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But their lines of business have inherently low barriers to entry and inherent economic disincentives to artificially keep supply as high as these services do i
by mlthoughts2018 8y ago
But their lines of business have inherently low barriers to entry and inherent economic disincentives to artificially keep supply as high as these services do in outlying regions.
The minute they either pay drivers less, charge riders more, or reduce supply, it’s an immediate opportunity for another entrant. Diversifying into e-bikes won’t change that. It’s just an inherent property of the entire concept of a regional taxi service.
Self-driving cars won’t change anything either, as they will just be yet another commodity device that all those would-be entrants can lease and use all the same. The extreme sensitivity to price competition would remain.
The real reason for these auxiliary transportation acquisitions by Lyft or Uber and all the fluff about being “the Amazon of transportation” is simple: they don’t have anything close to a profitable business model. It’s wholly reliant on keeping ride supply artificially high in outlying areas and prices artificially low, through VC subsidy.
In the meantime, they need splashy new stories to tell to keep the hype train going. First it was going to be Uber Eats and other gig economy extensions. Not profitable either? OK, let’s do something with bikes or city travel guides.
- deleted 8y ago[deleted]
- 0xB31B1B 8y ago“Ridesharing isn’t a profitable business” - this isn’t true. Uber and Lyft both have many cities that have positive unit economics. IIRC the North American market as a whole is profitable for both companies. Both companies are losing money because they are plowing into more and more growth (a la amzn), not because the business is bunk.
- subway 8y agoBoth Uber and Lyft punt massive operating costs onto their semi-disposable drivers.
- mlthoughts2018 8y agoAll available data so far has not shown what you claim, except I believe for the borough of Manhattan (not even all of NYC), and even that is questionable because of all the widely reported accounting shenanigans Uber has pulled with including full prices in their revenue numbers instead of subtracting out large fare discounts or government fares, etc., from top line revenue. But regardless, nobody would question if a taxi operation is profitable in a small region with correctly calibrated ride supply in outlying areas. Even if a single company banded together a few such profitable regions around the world, it wouldn’t be surprising. However, it would be surprising if you claimed that company had a valuation of tens of billions of dollars while operating on annual losses of ~7 billion dollars. That would make no sense at all.