5 ms·

I'm convinced that the end goal is being the last one standing. Either one of them failing would guarantee a monopoly for the other and make it easier to play w

by m_ke 7y ago

I'm convinced that the end goal is being the last one standing. Either one of them failing would guarantee a monopoly for the other and make it easier to play with the margins.

CPLX 7y ago
> Either one of them failing would guarantee a monopoly for the other Why? Is there some reason someone else couldn't make a basic app-based service to get taxi rides?
- jorts 7y ago
  They exist and they're terrible (at least in SF) as taxis still aren't reliable to pick you up.
- m_ke 7y ago
  Because they'll be able to undercut any small competitor that attempts to enter one of their markets by subsidizing it with revenue from everywhere else.
  - CPLX 7y ago
    Not really. It’s a large market with almost no barrier to entry. Either they have huge margins or they don’t. If they do have large margins someone will come along and attack the most profitable segment of the business. That could be airport rides, or having extra cars outside the end of a sporting event, or whatever. As long as switching costs for customers are low then they can’t defend high margins. For monopoly to work you either have to corner supply somehow or lock the customers in. There’s no plausible mechanism for either with taxi services.
    - m_ke 7y ago
      Supply is a barrier to entry. These 2 sided market places require having a large supply of drivers and riders to be viable. A new competitor would probably need to come in with a managed fleet and be ready to operate at a loss for a really long time. At their current scale uber and lyft don't need to have huge margins, they just need to break even and can make up for it with volume. Like amazon they could undercut any new competitor and play the long game. Their marginal costs are so low that they could win out any city with competition by aggressively cutting their 25% of the fare.
      - CPLX 7y ago
        > These 2 sided market places require having a large supply of drivers and riders to be viable. No, they don't. They could just hang out outside of big crowded events, like the end of a stadium concert, or rush hour at the airport. Or whatever the peak crunch point is for the existing service. It would be trivial to make at least some money doing only that. Then the existing service sees its margins eroded. And so on. There's just a ton of handwaving here, but there's no mechanism for a monopoly. Burden of proof would be on your side to demonstrate it. It's absolutely trivial for customers to switch, there's no way to lock them in. At least some people would do it literally to save $10 on a single ride to the airport. And you don't need a fleet to take one person to the airport. Or a couple. Or to strike a deal with one large company, or airline, or whatever. Acquiring a monopoly is pointless if you can't defend it. And you can't unless you can constrict supply or lock in demand. Uber and Lyft can't and aren't ever going to be able to.
- eswat 7y ago
  You can’t get away with making a basic alternative when you have players like Uber, Lyft, Grab, etc. that have refined the entire experience. The alternatives I’ve tried in Canada succumb to failing miserably to even get the app experience right. There’s an extra level of competency needed to get an alternative to be considered competition.
- goobynight 7y ago
  They would either need funded or the founders would have to bring in a lot of cash. Driver acquisition isn't cheap. Then there's the question of which city you start in. The mega corp could probably just cut prices in that city until you give up.
- Fricken 7y ago
  Anybody can make a sweet, carbonated beverage, but when Coca-Cola is faced with an ambitious and successful upstart, Coke can run at a loss to drive them out of business, or Coke can acquire them, or Coke can copy them and beat them at their own game. Uber can do all the same things to smaller competitors in it's domain. Uber's big competitors, on the global front, aren't really competitors. Uber, Grab and Didi all own each other, and Masayoshi Son has massive stakes in all 3, it's an oligarchy. The global rideshare companies aim to bring accountability and logistics supremacy to ad hoc and inefficient transportation networks all over the developing world. I expect profit margins will forever be slim, but if it's a safe bet that rideshare is here to stay, then I believe over the long run Uber is a safe bet. I won't be investing in Uber myself because I have morals.
  - CPLX 7y ago
    Have you ever been to a supermarket? The market for carbonated beverages is massive with lots of competitors and tons of new entrants, as well as competitive pricing and low margins. Much like, I am arguing, the market for taxi hailing will continue to be.
    - Fricken 7y ago
      The soda aisle in my grocery store has about 30 feet of shelf space for Coke and Pepsi, 10 feet for it's own no-name brand, and another 10 feet for the craft hipster pop.
- lozenge 7y ago
  You cant get riders until they know you have drivers, and vice versa. So, you basically have to pay drivers to wait around for potential riders, which gets expensive quickly.

by m_ke 7y ago

I'm convinced that the end goal is being the last one standing. Either one of them failing would guarantee a monopoly for the other and make it easier to play with the margins.

CPLX 7y ago

> Either one of them failing would guarantee a monopoly for the other Why? Is there some reason someone else couldn't make a basic app-based service to get taxi rides?

jorts 7y ago
They exist and they're terrible (at least in SF) as taxis still aren't reliable to pick you up.
m_ke 7y ago
Because they'll be able to undercut any small competitor that attempts to enter one of their markets by subsidizing it with revenue from everywhere else.
- CPLX 7y ago
  Not really. It’s a large market with almost no barrier to entry. Either they have huge margins or they don’t. If they do have large margins someone will come along and attack the most profitable segment of the business. That could be airport rides, or having extra cars outside the end of a sporting event, or whatever. As long as switching costs for customers are low then they can’t defend high margins. For monopoly to work you either have to corner supply somehow or lock the customers in. There’s no plausible mechanism for either with taxi services.
  - m_ke 7y ago
    Supply is a barrier to entry. These 2 sided market places require having a large supply of drivers and riders to be viable. A new competitor would probably need to come in with a managed fleet and be ready to operate at a loss for a really long time. At their current scale uber and lyft don't need to have huge margins, they just need to break even and can make up for it with volume. Like amazon they could undercut any new competitor and play the long game. Their marginal costs are so low that they could win out any city with competition by aggressively cutting their 25% of the fare.
    - CPLX 7y ago
      > These 2 sided market places require having a large supply of drivers and riders to be viable. No, they don't. They could just hang out outside of big crowded events, like the end of a stadium concert, or rush hour at the airport. Or whatever the peak crunch point is for the existing service. It would be trivial to make at least some money doing only that. Then the existing service sees its margins eroded. And so on. There's just a ton of handwaving here, but there's no mechanism for a monopoly. Burden of proof would be on your side to demonstrate it. It's absolutely trivial for customers to switch, there's no way to lock them in. At least some people would do it literally to save $10 on a single ride to the airport. And you don't need a fleet to take one person to the airport. Or a couple. Or to strike a deal with one large company, or airline, or whatever. Acquiring a monopoly is pointless if you can't defend it. And you can't unless you can constrict supply or lock in demand. Uber and Lyft can't and aren't ever going to be able to.
eswat 7y ago
You can’t get away with making a basic alternative when you have players like Uber, Lyft, Grab, etc. that have refined the entire experience. The alternatives I’ve tried in Canada succumb to failing miserably to even get the app experience right. There’s an extra level of competency needed to get an alternative to be considered competition.
goobynight 7y ago
They would either need funded or the founders would have to bring in a lot of cash. Driver acquisition isn't cheap. Then there's the question of which city you start in. The mega corp could probably just cut prices in that city until you give up.
Fricken 7y ago
Anybody can make a sweet, carbonated beverage, but when Coca-Cola is faced with an ambitious and successful upstart, Coke can run at a loss to drive them out of business, or Coke can acquire them, or Coke can copy them and beat them at their own game. Uber can do all the same things to smaller competitors in it's domain. Uber's big competitors, on the global front, aren't really competitors. Uber, Grab and Didi all own each other, and Masayoshi Son has massive stakes in all 3, it's an oligarchy. The global rideshare companies aim to bring accountability and logistics supremacy to ad hoc and inefficient transportation networks all over the developing world. I expect profit margins will forever be slim, but if it's a safe bet that rideshare is here to stay, then I believe over the long run Uber is a safe bet. I won't be investing in Uber myself because I have morals.
- CPLX 7y ago
  Have you ever been to a supermarket? The market for carbonated beverages is massive with lots of competitors and tons of new entrants, as well as competitive pricing and low margins. Much like, I am arguing, the market for taxi hailing will continue to be.
  - Fricken 7y ago
    The soda aisle in my grocery store has about 30 feet of shelf space for Coke and Pepsi, 10 feet for it's own no-name brand, and another 10 feet for the craft hipster pop.
lozenge 7y ago
You cant get riders until they know you have drivers, and vice versa. So, you basically have to pay drivers to wait around for potential riders, which gets expensive quickly.