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I was under the impression that the only way the Uber/Lyft business model is even remotely viable (without continuous VC subsidy) is classifying drivers as cont

I was under the impression that the only way the Uber/Lyft business model is even remotely viable (without continuous VC subsidy) is classifying drivers as contractors, meaning they don't have to pay them minimum wage or benefits, which lets them undercut taxis.

nerfhammer 7y ago
1) Uber is a public company now, it has not been VC funded for a long time 2) Regular taxi companies generally also treat drivers as contractors
- chrisseaton 7y ago
  > Uber is a public company now, it has not been VC funded for a long time I don’t think those two things are exclusive are they?
- xenospn 7y ago
  And it has been losing tons of money for even longer. Without VCs to bail them out several times a year, how will they justify operating at a huge loss in France without a viable path to profitability?
  - vkou 7y ago
    Somehow, taxi companies in France have figured out how to operate profitably.
- BigBubbleButt 7y ago
  > 1) Uber is a public company now, it has not been VC funded for a long time They also typically lose around $1 billion per quarter. Unless they figure out how to be profitable, they will eventually run out of money. So really, they are still burning cash on the roughly $20 billion of VC capital they raised, plus the money they raised during IPO. https://www.theverge.com/2019/8/8/20793793/uber-5-billion-quarter-loss-profit-lyft-traffic-2019 https://www.theverge.com/2019/8/8/20793793/uber-5-billion-qu...
  - lostgame 7y ago
    >> They also typically lose around $1 billion per quarter. What?! How on earth do you burn through $1B a quarter on a ride sharing app?
    - chrisseaton 7y ago
      Subsidising rides, a lot of engineers required to run a massive real-time system, and big legal teams to work in so many regions.
  - aglavine 7y ago
    They are reinvesting a lot.
ars 7y ago
> as contractors, meaning they don't have to pay them minimum wage or benefits, which lets them undercut taxis. That's not really true though. Their pay is higher to make up the difference. No, the main thing is that Uber doesn't have to guarantee them fulltime work, or at least any kind of minimum amount of work. i.e. Uber can say "No work today, too bad".
- ska 7y ago
  > Their pay is higher to make up the difference. I thought part of the problem was that it isn't, in general.
  - ars 7y ago
    People (especially California) would like you to believe that. Uber drivers are rational beings, they know exactly how much money they are making, and they are aware of their taxes. If Uber paid their Social Security and Medicare taxes, then Uber would just lower their base pay, and the net would stay the same. Or in other words the pay is higher because the driver has to pay those taxes.
    - ska 7y ago
      I don't know one way or the other, but I have heard the argument that if you actually do all the math, particular with the reductions in pay more recently, it doesn't all net out. Generally people do not act as fully rational economic actors, so we can't assume that this is not true based on the fact that people still choose to do it. Which isn't to say they shouldn't have that option.
- AlexandrB 7y ago
  > Their pay is higher to make up the difference. Citation needed. Please include costs of owning, operating, and maintaining an automobile in your calculations.
  - ars 7y ago
    Are you implying that millions of Uber drivers are idiots and can't do basic math to decide if it's worth working or not?

nerfhammer 7y ago

1) Uber is a public company now, it has not been VC funded for a long time 2) Regular taxi companies generally also treat drivers as contractors

chrisseaton 7y ago
> Uber is a public company now, it has not been VC funded for a long time I don’t think those two things are exclusive are they?
xenospn 7y ago
And it has been losing tons of money for even longer. Without VCs to bail them out several times a year, how will they justify operating at a huge loss in France without a viable path to profitability?
- vkou 7y ago
  Somehow, taxi companies in France have figured out how to operate profitably.
BigBubbleButt 7y ago
> 1) Uber is a public company now, it has not been VC funded for a long time They also typically lose around $1 billion per quarter. Unless they figure out how to be profitable, they will eventually run out of money. So really, they are still burning cash on the roughly $20 billion of VC capital they raised, plus the money they raised during IPO. https://www.theverge.com/2019/8/8/20793793/uber-5-billion-quarter-loss-profit-lyft-traffic-2019 https://www.theverge.com/2019/8/8/20793793/uber-5-billion-qu...
- lostgame 7y ago
  >> They also typically lose around $1 billion per quarter. What?! How on earth do you burn through $1B a quarter on a ride sharing app?
  - chrisseaton 7y ago
    Subsidising rides, a lot of engineers required to run a massive real-time system, and big legal teams to work in so many regions.
- aglavine 7y ago
  They are reinvesting a lot.

ars 7y ago

> as contractors, meaning they don't have to pay them minimum wage or benefits, which lets them undercut taxis. That's not really true though. Their pay is higher to make up the difference. No, the main thing is that Uber doesn't have to guarantee them fulltime work, or at least any kind of minimum amount of work. i.e. Uber can say "No work today, too bad".

ska 7y ago
> Their pay is higher to make up the difference. I thought part of the problem was that it isn't, in general.
- ars 7y ago
  People (especially California) would like you to believe that. Uber drivers are rational beings, they know exactly how much money they are making, and they are aware of their taxes. If Uber paid their Social Security and Medicare taxes, then Uber would just lower their base pay, and the net would stay the same. Or in other words the pay is higher because the driver has to pay those taxes.
  - ska 7y ago
    I don't know one way or the other, but I have heard the argument that if you actually do all the math, particular with the reductions in pay more recently, it doesn't all net out. Generally people do not act as fully rational economic actors, so we can't assume that this is not true based on the fact that people still choose to do it. Which isn't to say they shouldn't have that option.
AlexandrB 7y ago
> Their pay is higher to make up the difference. Citation needed. Please include costs of owning, operating, and maintaining an automobile in your calculations.
- ars 7y ago
  Are you implying that millions of Uber drivers are idiots and can't do basic math to decide if it's worth working or not?