4 ms·

>But the "cheaper" part is largely because rides are being subsidized by VC money no? Uber is a private company so their accounting isn't publicized but as far

by jasode 10y ago

>But the "cheaper" part is largely because rides are being subsidized by VC money no? Uber is a private company so their accounting isn't publicized but as far we can tell, the VC subsidies target a very specific situation: the low prices from competition such as Lyft/Didi Leaving out the "price wars" aspect, the unsubsidized higher Uber fares would still be lower than: 1) taxis (especially out to the suburbs) 2) the TOC (Total Cost Ownership) of owning a car if consumers make a behavioral change from buying their own car and instead, switch to an on-demand "car as a service". E.g. using Uber 10 to 20 times a month is less than purchase price of car + loan interest + taxes + annual registration + insurance + parking garages.

cmdrfred 10y ago
That price equation probably only holds for new or used luxury cars or within major cities. A cheap beater or something like a new Kia would likely be more cost effective for commuting over the life of the vehicle in my estimation.
- jasode 10y ago
  Yes, I didn't mean for my example to be a universal cost savings for everyone. It's definitely a case-by-case basis. If one is doing a lot of driving around such as real estate agent or soccer mom with 3 active kids, relying on Uber instead of owning a car would be not be cost effective. That aside, many would see cost savings by making the economic switch from car-as-ownership to car-as-a-service and that scenario doesn't depend on VC subsidies.
bogomipz 10y ago
How did you arrive at number 1 if you don't know what the subsidy is? Similar with number 2, if don't actually know what the subsidy is worth how can you state this?
- jasode 10y ago
  >How did you arrive at number 1 if you don't know what the subsidy is? Keep in mind that Uber isn't subsidizing every fare in every city in all circumstances because even with a $11 billion war chest from VCs, that's unaffordable. They are strategically subsidizing in specific markets (e.g. price wars with Lyft and previously Didi in China). In the early days (2011?), Uber didn't have heavily subsidized fares and riders still chose them over taxis because they cost less. My comments are based on observations from analysts, comments from investors Bill Gurley (Benchmark) and the CEO.[1] [1] http://www.businessinsider.com/uber-says-its-profitable-in-the-us-2016-4 http://www.businessinsider.com/uber-says-its-profitable-in-t...
  - bogomipz 10y ago
    Your link is a Business Insider story that cites a Bloomberg story that cites a "a previously undisclosed document." That's a bit loose isn't it? Additionally the statement is for "February" and only the United States. "In February, Uber earned an average of 19¢ per ride in the U.S., according to previously undisclosed financial documents." You realize that comments from analysts have been hugely wrong before? See Henry Blodgett and Mary Meeker.
    - jasode 10y ago
      >You realize that comments from analysts have been hugely wrong before? Yes they're often wrong but I wasn't talking about predictions. I was talking about how they described the past. Uber was already beating taxis in limited markets without any subsidies. If I'm interpreting your position correctly, you believe that the only possible way for Uber to be cheaper than taxis is through subsidies. This isn't true. Financial arbitrage of transportation by using crowd-sourced cars instead of taxis has been discovered by a dozen companies besides Uber. In fact, the opposite tactic of no subsidies and aggressive surge pricing can still be cheaper than taxis.[1] Put another way, Uber (crowd-sourced cars and not the luxury Black Service) without subsidies is by design, cheaper than taxis. What the subsidies attempt do is make Uber cheaper than Lyft/Didi. The subsidies were part of a competitive strategy to try and bleed Lyft and Didi to death. (It didn't work with Didi and Uber called a truce with them. How Lyft plays out remains to be seen.) However, the subsidies are not necessary for Uber fares to be cheaper than taxis. [1] http://www.chicagotribune.com/redeye/redeye-ride-share-cabs-surge-cost-breakdown-20160408-column.html http://www.chicagotribune.com/redeye/redeye-ride-share-cabs-...

by jasode 10y ago

cmdrfred 10y ago

That price equation probably only holds for new or used luxury cars or within major cities. A cheap beater or something like a new Kia would likely be more cost effective for commuting over the life of the vehicle in my estimation.

jasode 10y ago
Yes, I didn't mean for my example to be a universal cost savings for everyone. It's definitely a case-by-case basis. If one is doing a lot of driving around such as real estate agent or soccer mom with 3 active kids, relying on Uber instead of owning a car would be not be cost effective. That aside, many would see cost savings by making the economic switch from car-as-ownership to car-as-a-service and that scenario doesn't depend on VC subsidies.

bogomipz 10y ago

How did you arrive at number 1 if you don't know what the subsidy is? Similar with number 2, if don't actually know what the subsidy is worth how can you state this?

jasode 10y ago
>How did you arrive at number 1 if you don't know what the subsidy is? Keep in mind that Uber isn't subsidizing every fare in every city in all circumstances because even with a $11 billion war chest from VCs, that's unaffordable. They are strategically subsidizing in specific markets (e.g. price wars with Lyft and previously Didi in China). In the early days (2011?), Uber didn't have heavily subsidized fares and riders still chose them over taxis because they cost less. My comments are based on observations from analysts, comments from investors Bill Gurley (Benchmark) and the CEO.[1] [1] http://www.businessinsider.com/uber-says-its-profitable-in-the-us-2016-4 http://www.businessinsider.com/uber-says-its-profitable-in-t...
- bogomipz 10y ago
  Your link is a Business Insider story that cites a Bloomberg story that cites a "a previously undisclosed document." That's a bit loose isn't it? Additionally the statement is for "February" and only the United States. "In February, Uber earned an average of 19¢ per ride in the U.S., according to previously undisclosed financial documents." You realize that comments from analysts have been hugely wrong before? See Henry Blodgett and Mary Meeker.
  - jasode 10y ago
    >You realize that comments from analysts have been hugely wrong before? Yes they're often wrong but I wasn't talking about predictions. I was talking about how they described the past. Uber was already beating taxis in limited markets without any subsidies. If I'm interpreting your position correctly, you believe that the only possible way for Uber to be cheaper than taxis is through subsidies. This isn't true. Financial arbitrage of transportation by using crowd-sourced cars instead of taxis has been discovered by a dozen companies besides Uber. In fact, the opposite tactic of no subsidies and aggressive surge pricing can still be cheaper than taxis.[1] Put another way, Uber (crowd-sourced cars and not the luxury Black Service) without subsidies is by design, cheaper than taxis. What the subsidies attempt do is make Uber cheaper than Lyft/Didi. The subsidies were part of a competitive strategy to try and bleed Lyft and Didi to death. (It didn't work with Didi and Uber called a truce with them. How Lyft plays out remains to be seen.) However, the subsidies are not necessary for Uber fares to be cheaper than taxis. [1] http://www.chicagotribune.com/redeye/redeye-ride-share-cabs-surge-cost-breakdown-20160408-column.html http://www.chicagotribune.com/redeye/redeye-ride-share-cabs-...