4 ms·

I don't disagree with your main argument, but I'd say there's at least some barrier to entry. The market definitely has some network effects. More drivers in th

by hencq 10y ago

I don't disagree with your main argument, but I'd say there's at least some barrier to entry. The market definitely has some network effects. More drivers in the network makes it faster to get a ride and therefore more attractive to riders. Vice versa more riders makes it more attractive to drivers to be on Uber's network. As you point out, drivers and riders can install multiple apps (and they often do, e.g. Lyft), but for a competitor to enter they'll likely need to jumpstart their network. Something which they'll likely have to do by subsidizing both drivers and riders. This means that whoever decides to take on Uber would probably need quite a big war chest themselves.

meira 10y ago
Uber penetration is very low, a lot of cities don't have their serviços available so others can occupy these spaces without worrying with network effect at all. Uber is doomed.
- umanwizard 10y ago
  What country are you talking about? Uber is available in every major US city, for a pretty loose definition of "major".
  - paulddraper 10y ago
    I agree. I've never been anywhere in the US with lots of taxis where Uber wasn't.
  - gregpilling 10y ago
    I was in Italy in June, and Uber was not very useful. I could not get a ride in Modena, Bologna and a few other places I tried.
  - user5994461 10y ago
    It might be hard to understand for the typical American HN reader but the major USA cities are only a tiny fraction of the world. There are more than 100 other countries out there with many cities in need of taxis.
    - umanwizard 10y ago
      Don't be an asshole. I was asking out of curiosity.
potatolicious 10y ago
I think it's more accurate to say that there is some barrier to entry, but maybe the barrier is not as high as Uber needs it to be. When Lyft launched here in NYC it was pretty dead, and they lost the initiative with the initial batch of riders. They've since rallied around driver recruiting and now the service is good. Everyone I know here has multiple ride hailing apps installed, and multiple services are competitive with Uber re: driver availability. So yeah, it's not trivially easy to get into this game, but it's also not absurdly difficult - you need someone with deep pockets, but not that deep. This is especially true because Uber's network effect between markets is pretty minimal - people mostly take rides in their home market, so it's easy for upstarts to compete for a single market without the pressure to take themselves global immediately. One structural weakness on Uber's part (and Lyft's, too) is that their commissions are still quite high (20-25%?) and this gives a lot of room for competition. Juno launched here successfully simply by undercutting the commission.
- mywittyname 10y ago
  The company that creates THE ride sharing broker wins. The service will automatically hail from whichever service is the cheapest. Then pull an Amazon and expand into only the most profitable markets.
  - jellicle 10y ago
    Why can't someone create a competing ride-sharing broker? How many travel aggregator sites are there?
    - mack73 10y ago
      Yes, there are lots of those, because the travel industry realized people want to compare offerings before they make their priciest purchase of the year. Customers would themselves do manually what all those aggregator sites do automatically and they care less about who they are dealing with and more about the price tag. In comparison, a taxi ride might not even be the priciest purchase of the day.
- 10y ago
prostoalex 10y ago
> More drivers in the network makes it faster to get a ride and therefore more attractive to riders. All else being equal. A competitor boasting "hey, we're just like Uber, but with longer waits" probably won't get far. They could compete on * lower price (fixed rate vs dynamic pricing, like Wingz) * higher class of the vehicle * support certain edge cases like kid-friendly service, bilingual service or women driver (hat tip Bojack Horseman Season 3 for that business idea)

by hencq 10y ago

meira 10y ago

Uber penetration is very low, a lot of cities don't have their serviços available so others can occupy these spaces without worrying with network effect at all. Uber is doomed.

umanwizard 10y ago
What country are you talking about? Uber is available in every major US city, for a pretty loose definition of "major".
- paulddraper 10y ago
  I agree. I've never been anywhere in the US with lots of taxis where Uber wasn't.
- gregpilling 10y ago
  I was in Italy in June, and Uber was not very useful. I could not get a ride in Modena, Bologna and a few other places I tried.
- user5994461 10y ago
  It might be hard to understand for the typical American HN reader but the major USA cities are only a tiny fraction of the world. There are more than 100 other countries out there with many cities in need of taxis.
  - umanwizard 10y ago
    Don't be an asshole. I was asking out of curiosity.

potatolicious 10y ago

I think it's more accurate to say that there is some barrier to entry, but maybe the barrier is not as high as Uber needs it to be. When Lyft launched here in NYC it was pretty dead, and they lost the initiative with the initial batch of riders. They've since rallied around driver recruiting and now the service is good. Everyone I know here has multiple ride hailing apps installed, and multiple services are competitive with Uber re: driver availability. So yeah, it's not trivially easy to get into this game, but it's also not absurdly difficult - you need someone with deep pockets, but not that deep. This is especially true because Uber's network effect between markets is pretty minimal - people mostly take rides in their home market, so it's easy for upstarts to compete for a single market without the pressure to take themselves global immediately. One structural weakness on Uber's part (and Lyft's, too) is that their commissions are still quite high (20-25%?) and this gives a lot of room for competition. Juno launched here successfully simply by undercutting the commission.

mywittyname 10y ago
The company that creates THE ride sharing broker wins. The service will automatically hail from whichever service is the cheapest. Then pull an Amazon and expand into only the most profitable markets.
- jellicle 10y ago
  Why can't someone create a competing ride-sharing broker? How many travel aggregator sites are there?
  - mack73 10y ago
    Yes, there are lots of those, because the travel industry realized people want to compare offerings before they make their priciest purchase of the year. Customers would themselves do manually what all those aggregator sites do automatically and they care less about who they are dealing with and more about the price tag. In comparison, a taxi ride might not even be the priciest purchase of the day.
10y ago

prostoalex 10y ago

> More drivers in the network makes it faster to get a ride and therefore more attractive to riders. All else being equal. A competitor boasting "hey, we're just like Uber, but with longer waits" probably won't get far. They could compete on * lower price (fixed rate vs dynamic pricing, like Wingz) * higher class of the vehicle * support certain edge cases like kid-friendly service, bilingual service or women driver (hat tip Bojack Horseman Season 3 for that business idea)