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No one has seen all the numbers but both services spend an extraordinary amount on advertising, Rider and driver obtainment, market development/setup costs, and
by spaceflunky 8y ago
No one has seen all the numbers but both services spend an extraordinary amount on advertising, Rider and driver obtainment, market development/setup costs, and legal costs. Like an absolute shit load.
Presumably all of those costs would disappear once someone wins the market or a "truce" is called. Right now both teams are spending like crazy in those areas because they need to have best numbers at IPO time. But once they both go public and the stock prices stabilize I suspect the spending will go down and they will be more profitable.
- marinman 8y ago"Presumably all of those costs would disappear once someone wins the market or a "truce" is called." I'm not sure any single company ever truly wins this market because, as others have mentioned, the barriers to entry are pretty low. Raise VC money to subsidize the most lucrative rides/markets and Lyft & Uber will never be able to stop their spending (either through advertising or through acquiring new entrants). The ride-share market may wind up like the airlines: heavy utilization but not amazing businesses.
- spaceflunky 8y ago>The ride-share market may wind up like the airlines: heavy utilization but not amazing businesses. I think that's more or less what I was trying to get at. Once you build your place in the market, competition can and will come along, but you'll be so entrenched, just like the airlines, you can just cruise along (no pun intended) with very little spent on ads or customer acquisition.
- Jommi 8y agoYou're quite close. There is a also a cost lowering network effect in ridehailing