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When drivers are already driving for Lyft and Uber the on-boarding is taken care of. Uber and Lyft are pushing margins down because they want to extract profit

When drivers are already driving for Lyft and Uber the on-boarding is taken care of. Uber and Lyft are pushing margins down because they want to extract profit to pass back to shareholders. When revenue only goes to supporting the infrastructure and paying riders the only competition is who can deliver the cheaper ride. Delivering the cheaper ride for Uber/Lyft while also generating a profit means the driver needs to take a hit. Why would the driver take a hit when he can drive on a platform that pays better?

lhorie 7y ago
Every company has to take care of its own onboarding, so sure it's taken care of... for Uber and Lyft. But not for a new competing service. A new competitor has to figure the local regulations etc for every city they operate on, setup driver intake centers, man these offices, etc. New cities also typically suffer from rampant fraud and anti-competitive practices (e.g. subsidizing rides via VC money). Dealing with this stuff isn't cheap either. > Uber and Lyft are pushing margins down because they want to extract profit to pass back to shareholders. Profit comes from within those margins, so pushing it down (as in a race to the bottom) is at odds w/ shareholder yield. Also uber/lyft stocks don't yield in the first place (they haven't even had a single profitable quarter in the open markets yet...) In fact Uber/Lyft IPO stories have largely been told in terms of growth and market share. > Delivering the cheaper ride for Uber/Lyft while also generating a profit means the driver needs to take a hit. You can't really have your cake and eat it too. If you're delivering a cheaper price, then by definition driver pay goes down too. Uber can increase margins via economies of scale (e.g. the same call center can support US, Australia and India, price shopping for insurance on a per-month basis actually makes a difference, etc). The whole game is actually about getting as much market share possible to increase the total margin through sheer scale. Having seen a financial breakdown of costs per ride, I can tell you that you are severely overestimating what percentage of a ride's money goes to things other than driver pay. The vast majority does indeed go to the driver already, and the rest gets extremely complicated on a city-by-city basis due to intense local competition, regulations, and a million other factors. Overall, it really just sounds like you are armchair-postulating without any grasp whatsoever on the industry...
- permatech 7y ago
  > Overall, it really just sounds like you are armchair-postulating without any grasp whatsoever on the industry... No, I was proposing a employee owned version of Lyft. For onboarding screen you use something like "already has 100+ drives with 5+ star rating" or similar. > You can't really have your cake and eat it too. True. Rather than paying shareholders and drivers an employee owned company only pays the driver. They are recruiting from the same pool of drivers.
  - lhorie 7y ago
    Onboarding often requires things like criminal background checks, medical exams, city-issued permits, driver license validation, training, etc. You can't just show your Uber driver profile screen to Lyft to qualify as a driver for Lyft. You're in for a world of trouble if your onboarding flow is: "oh, I see you drove for Lyft for ~2 weeks, welcome to being one of the company owners, here are some health benefits!" > Rather than paying shareholders I just told you Uber/Lyft shareholders get zero dollars out of the operational money.

lhorie 7y ago

Every company has to take care of its own onboarding, so sure it's taken care of... for Uber and Lyft. But not for a new competing service. A new competitor has to figure the local regulations etc for every city they operate on, setup driver intake centers, man these offices, etc. New cities also typically suffer from rampant fraud and anti-competitive practices (e.g. subsidizing rides via VC money). Dealing with this stuff isn't cheap either. > Uber and Lyft are pushing margins down because they want to extract profit to pass back to shareholders. Profit comes from within those margins, so pushing it down (as in a race to the bottom) is at odds w/ shareholder yield. Also uber/lyft stocks don't yield in the first place (they haven't even had a single profitable quarter in the open markets yet...) In fact Uber/Lyft IPO stories have largely been told in terms of growth and market share. > Delivering the cheaper ride for Uber/Lyft while also generating a profit means the driver needs to take a hit. You can't really have your cake and eat it too. If you're delivering a cheaper price, then by definition driver pay goes down too. Uber can increase margins via economies of scale (e.g. the same call center can support US, Australia and India, price shopping for insurance on a per-month basis actually makes a difference, etc). The whole game is actually about getting as much market share possible to increase the total margin through sheer scale. Having seen a financial breakdown of costs per ride, I can tell you that you are severely overestimating what percentage of a ride's money goes to things other than driver pay. The vast majority does indeed go to the driver already, and the rest gets extremely complicated on a city-by-city basis due to intense local competition, regulations, and a million other factors. Overall, it really just sounds like you are armchair-postulating without any grasp whatsoever on the industry...

permatech 7y ago
> Overall, it really just sounds like you are armchair-postulating without any grasp whatsoever on the industry... No, I was proposing a employee owned version of Lyft. For onboarding screen you use something like "already has 100+ drives with 5+ star rating" or similar. > You can't really have your cake and eat it too. True. Rather than paying shareholders and drivers an employee owned company only pays the driver. They are recruiting from the same pool of drivers.
- lhorie 7y ago
  Onboarding often requires things like criminal background checks, medical exams, city-issued permits, driver license validation, training, etc. You can't just show your Uber driver profile screen to Lyft to qualify as a driver for Lyft. You're in for a world of trouble if your onboarding flow is: "oh, I see you drove for Lyft for ~2 weeks, welcome to being one of the company owners, here are some health benefits!" > Rather than paying shareholders I just told you Uber/Lyft shareholders get zero dollars out of the operational money.