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I've never been convinced that you can make this model profitable if you expect to pay the drivers a living wage. People are price sensitive which limits how mu

I've never been convinced that you can make this model profitable if you expect to pay the drivers a living wage. People are price sensitive which limits how much you can charge. (This goes for other delivery services too like DoorDash.) If you charge the customer enough to cover all the expenses and pay a decent wage it results in a price high enough to cut into demand. At some point we may find the right marginal pricing model for all this but I have yet to see it.

Finnucane 5y ago
Clearly the model did not include a living wage for the driver. In fact, the opposite--the model depended on pushing costs as much as possible onto the drivers.
linuxftw 5y ago
Let's say they have 1M rides per day for an average of $10/ride. That's $10M in revenue per day. If they charged a flat 5%, that would be $500k in revenue per day, or $182.5M per year. Of course, they actually did about 13M rides per day in 2020, and they're taking a much greater slice than 5%. They should be printing money, not burning it. They only reason they're not insanely profitable is complete and utter mismanagement.
- nemothekid 5y ago
  >They only reason they're not insanely profitable is complete and utter mismanagement. It's hard to take this statement seriously, at least look into the business before making claims that it should be "easy". How did you come to your $10/ride number? Over what distance/time are those rides? How are those rides spaced during the day? How many drivers can you keep on standby to service those rides. Those questions are incredibly important into whether you can achieve a sustainable business that you have handwaved away into "$10/ride".
  - linuxftw 5y ago
    5% of $10/ride would be $0.50/ride. Maybe they could charge a $0.50/ride flat fee for rides under $10. CC processing fees, retail, are about 3% and $0.30 each, so that can be added on to uber's cut as well. They did 5B rides in 2020. At $0.50/ride, that's $2.5B. That's enough to pay 1k employees $1M, and still leave $1.5B for infrastructure, business expenses, and profit. It's also a business that requires no on-going capital other than operating costs, it's not like they buying steel and stamping out widgets, it's practically free money. Right now, their revenue is over $2/ride, so what are they doing with all that cash? Nothing useful.
potatolicious 5y ago
This very much. Ultimately what Uber (and most other gig economy companies) offers is on-demand servants - and there's a floor to how much this service can sustainably cost. The trick Uber pulled was inventing something that has a clear (and sustainable) market within the wealthy elite, but convincing investors that the product could be sustainably operated for vast swathes of the middle- and upper-middle class. In other words, the trick was asserting their TAM was way larger than reasonable measure, and having everyone believe it.
lowkey_ 5y ago
The plan was for drivers to no longer be a part of the model. Travis's goal for Uber was to achieve self-driving at all costs, and he acknowledged that Uber would inevitably fail as a company if they could not achieve self-driving in order to be competitive on pricing. His resolve to stay private and focus on the long-term while openly accepting that risk is why Benchmark pushed him out in order to take Uber public.

Finnucane 5y ago

Clearly the model did not include a living wage for the driver. In fact, the opposite--the model depended on pushing costs as much as possible onto the drivers.

linuxftw 5y ago

Let's say they have 1M rides per day for an average of $10/ride. That's $10M in revenue per day. If they charged a flat 5%, that would be $500k in revenue per day, or $182.5M per year. Of course, they actually did about 13M rides per day in 2020, and they're taking a much greater slice than 5%. They should be printing money, not burning it. They only reason they're not insanely profitable is complete and utter mismanagement.

nemothekid 5y ago
>They only reason they're not insanely profitable is complete and utter mismanagement. It's hard to take this statement seriously, at least look into the business before making claims that it should be "easy". How did you come to your $10/ride number? Over what distance/time are those rides? How are those rides spaced during the day? How many drivers can you keep on standby to service those rides. Those questions are incredibly important into whether you can achieve a sustainable business that you have handwaved away into "$10/ride".
- linuxftw 5y ago
  5% of $10/ride would be $0.50/ride. Maybe they could charge a $0.50/ride flat fee for rides under $10. CC processing fees, retail, are about 3% and $0.30 each, so that can be added on to uber's cut as well. They did 5B rides in 2020. At $0.50/ride, that's $2.5B. That's enough to pay 1k employees $1M, and still leave $1.5B for infrastructure, business expenses, and profit. It's also a business that requires no on-going capital other than operating costs, it's not like they buying steel and stamping out widgets, it's practically free money. Right now, their revenue is over $2/ride, so what are they doing with all that cash? Nothing useful.

potatolicious 5y ago

This very much. Ultimately what Uber (and most other gig economy companies) offers is on-demand servants - and there's a floor to how much this service can sustainably cost. The trick Uber pulled was inventing something that has a clear (and sustainable) market within the wealthy elite, but convincing investors that the product could be sustainably operated for vast swathes of the middle- and upper-middle class. In other words, the trick was asserting their TAM was way larger than reasonable measure, and having everyone believe it.

lowkey_ 5y ago

The plan was for drivers to no longer be a part of the model. Travis's goal for Uber was to achieve self-driving at all costs, and he acknowledged that Uber would inevitably fail as a company if they could not achieve self-driving in order to be competitive on pricing. His resolve to stay private and focus on the long-term while openly accepting that risk is why Benchmark pushed him out in order to take Uber public.