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What's really interesting, and I think what's unclear is this: what's costs these services so much that they can't turn a profit? Their costs, other than takin
by bane 8y ago
What's really interesting, and I think what's unclear is this: what's costs these services so much that they can't turn a profit?
Their costs, other than taking a haircut on the ride, doesn't seem entirely clear, or obviously large.
A 2017 number says Lyft completes about 360 million rides per year. For fun, let's say they make $1 per ride, are they really not able to run their front-end operations with around 1,000 employees? (assuming an employee costs about $250k-300k/yr)?
That seems crazy to me, but I don't know what hidden costs there are. From an outside PoV it appears they need to run a more or less static website, about 4 smartphone apps with some back-end routefinding and accounting systems.
What am I missing?
- hopler 8y agoLyft charges $2/ride plus some wiggle around discounts and surge pricing.
- mosdl 8y agoWhich is why I expect massive layoffs at uber/lyft, they have too many employees for the simple things they do.
- lazyasciiart 8y agoI'd guess you're underestimating the cost per employee by about half, is one factor.
- bane 8y agoIf your cost per employee is approaching half a million dollars or more on average, you've probably messed up somewhere. If you're a taxicab company and your non-driving staff is making that, you've definitely screwed up somewhere.
- nabaraz 8y agoLast I looked at Uber's financials, 90-95% of their expenses was driver earnings. And then you have operating expenses that includes employees, promotions, r&d, regulatory fees, marketing, support, new investments etc. Uber's margin is probably under 5% which simply isn't enough.
- remote_phone 8y agoYou were looking at the wrong numbers, or you didn’t understand if those were the conclusions you came to.
- wonnage 8y agoAWS/Google Maps/Foursquare etc. bills probably add up. Customer service - Uber seems to have decided it's cheaper to just allow a few no-questions-asked refunds for cancellations than actually getting humans involved every time Office space (in SF!) to hold all those employees "some back-end routefinding" becomes hideously complex once you factor in: - real-time road closures - lyft line matching - traffic modelling - time-of-day turn restrictions - normalizing data from various regional map providers - routing itself is NP-hard