- coralreef 10y ago
  I'm not sure that Uber offering some sort of subscription model creates any sort of barrier to entry for competitors wishing to participate in the market.
  - guitarsteve 10y ago
    Sure it does. If you already have an Uber subscription, then you're comparing $2 for a subscription-subsidized Uber ride versus $(more) for a ride from Lyft or some other competitor. The competition won't be able to compete on price at that level.
- LordHumungous 10y ago
  Half the time I take an Uber pool I end up riding alone. My guess is the margins on it are not stellar.
bsder 10y ago
Even worse, Uber and Lyft threw a hissy fit in Austin and now there are competitors getting traction. Once you've got one city down, scaling it isn't that hard.
- the_watcher 10y ago
  No, Austin kicked them out for bullshit reasons, citing safety of riding with un-fingerprinted drivers, when if you simply go out downtown in Austin now or before Uber, you'd see dozens of people knocking on random car windows and offering them cash for a ride. None of whom were fingerprinted. The competitors who have gotten traction also do not fingerprint, but as they are decentralized, there's not really a way to regulate them out. Uber and Lyft should relaunch there with self-driving cars (the mayor is all about self-driving cars) and change their logo to a fingerprint.
  - bsder 10y ago
    > The competitors who have gotten traction also do not fingerprint, but as they are decentralized, there's not really a way to regulate them out. So, that would be why the city was overwhelmed fingerprinting drivers. Uh, yeah, let's see some evidence behind your statements. And Austin didn't kick them out, Uber and Lyft LEFT. Uber and Lyft tried to hold Austin hostage, and, surprise, the Austin VOTERS bit them.
  - iamdave 10y ago
    Austin kicked them out? That's news to me as a resident because the distinct impression I got was that we the people voted we wanted drivers fingerprinted, and if they could do that, they could stay but apparently it was more cost effective to launch a million+ dollar campaign against the proposal and try running a sitting councilmember (who, sure, I'll admit, probably doesn't have good approval ratings) out of office and then left when the people voted in favor of the fingerprinting rules. The same rules that Uber and Lyft seem to have no problem working under in Dallas and Houston. Austin didn't kick anyone out, they left and good riddance I say. Fare and Fasten aren't perfect, but I will much more readily support a local company than Uber.
the_watcher 10y ago
> but now there seems to be no barrier to entry for any competing service except writing an app. Except network of drivers, network of riders with the app installed, name recognition, capital to run the backend systems and delve into mapping algorithms, etc.
- capkutay 10y ago
  Yeah I think barrier to entry is misunderstood as a technical attribute of a company. Of course it's possible to build some app that tells people nearby to pick them up with metering/billing services built in. From a business standpoint, it would almost be impossible to duplicate what they have today.
  - maerF0x0 10y ago
    at least not without a 10x improvement in some area. If someone can get the cost down to 1/10th or speed it up 10x etc, then uber may find itself down and out (or racing to catchup).
    - rdl 10y ago
      If you're talking about scale: Just build an app which cherry-picks part of the market -- either specific users or specific locations or specific use cases -- and then fails back to Uber (automatically, or manually) when unavailable. i.e. I could build "the Uber for when you want to go out on a date and impress someone in the car" as an overlay service.
      - neosat 10y ago
        >> i.e. I could build "the Uber for when you want to go out on a date and impress someone in the car" as an overlay service. There is a service for that. It's called Uber Black.
  - methehack 10y ago
    I entirely disagree. I don't see proprietary technology that can't be duplicated or bought. I see _some_ network effects but ultimately the drivers will go to the highest bidder and the riders will go to the lowest price. I see _some_ brand equity, but not much. Maybe a little economy of scale, but not much. Yes, they have a head start, but they are far from enthroned. Ultimately, this space will operationalize out to the company that can manufacture safe and reliable self-driving cars most efficiently. That's kind of how you can tell uber hasn't won yet: if a company came along that was doing that, it would eat their lunch. Further, faced with the awesome self-driving car company, uber's hungry huge capital needs thus far will be nothing but a burden. I believe they timed this all wrong -- they are myspace and in the wrong business.
0xmohit 10y ago
Apparently Uber makes a lot by monetizing data that it collects about the riders. Cheaper rides serve as a mechanism to have more passengers on board. The more data, the merrier.
NelsonMinar 10y ago
It's not sustainable. Uber is trying to drive competition out of business, so it then has monopoly pricing and can charge what it wants. We've seen a preview of this in China; the day Uber and Didi signed their agreement fares went significantly up because both companies dropped all their promotional discounts.
randomsearch 10y ago
If writing an app is all there is to a business, why hasn't Facebook been replaced yet? Uber = Network effects. And not just that, but a two-sided market too! Combine that with the verb "to uber" and you have huge barriers!
randomsearch 10y ago
If writing an app were all there is to a business, why hasn't Facebook been replaced yet? Uber = Network effects. And not just that, but a two-sided market too! Combine that with the verb "to uber" and you have huge barriers!
adamhepner 10y ago
I wonder if they will succeed with autonomous fleet, or will burn through all the cash and reserves way before that...

methehack 10y ago

I have long held the same position. The only thing I can think is that the pricing is based on an estimate of what will be sustainable once self-driving cars are used instead of drivers. Uber is, in fact, launching self-driving already in, wait for it...Pitsburgh. http://www.bloomberg.com/news/features/2016-08-18/uber-s-first-self-driving-fleet-arrives-in-pittsburgh-this-month-is06r7on http://www.bloomberg.com/news/features/2016-08-18/uber-s-fir... So, maybe that's the deal.

foobarqux 10y ago

A new entrant would have an undifferentiated product (and no drivers)

twblalock 10y ago

> but now there seems to be no barrier to entry for any competing service except writing an app. If that's true, why isn't Lyft doing well?

ianferrel 10y ago
Because Uber is outcompeting them on VC subsidies. The point of the parent is: How does Uber turn all these subsidies into an actual profit someday? It's easy to undersell your competitors when you're burning money. Once the VC dries up, how does Uber compete with any other entrant?
- serge2k 10y ago
  If Uber grows to a point where they can set their prices to get a reasonable profit margin. If their competitors can't really undercut and make money then they have to rely on VCs who are willing to burn cash to help a competitor grow. But why a VC do that? `
  - llamataboot 10y ago
    True sometimes, not at all other times. Or else we would all still be using Friendster. I agree in this case there are significant barriers to entry and that once Uber captures the market they will likely have it all the way through to self-driving taxis (10 years?), but there's some VCs out there that like to fund the underdog under hopes that it can leapfrog and then got the overpour of an already existing market that has learned that a technology exists (whether that be the technology of logging on and seeing what all your friends did today or the expectation that you could press a button on your phone and have a driver show up at your door in 5 minutes)

tuna-piano 10y ago

1. This exact program they're launching helps build a barrier (subscription) 2. Uber Pool requires a large number of drivers and customers to make it work. This is a real network effect and benefit, as having 2-3 customers in a car is more efficient than 1. This requires having other customers on a similiar route. 3. Customers want the closest car to them, meaning the company with the most cars gets a benefit 4. There are driver and customer acquisition and switching costs

coralreef 10y ago
I'm not sure that Uber offering some sort of subscription model creates any sort of barrier to entry for competitors wishing to participate in the market.
- guitarsteve 10y ago
  Sure it does. If you already have an Uber subscription, then you're comparing $2 for a subscription-subsidized Uber ride versus $(more) for a ride from Lyft or some other competitor. The competition won't be able to compete on price at that level.
LordHumungous 10y ago
Half the time I take an Uber pool I end up riding alone. My guess is the margins on it are not stellar.

bsder 10y ago

Even worse, Uber and Lyft threw a hissy fit in Austin and now there are competitors getting traction. Once you've got one city down, scaling it isn't that hard.

the_watcher 10y ago
No, Austin kicked them out for bullshit reasons, citing safety of riding with un-fingerprinted drivers, when if you simply go out downtown in Austin now or before Uber, you'd see dozens of people knocking on random car windows and offering them cash for a ride. None of whom were fingerprinted. The competitors who have gotten traction also do not fingerprint, but as they are decentralized, there's not really a way to regulate them out. Uber and Lyft should relaunch there with self-driving cars (the mayor is all about self-driving cars) and change their logo to a fingerprint.
- bsder 10y ago
  > The competitors who have gotten traction also do not fingerprint, but as they are decentralized, there's not really a way to regulate them out. So, that would be why the city was overwhelmed fingerprinting drivers. Uh, yeah, let's see some evidence behind your statements. And Austin didn't kick them out, Uber and Lyft LEFT. Uber and Lyft tried to hold Austin hostage, and, surprise, the Austin VOTERS bit them.
- iamdave 10y ago
  Austin kicked them out? That's news to me as a resident because the distinct impression I got was that we the people voted we wanted drivers fingerprinted, and if they could do that, they could stay but apparently it was more cost effective to launch a million+ dollar campaign against the proposal and try running a sitting councilmember (who, sure, I'll admit, probably doesn't have good approval ratings) out of office and then left when the people voted in favor of the fingerprinting rules. The same rules that Uber and Lyft seem to have no problem working under in Dallas and Houston. Austin didn't kick anyone out, they left and good riddance I say. Fare and Fasten aren't perfect, but I will much more readily support a local company than Uber.

the_watcher 10y ago

> but now there seems to be no barrier to entry for any competing service except writing an app. Except network of drivers, network of riders with the app installed, name recognition, capital to run the backend systems and delve into mapping algorithms, etc.

capkutay 10y ago
Yeah I think barrier to entry is misunderstood as a technical attribute of a company. Of course it's possible to build some app that tells people nearby to pick them up with metering/billing services built in. From a business standpoint, it would almost be impossible to duplicate what they have today.
- maerF0x0 10y ago
  at least not without a 10x improvement in some area. If someone can get the cost down to 1/10th or speed it up 10x etc, then uber may find itself down and out (or racing to catchup).
  - rdl 10y ago
    If you're talking about scale: Just build an app which cherry-picks part of the market -- either specific users or specific locations or specific use cases -- and then fails back to Uber (automatically, or manually) when unavailable. i.e. I could build "the Uber for when you want to go out on a date and impress someone in the car" as an overlay service.
    - neosat 10y ago
      >> i.e. I could build "the Uber for when you want to go out on a date and impress someone in the car" as an overlay service. There is a service for that. It's called Uber Black.
- methehack 10y ago
  I entirely disagree. I don't see proprietary technology that can't be duplicated or bought. I see _some_ network effects but ultimately the drivers will go to the highest bidder and the riders will go to the lowest price. I see _some_ brand equity, but not much. Maybe a little economy of scale, but not much. Yes, they have a head start, but they are far from enthroned. Ultimately, this space will operationalize out to the company that can manufacture safe and reliable self-driving cars most efficiently. That's kind of how you can tell uber hasn't won yet: if a company came along that was doing that, it would eat their lunch. Further, faced with the awesome self-driving car company, uber's hungry huge capital needs thus far will be nothing but a burden. I believe they timed this all wrong -- they are myspace and in the wrong business.

0xmohit 10y ago

Apparently Uber makes a lot by monetizing data that it collects about the riders. Cheaper rides serve as a mechanism to have more passengers on board. The more data, the merrier.

NelsonMinar 10y ago

It's not sustainable. Uber is trying to drive competition out of business, so it then has monopoly pricing and can charge what it wants. We've seen a preview of this in China; the day Uber and Didi signed their agreement fares went significantly up because both companies dropped all their promotional discounts.

randomsearch 10y ago

If writing an app is all there is to a business, why hasn't Facebook been replaced yet? Uber = Network effects. And not just that, but a two-sided market too! Combine that with the verb "to uber" and you have huge barriers!

randomsearch 10y ago

If writing an app were all there is to a business, why hasn't Facebook been replaced yet? Uber = Network effects. And not just that, but a two-sided market too! Combine that with the verb "to uber" and you have huge barriers!

adamhepner 10y ago

I wonder if they will succeed with autonomous fleet, or will burn through all the cash and reserves way before that...