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Regarding the lack of "innovation" concept this article is hocking... pretty sure before Uber/Lyft I couldn't click a button and know how much my ride to a plac

by jppope 7y ago

Regarding the lack of "innovation" concept this article is hocking... pretty sure before Uber/Lyft I couldn't click a button and know how much my ride to a place would cost then, book it and pay for it. (I still remember cabs in NYC where the driver "knew a shortcut" that ended up adding $10/$15 to a ride... I've never seen uber/Lyft pull that move)

microwavecamera 7y ago
It's covered in the article. When they say "lack of innovation" it's alluding to the fact that nothing Uber does is necessarily exclusive to Uber. Uber is entering into an massive existing market with a low entry barrier and high competition that often already out performs Uber in terms of cost and efficiency.
- dmix 7y ago
  You could say the same about Facebook when there were a hundred clones available after it was made. Everyone was building social networks back then. Being able to repeat the technology part is a tiny percentage of the business. Which demonstrates a lack of understanding of tech businesses, or business in general.
  - discreteevent 7y ago
    I think the writer understands business in general. His main point is that Uber may have innovated in small ways but they failed to innovate in a way that solves the major problems of making a profit in the transport business
  - kszxgz 7y ago
    Network effects in social media are high and protect Facebook from competition. Barriers to entry in the taxi industry are lower.
    - lozenge 7y ago
      "Uber incurs huge start-up costs with each new city and country it enters." In other words - people won't use the next Uber unless it has drivers available every time you open the app, but drivers won't be available unless they know there will be riders paying them fares. To fill in the gap, rideshare apps have to pay drivers when they enter a market, even if there are no riders yet.
      - Traster 7y ago
        This is also covered in the article - it costs uber huge sums of money to enter a market because they offer driver incentives that are uneconomical, they have a huge advertiser budget and they use below market rates to achieve growth. It also costs them a lot because they don't move into a market to be in that market, they move into a market to dominate it. That dynamic isn't true for its competitors. Any current driver for Uber can go "fuck this" get an off-the-shelf taxi company app and start working for themselves. Since Uber is paying minimum wage and still making a loss, there's a strong incentive to do this the second Uber raises prices in an area. At which point Uber has to go back to its incentives to regain its dominant position in the market. The result is they can't sustainably raise prices or lower costs without destroying the growth that justifies their tech-like valuation.
amelius 7y ago
Yes, but that's not an innovation worth billions of dollars, like real high tech innovation that takes billions of dollars to get off the ground (e.g. the semiconductor industry back in the days). Instead it's pretty much straightforward functionality that could be implemented by any small team of programmers.
- hyperbovine 7y ago
  I’ve felt that way about Twitter since the beginning. The core idea is like 1000 lines of RoR. Yet year after year, nothing displaces Twitter. Network effects are real and powerful.
  - deleted 7y ago
    [deleted]
  - sweeneyrod 7y ago
    Network effects are crucial to social networks like Twitter. But why should that apply to Uber? The network effect on Twitter etc. comes from the fact that each additional user increases value for existing users. But Uber is a two-sided market, and while each additional driver benefits existing riders they are also additional competition for existing drivers.
    - abakker 7y ago
      Network effect for Uber is having the app installed. It is more comparable to a central market for a single, homogenous good.
    - FabHK 7y ago
      The article makes that point, too: > [Uber etc.] also have none of the Facebook-type network effects (following what is known as “Metcalfe’s Law”), by which each new user makes the network more valuable to all other users, which makes it nearly impossible for smaller competitors to survive. However, I think that's wrong. If I'm in a city with two "ride sharing" companies, but one has twice as many cars on the road, I'd expect to wait longer for a taxi from the company with fewer cars, right (or, if I check both, most of the time the one with more cars will show a shorter waiting time). Thus, as a customer I'd be inclined to choose the one with more cars.
wrs 7y ago
Uber definitely changed the user experience of calling a car service for the better. Everybody has an app now and lots have predefined pricing. It’s the stuff they did after that (the so-called “sharing economy”) that went off the rails.
petra 7y ago
Uber/lyft's big innovation is shared rides. For ex: "223 million of first billion Lyft rides were shared through Lyft Line" http://www.businessofapps.com/data/lyft-statistics/ http://www.businessofapps.com/data/lyft-statistics/ But when we look at the market as a whole, Via, a new company, took this trend and improved it(more people per ride). So maybe UBER has no moat.
- umanwizard 7y ago
  The major innovation is being able to book shared rides through a smartphone app. Ambiguously legal gypsy bus services have been around for ages.
  - petra 7y ago
    But shared, on-demand rides offer a much shorter trip time than a gypsy bus, by matching people going on the same route.
AndrewKemendo 7y ago
I think the question is whether the amount of innovation Uber has spurred was in line with how much money it has taken to get there. From the article: "Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business." For reference, Intel, which arguably represented foundational innovation, raised $6.8 Million ($42M in 2019 dollars) in their IPO alone.
tomjakubowski 7y ago
At first, for many years actually, neither Uber nor Lyft offered an upfront quote. The other feature, to press a button on your phone and book a cab to your location instantly, existed in a taxi hailing app that I used in Los Angeles around 2010, which I think was called "MyTaxi". I'll admit it wasn't as reliable as getting an Uber or Lyft now is, but it was still 2010. Funny enough, before the upfront fares on Uber/Lyft, I did see drivers try to pull that "shortcut" move! In either case you just have to be firm and have them stick to your route. Uber and Lyft opened up some supply and juiced everything by subsidizing rides with cheap VC money. You can call that innovation if you'd like to.
dageshi 7y ago
Beyond that, if you're travelling you can do the same but in a place where previously you couldn't even speak the same language as your driver and you would almost certainly get scammed in what you paid. Uber is a better product than what existed before, perhaps it's fair to say it didn't solve any big problem but rather lots of small problems.
prmph 7y ago
To me the biggest "innovation" of Uber is how they were able to strong-arm municipalities into allowing regular people to use their cars effectively as taxis without having to deal with any special regulation or taxes. Whether this is good or bad is up for debate. The other aspect -- being able to hail a car from an app and know (within reasonable bounds) how much the ride will cost in advance -- is not much of an innovation technically, but considering that the cab companies could have something similar and failed to do so, the innovation is showing that the logistics of it can work
alkonaut 7y ago
> pretty sure before Uber/Lyft I couldn't click a button and know how much my ride to a place would cost then, book it and pay for it. I did that with my local traditional taxi co in 2008. Couldn’t pay in the app until a few years later though. Uber weren’t the first taxi company in my town with app booking+quotes. They probably weren’t even in the first 5.
FabHK 7y ago
1. The article addresses this: "Although Uber may have been an early adopter of smart-phone-app-based cab hailing, this service has been easily replicated by other companies, including traditional cab operators, and Uber has no significant advantage here. More importantly, there is no evidence that any of it creates meaningful efficiency gains, or that similar technologies led to major competitive upheavals in any other industry." 2. You can use Apple Maps (or Yandex Maps or any competing app) to get an indication of the best route and its length today. So, I'd say the problem of "shortcuts" is solved by the smartphone, not only/primarily by Uber.
rayiner 7y ago
It’s worth noting that this isn’t really a technical innovation. Taxicab pricing and metering is heavily regulated. Before, it often would’ve been illegal for a cab company to use a smart phone app (or anything other than the required meter) to calculate the fare. Also, there are regulations around how taxi cabs accept riders. In many places a taxi can can only accept a street jail. Uber got many of these regulations loosened for cab companies, because they entered the markets and widely ignored them to start with. It’s more regulatory innovation than technical innovation
stonogo 7y ago
Uber's app sucks at routing, so people frequently accuse drivers of malfeasance. https://www.npr.org/2014/09/18/349560787/drivers-passengers-say-uber-app-doesnt-always-yield-best-routes https://www.npr.org/2014/09/18/349560787/drivers-passengers-... Some drivers ARE taking longer routes; you don't pay for it, but Uber does. https://thepointsguy.com/news/why-your-uber-driver-is-purposely-taking-a-longer-route/ https://thepointsguy.com/news/why-your-uber-driver-is-purpos...
masonic 7y ago
Then again, things like "vomit fraud" didn't exist before Uber.
mpweiher 7y ago
That has nothing to do with Uber/Lyft, and everything to do with mobile phones. I have an app called "mytaxi" on my phone that does all of that with taxis. I also remember several of my friends telling me about their idea of exactly that app shortly after the iPhone was introduced, so it's not like everyone got that idea from Uber/Lyft. The "innovation" Uber/Lyft added was undercutting taxis by replacing employees and a fleet of cars with "self employed" drivers bringing their own cars and subsidising the whole shebang with huge amounts of investor dollars. Oh, and flouting laws and regulations.

by jppope 7y ago

microwavecamera 7y ago

It's covered in the article. When they say "lack of innovation" it's alluding to the fact that nothing Uber does is necessarily exclusive to Uber. Uber is entering into an massive existing market with a low entry barrier and high competition that often already out performs Uber in terms of cost and efficiency.

dmix 7y ago
You could say the same about Facebook when there were a hundred clones available after it was made. Everyone was building social networks back then. Being able to repeat the technology part is a tiny percentage of the business. Which demonstrates a lack of understanding of tech businesses, or business in general.
- discreteevent 7y ago
  I think the writer understands business in general. His main point is that Uber may have innovated in small ways but they failed to innovate in a way that solves the major problems of making a profit in the transport business
- kszxgz 7y ago
  Network effects in social media are high and protect Facebook from competition. Barriers to entry in the taxi industry are lower.
  - lozenge 7y ago
    "Uber incurs huge start-up costs with each new city and country it enters." In other words - people won't use the next Uber unless it has drivers available every time you open the app, but drivers won't be available unless they know there will be riders paying them fares. To fill in the gap, rideshare apps have to pay drivers when they enter a market, even if there are no riders yet.
    - Traster 7y ago
      This is also covered in the article - it costs uber huge sums of money to enter a market because they offer driver incentives that are uneconomical, they have a huge advertiser budget and they use below market rates to achieve growth. It also costs them a lot because they don't move into a market to be in that market, they move into a market to dominate it. That dynamic isn't true for its competitors. Any current driver for Uber can go "fuck this" get an off-the-shelf taxi company app and start working for themselves. Since Uber is paying minimum wage and still making a loss, there's a strong incentive to do this the second Uber raises prices in an area. At which point Uber has to go back to its incentives to regain its dominant position in the market. The result is they can't sustainably raise prices or lower costs without destroying the growth that justifies their tech-like valuation.

amelius 7y ago

Yes, but that's not an innovation worth billions of dollars, like real high tech innovation that takes billions of dollars to get off the ground (e.g. the semiconductor industry back in the days). Instead it's pretty much straightforward functionality that could be implemented by any small team of programmers.

hyperbovine 7y ago
I’ve felt that way about Twitter since the beginning. The core idea is like 1000 lines of RoR. Yet year after year, nothing displaces Twitter. Network effects are real and powerful.
- deleted 7y ago
  [deleted]
- sweeneyrod 7y ago
  Network effects are crucial to social networks like Twitter. But why should that apply to Uber? The network effect on Twitter etc. comes from the fact that each additional user increases value for existing users. But Uber is a two-sided market, and while each additional driver benefits existing riders they are also additional competition for existing drivers.
  - abakker 7y ago
    Network effect for Uber is having the app installed. It is more comparable to a central market for a single, homogenous good.
  - FabHK 7y ago
    The article makes that point, too: > [Uber etc.] also have none of the Facebook-type network effects (following what is known as “Metcalfe’s Law”), by which each new user makes the network more valuable to all other users, which makes it nearly impossible for smaller competitors to survive. However, I think that's wrong. If I'm in a city with two "ride sharing" companies, but one has twice as many cars on the road, I'd expect to wait longer for a taxi from the company with fewer cars, right (or, if I check both, most of the time the one with more cars will show a shorter waiting time). Thus, as a customer I'd be inclined to choose the one with more cars.

wrs 7y ago

Uber definitely changed the user experience of calling a car service for the better. Everybody has an app now and lots have predefined pricing. It’s the stuff they did after that (the so-called “sharing economy”) that went off the rails.

petra 7y ago

Uber/lyft's big innovation is shared rides. For ex: "223 million of first billion Lyft rides were shared through Lyft Line" http://www.businessofapps.com/data/lyft-statistics/ http://www.businessofapps.com/data/lyft-statistics/ But when we look at the market as a whole, Via, a new company, took this trend and improved it(more people per ride). So maybe UBER has no moat.

umanwizard 7y ago
The major innovation is being able to book shared rides through a smartphone app. Ambiguously legal gypsy bus services have been around for ages.
- petra 7y ago
  But shared, on-demand rides offer a much shorter trip time than a gypsy bus, by matching people going on the same route.

AndrewKemendo 7y ago

I think the question is whether the amount of innovation Uber has spurred was in line with how much money it has taken to get there. From the article: "Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business." For reference, Intel, which arguably represented foundational innovation, raised $6.8 Million ($42M in 2019 dollars) in their IPO alone.

tomjakubowski 7y ago

At first, for many years actually, neither Uber nor Lyft offered an upfront quote. The other feature, to press a button on your phone and book a cab to your location instantly, existed in a taxi hailing app that I used in Los Angeles around 2010, which I think was called "MyTaxi". I'll admit it wasn't as reliable as getting an Uber or Lyft now is, but it was still 2010. Funny enough, before the upfront fares on Uber/Lyft, I did see drivers try to pull that "shortcut" move! In either case you just have to be firm and have them stick to your route. Uber and Lyft opened up some supply and juiced everything by subsidizing rides with cheap VC money. You can call that innovation if you'd like to.

dageshi 7y ago

Beyond that, if you're travelling you can do the same but in a place where previously you couldn't even speak the same language as your driver and you would almost certainly get scammed in what you paid. Uber is a better product than what existed before, perhaps it's fair to say it didn't solve any big problem but rather lots of small problems.

prmph 7y ago

To me the biggest "innovation" of Uber is how they were able to strong-arm municipalities into allowing regular people to use their cars effectively as taxis without having to deal with any special regulation or taxes. Whether this is good or bad is up for debate. The other aspect -- being able to hail a car from an app and know (within reasonable bounds) how much the ride will cost in advance -- is not much of an innovation technically, but considering that the cab companies could have something similar and failed to do so, the innovation is showing that the logistics of it can work

alkonaut 7y ago

> pretty sure before Uber/Lyft I couldn't click a button and know how much my ride to a place would cost then, book it and pay for it. I did that with my local traditional taxi co in 2008. Couldn’t pay in the app until a few years later though. Uber weren’t the first taxi company in my town with app booking+quotes. They probably weren’t even in the first 5.

FabHK 7y ago

1. The article addresses this: "Although Uber may have been an early adopter of smart-phone-app-based cab hailing, this service has been easily replicated by other companies, including traditional cab operators, and Uber has no significant advantage here. More importantly, there is no evidence that any of it creates meaningful efficiency gains, or that similar technologies led to major competitive upheavals in any other industry." 2. You can use Apple Maps (or Yandex Maps or any competing app) to get an indication of the best route and its length today. So, I'd say the problem of "shortcuts" is solved by the smartphone, not only/primarily by Uber.

rayiner 7y ago

It’s worth noting that this isn’t really a technical innovation. Taxicab pricing and metering is heavily regulated. Before, it often would’ve been illegal for a cab company to use a smart phone app (or anything other than the required meter) to calculate the fare. Also, there are regulations around how taxi cabs accept riders. In many places a taxi can can only accept a street jail. Uber got many of these regulations loosened for cab companies, because they entered the markets and widely ignored them to start with. It’s more regulatory innovation than technical innovation

stonogo 7y ago

Uber's app sucks at routing, so people frequently accuse drivers of malfeasance. https://www.npr.org/2014/09/18/349560787/drivers-passengers-say-uber-app-doesnt-always-yield-best-routes https://www.npr.org/2014/09/18/349560787/drivers-passengers-... Some drivers ARE taking longer routes; you don't pay for it, but Uber does. https://thepointsguy.com/news/why-your-uber-driver-is-purposely-taking-a-longer-route/ https://thepointsguy.com/news/why-your-uber-driver-is-purpos...

masonic 7y ago

Then again, things like "vomit fraud" didn't exist before Uber.

mpweiher 7y ago

That has nothing to do with Uber/Lyft, and everything to do with mobile phones. I have an app called "mytaxi" on my phone that does all of that with taxis. I also remember several of my friends telling me about their idea of exactly that app shortly after the iPhone was introduced, so it's not like everyone got that idea from Uber/Lyft. The "innovation" Uber/Lyft added was undercutting taxis by replacing employees and a fleet of cars with "self employed" drivers bringing their own cars and subsidising the whole shebang with huge amounts of investor dollars. Oh, and flouting laws and regulations.