7 ms·

I think NYT misses the point. The problem with Uber isn't some cultural issue, it's that they're in an extremely tough and competitive business. It's really a r

I think NYT misses the point. The problem with Uber isn't some cultural issue, it's that they're in an extremely tough and competitive business. It's really a race to the bottom. The logic I kept hearing repeated is ride-sharing is a winner take all market. Like once you have a network of drivers setup giving people the lowest times for rides, you can force other competitors out and raise prices. Time has proven how wrong this thinking was. It's almost impossible to stop competitors in ride-sharing because the cost of switching for customers is low, there are no legal or capital ex competitive barriers, and you can be picked apart city by city. Even drivers are incentivized to download as many of these apps as possible. The whole situation seems awfully similar to Living Social and Groupon.

whatshisface 7y ago
The cultural problem is with the investors that are willing to spend $100B to win a cut-throat $10M/year profit market.
- bobbiechen 7y ago
  Perhaps this is an example of a "dollar auction": A dollar bill is auctioned with these two rules: 1. (As in any auction) the dollar bill goes to the highest bidder, who pays whatever the high bid was. Each new bid has to be higher than the current high bid, and the game ends when there is no new bid within a specified time limit. 2. (Unlike at Sotheby’s!) the second-highest bidder also has to pay the amount of his last bid – and gets nothing in return. [...] This peculiar game leads to a bad case of buyer’s remorse. The highest bidder pays far more than a dollar for a dollar, and the second-highest bidder pays far more than a dollar for nothing. http://www.heretical.com/pound/dollar.html http://www.heretical.com/pound/dollar.html
  - deleted 7y ago
    [deleted]
- mycall 7y ago
  or they don't have a good place to park their money, looking for the NBT.
- tyingq 7y ago
  It feels like there are two classes of Uber investors, and money is flowing from one to the other. Maybe that was the point all along, versus disrupting taxis.
clairity 7y ago
also the value chain of driver->dispatcher->rider just doesn't have a lot of extra margin to squeeze out of the ride-hailing business to make it really profitable (this should have been obvious from the beginning to VCs). once uber/lyft cut out the dispatcher, reduce no-shows a tiny bit, increase utilization a bit, off-loaded cap ex/risk to drivers, where do the killer profits come from? when you do a five forces analysis, the only place they have some leverage is on the drivers (supplier-side), whom they've already squeezed down to below minimum wage (on average). walmart can eek out huge profits from a low-margin business because they provide essentials that are hard to subsitute at their price point. ride-hailing is not nearly as essential and has a number of substitutes available in most places.
- ghaff 7y ago
  I don't suppose we'll ever really know, if only because people are so good at adjusting their memories as needed but... One does wonder if the self-driving promise here was: 1. A cynical con job to get investors on board from the beginning 2. Not quite so cynical but nonetheless recognized by management as a hail mary pass 3. Uber just got swept up in the overall industry overoptimism/groupthink around self-driving dates and capabilities
  - clairity 7y ago
    all of the above, probably. but there was basically zero chance that self-driving cars of the sophistication and scale needed by uber would be widely deployed within 10 years (i'd wildly guess a 50% chance of its existence in 30 years), as anyone employing a critical mind for more than a few minutes could surmise.
    - ghaff 7y ago
      It seemed obvious to me based on a combination of what some disinterested expert observers were saying and the sort of situations I see driving every day, especially in big cities, needed to get door to door without human intervention. However, you've only had to read this site over the past few years to see the huge number of people who bought the Level 5 is right around the corner story hook line and sinker. In all fairness, I attribute a lot of this to people who so wanted to believe they'd never need to own or drive a car that they weren't as critical as they should have been. I find it "interesting" how quickly the narrative has shifted. A lot of the same people who were more or less making the aggressive promises pretty much all changed their stories in near-unison. One suspects they all knew or had come to known at some level but felt they had to wait for others to back off too lest they be seen as laggards.
dhnsmakala 7y ago
This makes a lot of sense. A large business doesn't rely on the average employee. The employee relies on the business for food, shelter, healthcare...everything. It's just an inherently large imbalance, and the only way it doesn't exist is if there is a shortage of employees in the sector and the ROI per employee is high. This is a pretty small percentage of jobs. Unions are one way to try to curb exploitation, but I don't know how effective they are in practice. If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union?
- capitol_ 7y ago
  Unions work well if a large part of the workforce in that sector are members, see the nordic countries for examples. It's a bit like herd immunity.
- goatinaboat 7y ago
  If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union? We know the answer to that because film extras (and most screenwriters) are of a comparable replaceability to retail workers but the Hollywood unions are strong.
- geofft 7y ago
  > I don't know how effective they are in practice. If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union? See the strike of grocery workers at Stop and Shop earlier this year: https://en.wikipedia.org/wiki/2019_Stop_%26_Shop_strike https://en.wikipedia.org/wiki/2019_Stop_%26_Shop_strike They are effective in practice. (Some possible first-principles reasons why this might be true: training replacement workers is hard and the labor market is not quite that liquid; new workers will want union representation too; new workers will want good wages too; the fact that the Teamsters respected the strike and union truckers refused to deliver across picket lines meant they'd have to find replacement non-union truck drivers too.)
linkregister 7y ago
This isn't necessarily "The NYT." It's an excerpt from the book that Mike Isaac (https://twitter.com/MikeIsaac https://twitter.com/MikeIsaac) wrote about Uber for the past 3 years.
- gumby 7y ago
  Still, they are making an editorial decision that the book is worth reviewing and/or excerpting.
  - szbalint 7y ago
    Because Mike is the NYT beat reporter for a number of tech companies like Facebook or Uber.
ENOTTY 7y ago
Completely agree re competitors. If you look at when Uber and Lyft left Austin, almost overnight, competitors willing to follow the local laws sprung up and soon began providing equivalent service. In my opinion, it's going to be impossible to establish a moat (aside from incumbency) in ridesharing (absent some kind of regulatory change heavily favoring incumbents). The second someone thinks they can do it better, they will try (provided the capital is available).
- jen20 7y ago
  I was in Austin many times over the period that Uber and Lyft were not there. One of my takeaways was that building a mobile app which feels polished and actually works as advertised is _hard_ - not one of the local competitors managed it. Most of them didn’t even bother to distribute their app outside the US App Stores (a common issue with American companies) making it next to impossible to use for international visitors. Uber and Lyft are not immune to some of this though - Lyft still do not appear to accept international credit cards correctly, though fortunately they do accept Apple Pay which is a reasonable substitute. And Uber’s GPS navigation is unspeakably bad in most metros, offering idiotic routes.
  - hn_throwaway_99 7y ago
    I (mostly) disagree. I always prefer to take RideAustin now because they pay their drivers more and donate a large amount of money to local charities with their round up feature. RideAustin was most definitely sub-par when it first came out, but considering it was rushed on a teeny shoe-string, non-profit budget, that's not surprising. I'm sure Uber and Lyft had lots of issues when they first launched, too. Point being these days RideAustin is 100% adequate. It gets me from A to B at a fair price, quickly.
    - jen20 7y ago
      It’s only 100% adequate if you can download it and it takes the payment you have. During the entire period Uber was away, this was not the case for me, making it 100% useless instead. During that period, I rented a car each time I flew in.
dd36 7y ago
Ironically, if the drivers were actual employees, it’d be an actual barrier.
- jandrese 7y ago
  I was just thinking this. In treating their workforce as disposable they themselves became disposable.
  - dumbfoundded 7y ago
    Not necessarily. Growth depends on the price charged to the customer. The unit economics of using "contactors" to circumvent labor (minimum wage) laws, probably offers this model to provide the cheapest price to customers. When you take into account car depreciation, the median Uber driver earns something like half of the minimum wage.
rokhayakebe 7y ago
Winner Takes “All” is an incomplete sentence. All what? All profits or all losses?
- Jommi 7y ago
  It's a common term.
- Kye 7y ago
  It's an English expression. https://en.wikipedia.org/wiki/Winner-take-all_market https://en.wikipedia.org/wiki/Winner-take-all_market
- naveen99 7y ago
  All rise !
jfoster 7y ago
If it's so easy to compete, why aren't there more competitors with a larger market share? I don't know of any ride share market with more than two major players. US: Uber / Lyft South East Asia: Grab / GoJek Australia: Mainly just Uber (lots of smaller players but none with very significant market share)
- bradleyjg 7y ago
  In NYC Via is making a big dent, and is actual ride sharing to boot.
- freehunter 7y ago
  It's easy to compete with the company, but hard to compete with the VC money Uber pulls in. Uber's only competitive advantage is the $24b they were given to keep them alive. If VCs keep funding Uber, Uber is unstoppable. But as soon as that money runs out, they're just another taxi company. Except they're a taxi company who loses $350 million dollars every month. That's not hard to compete against.
  - sokoloff 7y ago
    Or are they a taxi company that makes $100MM/month and spends $450MM on R&D that they could stop if they aspired to only be a taxi company? (I think UBER is comically over-valued, but I also think their core business is probably quite profitable.)
    - freehunter 7y ago
      In this situation I don't think it really matters. If the VC money stopped, Uber would either go out of business or shrink back down to being a taxi company, in which case they have no competitive advantage and no network effects, making switching costs extremely low. Being a more profitable taxi company doesn't mean much when most of your employees are also employees of your competitors, and most of your customers are also customers of your competitors. There's just no lock-in.
    - CydeWeys 7y ago
duxup 7y ago
I rode in a cab in Chicago that was a regular cab, Uber, and Lyft. I was amused.
CydeWeys 7y ago
"It's almost impossible to stop competitors in ride-sharing because the cost of switching for customers is low, there are no legal or capital ex competitive barriers, and you can be picked apart city by city." This is so true. I only ever take rideshare to/from airports, and those trips are sufficiently expensive that it makes sense for me to spend the extra minute to launch the four different ridesharing apps I have installed and comparison-shop the cheapest one. It's a no-brainer to spend a minute to potentially save $40 or more, depending on surge conditions. And four might be a little extreme, but I hardly know anyone who uses rideshare at all who doesn't at least have both Lyft and Uber installed. And even two players in a competitive market can drastically fight prices to the bottom. Ridesharing is not a duopoly situation.
- sokoloff 7y ago
  I was the "only has Uber" ride share user for a long time. Then I landed at Orlando and Uber was going to be $60+ for a 15 minute ride. Even though my company was paying for it, that was BS and I added Lyft on the spot. Lyft now gets probably 70% of my rides. That afternoon was a very costly surge for Uber.
  - ehnto 7y ago
    Would a taxi have cost $60? They tend to also have the pro of already being at the airport. I don't think "anti-taxi" was why most people picked up Uber, rather it was cheaper. So if that isn't the case then going to a taxi rank makes a lot of sense in many cases.
    - sokoloff 7y ago
      If Lyft was not reasonably priced, I'd have checked on the taxi situation. It turns out Lyft was $21 and change and I gave a $4 tip. If a cab was going to be $60 each way as well, I may have even gone and rented a car. I am spoiled by the ride hailing apps; a medallioned taxi is a distant last resort for me personally. I may never call for a cab again in my life and that'll be just fine for me. Walking up to an airport cab stand is convenient and certain, so that's still in play.

whatshisface 7y ago

The cultural problem is with the investors that are willing to spend $100B to win a cut-throat $10M/year profit market.

bobbiechen 7y ago
Perhaps this is an example of a "dollar auction": A dollar bill is auctioned with these two rules: 1. (As in any auction) the dollar bill goes to the highest bidder, who pays whatever the high bid was. Each new bid has to be higher than the current high bid, and the game ends when there is no new bid within a specified time limit. 2. (Unlike at Sotheby’s!) the second-highest bidder also has to pay the amount of his last bid – and gets nothing in return. [...] This peculiar game leads to a bad case of buyer’s remorse. The highest bidder pays far more than a dollar for a dollar, and the second-highest bidder pays far more than a dollar for nothing. http://www.heretical.com/pound/dollar.html http://www.heretical.com/pound/dollar.html
- deleted 7y ago
  [deleted]
mycall 7y ago
or they don't have a good place to park their money, looking for the NBT.
tyingq 7y ago
It feels like there are two classes of Uber investors, and money is flowing from one to the other. Maybe that was the point all along, versus disrupting taxis.

clairity 7y ago

also the value chain of driver->dispatcher->rider just doesn't have a lot of extra margin to squeeze out of the ride-hailing business to make it really profitable (this should have been obvious from the beginning to VCs). once uber/lyft cut out the dispatcher, reduce no-shows a tiny bit, increase utilization a bit, off-loaded cap ex/risk to drivers, where do the killer profits come from? when you do a five forces analysis, the only place they have some leverage is on the drivers (supplier-side), whom they've already squeezed down to below minimum wage (on average). walmart can eek out huge profits from a low-margin business because they provide essentials that are hard to subsitute at their price point. ride-hailing is not nearly as essential and has a number of substitutes available in most places.

ghaff 7y ago
I don't suppose we'll ever really know, if only because people are so good at adjusting their memories as needed but... One does wonder if the self-driving promise here was: 1. A cynical con job to get investors on board from the beginning 2. Not quite so cynical but nonetheless recognized by management as a hail mary pass 3. Uber just got swept up in the overall industry overoptimism/groupthink around self-driving dates and capabilities
- clairity 7y ago
  all of the above, probably. but there was basically zero chance that self-driving cars of the sophistication and scale needed by uber would be widely deployed within 10 years (i'd wildly guess a 50% chance of its existence in 30 years), as anyone employing a critical mind for more than a few minutes could surmise.
  - ghaff 7y ago
    It seemed obvious to me based on a combination of what some disinterested expert observers were saying and the sort of situations I see driving every day, especially in big cities, needed to get door to door without human intervention. However, you've only had to read this site over the past few years to see the huge number of people who bought the Level 5 is right around the corner story hook line and sinker. In all fairness, I attribute a lot of this to people who so wanted to believe they'd never need to own or drive a car that they weren't as critical as they should have been. I find it "interesting" how quickly the narrative has shifted. A lot of the same people who were more or less making the aggressive promises pretty much all changed their stories in near-unison. One suspects they all knew or had come to known at some level but felt they had to wait for others to back off too lest they be seen as laggards.

dhnsmakala 7y ago

This makes a lot of sense. A large business doesn't rely on the average employee. The employee relies on the business for food, shelter, healthcare...everything. It's just an inherently large imbalance, and the only way it doesn't exist is if there is a shortage of employees in the sector and the ROI per employee is high. This is a pretty small percentage of jobs. Unions are one way to try to curb exploitation, but I don't know how effective they are in practice. If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union?

capitol_ 7y ago
Unions work well if a large part of the workforce in that sector are members, see the nordic countries for examples. It's a bit like herd immunity.
goatinaboat 7y ago
If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union? We know the answer to that because film extras (and most screenwriters) are of a comparable replaceability to retail workers but the Hollywood unions are strong.
geofft 7y ago
> I don't know how effective they are in practice. If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union? See the strike of grocery workers at Stop and Shop earlier this year: https://en.wikipedia.org/wiki/2019_Stop_%26_Shop_strike https://en.wikipedia.org/wiki/2019_Stop_%26_Shop_strike They are effective in practice. (Some possible first-principles reasons why this might be true: training replacement workers is hard and the labor market is not quite that liquid; new workers will want union representation too; new workers will want good wages too; the fact that the Teamsters respected the strike and union truckers refused to deliver across picket lines meant they'd have to find replacement non-union truck drivers too.)

linkregister 7y ago

This isn't necessarily "The NYT." It's an excerpt from the book that Mike Isaac (https://twitter.com/MikeIsaac https://twitter.com/MikeIsaac) wrote about Uber for the past 3 years.

gumby 7y ago
Still, they are making an editorial decision that the book is worth reviewing and/or excerpting.
- szbalint 7y ago
  Because Mike is the NYT beat reporter for a number of tech companies like Facebook or Uber.

ENOTTY 7y ago

Completely agree re competitors. If you look at when Uber and Lyft left Austin, almost overnight, competitors willing to follow the local laws sprung up and soon began providing equivalent service. In my opinion, it's going to be impossible to establish a moat (aside from incumbency) in ridesharing (absent some kind of regulatory change heavily favoring incumbents). The second someone thinks they can do it better, they will try (provided the capital is available).

jen20 7y ago
I was in Austin many times over the period that Uber and Lyft were not there. One of my takeaways was that building a mobile app which feels polished and actually works as advertised is _hard_ - not one of the local competitors managed it. Most of them didn’t even bother to distribute their app outside the US App Stores (a common issue with American companies) making it next to impossible to use for international visitors. Uber and Lyft are not immune to some of this though - Lyft still do not appear to accept international credit cards correctly, though fortunately they do accept Apple Pay which is a reasonable substitute. And Uber’s GPS navigation is unspeakably bad in most metros, offering idiotic routes.
- hn_throwaway_99 7y ago
  I (mostly) disagree. I always prefer to take RideAustin now because they pay their drivers more and donate a large amount of money to local charities with their round up feature. RideAustin was most definitely sub-par when it first came out, but considering it was rushed on a teeny shoe-string, non-profit budget, that's not surprising. I'm sure Uber and Lyft had lots of issues when they first launched, too. Point being these days RideAustin is 100% adequate. It gets me from A to B at a fair price, quickly.
  - jen20 7y ago
    It’s only 100% adequate if you can download it and it takes the payment you have. During the entire period Uber was away, this was not the case for me, making it 100% useless instead. During that period, I rented a car each time I flew in.

dd36 7y ago

Ironically, if the drivers were actual employees, it’d be an actual barrier.

jandrese 7y ago
I was just thinking this. In treating their workforce as disposable they themselves became disposable.
- dumbfoundded 7y ago
  Not necessarily. Growth depends on the price charged to the customer. The unit economics of using "contactors" to circumvent labor (minimum wage) laws, probably offers this model to provide the cheapest price to customers. When you take into account car depreciation, the median Uber driver earns something like half of the minimum wage.

rokhayakebe 7y ago

Winner Takes “All” is an incomplete sentence. All what? All profits or all losses?

Jommi 7y ago
It's a common term.
Kye 7y ago
It's an English expression. https://en.wikipedia.org/wiki/Winner-take-all_market https://en.wikipedia.org/wiki/Winner-take-all_market
naveen99 7y ago
All rise !

jfoster 7y ago

If it's so easy to compete, why aren't there more competitors with a larger market share? I don't know of any ride share market with more than two major players. US: Uber / Lyft South East Asia: Grab / GoJek Australia: Mainly just Uber (lots of smaller players but none with very significant market share)

bradleyjg 7y ago
In NYC Via is making a big dent, and is actual ride sharing to boot.
freehunter 7y ago
It's easy to compete with the company, but hard to compete with the VC money Uber pulls in. Uber's only competitive advantage is the $24b they were given to keep them alive. If VCs keep funding Uber, Uber is unstoppable. But as soon as that money runs out, they're just another taxi company. Except they're a taxi company who loses $350 million dollars every month. That's not hard to compete against.
- sokoloff 7y ago
  Or are they a taxi company that makes $100MM/month and spends $450MM on R&D that they could stop if they aspired to only be a taxi company? (I think UBER is comically over-valued, but I also think their core business is probably quite profitable.)
  - freehunter 7y ago
    In this situation I don't think it really matters. If the VC money stopped, Uber would either go out of business or shrink back down to being a taxi company, in which case they have no competitive advantage and no network effects, making switching costs extremely low. Being a more profitable taxi company doesn't mean much when most of your employees are also employees of your competitors, and most of your customers are also customers of your competitors. There's just no lock-in.
  - CydeWeys 7y ago

duxup 7y ago

I rode in a cab in Chicago that was a regular cab, Uber, and Lyft. I was amused.

CydeWeys 7y ago

"It's almost impossible to stop competitors in ride-sharing because the cost of switching for customers is low, there are no legal or capital ex competitive barriers, and you can be picked apart city by city." This is so true. I only ever take rideshare to/from airports, and those trips are sufficiently expensive that it makes sense for me to spend the extra minute to launch the four different ridesharing apps I have installed and comparison-shop the cheapest one. It's a no-brainer to spend a minute to potentially save $40 or more, depending on surge conditions. And four might be a little extreme, but I hardly know anyone who uses rideshare at all who doesn't at least have both Lyft and Uber installed. And even two players in a competitive market can drastically fight prices to the bottom. Ridesharing is not a duopoly situation.

sokoloff 7y ago
I was the "only has Uber" ride share user for a long time. Then I landed at Orlando and Uber was going to be $60+ for a 15 minute ride. Even though my company was paying for it, that was BS and I added Lyft on the spot. Lyft now gets probably 70% of my rides. That afternoon was a very costly surge for Uber.
- ehnto 7y ago
  Would a taxi have cost $60? They tend to also have the pro of already being at the airport. I don't think "anti-taxi" was why most people picked up Uber, rather it was cheaper. So if that isn't the case then going to a taxi rank makes a lot of sense in many cases.
  - sokoloff 7y ago
    If Lyft was not reasonably priced, I'd have checked on the taxi situation. It turns out Lyft was $21 and change and I gave a $4 tip. If a cab was going to be $60 each way as well, I may have even gone and rented a car. I am spoiled by the ride hailing apps; a medallioned taxi is a distant last resort for me personally. I may never call for a cab again in my life and that'll be just fine for me. Walking up to an airport cab stand is convenient and certain, so that's still in play.