4 ms·

"Their business model has no barrier to entry." Critical mass of drivers, particularly within a specific market area - and brand - are definitely barriers to e

"Their business model has no barrier to entry." Critical mass of drivers, particularly within a specific market area - and brand - are definitely barriers to entry. There are network externalities for sure. If you go to city ABC and 'everyone is on Uber' - as a consumer, you'll probably just use Uber. Drivers? Well, they'll just sign up for Uber if there's little else. A 'new market entrant' will have a 'chicken and egg' problem in terms of signing up drivers and riders. A true 'lower barrier to entry' business would be like a hot-dog stand - no cost, you set up beside the other guy, you can take just as much business. Your benefit scales roughly linearly with the number of stands you have, and because you have more, does not really give customers incentive to buy from you etc.. So there are 'competitors' but there are also at least some barriers, on a locale by locale basis. There are other barriers - such as the ability to fund/lobby (and bribe) all of the various political entities that could oppose you - Uber has been pretty aggressive at winning these things and that costs $$$.

castratikron 10y ago
I've got both Uber and Lyft on my phone, which I guess could be analogous to having two hot dog stands on the same block. Drivers can switch between the two just as easily. You're right though, they do have a well-established brand, and they have spent a lot of effort in getting around all sorts of legal problems. I wonder, though, if the legal things that Uber has paved the way on would ever make it easier for some other Uber clone to take up the same business without all of the legal hurdles, since they've already established some sort of precedent.
- edblarney 10y ago
  Yes, but you don't have 'ABC lift' on your phone. Why? Because ABC has almost no drivers, and because it has almost no drivers, no customers, which means it's hard to attract drivers. - hence, network externalization as a barrier. There are tons of Uber-like companies, and you've never heard of them largely for this reason.
  - bsder 10y ago
    > Yes, but you don't have 'ABC lift' on your phone. Why? Because ABC has almost no drivers, and because it has almost no drivers, no customers, which means it's hard to attract drivers. - hence, network externalization as a barrier. Actually, I do. But I only have 'ABC lift" for local, native areas that I am in continuously. I tend to use Lyft when I am out of my home area.
- petra 10y ago
  If it's a company market, price signaling and a reasonable market for both companies, long term, seems possible.

castratikron 10y ago

I've got both Uber and Lyft on my phone, which I guess could be analogous to having two hot dog stands on the same block. Drivers can switch between the two just as easily. You're right though, they do have a well-established brand, and they have spent a lot of effort in getting around all sorts of legal problems. I wonder, though, if the legal things that Uber has paved the way on would ever make it easier for some other Uber clone to take up the same business without all of the legal hurdles, since they've already established some sort of precedent.

edblarney 10y ago
Yes, but you don't have 'ABC lift' on your phone. Why? Because ABC has almost no drivers, and because it has almost no drivers, no customers, which means it's hard to attract drivers. - hence, network externalization as a barrier. There are tons of Uber-like companies, and you've never heard of them largely for this reason.
- bsder 10y ago
  > Yes, but you don't have 'ABC lift' on your phone. Why? Because ABC has almost no drivers, and because it has almost no drivers, no customers, which means it's hard to attract drivers. - hence, network externalization as a barrier. Actually, I do. But I only have 'ABC lift" for local, native areas that I am in continuously. I tend to use Lyft when I am out of my home area.
petra 10y ago
If it's a company market, price signaling and a reasonable market for both companies, long term, seems possible.