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For a long time I thought that companies like Uber, lyft and Doordash were the super rich subsidizing the lives of the upper middle class on the backs of the po

For a long time I thought that companies like Uber, lyft and Doordash were the super rich subsidizing the lives of the upper middle class on the backs of the poor. We might never be able to retire but we can get cheap rides home from the bar. The bread and circuses of the modern age. Having worked as an engineer at one of the above it was clear that the amount people are willing to pay for a ride or food delivery is fundamentally less than what you need to pay a driver. Now I believe it was a ponzi scheme by the investors. If you sell hundred dollar bills for ten dollars you’ll have lots of customers. Even if you start selling the hundred bills for fifty dollars or even 95 you’ll have lots of customers and be able to claim you are the path to profitability. The numbers almost work. And it was a successful Ponzi scheme. All of the original vcs and investors were able to cash out with massive reruns. When these companies eventually (and inevitably) collapse it will be average investors and pension funds left holding the bag.

908B64B197 5y ago
> Having worked as an engineer at one of the above it was clear that the amount people are willing to pay for a ride or food delivery is fundamentally less than what you need to pay a driver. Every market has an equilibrium price. The old medallion system enforced a given (high) price, and the result was that the drivers had to work 12+ hours to break even due to the medallion price and the low demand. Uber has shifted that equilibrium point. I'm not sure it's above minimum wage, but note that taxi medallions didn't enforce a minimal wage either. But nobody would be doing it if it wasn't profitable.
- pmoriarty 5y ago
  "nobody would be doing it if it wasn't profitable" Not necessarily true. Some drivers might not be figuring in the costs of depreciation and maintenance, which are the biggest expenses of owning a car, and so might not even realize they're losing money in the balance. Not everybody's good at math, accounting, or business.
- ryanbrunner 5y ago
  People make plenty of economic decisions that aren't long term profitable. Go to any struggling downtown, and it will probably be chock full of predatory loan and check cashing places, which are universally considered to be a horrible economic decision to use. I'm not necessarily saying that driving Uber is quite at that level, but the fact that people are driving for Uber isn't evidence that it's a profitable thing for them to do.

908B64B197 5y ago

> Having worked as an engineer at one of the above it was clear that the amount people are willing to pay for a ride or food delivery is fundamentally less than what you need to pay a driver. Every market has an equilibrium price. The old medallion system enforced a given (high) price, and the result was that the drivers had to work 12+ hours to break even due to the medallion price and the low demand. Uber has shifted that equilibrium point. I'm not sure it's above minimum wage, but note that taxi medallions didn't enforce a minimal wage either. But nobody would be doing it if it wasn't profitable.

pmoriarty 5y ago
"nobody would be doing it if it wasn't profitable" Not necessarily true. Some drivers might not be figuring in the costs of depreciation and maintenance, which are the biggest expenses of owning a car, and so might not even realize they're losing money in the balance. Not everybody's good at math, accounting, or business.
ryanbrunner 5y ago
People make plenty of economic decisions that aren't long term profitable. Go to any struggling downtown, and it will probably be chock full of predatory loan and check cashing places, which are universally considered to be a horrible economic decision to use. I'm not necessarily saying that driving Uber is quite at that level, but the fact that people are driving for Uber isn't evidence that it's a profitable thing for them to do.