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> I don't see how these companies will stop losing $1b+ a year each year. The public markets will not be too kind. Are you saying taxis can't exist? As far as

by dwild 8y ago

> I don't see how these companies will stop losing $1b+ a year each year. The public markets will not be too kind. Are you saying taxis can't exist? As far as I know, any taxi dispatcher take a similar cut (30%) as them and their cost seems way higher (no automation at all, require people on phone, etc..). Theses loses are either because they are considered unlawful somewhere (I never heard of this issue with Lyft but I guess that's may be happening) and have to fight for it, or because they are trying to expands. If they stop both of theses (operating everywhere they are considered unlawful and stopping to expands) then their cost remaining are pretty similar to any Taxi dispatcher but they require much less staff.

Areading314 8y ago
Right, but the market for taxi dispatchers is a much smaller market than the market for taxis. Riders aren't the customer, drivers are. And price in this competitive market will tend towards a fixed monthly subscription cost, not a % cut of their rides.
robryan 8y ago
If Lyft and Uber eventually have to raise prices to be similar to a regular taxi or even higher that could hurt them in a lot of markets.
arcticbull 8y ago
The difference is taxi companies are profitable (or at least break even) -- and by virtue of necessity. There's no nationwide taxi company. Each tends to be local to their municipality. As such they can't absorb big losses and aren't subsidized by VCs or public markets. Taxis charge more than the service costs to deliver, Lyft and Uber don't. Lyft and Uber have higher cost basis than taxi companies because they don't leverage economies of scale of car ownership and insurance via shared fleet as taxis do. Then they also charge less to riders. There's also no guarantee people would continue to use Lyft or Uber if they raised their prices to above the cost to provide the service, particularly when that number is actually higher than a taxi. To my knowledge, Uber has a -61% profit margin. You give them $10 and they spend $16 to provide you the service.

by dwild 8y ago

Areading314 8y ago

Right, but the market for taxi dispatchers is a much smaller market than the market for taxis. Riders aren't the customer, drivers are. And price in this competitive market will tend towards a fixed monthly subscription cost, not a % cut of their rides.

robryan 8y ago

If Lyft and Uber eventually have to raise prices to be similar to a regular taxi or even higher that could hurt them in a lot of markets.

arcticbull 8y ago

The difference is taxi companies are profitable (or at least break even) -- and by virtue of necessity. There's no nationwide taxi company. Each tends to be local to their municipality. As such they can't absorb big losses and aren't subsidized by VCs or public markets. Taxis charge more than the service costs to deliver, Lyft and Uber don't. Lyft and Uber have higher cost basis than taxi companies because they don't leverage economies of scale of car ownership and insurance via shared fleet as taxis do. Then they also charge less to riders. There's also no guarantee people would continue to use Lyft or Uber if they raised their prices to above the cost to provide the service, particularly when that number is actually higher than a taxi. To my knowledge, Uber has a -61% profit margin. You give them $10 and they spend $16 to provide you the service.