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I don't get it. Taxicabs such as in NYC are famously expensive to buy into, and yet drivers somehow afford it and make livings on them. So if they are clearly

I don't get it. Taxicabs such as in NYC are famously expensive to buy into, and yet drivers somehow afford it and make livings on them. So if they are clearly not losing money, why is it that a company that's supposed to be vastly more efficient due to use of computers can't make a profit? Are the tech overheads really that high?

nerfhammer 9y ago
Because they're spending it on other stuff. Lots of those thousands and thousands of engineers are working on developing other products not the least of which is self-driving cars.
UncleEntity 9y ago
My theory is they are attempting to put the competition out of business by running at a loss then adjust the rates to where they can make money which, coincidentally, will be be almost exactly the amounts the "evil" taxi companies were charging. I could be totally wrong but if I were a betting man...
- chadrs 9y ago
  By the way this behavior is illegal in many countries: https://en.wikipedia.org/wiki/Predatory_pricing#Legal_aspects https://en.wikipedia.org/wiki/Predatory_pricing#Legal_aspect...
- pesfandiar 9y ago
  That's still a win for consumers, because they certainly raised the bar for customer experience. They run leaner than old-fashioned cab companies and can keep prices lower at the end too.
  - hrasyid 9y ago
    Is it a win for society, though? If they ended up being a stronger and more global monopoly than cab companies, the savings from being "leaner" would just end up in the pockets of the few and everyone else would not be better off.
  - gaius 9y ago
    That's still a win for consumers No it isn’t, because externalities. With Uber dodging all its taxes who is paying for the infrastructure and services it relies on? If you are an Uber driver in London neither you nor Uber is paying any NI but you’d still expect the NHS to treat you...
rhino369 9y ago
Uber is probably profitable in NYC (and if it isn’t, it could be by raising prices and cutting costs). The question is everywhere else. And NYC taxis relied on mostly immigrants driving 12 hours a day; in cheap fleet cars. The medallions (for a long time) were an appreciating asset. So only the interest on the loans were an actual expense. 5% interest on a million dollar loan is only 50k a year. And they’d offer split it amongst drivers (two or three split a car).
em3rgent0rdr 9y ago
Taxicabs such as in NYC are (were) monopolies. The price you paid was far above what the market rate should have been, which is why drivers were able to make livings on them. Uber/Lyft are simply forcing prices back down to the market rate which is where the prices should be in a free market. Driving isn't really something that should be a career. > "Why is it that a company that's supposed to be vastly more efficient due to use of computers can't make a profit?" Well Uber/Lyft are probably focused on growth now. They will make plenty of profit once they dominante every city with driver-less cars.
- prostoalex 9y ago
  Yeah, but the taxi driver had to finance both his/her medallion and the car, which in most cases would not double as a personal car for everyday errands (as somebody else would drive it during their shift). Those costs have been driven down as well.
- chrismcb 9y ago
  If the GP is correct and the companies are losing money and subsidized by venture capital... Then no, they aren't fixing the process down to market rate. They are artificially delaying the market rate with venture capital.
  - sundvor 9y ago
    Yep, and ruining life of lots of people in the process. But hey, all for big money!
    - nopriorarrests 9y ago
      I do not see how subsidizing work is "ruining life of people". I, for one, receive competitive salary from market and would love my work be additionally subsidized by VC. Ruin me all you can.
      - addicted 9y ago
        Subsidizing poorly paid work. Work that on the median, if the research is correct, does not even make 50% of minimum wage.
lhorie 9y ago
As I understand, it tends to be profitable in cities where it has operated for longer time, but it operates at a loss in cities where they've entered more recently due to costs related to marketing for driver acquisition, customer support, fraud, etc while ramping up the fleet size and establishing a stable physical presence. As for drivers, my anecdata is that many claim to make "good money" (in their words). I've had a guy say Uber doesn't make him money, but then he followed up by saying he's a retired guy just doing it to keep active and that he owns two convenience stores...

nerfhammer 9y ago

Because they're spending it on other stuff. Lots of those thousands and thousands of engineers are working on developing other products not the least of which is self-driving cars.

UncleEntity 9y ago

My theory is they are attempting to put the competition out of business by running at a loss then adjust the rates to where they can make money which, coincidentally, will be be almost exactly the amounts the "evil" taxi companies were charging. I could be totally wrong but if I were a betting man...

chadrs 9y ago
By the way this behavior is illegal in many countries: https://en.wikipedia.org/wiki/Predatory_pricing#Legal_aspects https://en.wikipedia.org/wiki/Predatory_pricing#Legal_aspect...
pesfandiar 9y ago
That's still a win for consumers, because they certainly raised the bar for customer experience. They run leaner than old-fashioned cab companies and can keep prices lower at the end too.
- hrasyid 9y ago
  Is it a win for society, though? If they ended up being a stronger and more global monopoly than cab companies, the savings from being "leaner" would just end up in the pockets of the few and everyone else would not be better off.
- gaius 9y ago
  That's still a win for consumers No it isn’t, because externalities. With Uber dodging all its taxes who is paying for the infrastructure and services it relies on? If you are an Uber driver in London neither you nor Uber is paying any NI but you’d still expect the NHS to treat you...

rhino369 9y ago

Uber is probably profitable in NYC (and if it isn’t, it could be by raising prices and cutting costs). The question is everywhere else. And NYC taxis relied on mostly immigrants driving 12 hours a day; in cheap fleet cars. The medallions (for a long time) were an appreciating asset. So only the interest on the loans were an actual expense. 5% interest on a million dollar loan is only 50k a year. And they’d offer split it amongst drivers (two or three split a car).

em3rgent0rdr 9y ago

Taxicabs such as in NYC are (were) monopolies. The price you paid was far above what the market rate should have been, which is why drivers were able to make livings on them. Uber/Lyft are simply forcing prices back down to the market rate which is where the prices should be in a free market. Driving isn't really something that should be a career. > "Why is it that a company that's supposed to be vastly more efficient due to use of computers can't make a profit?" Well Uber/Lyft are probably focused on growth now. They will make plenty of profit once they dominante every city with driver-less cars.

prostoalex 9y ago
Yeah, but the taxi driver had to finance both his/her medallion and the car, which in most cases would not double as a personal car for everyday errands (as somebody else would drive it during their shift). Those costs have been driven down as well.
chrismcb 9y ago
If the GP is correct and the companies are losing money and subsidized by venture capital... Then no, they aren't fixing the process down to market rate. They are artificially delaying the market rate with venture capital.
- sundvor 9y ago
  Yep, and ruining life of lots of people in the process. But hey, all for big money!
  - nopriorarrests 9y ago
    I do not see how subsidizing work is "ruining life of people". I, for one, receive competitive salary from market and would love my work be additionally subsidized by VC. Ruin me all you can.
    - addicted 9y ago
      Subsidizing poorly paid work. Work that on the median, if the research is correct, does not even make 50% of minimum wage.

lhorie 9y ago

As I understand, it tends to be profitable in cities where it has operated for longer time, but it operates at a loss in cities where they've entered more recently due to costs related to marketing for driver acquisition, customer support, fraud, etc while ramping up the fleet size and establishing a stable physical presence. As for drivers, my anecdata is that many claim to make "good money" (in their words). I've had a guy say Uber doesn't make him money, but then he followed up by saying he's a retired guy just doing it to keep active and that he owns two convenience stores...