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Uber and lyft look like a charity set up by VCs to provide people with cheaper transportation. Who knows what will happen once they increase fares as they promi

Uber and lyft look like a charity set up by VCs to provide people with cheaper transportation. Who knows what will happen once they increase fares as they promise to investors

swarnie_ 7y ago
As soon as one of them increase prices to generate profit ill just move on to the next ride sharing app, then the next, then the next. You'd need a price fixing scheme worthy of British Airways make this work.
- deleted 7y ago
  [deleted]
- adventured 7y ago
  It doesn't actually work that way in reality. If it did, there would already be another massive Uber undercutting Uber in eg the US market and raising $10+ billion in VC money to do it. Because hey, a $75 billion valuation is sitting right there, so it's really easy: just put $10 or $20 billion into the company, undercut Uber, IPO, easy return. Everbody can do it, just add $20 billion. What's actually the case, is the next clone will need $20 or $30 billion to fight and undercut Uber's entrenched brand, functioning system and scaled up position. And even in that case, the odds of winning against the large incumbents is low. It will cost even more to beat Uber via the undercut game than what Uber has already spent, because you have to take the market away from them - always a dramatically more expensive and difficult proposition. VCs are not going to continue to burn massive amounts of capital trying to fund the next loss-making ride hailing company. The next $10 or $20 billion to put into an Uber clone in its major markets, does not exist and it will never exist. Few things would scare a VC more than having the pitch that your plan is to destroy twice as much capital as what Uber did, to unseat Uber's entreched position, with nothing to differentiate you other than the speed at which you destroy capital. That's why nobody is doing it right now. There isn't another Lyft, much less another Uber. Softbank isn't looking to drop $20 billion to fund the next Uber, to fight with Uber, in the US and similar markets that Uber dominates now.
  - philipodonnell 7y ago
    > As soon as one of them increase prices to generate profit Once prices get back to a sustainable level it will be more appealing for other entrants and they won't need to burn that much money.
  - return1 7y ago
    There are a bunch of taxi apps in markets where uber is not allowed to enter and they are doing quite well too. This means thay if drivers are not happy with uber s pay, they can group together to creat their own gig. Users seem to go with whatever is cheapest. Uber doesn’t have entrenched anything
    - asdff 7y ago
      Everyone I know compares prices between the two and goes with the cheapest, there isn't any loyalty. In most cases its the exact same driver working for both companies anyway; the service is identical. Even Lyfts subscription plan seems tailored to people who take one to work every day, and how many jobs really compensate you well enough to hail a private vehicle 10+ times a week? Maybe if you make north of 200k a year it seems great, but if I took one to work I'd be blowing $70-100+ a week on commuting alone, about the going rate of a bicycle on craigslist, and over twice as much as an unlimited NYC metro pass.
  - JMTQp8lwXL 7y ago
    The company that delivers fully autonomous vehicles would have no trouble securing funding to not have to operate within Uber's walled garden and give Uber a 22% cut of profits, and make their own app. Remember, when the independent contractors go away, you don't need offices in every city to onboard drivers, you don't need a big legal team to fight the ongoing "are they contractors or employees" debate, etc. In other words, the company that delivers autonomous won't need $10B to make a cloned Uber app. Since the driver is the biggest cost for Uber, riders will gleefully switch to the clone at even cheaper prices.
    - rbranson 7y ago
- unreal37 7y ago
  This reminds me of an airline actually. Uber is "the first airline" for ride sharing service. Lyft is "the second airline". The way that you beat an airline is not to copy it's service. It's to figure out it's most profitable routes and provide cheaper service on only those routes. Ignore the unprofitable routes. If Uber can make a good profit in one city, and loses money in hundreds of other cities, someone will come along and compete with them in just the one city. You don't need $20 billion to beat Uber. You only need to compete in their 5 most profitable cities.
  - sjg007 7y ago
    Airlines are a good analogy. I imagine we will see Uber and Lyft miles/points as a thing. Maybe even status as a thing.. A good comparison to Uber is starbucks. Their average sale is $5 but they’ve managed to grow and grow, mostly by investing in their “partners”. Uber could do something similar. The podcast masters of scale has a good segment on Starbucks.
    - unreal37 7y ago
      Right, how do the airlines hang on to their customers with cheaper competitors? Points, upgrades and luxury. Imagine getting Uber Black upgrade for free if you've done 100 rides with them in a year....
- jartelt 7y ago
  How do Delta, United, American Airlines, and Southwest all operate within the same market and not have fare wars constantly leading to bankruptcy? If you were correct, it seems like it would be impossible for several airlines to operate within the US. Yet, several airlines somehow manage to set prices that allow them to operate. I'm not saying Lyft and Uber will ultimately be successful (I don't know), but it wouldn't unheard of for multiple players to operate in the ride sharing market and not constantly have a fare war.
  - return1 7y ago
    sounds like what taxicab companies have been doing for centuries.the question is what growth prospects uber has in a market that is already saturated and fighting for the bottom line, as there is little barrier for a new entrant.
  - unreal37 7y ago
    Not sure if you're joking, but the airlines have a long long history of bankruptcy... Even American Airlines declared bankruptcy in 2011 and emerged from it in 2013... Delta in 2005. United in 2002. [0] http://airlines.org/dataset/u-s-bankruptcies-and-services-cessations/ http://airlines.org/dataset/u-s-bankruptcies-and-services-ce...
    - jartelt 7y ago
      Yet AA, Delta, and United are each still operating and each valued at over $10B today. The point is that the airline industry has several players operating and competing and has not totally imploded and fares have not skyrocketed. Many are predicting Uber and lyft will either raise fares a ton or the companies will totally fail and be worthless. I'm saying there is a middle ground where they compete without killing each other.
forgotmyhnacc 7y ago
We already have seen the effects of non subsidized fees: mass protests. https://www.sfchronicle.com/business/article/Uber-drivers-draw-attention-shut-down-Market-13830480.php https://www.sfchronicle.com/business/article/Uber-drivers-dr...

Uber and lyft look like a charity set up by VCs to provide people with cheaper transportation. Who knows what will happen once they increase fares as they promise to investors

swarnie_ 7y ago

As soon as one of them increase prices to generate profit ill just move on to the next ride sharing app, then the next, then the next. You'd need a price fixing scheme worthy of British Airways make this work.

deleted 7y ago
[deleted]
adventured 7y ago
It doesn't actually work that way in reality. If it did, there would already be another massive Uber undercutting Uber in eg the US market and raising $10+ billion in VC money to do it. Because hey, a $75 billion valuation is sitting right there, so it's really easy: just put $10 or $20 billion into the company, undercut Uber, IPO, easy return. Everbody can do it, just add $20 billion. What's actually the case, is the next clone will need $20 or $30 billion to fight and undercut Uber's entrenched brand, functioning system and scaled up position. And even in that case, the odds of winning against the large incumbents is low. It will cost even more to beat Uber via the undercut game than what Uber has already spent, because you have to take the market away from them - always a dramatically more expensive and difficult proposition. VCs are not going to continue to burn massive amounts of capital trying to fund the next loss-making ride hailing company. The next $10 or $20 billion to put into an Uber clone in its major markets, does not exist and it will never exist. Few things would scare a VC more than having the pitch that your plan is to destroy twice as much capital as what Uber did, to unseat Uber's entreched position, with nothing to differentiate you other than the speed at which you destroy capital. That's why nobody is doing it right now. There isn't another Lyft, much less another Uber. Softbank isn't looking to drop $20 billion to fund the next Uber, to fight with Uber, in the US and similar markets that Uber dominates now.
- philipodonnell 7y ago
  > As soon as one of them increase prices to generate profit Once prices get back to a sustainable level it will be more appealing for other entrants and they won't need to burn that much money.
- return1 7y ago
  There are a bunch of taxi apps in markets where uber is not allowed to enter and they are doing quite well too. This means thay if drivers are not happy with uber s pay, they can group together to creat their own gig. Users seem to go with whatever is cheapest. Uber doesn’t have entrenched anything
  - asdff 7y ago
    Everyone I know compares prices between the two and goes with the cheapest, there isn't any loyalty. In most cases its the exact same driver working for both companies anyway; the service is identical. Even Lyfts subscription plan seems tailored to people who take one to work every day, and how many jobs really compensate you well enough to hail a private vehicle 10+ times a week? Maybe if you make north of 200k a year it seems great, but if I took one to work I'd be blowing $70-100+ a week on commuting alone, about the going rate of a bicycle on craigslist, and over twice as much as an unlimited NYC metro pass.
- JMTQp8lwXL 7y ago
  The company that delivers fully autonomous vehicles would have no trouble securing funding to not have to operate within Uber's walled garden and give Uber a 22% cut of profits, and make their own app. Remember, when the independent contractors go away, you don't need offices in every city to onboard drivers, you don't need a big legal team to fight the ongoing "are they contractors or employees" debate, etc. In other words, the company that delivers autonomous won't need $10B to make a cloned Uber app. Since the driver is the biggest cost for Uber, riders will gleefully switch to the clone at even cheaper prices.
  - rbranson 7y ago
unreal37 7y ago
This reminds me of an airline actually. Uber is "the first airline" for ride sharing service. Lyft is "the second airline". The way that you beat an airline is not to copy it's service. It's to figure out it's most profitable routes and provide cheaper service on only those routes. Ignore the unprofitable routes. If Uber can make a good profit in one city, and loses money in hundreds of other cities, someone will come along and compete with them in just the one city. You don't need $20 billion to beat Uber. You only need to compete in their 5 most profitable cities.
- sjg007 7y ago
  Airlines are a good analogy. I imagine we will see Uber and Lyft miles/points as a thing. Maybe even status as a thing.. A good comparison to Uber is starbucks. Their average sale is $5 but they’ve managed to grow and grow, mostly by investing in their “partners”. Uber could do something similar. The podcast masters of scale has a good segment on Starbucks.
  - unreal37 7y ago
    Right, how do the airlines hang on to their customers with cheaper competitors? Points, upgrades and luxury. Imagine getting Uber Black upgrade for free if you've done 100 rides with them in a year....
jartelt 7y ago
How do Delta, United, American Airlines, and Southwest all operate within the same market and not have fare wars constantly leading to bankruptcy? If you were correct, it seems like it would be impossible for several airlines to operate within the US. Yet, several airlines somehow manage to set prices that allow them to operate. I'm not saying Lyft and Uber will ultimately be successful (I don't know), but it wouldn't unheard of for multiple players to operate in the ride sharing market and not constantly have a fare war.
- return1 7y ago
  sounds like what taxicab companies have been doing for centuries.the question is what growth prospects uber has in a market that is already saturated and fighting for the bottom line, as there is little barrier for a new entrant.
- unreal37 7y ago
  Not sure if you're joking, but the airlines have a long long history of bankruptcy... Even American Airlines declared bankruptcy in 2011 and emerged from it in 2013... Delta in 2005. United in 2002. [0] http://airlines.org/dataset/u-s-bankruptcies-and-services-cessations/ http://airlines.org/dataset/u-s-bankruptcies-and-services-ce...
  - jartelt 7y ago
    Yet AA, Delta, and United are each still operating and each valued at over $10B today. The point is that the airline industry has several players operating and competing and has not totally imploded and fares have not skyrocketed. Many are predicting Uber and lyft will either raise fares a ton or the companies will totally fail and be worthless. I'm saying there is a middle ground where they compete without killing each other.

forgotmyhnacc 7y ago

We already have seen the effects of non subsidized fees: mass protests. https://www.sfchronicle.com/business/article/Uber-drivers-draw-attention-shut-down-Market-13830480.php https://www.sfchronicle.com/business/article/Uber-drivers-dr...