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I am not a shareholder, but I think market share is the short term goal. The incentives can be phased out as prices increase a bit after competition cools off.

AJ007 7y ago
The big question is driver retention and how much Uber subsidizing drivers is required. Maybe Uber spends 0 extra, drivers drop out of the system, ride prices increase, and drivers return as riders stop using Uber, bringing it to some sort of equilibrium. Maybe not. These retention numbers, for any business that needs returning customers or service providers pretty much make or break all the customer/provider acquisition economics.
- sprafa 7y ago
  In London Uber is unravelling already. Here Citymapper is the default transit app and Uber is just one of the options listed. The transfer cost for a customer changing app is 0. We keep saying we’re “not sure” whether Uber will have customer retention... no, of course it won’t! Unless they change their model, they’re the biggest VC folly in recent times. Just proves how overheated the market become when F/A/G acquired everything in the market that competes with them, leaving ridiculous Vc money to flow to dumb ideas like Uber.
  - ddalex 7y ago
    no VC money anylonger, now it's stock market money, i.e. our pension funds
    - VRay 7y ago
      Wait, you guys get pension funds?
- flukus 7y ago
  > The big question is driver retention and how much Uber subsidizing drivers is required. In Australia we've got drivers advertising other services directly to riders. Most of these are probably subsidizing rides to enter the market, but how long can uber continue losing money as competitors try and enter the market?
amiga_500 7y ago
> market share is the short term goal. Creating a monopoly then jacking up the price. Not doubt shafting drivers and their customers.
- amelius 7y ago
  But Uber's business model doesn't have lock-in potential. So if a price change happens, people (drivers and customers) will just switch to a different app.
  - amiga_500 7y ago
    I have sympathy with your view. Do Uber even care about that? It's selling the prospect of a lock-in that got them the IPO.
stevietopsiders 7y ago
A criticism of this "model" is that building a ridesharing app and cloud backend is now not that hard. So some developers with VC money can develop an app, launch in a city, and force Uber to cut prices, because people will be happy to install a FastRyde app and get rides for $3 less than Lyft/Uber.
- bloemy 7y ago
  And that is exactly what is happening in Paris, for instance. There are a ton of different apps there. Kapten is one of them. They simply cut their commission by 15% compared to Uber, pay the drivers 7.5% more and make the rides 7.5% cheaper, basically. Since they don't have as much legal costs and marketing costs as Uber, it seems to work out for now. I really don't see how Uber will be able to prevent this in other places too...
phatfish 7y ago
To me this only works out if they are a monopoly bribing politicians to allow them to keep being the only smartphone-app-based taxi and food delivery service in town. As others mentioned, its not hard to clone Uber. They don't even have the network effect of Facebook or Twitter. No one cares if their friend uses Lyft and they use Uber, they just care about the one time they make a journey, and how much it costs (along with safety I suppose, but that is an extra cost Uber try very hard to avoid). The drivers are free to run whatever apps they want simultaneously, because Uber only works when exploiting them as "contractors" free to choose when and how they work. I think Travis Kalanick was right, they need self driving cars, now...

AJ007 7y ago

The big question is driver retention and how much Uber subsidizing drivers is required. Maybe Uber spends 0 extra, drivers drop out of the system, ride prices increase, and drivers return as riders stop using Uber, bringing it to some sort of equilibrium. Maybe not. These retention numbers, for any business that needs returning customers or service providers pretty much make or break all the customer/provider acquisition economics.

sprafa 7y ago
In London Uber is unravelling already. Here Citymapper is the default transit app and Uber is just one of the options listed. The transfer cost for a customer changing app is 0. We keep saying we’re “not sure” whether Uber will have customer retention... no, of course it won’t! Unless they change their model, they’re the biggest VC folly in recent times. Just proves how overheated the market become when F/A/G acquired everything in the market that competes with them, leaving ridiculous Vc money to flow to dumb ideas like Uber.
- ddalex 7y ago
  no VC money anylonger, now it's stock market money, i.e. our pension funds
  - VRay 7y ago
    Wait, you guys get pension funds?
flukus 7y ago
> The big question is driver retention and how much Uber subsidizing drivers is required. In Australia we've got drivers advertising other services directly to riders. Most of these are probably subsidizing rides to enter the market, but how long can uber continue losing money as competitors try and enter the market?

amiga_500 7y ago

> market share is the short term goal. Creating a monopoly then jacking up the price. Not doubt shafting drivers and their customers.

amelius 7y ago
But Uber's business model doesn't have lock-in potential. So if a price change happens, people (drivers and customers) will just switch to a different app.
- amiga_500 7y ago
  I have sympathy with your view. Do Uber even care about that? It's selling the prospect of a lock-in that got them the IPO.

stevietopsiders 7y ago

A criticism of this "model" is that building a ridesharing app and cloud backend is now not that hard. So some developers with VC money can develop an app, launch in a city, and force Uber to cut prices, because people will be happy to install a FastRyde app and get rides for $3 less than Lyft/Uber.

bloemy 7y ago
And that is exactly what is happening in Paris, for instance. There are a ton of different apps there. Kapten is one of them. They simply cut their commission by 15% compared to Uber, pay the drivers 7.5% more and make the rides 7.5% cheaper, basically. Since they don't have as much legal costs and marketing costs as Uber, it seems to work out for now. I really don't see how Uber will be able to prevent this in other places too...

phatfish 7y ago

To me this only works out if they are a monopoly bribing politicians to allow them to keep being the only smartphone-app-based taxi and food delivery service in town. As others mentioned, its not hard to clone Uber. They don't even have the network effect of Facebook or Twitter. No one cares if their friend uses Lyft and they use Uber, they just care about the one time they make a journey, and how much it costs (along with safety I suppose, but that is an extra cost Uber try very hard to avoid). The drivers are free to run whatever apps they want simultaneously, because Uber only works when exploiting them as "contractors" free to choose when and how they work. I think Travis Kalanick was right, they need self driving cars, now...