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If the individual driver doesn't think they're getting paid enough, that's fine. They don't have to drive for a ride-sharing company. But it's been years now a

If the individual driver doesn't think they're getting paid enough, that's fine. They don't have to drive for a ride-sharing company. But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. That means the only way VCs could be "subsidizing" the price is if the remainder of the price (the cut Uber takes) is too low, which is difficult to imagine. We already know what's actually happening--they're spending a ton of money expanding into new geographic areas and new markets (like Uber Eats). Yet that doesn't stop every Uber discussion on HN from becoming about the bubble popping on "subsidized" ride prices.

Jasper_ 9y ago
> But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. Why do you say that? It's well-known that they've toyed in every possible way with driver rates, including showing different rates to the consumer and the driver in an attempt to hide lower-than-market-rate wages.
- dnautics 9y ago
  In the end the driver has to eat, so whatever deception Uber does on the driver pay side is not really sustainable if it doesn't in the end meet the driver market (I was a driver for 1.5 yrs)
- moduspol 9y ago
  They still have the drivers. I'm not even endorsing it--but even at worst, that means drivers are subsidizing the ride prices, not investors. I don't think they are, though. If they were, they'd be having trouble keeping drivers working and we'd see complaints about long waits and unavailability.
  - emodendroket 9y ago
    If the prices they have are too low to pay the drivers and maintain a profit then the drivers are not the party subsidizing anything.
    - moduspol 9y ago
      The prices are verifiably not too low to pay the drivers because they do pay the drivers at the prices they're using. If the drivers are being paid below market rate and still driving for them, then they are the ones subsidizing.
      - emodendroket 9y ago
        I don't think you understand. Uber loses money on every ride. The only reason they can set such low prices is they're burning through investors' money.
        moduspol 9y ago
        No--the only reason they can pursue growth into new geographic areas and pursue new business models (like Uber eats) is because they're burning through investors' money. That in no way implies that their rides would not profitable if they were not spending so much on growth. But that's basically every business focused on growth.
        emodendroket 9y ago
        Here is a short summary of their earlier series on the topic: https://www.vox.com/new-money/2017/1/9/14194202/uber-lost-22-billion-9-months https://www.vox.com/new-money/2017/1/9/14194202/uber-lost-22... > In an epic five-part series of blog posts, transportation industry analyst Hubert Horan lays out the case for skepticism about Uber’s hype. In his view, Uber just doesn’t have a cost advantage over its competitors the way Amazon did. Amazon saved money by getting rid of expensive retail stores and sales clerks. In contrast, an Uber ride still requires a car, a driver, and some fuel just like a conventional taxi ride. So there isn’t much room for Uber to undercut its competitors. > “This industry has a simple cost structure,” Horan told me in January. “Labor is about 58 percent, fuel is 9 percent, and so forth.” > Of course, this flies in the face of many customers’ experiences. It sure seems like Uber has figured out how to provide a cleaner, faster ride at a lower fare. But Horan argues that this is entirely a reflection of the subsidies provided by Uber’s investors. Uber rides aren’t actually cheaper to provide than conventional taxi rides, Horan believes, it just seems like it because Uber is taking a loss on every ride. > An obvious objection here is that Uber’s investors are not idiots. They know perfectly well that “lose money on every ride and make it up on volume” isn’t a viable business model. And when they made their investments, they presumably had access to internal financial data that isn’t available to the rest of us. It seems very unlikely that Uber could convince investors to give it $11 billion to continue pursuing a business model whose numbers didn’t add up. > Horan told me Uber is accepting big losses now in an effort to drive conventional taxi companies and rivals like Lyft out of business. “Their growth is predatory,” Horan argued. “They are trying to displace more efficient producers.” The article I linked also offers an argument against this logic, but I'm not persuaded by it.
  - Jasper_ 9y ago
    There have been stories that drivers in searches of riches lease a car from Uber, which is paid off by being an Uber driver. If they leave the platform, they can't pay their lease. Low-income "gig economy" workers might not have the mobility to leave for better jobs. Perhaps that's a privilege only certain classes of well-paying jobs have.
    - moduspol 9y ago
      Even if that's 100% true at face value, it has no relevance to my point.
UncleEntity 9y ago
> But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. Sure they have drivers still...a whole lot of people who are basically just cashing out the equity on their cars today to make a couple bucks on the side.

Jasper_ 9y ago

> But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. Why do you say that? It's well-known that they've toyed in every possible way with driver rates, including showing different rates to the consumer and the driver in an attempt to hide lower-than-market-rate wages.

dnautics 9y ago
In the end the driver has to eat, so whatever deception Uber does on the driver pay side is not really sustainable if it doesn't in the end meet the driver market (I was a driver for 1.5 yrs)
moduspol 9y ago
They still have the drivers. I'm not even endorsing it--but even at worst, that means drivers are subsidizing the ride prices, not investors. I don't think they are, though. If they were, they'd be having trouble keeping drivers working and we'd see complaints about long waits and unavailability.
- emodendroket 9y ago
  If the prices they have are too low to pay the drivers and maintain a profit then the drivers are not the party subsidizing anything.
  - moduspol 9y ago
    The prices are verifiably not too low to pay the drivers because they do pay the drivers at the prices they're using. If the drivers are being paid below market rate and still driving for them, then they are the ones subsidizing.
    - emodendroket 9y ago
      I don't think you understand. Uber loses money on every ride. The only reason they can set such low prices is they're burning through investors' money.
      - moduspol 9y ago
        No--the only reason they can pursue growth into new geographic areas and pursue new business models (like Uber eats) is because they're burning through investors' money. That in no way implies that their rides would not profitable if they were not spending so much on growth. But that's basically every business focused on growth.
        emodendroket 9y ago
        Here is a short summary of their earlier series on the topic: https://www.vox.com/new-money/2017/1/9/14194202/uber-lost-22-billion-9-months https://www.vox.com/new-money/2017/1/9/14194202/uber-lost-22... > In an epic five-part series of blog posts, transportation industry analyst Hubert Horan lays out the case for skepticism about Uber’s hype. In his view, Uber just doesn’t have a cost advantage over its competitors the way Amazon did. Amazon saved money by getting rid of expensive retail stores and sales clerks. In contrast, an Uber ride still requires a car, a driver, and some fuel just like a conventional taxi ride. So there isn’t much room for Uber to undercut its competitors. > “This industry has a simple cost structure,” Horan told me in January. “Labor is about 58 percent, fuel is 9 percent, and so forth.” > Of course, this flies in the face of many customers’ experiences. It sure seems like Uber has figured out how to provide a cleaner, faster ride at a lower fare. But Horan argues that this is entirely a reflection of the subsidies provided by Uber’s investors. Uber rides aren’t actually cheaper to provide than conventional taxi rides, Horan believes, it just seems like it because Uber is taking a loss on every ride. > An obvious objection here is that Uber’s investors are not idiots. They know perfectly well that “lose money on every ride and make it up on volume” isn’t a viable business model. And when they made their investments, they presumably had access to internal financial data that isn’t available to the rest of us. It seems very unlikely that Uber could convince investors to give it $11 billion to continue pursuing a business model whose numbers didn’t add up. > Horan told me Uber is accepting big losses now in an effort to drive conventional taxi companies and rivals like Lyft out of business. “Their growth is predatory,” Horan argued. “They are trying to displace more efficient producers.” The article I linked also offers an argument against this logic, but I'm not persuaded by it.
- Jasper_ 9y ago
  There have been stories that drivers in searches of riches lease a car from Uber, which is paid off by being an Uber driver. If they leave the platform, they can't pay their lease. Low-income "gig economy" workers might not have the mobility to leave for better jobs. Perhaps that's a privilege only certain classes of well-paying jobs have.
  - moduspol 9y ago
    Even if that's 100% true at face value, it has no relevance to my point.

UncleEntity 9y ago

> But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. Sure they have drivers still...a whole lot of people who are basically just cashing out the equity on their cars today to make a couple bucks on the side.