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> Ride-sharing is not an area that can be monopolized It is very close. There are massive network effects and it will be hard to unseat an incumbent. The mor

> Ride-sharing is not an area that can be monopolized It is very close. There are massive network effects and it will be hard to unseat an incumbent. The more riders there are, the more revenue is available for the service provider (eg drivers). More riders means average waiting time is lower because more vehicles will be around. More riders means less downtime between riders since the next rider will be closer. More time in revenue service lets you spread fixed costs over more riders, reducing the fixed costs per ride (economies of scale). This all means an incumbent will provide better service especially as reduced waiting times, and will be able to provide that service more cheaply due to greater utilisation. Their drivers/owners will also make more money due to greater utilisation. Newcomers will end up providing worse service (longer waiting times etc) and cost more!

chris_va 10y ago
Many drivers will work for multiple companies in parallel, e.g. Lyft and Uber at the same time. Even if they only get 10% of their rides from Lyft, it isn't a huge cost to the driver. As a result, from the driver perspective, the network effect protection is relatively poor. This battle will play out city by city, which just reduces the barrier to entry for smaller operators. All in all, I think Uber's defensibility is fairly poor.
- rogerbinns 10y ago
  > ... from the driver perspective, the network effect protection is relatively poor I disagree. A driver will prefer as little time between the end of one ride and the beginning of the next, since they don't get paid for down time. Whichever service has the most riders is most likely to have the next closest rider. You are right that at the end of the first ride, the driver could examine all services to see who has the closest next rider, giving a new service a shot, although the new service riders are far less likely to be the closest one. Uber (incumbent) for example already counteracts this by giving drivers bonuses for picking up more riders in certain timeframes, so the driver picking the less popular service will also be giving up on those.
  - JBlue42 10y ago
    >A driver will prefer as little time between the end of one ride and the beginning of the next, since they don't get paid for down time. There are also penalties it seems for not picking up the next ride that requests you as soon as possible. I'm not sure how hard it is time-wise for the drivers to switch between the apps and add up to consistent time and money but I would think you would try and batch your time for each. An hour or an hour there.
    - rogerbinns 10y ago
      As with any measured system, people will always try and game it for their own goals. The first article I found is from 10 months ago: http://www.sfchronicle.com/business/article/Uber-incentives-aim-to-lure-power-drivers-7089842.php http://www.sfchronicle.com/business/article/Uber-incentives-... "In one offer, Uber is now guaranteeing $2,000 a week in gross earnings for new drivers who work 60 hours a week. Another, more-extensive program for existing drivers promises bonuses based on how many trips they complete. For 100 trips in a week, they get an extra $350, for instance." If a driver can already easily meet those then great. But it wouldn't be that great to spread yourself amongst the services and avoid the incentives. And remember the larger incumbents have more wiggle room in terms of incentives and changing them based on real world driver behaviour.
jly 10y ago
We'll see. This business is becoming massively commoditized, which will eventually minimize network effects in the face of competition and price (for drivers and riders). We lost Uber/Lyft in Austin less than a year ago, and there are now several new services (Fare, Fasten, etc) that do exactly the same thing here, with a little less of that moneyed polish. Drivers and riders alike are using them just like before. One hardly even notices a difference except the name of the app.
- rogerbinns 10y ago
  How mismatched are the new services in terms of size? If they are all roughly similar then network effects won't make much of a difference. But for example if one is ten times the size of the others, then I stand by my claim that network effects will result in * shorter wait times for riders (better customer experience) * more money for drivers (shorter waits between riders, so more paid time) * cheaper fares (fixed costs spread over more riders, reducing per rider cost) * more effective loyalty programs (improved ways to earn and spend on them) A larger incumbent can be attacked, with the simplest way of doing it to go more niche - eg serving a smaller area better. Even then the incumbent should have greater ability to react.
  - bob12346 10y ago
    The Austin services are not comparable when it comes to wait times. I've found it very hard to get a Ride or Fasten on several occasions even in high density areas, and you can't really count on being able to get a Ride at all times in all parts of the city. I'm definitely eagerly awaiting the return of Uber/Lyft.

chris_va 10y ago

Many drivers will work for multiple companies in parallel, e.g. Lyft and Uber at the same time. Even if they only get 10% of their rides from Lyft, it isn't a huge cost to the driver. As a result, from the driver perspective, the network effect protection is relatively poor. This battle will play out city by city, which just reduces the barrier to entry for smaller operators. All in all, I think Uber's defensibility is fairly poor.

rogerbinns 10y ago
> ... from the driver perspective, the network effect protection is relatively poor I disagree. A driver will prefer as little time between the end of one ride and the beginning of the next, since they don't get paid for down time. Whichever service has the most riders is most likely to have the next closest rider. You are right that at the end of the first ride, the driver could examine all services to see who has the closest next rider, giving a new service a shot, although the new service riders are far less likely to be the closest one. Uber (incumbent) for example already counteracts this by giving drivers bonuses for picking up more riders in certain timeframes, so the driver picking the less popular service will also be giving up on those.
- JBlue42 10y ago
  >A driver will prefer as little time between the end of one ride and the beginning of the next, since they don't get paid for down time. There are also penalties it seems for not picking up the next ride that requests you as soon as possible. I'm not sure how hard it is time-wise for the drivers to switch between the apps and add up to consistent time and money but I would think you would try and batch your time for each. An hour or an hour there.
  - rogerbinns 10y ago
    As with any measured system, people will always try and game it for their own goals. The first article I found is from 10 months ago: http://www.sfchronicle.com/business/article/Uber-incentives-aim-to-lure-power-drivers-7089842.php http://www.sfchronicle.com/business/article/Uber-incentives-... "In one offer, Uber is now guaranteeing $2,000 a week in gross earnings for new drivers who work 60 hours a week. Another, more-extensive program for existing drivers promises bonuses based on how many trips they complete. For 100 trips in a week, they get an extra $350, for instance." If a driver can already easily meet those then great. But it wouldn't be that great to spread yourself amongst the services and avoid the incentives. And remember the larger incumbents have more wiggle room in terms of incentives and changing them based on real world driver behaviour.

jly 10y ago

We'll see. This business is becoming massively commoditized, which will eventually minimize network effects in the face of competition and price (for drivers and riders). We lost Uber/Lyft in Austin less than a year ago, and there are now several new services (Fare, Fasten, etc) that do exactly the same thing here, with a little less of that moneyed polish. Drivers and riders alike are using them just like before. One hardly even notices a difference except the name of the app.

rogerbinns 10y ago
How mismatched are the new services in terms of size? If they are all roughly similar then network effects won't make much of a difference. But for example if one is ten times the size of the others, then I stand by my claim that network effects will result in * shorter wait times for riders (better customer experience) * more money for drivers (shorter waits between riders, so more paid time) * cheaper fares (fixed costs spread over more riders, reducing per rider cost) * more effective loyalty programs (improved ways to earn and spend on them) A larger incumbent can be attacked, with the simplest way of doing it to go more niche - eg serving a smaller area better. Even then the incumbent should have greater ability to react.
- bob12346 10y ago
  The Austin services are not comparable when it comes to wait times. I've found it very hard to get a Ride or Fasten on several occasions even in high density areas, and you can't really count on being able to get a Ride at all times in all parts of the city. I'm definitely eagerly awaiting the return of Uber/Lyft.