4 ms·

I think the argument is that Uber has almost zero switching cost. If I wanted to replace Facebook with Google+ or switch from Xbox to PlayStation I'd have to co

by tapoxi 9y ago

I think the argument is that Uber has almost zero switching cost. If I wanted to replace Facebook with Google+ or switch from Xbox to PlayStation I'd have to convince my friends to do so. To switch to Lyft I just had to install the app. Most of the drivers are the same since they just keep both apps running.

adventured 9y ago
That's in a fantasy premise that will never actually exist. Back in reality, here's the switching cost: the start-up trying to take Uber's market share, has dramatically inferior data on ride timing/volume; said company has dramatically inferior ride availability in a given city (and at a national, city to city consistency level it's a joke comparison). Further down the line, the upstart is going to lag even further behind due to Uber's data wall, as we shift into autonomous. Fantasy: it's friction free, anyone can start an Uber clone, there's no switching cost Reality: it's extraordinarily difficult to compete with Uber, which is why so few have or can. There's a huge switching cost: Uber has all sorts of advantages over a start-up, that help Uber provide a superior service - locally, nationally, globally - over what a new company can manage. Oh yeah, and the biggest one: it's very hard to build what Uber built, it's ten times harder to do it while there's already an Uber, because you have to fight with them and their hyper scale while you're doing it (Uber didn't have to kill an Uber, now you do, good luck). Wait there's more: and that's before we get to the fact that people are huge creatures of habit. Duck Duck Go produces excellent results, it'll never dent Google's search monopoly in a meaningful way; people do not want to switch unless they either have to, or the context goes beyond an extreme inconvenience. Both drivers and customers will tolerate a lot to not have to go through the immense (to them) hassle of switching. People grow to like their routines a lot, the things they use day to day, week to week; in fact, it's far beyond that, people are hyper resistant to change once they become settled in.
- linkregister 9y ago
  So few have or can? Lyft, which is still experiencing 100% growth year-over-year? Didi, which dominates the Chinese market? Ola, which matches Uber in India? Grab, which dominates in Malaysia and is experiencing large growth in Southeast Asia? Didi, Lyft, and Uber are all nearing the point where they can't dump subsidies on the market; they have to raise rates or they won't raise more money. They have to become profitable soon. When they become public companies, they won't be able to lower rates at the expense of profits without raising the ire of shareholders. By the way, the entire European market is open to the ride sharing company who can be palatable to EU governments. Uber is failing at this; the opportunity is very much there.
  - adventured 9y ago
    Lyft is going bankrupt in my opinion. They'll be acquired by one of the far larger companies interested in the space. They have a maximum of 12 to 18 months before an acquisition is forced upon them, as it nearly was a year ago, when they failed to find a buyer at the valuation they were seeking. There's no scenario where Lyft remains a viable stand-alone competitor; they're already not a viable competitor, their last funding merely bought them one more year of flailing about, burning vast red ink, looking for a buyer. It's obviously a different context globally, due to regulations, nationalism, et al. Didi for example will never own the US market, they're likely to end up like other Chinese tech giants, struggling to dominate internationally as they do domestically. Ola is the next Flipkart.
    - eberkund 9y ago
      But how is that any different than Uber? IMO people are going to be in for a real wake-up call when these companies finally kill traditional taxi company and there is a massive rate hike. Right now everyone loves Uber because they are cheaper than the equivalent Taxi ride but that is only because they are operating a massive loss and do some shady things with the way they hire and pay drivers.
      - adventured 9y ago
        > But how is that any different than Uber? Because they have a lot more money and will remain standing as an independent entity. Prices will either rise, or Uber will remove costs via autonomous driving (they're hoping to get there before they have to hike prices, because if they get there in time, it becomes a very difficult to overcome moat and they win). Amazon nearly went bankrupt on their hyper thin margins early on. Had the dotcom bubble popped just a bit sooner, they'd have gone under. They were bleeding red ink trying to get to scale before the easy money ran out. Uber is trying to do a similar thing, fortunately for them the asset bubble party has continued on long enough for them to raise a vast warchest of cash.
      - zoomzippity 9y ago
        Prices likely won't go up when taxis are gone. Uber doesn't consider taxis to be a competitor. Uber is trying to compete with car ownership. Liquidity begets liquidity. This is why marketplaces like stock exchanges and Amazon are natural monopolies.
- vannevar 9y ago
  There may come a day when Uber is winning because of their data, but that day is years away. Until then, back in reality, Uber is winning by spending investor money to pay customers to use their service. I tried DuckDuckGo and did not find the results to be excellent, so I switched back to Google. But I literally can't tell the difference between a Lyft, an Uber or a Fasten cab, it's just a sticker on the window as far as the customer is concerned. Price is the only significant discriminator.
  - adventured 9y ago
    > Price is the only significant discriminator. No, availability / scale, is also a massive discriminator. That's at least as important as price in the equation of succeeding as an Uber competitor. Lyft has some scale, however that requirement keeps out other new competition in a extremely big way. It'll have cost Lyft billions of dollars just to try to stay in the game with Uber and to get to meaningful scale; no VC is throwing another $2+ billion at the Nth Uber clone (particularly when you still have to compete with an existing Lyft). Few customers will keep track of a dozen Uber-clone services, and remember which ones have good city-by-city availability / representation. I live in SF, I'm going to Dallas, I want to have one Uber-like service that I can use in both locations without having to think about it, it just works in most or all major cities. That one issue will keep out most competition (as though the billion dollar cost of trying to dig into the market, trying to take share away from Uber & Lyft, isn't enough).

by tapoxi 9y ago

adventured 9y ago

That's in a fantasy premise that will never actually exist. Back in reality, here's the switching cost: the start-up trying to take Uber's market share, has dramatically inferior data on ride timing/volume; said company has dramatically inferior ride availability in a given city (and at a national, city to city consistency level it's a joke comparison). Further down the line, the upstart is going to lag even further behind due to Uber's data wall, as we shift into autonomous. Fantasy: it's friction free, anyone can start an Uber clone, there's no switching cost Reality: it's extraordinarily difficult to compete with Uber, which is why so few have or can. There's a huge switching cost: Uber has all sorts of advantages over a start-up, that help Uber provide a superior service - locally, nationally, globally - over what a new company can manage. Oh yeah, and the biggest one: it's very hard to build what Uber built, it's ten times harder to do it while there's already an Uber, because you have to fight with them and their hyper scale while you're doing it (Uber didn't have to kill an Uber, now you do, good luck). Wait there's more: and that's before we get to the fact that people are huge creatures of habit. Duck Duck Go produces excellent results, it'll never dent Google's search monopoly in a meaningful way; people do not want to switch unless they either have to, or the context goes beyond an extreme inconvenience. Both drivers and customers will tolerate a lot to not have to go through the immense (to them) hassle of switching. People grow to like their routines a lot, the things they use day to day, week to week; in fact, it's far beyond that, people are hyper resistant to change once they become settled in.

linkregister 9y ago
So few have or can? Lyft, which is still experiencing 100% growth year-over-year? Didi, which dominates the Chinese market? Ola, which matches Uber in India? Grab, which dominates in Malaysia and is experiencing large growth in Southeast Asia? Didi, Lyft, and Uber are all nearing the point where they can't dump subsidies on the market; they have to raise rates or they won't raise more money. They have to become profitable soon. When they become public companies, they won't be able to lower rates at the expense of profits without raising the ire of shareholders. By the way, the entire European market is open to the ride sharing company who can be palatable to EU governments. Uber is failing at this; the opportunity is very much there.
- adventured 9y ago
  Lyft is going bankrupt in my opinion. They'll be acquired by one of the far larger companies interested in the space. They have a maximum of 12 to 18 months before an acquisition is forced upon them, as it nearly was a year ago, when they failed to find a buyer at the valuation they were seeking. There's no scenario where Lyft remains a viable stand-alone competitor; they're already not a viable competitor, their last funding merely bought them one more year of flailing about, burning vast red ink, looking for a buyer. It's obviously a different context globally, due to regulations, nationalism, et al. Didi for example will never own the US market, they're likely to end up like other Chinese tech giants, struggling to dominate internationally as they do domestically. Ola is the next Flipkart.
  - eberkund 9y ago
    But how is that any different than Uber? IMO people are going to be in for a real wake-up call when these companies finally kill traditional taxi company and there is a massive rate hike. Right now everyone loves Uber because they are cheaper than the equivalent Taxi ride but that is only because they are operating a massive loss and do some shady things with the way they hire and pay drivers.
    - adventured 9y ago
      > But how is that any different than Uber? Because they have a lot more money and will remain standing as an independent entity. Prices will either rise, or Uber will remove costs via autonomous driving (they're hoping to get there before they have to hike prices, because if they get there in time, it becomes a very difficult to overcome moat and they win). Amazon nearly went bankrupt on their hyper thin margins early on. Had the dotcom bubble popped just a bit sooner, they'd have gone under. They were bleeding red ink trying to get to scale before the easy money ran out. Uber is trying to do a similar thing, fortunately for them the asset bubble party has continued on long enough for them to raise a vast warchest of cash.
    - zoomzippity 9y ago
      Prices likely won't go up when taxis are gone. Uber doesn't consider taxis to be a competitor. Uber is trying to compete with car ownership. Liquidity begets liquidity. This is why marketplaces like stock exchanges and Amazon are natural monopolies.
vannevar 9y ago
There may come a day when Uber is winning because of their data, but that day is years away. Until then, back in reality, Uber is winning by spending investor money to pay customers to use their service. I tried DuckDuckGo and did not find the results to be excellent, so I switched back to Google. But I literally can't tell the difference between a Lyft, an Uber or a Fasten cab, it's just a sticker on the window as far as the customer is concerned. Price is the only significant discriminator.
- adventured 9y ago
  > Price is the only significant discriminator. No, availability / scale, is also a massive discriminator. That's at least as important as price in the equation of succeeding as an Uber competitor. Lyft has some scale, however that requirement keeps out other new competition in a extremely big way. It'll have cost Lyft billions of dollars just to try to stay in the game with Uber and to get to meaningful scale; no VC is throwing another $2+ billion at the Nth Uber clone (particularly when you still have to compete with an existing Lyft). Few customers will keep track of a dozen Uber-clone services, and remember which ones have good city-by-city availability / representation. I live in SF, I'm going to Dallas, I want to have one Uber-like service that I can use in both locations without having to think about it, it just works in most or all major cities. That one issue will keep out most competition (as though the billion dollar cost of trying to dig into the market, trying to take share away from Uber & Lyft, isn't enough).