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The Uber Bubble

• Animats 5y ago
  Uber’s margin gains have not come from efficiency improvements but from its ability to unilaterally cut driver compensation by 40 percent since 2016. So much more cost-effective than slavery.
  • Supermancho 5y ago
    Slavery is not a trade you choose to practice. Not sure how this is constructive.
    • neojebfkekeej 5y ago
      Slavery has redefined itself into newer forms. One such manifestation is in the form of worker exploitation.
      • deleted 5y ago
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      • lurquer 5y ago
        Words don’t redefine themselves. Describing low-paying jobs as “slavery” is a metaphor. Saying “certain aspects of X are like Y” does not mean Y ‘is’ X. But, of course, that is often why rhetoricians use metaphors and similes… to dupe and confuse people into a false equivalence. There are slaves in this world… diluting the meaning of the word to include Uber drivers does not help them.
        • belter 5y ago
          That is not the argument. The argument is that Uber business model is more cost-effective than Slavery. (And without trying to sound insensitive here)...the "slave owner" still bears the costs of his "slaves".
          • yywwbbn 5y ago
            But it’s still not profitable, unlike slavery which was extremely profitable. So how can it be more effective?
            • belter 5y ago
              "Slave owners" did not have high AWS bills, Stock Based compensation, Sales and Marketing and so on... "Uber Technologies Operating Expenses 2017-2021 | UBER" https://www.macrotrends.net/stocks/charts/UBER/uber-technologies/operating-expenses#:~:text=Uber%20Technologies%20annual%20operating%20expenses,a%2012.1%25%20increase%20from%202017 https://www.macrotrends.net/stocks/charts/UBER/uber-technolo.... "Uber Announces Results for Fourth Quarter and Full Year 2021" https://investor.uber.com/news-events/news/press-release-details/2022/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2021/ https://investor.uber.com/news-events/news/press-release-det...
      • ohyoutravel 5y ago
        I am interested to hear your reasoning on this. To me, thinking through it, I see some potential commonalities but the sine qua non of being owned as property fails. Is the argument that people have to work in general to survive, and it is the fact that they have to work what renders them as a “modern slave?” I hope not because that seems facile.
    • mistrial9 5y ago
      "slavery" is a relationship with gravitational pull for the ages; less a literal, particular configuration IMHO
      • naoqj 5y ago
        If you can freely change the meaning of words then they may as well have no meaning at all.
        • catlifeonmars 5y ago
          Only if we don’t all agree on the new meaning :)
      • gruez 5y ago
        If you call working for uber "slavery", what do you call what african-americans were subjected to in southern US up to the 19th century? "super-slavery"?
    • belter 5y ago
      Animats did not claim it's Slavery, it claimed it's more cost-effective than Slavery.
    • pessimizer 5y ago
      Slavery is not a trade you choose to have practiced on you, it is a trade you choose to practice. And as a slave, you always have a choice. It's not cost effective to monitor and restrain you well enough to keep you from killing yourself indefinitely. Lacking others, plenty of slaves have chosen and do choose this option. Same as if all physical work turns into piece/gig-work. You can choose to do it, or you can choose to starve.
      • aetherson 5y ago
        Or, you know, as a gig or piece worker, you can choose to do something else, which as it turns out is not a choice a slave enjoys. Do you feel kind of dirty suggesting that a slave can just choose to kill himself and comparing that to Barcelona cab drivers? If you don't, why not?
        • pessimizer 5y ago
          > as a gig or piece worker, you can choose to do something else Not if every other job is gig and piecework. > Do you feel kind of dirty suggesting that a slave can just choose to kill himself and comparing that to Barcelona cab drivers? If you don't, why not? No, because choice is a word that means something. You're doing the common rationalization that there are always choices in employment, so while any particular employment can be arbitrarily bad, it's not slavery. I'm pointing out that slaves also have bad choices.
          • aetherson 5y ago
            I mean, among other things, Spain has a social safety net for people who don't work at all. There are obviously shitty jobs in the world. There are obviously people whose choices do not include, you know, the ideal of material well-being plus fulfilling days. It is certainly a defensible position that the world owes it to people in that position to try to make their choices better. Conflating those things to slavery makes you fundamentally an unserious person.
  • golergka 5y ago
    Unless you're able to show how Uber used violence or threats of violence to force drivers to work, it's not slavery. Even if it was the only employer on the driver labour market, it still would not be slavery — but it's not even that. In almost any labour market that Uber operates in, it has competition.
    • Skunkleton 5y ago
      > So much more cost-effective than slavery. The point is that it's not slavery, its cheaper.
  • belter 5y ago
    Actions possible, when the market is divided between just two companies. Hopefully, some kind of regulatory body, will investigate if there is no collusion. "Market share of the leading ride-hailing companies in the United States from September 2017 to July 2021" https://www.statista.com/statistics/910704/market-share-of-rideshare-companies-united-states/ https://www.statista.com/statistics/910704/market-share-of-r... "...For years, drivers have seen their earnings decrease despite putting in longer and longer hours behind the wheel. Earnings are decreasing because Uber and Lyft keep changing the rates - keeping prices the same for passengers, lowering pay for drivers and pocketing the difference...As Uber and Lyft continue to make more, drivers continue to make less..." https://www.coworker.org/petitions/uber-lyft-reverse-the-rate-cut https://www.coworker.org/petitions/uber-lyft-reverse-the-rat...
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• Closi 5y ago
  Easy answer - They are still experiencing rapid revenue growth, they have a clear path to profitability with a simple monetization strategy, and have dominated the market in many territories.
  • MBCook 5y ago
    > they have a clear path to profitability What is it? The problem I see is that there’s zero switching cost. It’s like buying salt at the supermarket. It’s all the same. They have nothing to differentiate them except their brand. Sure they can charge a little more because of that. National brands charge a bit more than generic. But you can’t raise prices 50+% and hope people will just stick with you so that you aren’t losing money hand over fist and will only _slowly_ circle the drain. It feels like Uber’s model was a really good one if you’re operating under the assumption that no one else could ever compete. As soon as a competitor came along they seem to have been screwed. The only play left was to pump more money in and hopes that somehow it magically worked out.
    • JumpCrisscross 5y ago
      > there’s zero switching cost Finding an app, installing it, entering your card details and then hailing are switching costs. When I travel, I sometimes try the local app. I usually just use Uber. (In America I default to Lyft, in New York Revel.) Keep in mind that Uber is profitable in some markets, e.g. New York.
      • scarface74 5y ago
        You don’t have to enter your card details. Since they are selling physical goods, they can (and do) use Apple Pay and your credit card is already in your phone. Just to clarify; Apple Pay - standard credit card processing rates In-app purchases: 30% cut goes to Apple.
      • MBCook 5y ago
        OK. It’s a four minute process. It’s not like switching from Xbox to PlayStation or Windows to Mac or something. You don’t have to throw away something of value that you purchased and buy something else expensive. You can go back-and-forth between the apps.
• jsemrau 5y ago
  By the measure of growth and market penetration, Uber has been successful. By the measure of establishing a globally operating business that employs thousands of people, Uber has been successful (mostly). By the measure of establishing a profitable business we might argue that they likely will never achieve that. If you look at their SEA competitors who already earlier on introduced financial debt as a tool to create merchant stickiness (to phrase it kindly), their fall from grace was much harsher.
  • oblio 5y ago
    > By the measure of establishing a profitable business we might argue that they likely will never achieve that. A "profitable business" was what we'd call a business, back in the day. Companies weren't able to last 5-10 years of losses.
    • jsemrau 5y ago
      I would argue that they only survived their post IPO valuation because stock markets have been artificially propped up. Interestingly only 25% of shareholders are retail vs 75% institutional.
  • criddell 5y ago
    > employs thousands of people You made me wonder how many people are actually employed by Uber. I thought thousands sounded like a lot for what they do. First Google result - 29,000 employees. That blows me away. It sounds like Uber itself is ready for disruption.
    • Gwypaas 5y ago
      Uber is being disrupted by for example Bolt, which is their frugal Estonian competitor. An example close to me is that Uber essentially already lost the Swedish taxi market. They had a couple of years as the the top dog making everyone install an app but due to the huge overhead got undercut. This is a market with a completely unregulated taxi sector as long as you follow the base regulations. Maybe sometimes a bit archaic but I could finance a car and start driving within a month. From what I've heard the only way to make a profit is to be a business owning about 50 cars which are staffed 24/7 and on top owning your own service workshops. It's extremely cutthroat.
• thematrixturtle 5y ago
  The real magic of Uber is that it allows drivers to convert the depreciation of their car into cash at a time and schedule of their own choosing. For the reasons discussed in the story, this may still technically be a net negative in the long term compared to driving a regular cab fulltime, but a) drivers find it far preferable to/cheaper than alternatives like payday loans, and b) many Uber drivers have multiple jobs and are not in a position to drive regular cab shifts.
  • avs733 5y ago
    I would be curious to see independent citations of these claims.
    • thematrixturtle 5y ago
      This is hardly an original insight: https://www.wsj.com/articles/how-uber-makes-its-drivers-pay-11565737028 https://www.wsj.com/articles/how-uber-makes-its-drivers-pay-... And WSJ's survey (above) indicates that many Uber drivers are not actually aware that this is where the money is effectively coming from.
      • germinalphrase 5y ago
        “ And WSJ's survey (above) indicates that many Uber drivers are not actually aware that this is where the money is effectively coming from” Which is another way of saying that they don’t understand the economics enough to know they’re accepting a bad deal?
        • chipotle_coyote 5y ago
          Yes, basically. And it's certainly not in Uber's interest to help them understand.
    • emteycz 5y ago
      Talk with the driver few times? I never had a Uber driver who said they would rather have a normal job. 500+ rides.
• Havoc 5y ago
  It isn't about Uber at all though is it? The entire SV model is basically Uber. i.e. Can you VC fund something loss making long enough so that it corners the market somehow / gains some other crushing advantage. Unfortunately everyone and their dog is focused on the first part on that strategy. 9 times out of 10 no natural crushing advantage shows up so the SaaS gets under pressure and raises prices and then proceeds to circle the drain. Crucially thought that isn't an indictement of the model. For good ideas lose money then win big is a valid strategy. Just needs a crystal ball
  • acchow 5y ago
    > Can you VC fund something loss making long enough so that it corners the market somehow / gains some other crushing advantage. This is Uber's model. This is not every VC-funded company's model. Google was a money-loser for quite some time, but each additional search gave positive returns. There's just so much other fixed-cost overhead that you really need to expand the business massively so that you can "make it up in volume". This is the most common "tech startup" model - very high startup and fixed cost which takes years to build a large enough customer base to overcome. As far as I understand it, Uber for many years lost more money with each additional trip. This is the "selling $10 bills for $5" model. Which certainly lets you grow your market and hope for a future where you have pricing power and can raise prices. This is your "crushing advantage" model.
    • Animats 5y ago
      Google was a money-loser for quite some time No. Google was incorporated in 1998, profitable in 2001, and the IPO was in 2004. Total investment pre-IPO was about $25 million.
      • scarface74 5y ago
        Out of all five of the largest tech companies - Facebook, Apple, Amazon, Microsoft and Google. Only Amazon ran at a loss for any significant amount of time before IPOing.
• Ferrari911 5y ago
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• anon84827820 5y ago
• Barrin92 5y ago
  The piece is exactly right. Uber is effectively an instrument to shift economic gains from labour to capital by atomizing the workforce. From a macroeconomic perspective this is terrible because turning taxi firms into countless of one man businesses provides no efficiency gains, it's basically reverse economic development. There is a version of Uber that actually makes sense. As a lean SaaS company that sells its software to ordinary taxi companies, takes a cut and makes a profit. Which is basically how they operate in Spain because Spanish law has not tolerated Ubers attempts to capture markets.
  • JumpCrisscross 5y ago
    > a lean SaaS company that sells Uber's software as a service to ordinary taxi companies, takes a cut and makes a profit This destroys a lot of value. Most taxi companies suck for reasons independent of their tech stack. (The fact that they’re better post-Uber shouldn’t obscure the effect of that competitive pressure.) Moreover, having a transport app that works in most countries is a value add for such a service’s most-profitable customers. Finally, the claim that taxi companies treat their drivers better than Uber applies in some markets, but it doesn’t in most, e.g. New York and New Delhi. Uber isn’t profitable as a company, but they’re profitable in some (and a growing number of) markets. There is a recurring set of Uber hot takes that get recycled every few months that ignores this.
    • BobbyJo 5y ago
      > This destroys most of the value. Most taxi companies suck for reasons independent of their tech stack. None of which Uber fixes? Uber is a tech company. Arguing that it's better than taxis for non-technical reasons is a bit absurd.
      • JumpCrisscross 5y ago
        > None of which Uber fixes? Did you hail or call taxis before Uber? The simple ability to see where your car is while en route was game changing. Add to that ratings, embedded payment (“credit card reader broken”) and dynamic pricing and you have a dramatically better experience.
• mupuff1234 5y ago
  Why are there so many competitors in the delivery/taxi type services, but in the short term rental industry Airbnb seems to be mostly unchallenged? I would've expected to see a lot of VC money being thrown there as well, but I'm only seeing Airbnb raising their fees and actually making a profit.
  • bombcar 5y ago
    Because if a food delivery company messes up I’m out dinner. An Uber competitor messes up in our a ride or have an uncomfortable half hour. But an Airbnb competitor messes up and maybe I have lice or worse. So the brand is worth more in that case. And they’re constrained on both ends by hotels also.
  • akmarinov 5y ago
    Isn’t booking.com up there as well in that field?
    • erik_seaberg 5y ago
      I see VRBO (Vacation Rentals by Owner) ads frequently.
  • Znafon 5y ago
    Because when you book a car or ask for food to be delivered of it does not happen you just cancel the transaction and book another one, perhaps on another app. There is not much risk associated to this transaction and this favour the apparition of « competitors » doing the exact same thing. When you are renting a flat in another town, or country, sometimes weeks or months in advance, the risk is much higher. If upon arrival you discover you have been scammed it has a much higher impact than a delayed meal. This favour a single actor that you can trust (however bad is Airbnb, image what it would like if you had to trust a local actor in a country that you have never been, acting without respecting the regulations…). This makes the dynamics of those two types of marketplace completely different.
  • ec109685 5y ago
    At least for Tahoe, VRBO and AirBnB have similar selection and interfaces.
• ggm 5y ago
  They also expatriate profits from economies, and are probably using international tax minimisation methods.
  • civilized 5y ago
    > They also expatriate profits from economies All non-local trade does this. > probably using international tax minimisation methods. All companies and individuals make some effort to minimize their tax liabilities.
    • ggm 5y ago
      Most non local trade which expropriates profits is exchanging goods or fintech. Uber is providing a service which almost exclusively before this was a semi or wholly regulated utility function, largely operated by onshore companies and often driver collectives. Philosophically I suspect we don't agree about tax, or utility functions or Uber. If you think it's a normal company I don't think you read the article. It's not.
• yesenadam 5y ago
  (2019) - This is the first in a series of three articles from the end of 2019
  • tootie 5y ago
    Yeah, I'm pretty sure they did actually have a small operating profit Q421.
    • scarface74 5y ago
      They didn’t. They only had a “profit” once you backed out over a dozen expenses - including stock based compensation.
    • scythe 5y ago
      Indeed, their burn rate seems to be improving: https://www.macrotrends.net/stocks/charts/UBER/uber-technologies/net-income https://www.macrotrends.net/stocks/charts/UBER/uber-technolo... We'll see if it keeps up, I guess.
• westcort 5y ago
  My key takeaways: 1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business 2. Individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab 3. Expenses other than drivers, vehicles, and fuel account for 15 percent of traditional taxi costs but Uber charges drivers 25-30 percent without coming close to covering their actual costs 4. Uber’s surge pricing does not improve efficiency, it simply prices those night shift workers out of the market 5. And as Uber has demonstrated, unlimited taxi market entry can lead to ruinous overcapacity and can allow part-timers to cherry-pick the peak revenue that full-time drivers depend on to cover their costs 6. Uber’s investors knew that it needed raw political power to accelerate growth, and to maintain its hoped-for dominance 7. Uber’s major strategic breakthrough was to treat business development as an entirely political process, using techniques that had proven successful in partisan political settings 8. All of Uber’s early popularity and rapid revenue and valuation growth are explained by the billions in predatory investor subsidies needed to drive those more efficient (but poorly capitalized) incumbents into bankruptcy 9. That [early popularity] allowed [Uber] to pursue more stratospheric valuations by exploiting anticompetitive market power and rent-extraction and buying out any potential competitive threats
  • ttcbj 5y ago
    These are all interesting points. However, I recently used Uber Premier twice in Miami, after not using any car service for two years, and the experience was excellent. It was fast, friendly, the car was nice, and I was happy with the price. For my use case, I am happy to pay more to get a better service, but it didn’t really seem that expensive. Both drivers had been doing Uber for a long time, which would be surprising if they were getting ripped off. So, as much as these points are interesting, I’m not sure they fully capture the situation.
    • sbarre 5y ago
      > Both drivers had been doing Uber for a long time, which would be surprising if they were getting ripped off Did you happen to ask if this was their full-time gig, or if they were doing it as supplementary income?
• inamberclad 5y ago
  Uber as a business is a massive loss, but consumers still _chose_ Uber over taxis because the process of getting and riding in a car is a million times more transparent than a taxi ever was. You can see what car and what driver are picking you up, what route they're going to take, and how much it will cost. Taxis failed because they failed to modernize.
  • maxerickson 5y ago
    Uber losing money on a ride should be expected to make it a more attractive option than close equivalents that do not lose money.
    • pessimizer 5y ago
      Exactly. If they were opaque, uncomfortable, and free, they would still "win" (by losing.)
  • jlund-molfese 5y ago
    One of the nice things about ridesharing is that, at least in some cities, taxis have started modernizing. I've been using Curb in Philadelphia, and it's significantly cheaper when Uber/Lyft have surge pricing. Otherwise, it's usually a little more expensive, but the drivers are more reliable so it's sometimes worth paying a few extra bucks. I've had Uber drivers accept my ride, then drive away from me, refuse calls, and not cancel the ride (expecting me to do it, so they avoid getting dinged, I guess) on multiple occasions. One time I ended up walking to my destination and saw the driver cancelled it after 2 hours. Uber, of course, doesn't have a way to report this behavior. The UI still isn't as perfect as Uber's, but it's good enough for me. Pretty similar to Uber without any bells or whistles. It wouldn't be convenient for me to hail taxis without an app.
    • gunshai 5y ago
      That is really interesting/odd behavior. What is the gain from this?
• danamit 5y ago
  All the complains in this thread seem like they can be solved by Uber easily, mainly by allowing drivers to set their price by themselves. Taxies in my country are so bad, it feels like you are asking them for a favor by using their service, not to mention they pick and choose if they wanna take you or no based on how profitable for them it is.
  • deleted 5y ago
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  • presentation 5y ago
    That defeats the selling point of Uber, you don’t just get a ride in one tap knowing how much you’ll end up paying anymore, unless you’re cool paying whatever the driver feels like they should be paid. Maybe I’m misunderstanding the idea though.
    • bombcar 5y ago
      I think the idea is you’d put up your trip and what you’re willing to pay, and drivers would “bid” on it (the app may do a bunch of this automatically for you, the driver could set rates etc) and then match you with the “best” offer.
    • danamit 5y ago
      You enter A to B, you choose the driver based on what you wanna pay.
  • SilasX 5y ago
    We had that, in the form of Sidecar, whose model lost to Uber et al in 2014.
    • danamit 5y ago
      I won't attribute a whole company losing because one feature, I still see it as a valuable option.
• 6510 5y ago
  Its one of those many apps governments should have created in the 80's
  • deleted 5y ago
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• cameronh90 5y ago
  Do people actually claim Uber is a successful business? In the UK, none of the original companies that built the railroads still exist. Many of the railway companies were never particularly profitable and the railway boom was a stock market bubble. Lots of them were fraudulent or poorly run. Eventually they all either went out of business, or amalgamated and ultimately got nationalised. Nevertheless, they proved the railway as a viable technology and built infrastructure that still exists and is used today (Ship of Theseus caveat). Were they successful as profit making businesses? Ultimately no. However society benefited greatly in the long run from their existence, even though we've all forgotten their names. I can't see Uber as a company surviving the next few decades, but without them the taxi experience would likely still be as horrific as it was in the 90s.
  • farmerstan 5y ago
    Surviving a “few decades” sounds like a successful business in anyones eyes.
  • axg11 5y ago
    An interesting perspective, but I think the key difference is that Uber has built no lasting infrastructure. I do agree that Uber has improved the taxi/private vehicle transport industry in essentially every market it entered. In London (UK) for example, taxis were previously mainly used by tourists, the rich, or the very drunk. Uber changed this completely, making it accessible for many more people. If Uber disappears I’m not sure what a follow-up company can build on top of? The only lasting impact I can see is that Uber popularised “gig work” so that future companies and even Lyft, DoorDash, etc. had an easier time to roll out the same model.
    • micromacrofoot 5y ago
      uber let the cat out of the bag… this model might not exist forever, but maybe it’ll last long enough for someone else to capitalize on its ghost
      • chrischen 5y ago
• MisterBastahrd 5y ago
  Uber has mostly been a disaster for me personally. Of the 6 times I've attempted to use the service for either travel or food delivery, 4 times I failed to get a driver on time even though I live in the DFW metro area. I've never EVER had that happen with Doordash. They've screwed up my order or missed picking up product but they never straight up just made me wait for 2.5 hours before giving up.
• amelius 5y ago
  Why isn't it illegal to disrupt a market by undercutting the competition in a long-term structural way? What makes it worse is that money is pumped into it like a ponzi scheme (first investors cash, last investors are left with the bubble), which should be illegal in itself.
  • willio58 5y ago
    How would you go about enforcing the alternative? Force companies to charge the same as the their competitors? And how would you evaluate if the undercut is sustainable or not?
    • DoughnutHole 5y ago
      This legislation already exists. Predatory underpricing has been a known problem for century, and is already built into antitrust laws. The thing is that it's not generally illegal in its own right - it just forms a component of a potential antitrust case case which could result in the breakup of a company in conjunction with other anti-competitive or monopolistic behaviour. But the precedent is there. A company destroying its competition by operating at a loss and surviving entirely by virtue of external capital injection surely falls at the very least under the spirit if not the letter of antitrust laws.
    • Ekaros 5y ago
      Show the numbers. Your incentive programs can't be more than your profits in a single market. That is the price you charge must be higher than the price it takes to pay for what you provide. Some things could be ignored in calculation like capital investments, operating cost and development costs.
  • gruez 5y ago
    According to https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy), it only seems to be banned if you're doing it as a country. >What makes it worse is that money is pumped into it like a ponzi scheme (first investors cash, last investors are left with the bubble), which should be illegal in itself. IANAL, but part of what makes a ponzi scheme illegal is that there's deception involved (ie. you're taking money for investors and saying that you'll use it to invest in the business, but really you're paying out yourself/other investors). There's nothing illegal about starting a crappy business, paying yourself and/or others (either through salaries or selling your shares), as long you're transparent about it and go through the proper channels (eg. board approval).
• bogomipz 5y ago
  >"Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business; individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab" Ironically enough Uber recently announced a partnership with yellow cabs in NYC whereby you can order taxis via the Uber app[1]. [1] https://www.nytimes.com/2022/03/24/business/uber-new-york-taxis.html https://www.nytimes.com/2022/03/24/business/uber-new-york-ta...
  • JohnTHaller 5y ago
    They did. You can also order them via Curb. Yellow cabs in NYC are often much less expensive than Uber. A recent trip I took via cab cost $29 plus tip. Uber wanted $76 plus tip for the same trip. It wasn't raining and there was no major event going on I was aware of. I hailed a cab in under a minute.
• nonrandomstring 5y ago
  I feel this entire thread has quite missed the point of the question the way a neutrino passes through a solid object and interacts with nothing but empty space. People have talked about microeconomics, gig economies, labour shifting, bad old days, safety, subsidies, licenses.... but we've gotten no closer to understanding; "Why Is a Company That Lost Billions Claimed to Be Successful?" To answer this one must ask "What is financialisation?" The short answer is; a system in which the success or failure of a company is of no relevance to its "value". Under financialised logic it is absolutely immaterial whether Twitter, Uber or whatever make a penny. Ever. Or whether any of the stakeholders are served. The rules of traditional business go out the window. All that matters is the stock price of a tradable financial entity (a company) based on brand confidence/perception. Under that system, Uber is successful so long as the financial market says it is. When it decides it's not successful, it's not. One has to realise that a total detachment of political economics and power has taken place.
  • gruez 5y ago
    >Under financialised logic it is absolutely immaterial whether Twitter, Uber or whatever make a penny. Ever. Or whether any of the stakeholders are served. The rules of traditional business go out the window. What makes you think that shareholders in Twitter or Uber don't care that they'll never make a penny? They're not turning a profit now, but it seems at least somewhat plausible that they'll make money in the future. Under that assumption (ie. future expected earnings), it seems perfectly consistent with "rules of traditional business". >Under that system, Uber is successful so long as the financial market says it is. When it decides it's not successful, it's not. One has to realise that a total detachment of political economics and power has taken place. Congratulations. You just discovered "the price of something is what someone is willing to pay for it", not its actual utility.
    • upvotepartytime 5y ago
      I think stakeholders, not shareholders, was intentional. Stakeholders (users, advertisers, whatever) might not be well served by a lack of edit button or whatever, but that’s only very tenuously connected to company value. Shareholders care that they make their pennies of course. That seems to be (part of) the observation. (Which as you say isn’t earth shattering but still worth remembering when you start wondering “why the heck is this company worth so much?” Because people think so. That’s all.)
• enahs-sf 5y ago
  A more egalitarian Uber/DoorDash/Lyft/etc. where all players in the market benefit and the company solely exists to provide value lives rent free in my head. In the practical reality however, the idea seems somewhat intractable.
• lvl102 5y ago
  Of all the SV bubbles, I feel Uber actually delivers incredible social value.
  • SixDouble5321 5y ago
    In what way? Having read several of the comments here from various angles, I can't imagine what you mean.
• theonlybutlet 5y ago
  It depends, in South Africa Uber basically created the personal taxi market all by itself, prior to Uber very very few people utilised personal taxi's. The big selling point being safety with car and driver being vetted. Edit: Without a doubt many of my friends and family would have never have stepped foot in a personal taxi in their lives prior to the advent of Uber.
  • danjc 5y ago
    You’re right but I’m not sure it’s going to last. Also in SA having spent a year out of the country. The condition of the cars is worrying. I think many of the drivers initially bought/financed new cars and now that they’re out of service plan they don’t prioritize maintaining them at the same level.
• encoderer 5y ago
  Uber and Lyft definitely expanded the market though. I went from taking cabs very rarely to using them as part of the normal fabric of city life.
• rsanek 5y ago
  Version without broken images: https://www.promarket.org/2019/11/20/the-uber-bubble-why-is-a-company-that-lost-20-billion-claimed-to-be-successful/ https://www.promarket.org/2019/11/20/the-uber-bubble-why-is-...
• rsanek 5y ago
  Feels to me like there's some pretty big leaps being made in the assertions. Just one example: >Taxi demand is sociologically bipolar; 35 percent of users have incomes over $100,000 and 55 percent have incomes under $40,000. Thus, on Saturday night wealthier people out for a night on the town compete for service with night shift workers who do not have transit options. Huge non-sequitur. It seems to be a reasonable assumption that high-income people will use rideshare for nights out, but how do we know night shift workers do not have other transit options? Or that night shift workers use rideshare/taxis at all? I think even for wealthy people it would be pretty crazy to rely on a taxi as their default commute option on a consistent basis, it is just way too expensive.
  • scarface74 5y ago
    My younger son had a job before he had his license. We spent around $300-$400 a month on Uber for him. That was still cheaper than a used car + insurance for an 18 year old male. My son is a big dude and we couldn’t buy him a little beater. Heck my parents paid $500/month on me in 1991 for a $10K low end Ford + car insurance. If my old Ford with 150K+ miles got to the point where it wasn’t worth getting fixed, I wouldn’t buy another car. I did without a car for a year when I gave my car to my older son who doesn’t live with us. I work remotely. When I needed to go some place local, I would take Uber often. I rented a car for a weekend every three months to go home to see my parents, I had groceries delivered. Admittedly we did have one car. But my wife was usually busy during the day. I see no purpose for having a car just to sit in the garage most of the time. Uber is cheaper.
• overgard 5y ago
  I can't disagree with most of that, but honestly in non-major cities the experience of getting an Uber is just like 10x nicer than the experience of getting a cab. If nothing else they made things way more convenient.
• throwaway787544 5y ago
  It's successful because success only requires you accomplish what you set out to do. If you steal money from a bank and get away with it, you were successful.
• lawrenceyan 5y ago
  Anecdotally, the only time I ever tried taking a taxi, the driver immediately tried to scam me by charging $40 for a trip that really should have been $20 at max. At least with Uber/Lyft, you know the exact price going in.
• farmerstan 5y ago
  Only in hacker news do you find people who think the taxi industry is some bastion of freedom and some poor victim of Uber. Does no one know how the taxi industry works and the insane levels of corruption involved? Most taxi drivers start their shift IN DEBT, every single shift. They owe the taxi company $100 at the beginning of their shift to rent the taxi and then have to work to pay off this debt every shift. Once they have earned it they can keep whatever money they earn. If they need to stop working in the middle of the shift, they are net negative. They need to pay for their own gas, they need to clean the taxi, and if someone pukes in their car they have to clean it themselves. There is no vacation pay, they have no freedom at all. Most Uber drivers are happy. That’s a fact. I dare you to ask your next driver. I just took 2 Ubers today and they were happy. My second driver told me he felt lucky because he had Uber to fall back on during the pandemic. You get a small number of professional drivers who want to destroy uber and journalists that want to as well so you get completely slanted articles like this. Somehow Lyft is the hero and Uber is the bad guy, when both do exactly the same things. The simple fact is Uber provides a great service and most drivers are happy. In terms of investment, post-IPO it has been largely dead money but the idea is never going away. Taxi companies are not the heros here. They were even more predatory than anything claimed here about Uber which are mostly twists or flat out lies.
  • smilespray 5y ago
    I haven't seen many people defending the cab industry, which is clearly broken in many markets, including mine. I get that you hate cab companies. I do, too. However, I'm just not sure that I like Uber any better. Most of the issues you describe with taxi drivers apply to Uber drivers as well. As for your happiness metric, I'm not so sure about what you call facts. Asking your driver isn't going to provide useful data. One type of dysfunctional business just got replaced with another.
    • farmerstan 5y ago
      The vast majority of Uber drivers are part time by choice. You don’t have that option with taxi driving. One driver I had would wake up early and drive people to the airport before work and that helped him pay off his car sooner. Uber is extremely flexible and the engagement model isn’t predatory. You make money from your first trip and everything is clearly spelled out. You can even work for Lyft and Uber at the same time. Flexibility is the key for most drivers. Is every driver happy? No. Is every google software engineer happy? No. Some would accuse google of being predatory but just because some people say that doesn’t make it real. Go ask most of the drivers and you will see that it’s a part time job to them and for what it is it’s fine. They don’t look to it like some career and they shouldn’t.
• arthurofbabylon 5y ago
  When traveling in India, I foolishly took a cycle rickshaw. It was gross/shameful. A man far less fortunate than I was sweating, working hard, barely getting paid, and breathing horribly polluted New Delhi air while I just sat there. When Uber started to squeeze its drivers, I again felt just like this. I hated hearing drivers complain about their life problems. I hated doing the math and seeing how little these people were making out of this transaction. I hated feeling like a perpetrator of class division. The common argument in support of Uber’s poor economics is their superior user experience compared to taxis. However, exploitative industry is a terrible “user experience” for the ethically- or morally-conscious. And that’s just the privileged party’s perspective…
  • chrischen 5y ago
    You think that taxi driver was being paid more fairly? Often they just drove for medallion owners and rented the time. The economics would have been at best same, if not worse since there was probably little oversight since it was a bunch of small cab operators.
  • meowtimemania 5y ago
    I used to live in Latin America and I would avoid hiring shoe-shiner kids in spite of them following me each day. I thought it was sad to see these kids working at such an early age and thought hiring them would be me exploiting them. In hindsight I should’ve just hired them, they need the money. it’s horrible people live in poverty and have to work such jobs, but IMO hiring them helps them more than not hiring them.
    • kwhitefoot 5y ago
      No, hiring them to shine your shoes would not have helped, it only perpetuates the system. What is needed is a social change that eliminates the need. Sadly this sometimes only happens when the oppressed party suffers enough to elicit real sympathetic action or in extreme cases an uprising. As you didn't hire them, presumably your shoes didn't need shining so they were not really performing a necessary function anyway. This suggests that the system continues to exist partly because some people like the idea of paying a pittance to someone to perform a menial job simply because it makes them feel good or superior instead of donating that money to an effort to eliminate the poverty in question.
• bern4444 5y ago
  In NYC Uber has struck an agreement with the city to allow taxi cabs on its app as a service provider. NYC (and other cities) have begun to use Curb (an Uber/Lyft like app for local taxis) but I've found it to be far worse than Uber and often even using Curb, traveling in or to any borough that isn't Manhattan is always a frustrating experience - I often have to give directions to the driver. Far from the frictionless experience that Uber does provide and ensure. Uber resisted this for a long time in favor of bulldozing over local taxi companies to make their platform dominant and a near monopoly but I hope Uber ends up as a generalized service that any independent driver or taxi company can use in their own fleet.
• hn_throwaway_99 5y ago
  > Oracle founder Larry Ellison noted that Uber’s app was less sophisticated than something his cat could have developed. That is the equivalent of "I could build that in a weekend" that you often hear from inexperienced devs that have no idea what they're talking about. In fact, we had the perfect experiment in Austin, TX, where a couple years ago the city essentially voted to kick out Uber and Lyft (required fingerprinting of drivers) before the state legislature passed a law overruling the city. There were lots of competitors that flooded in to fill the vacuum. They ranged from "barely if even functional" to "OK". I was even a big fan of Ride Austin because it was a nonprofit, but I'm not going to pretend its apps were anywhere close to Uber and Lyft's.
  • psyc 5y ago
    Didn't I read somewhere that all of Uber's complexity is in making it work correctly in every jurisdiction that it works in?
    • smilespray 5y ago
      That's a link I'd be willing to spend some time reading. Please?
      • psyc 5y ago
        https://youtu.be/zmeCYiD0hnE https://youtu.be/zmeCYiD0hnE
  • no1lives4ever 5y ago
    Uber used to have a much simpler app 6-7 years ago. I worked on a product that copied uber and gave whitelabelled uber like apps to taxi operators and other services that required similar functionality. But even then, we found that the app was hiding a lot of complexity under that simple interface. The uber app of 2022 shows a UI that is a least 10x as complex and hides even more behind that interface. Something as simple as how uber is able to show you car location in near real time on the screen requires a fair bit of engineering effort to get right at Uber's level of scale.
• wordnerd2022 5y ago
  No 2019 tag in the title?
• escot 5y ago
  I always thought Uber Pool was their main advantage over traditional cabs that couldnt coordinate sharing rides with multiple users. It was an actual productivity gain, like the article complains about them not having. I remember getting across SF for 3 bucks. I think it only shut down because of covid, so if they restart the program it could make them more interesting than paying for the whole route.
  • mym1990 5y ago
    Wow this brought back some memories! Its interesting thinking back to a time when riding in a Prius with 3 other strangers seemed perfectly normal haha.
• aemreunal 5y ago
  Like many people here, I share the negative sentiment towards yellow taxis. It's simply a sordid experience. Arguing with the drivers to not get figuratively (and actually on one occasion in NYC) robbed, trying to convince drivers that where you're going is worth their time, the rudeness you endure, the list is just endless... As long as taxi drivers resist any improvements to their behavior, companies like Uber will pop up to serve those who can pay for it. I, for one, am fortunate enough that I can pay for it and would continue to use Uber over taxis even if it costs 2x. I cannot overstate how much I hate taxis. The biggest success of Uber, for me, has been that they raised the bar and showed everyone that this experience can be better.
• drbig 5y ago
  Just want to provide taxi service context from "a lesser (known) place" - Łódź, Poland: 1. You can't hail a cab that's in traffic It's illegal for them to stop randomly. 2. Cabs have dedicated "TAXI" spots I _believe_ the city designates them - well marked space along curb. There any taxi company cabs can queue and wait for "off street pickup". Like at LAX, just smaller and spread over the city (not necessarily evenly). 3. Every taxi company prefer you to order the cab earlier You can do it old-school via a voice call, or via an app, or via an SMS or... I'm not even sure, I speak the language so I just call. You can order a cab for tomorrow, for the middle of the night etc. And they _will not ask_ you about the destination, only about the pickup point - which contrary to point 1 can be literally anywhere a car can stop without blocking traffic (i.e. a road in the middle of nowhere). 4. For an ordered ride the dispatcher do care It's the major part of their job for you to get your cab at the place and on the time agreed. I find it insulting if the cab isn't _earlier_ than the agreed time. Cab being late more than couple of minutes is very rare. 5. For an ordered ride you do get some cab info My favorite company sends an SMS with not only the car description and cab number (well visible), but also a link to a very simple but "data only" web-app that shows where the cab is, updating about once a minute. So like Uber, but simpler and way more reliable (ever seen your Uber driver get magically teleported way back than they were a second ago? ...prediction gone wrong). 6. Pay cash, card and others As per 3 you'll be asked your destination only ever when you're already in the cab, and by the driver - so I have no idea if any prepaid options are available, but then again to me taxi is like a haircut or a restaurant meal - a service where prepayment is just a bad incentive for the provider. 7. It's like a restaurant meal I had cases where I was going for a train (so tight schedule), but the cab driver got rather unlucky with the choice of route and time was running out... they offered to go lower over the metered number, because hey they are people too, and that's as much as they have power to do. I decline, not their fault (and a decade of experience of building in buffers for long-range travel means "I'm always fine"). I believe most if not all of the above applies across all Polish cities and taxi companies. I have used Uber in Poland only exactly twice, and many times abroad, with most trips in the USA. Compared to my Łódź, Poland taxi experience Uber is mostly "meh" - and it's very unreliable for anything with a schedule.
• thesaintlives 5y ago
  Great article and great website. Really worth looking at all the other articles. Thanks!
• mst 5y ago
  For those of you interested in parts 2 and 3 there's links to all three parts here: https://braveneweurope.com/tag/hubert-horan https://braveneweurope.com/tag/hubert-horan
• nonameking2026 5y ago
  My feeling has been for a while they are betting on self driving cars. When that becomes a reality - their cost structure will change dramatically.
  • rajman187 5y ago
    They perhaps were for some time, but both Uber and Lyft sold off their autonomous vehicle divisions a few years back. It makes more sense for an established car manufacturer to develop this as they already have the infrastructure to scale this and not require Uber to work on just software/hardware and rely on licensing or contractual agreements with car makers. They’ve probably both realized it’s a very difficult task to go beyond simple routes and that it’s not a viable investment for a non-profitable company that’s burning through investor money trying to establish a monopoly.
• frr149 5y ago
  The main driver for the ascension of Uber is that everybody hates taxis and taxi drivers. I don't care if it's more expensive or not, I don't want to deal ever again with taxi drivers that are not accountable for their bad service.
• sytelus 5y ago
  Has anyone actually verified the numbers? Per my calculation, per hour cost of running a car in US is about $17. Minimum wage is $15/hr. In my experience, Uber/Lyft charges comfortably so the drivers earn above minimum wage. I have in fact met few drivers who owns multiple cars “Ubering” around because it is profitable to them. This has also been previously verified by Forbes when they compared full time Uber drivers income with taxi driver income and concluded that Uber drivers often earned 20% or more. The article makes bold claims that Uber is killing “efficient” taxi companies using capital but presents no real data. In reality, taxi companies have much larger overhead because large chunk of revenue simply goes into medalian owner’s pockets purely as passive income. Additionally, they need to have staff for recruiting, maintainence, legal, radio etc. There is NO theaoratical reason why app based taxi company cannot beat traditional taxi company just on efficiency.
  • rnd420_69 5y ago
    I know someone who does bike delivery in a densely populated city. I don't know how uber works really or how they distribute money, but according to him you're not paid an hourly wage every hour. For example because there is so much competition among drivers, you can go hours without an order assigned to you. even in big/densely populated urban centers. and I think the guaranteed hourly rate thing only applies in specific circumstances. there is no way he is putting in even an 80% work day unless he waited for orders literally all his waking hours. and then from the money you are actually paid, you have to deduct all the costs for maintenance and so on. from back of the envelope calculations my buddy actually makes much less than minimum wage. I try to convince him from time to time to just get regular other jobs and point out he will quickly make a lot more money. but frankly he is in a hole and cant see outside perspectives. as you can imagine he's big into crypto as well, trying to day trade that shit with his measly capital not realizing he would make 4 times the money flipping burgers in mcdonalds a couple hours a week. but we're not that close so it's not my place to give him a kick in the ass. however he's probably a good example of the kind of ignorance and lack of education / perspective that uber can easily exploit.
• jokoon 5y ago
  I wonder if there are similar problems with airbnb. I've read from people complaining that their airbnb was cancelled. The problem with new age entrepreneurship and startups is that their interests intersects with either libertarian or conservative politics. We want to think the silicon valley holds progressive values, but it's not entirely true.
• kareemsabri 5y ago
  I don't disagree with many of the points argued in this article (and the subsequent two articles). An interesting piece of anecdotal evidence, I recently had a conversation with a Yellow Cab (or similar) driver in NYC who switched back to a cab from Uber. He pays, if I recall correctly, $900 per week to the taxi company and after that is able to keep all wages and tips. His $900 is owed regardless of the amount of fares he receives. Despite this, he still felt this was a better deal than Uber after doing both. So it doesn't appear that the cab cartel is some sort of myth, as the author seems to imply.
• kgbcia 5y ago
  Forget the economics for a minute . Uber Lyft changed the way we pay for rides and rate drivers. Uber used online payment and GPS to create a simple app that works. I no longer have to worry about payment since I prepay. Cars are owned by the individual so they are cleaner inside. I can summon one from a distance and I can pinpoint the exact pickup Spot. I once called a taxi dispatcher and I felt berated. It's the user experience, probably something mr. Oracle should look into.
  • nprateem 5y ago
    All of which have been replicated by my local taxi app
    • hartator 5y ago
      I highly doubt it. And even if it’s true, there is no reason for city mandated taxis anymore.
      • nprateem 5y ago
        There are multiple reasons, from regulation in terms of insurance, safety requirements, etc. to control of congestion and pollution by limiting the number of drivers.
    • sebastos 5y ago
      Which works perfectly when you fly to a new city and need a ride out of the airport, right?
      • nprateem 5y ago
        I know right, it's as difficult as going on the app store and typing "<city> taxi app"
• unfocussed_mike 5y ago
  My take: Uber is a libertarian economic crowbar. All of its backers, all of its investors, imagine an Uber world where no individual matters except themselves. They wilfully break laws expecting to be able to overturn them before they are punished; they destroy markets knowing that the regulation will have to adapt to allow them to continue. The Uberisation of everything is the tech sector's most disgraceful product.
• throwaway73838 5y ago
  Having existed pre and post Uber, in my country (Australia), here are my thoughts: Ordering an Uber is far, far quicker and easier than getting a taxi. Getting an Uber is still far cheaper. In the old days, if you were traveling after 10pm, you’d very often be charged up to $10 from before you’d even closed the door. That lead to taxis feeling like luxury vehicles. Catching an Uber seems so mundane by comparison.
• 3bproblem 5y ago
  It's considered a huge success because it returned a ton of money to shareholders
• junon 5y ago
  I worked on the long term forecasting team as engineering support. Uber is laughably unprofitable. They spend thousands of dollars per rider signup and way, way more per driver signup due to all of the perks. I worked there for a year and vowed never to work for a big tech company again. Sold my shares right as it was announced they got stung in the UK. It's a dying company. Won't say much more than that. I've been harassed a few times now for talking about it.
• njoubert 5y ago
  I find it hard to believe any article that describes taxi services as "efficient but undercapitalizes". Does the author remember the experience of trying to find a cab if you weren't in a downtown area already?
  • cgearhart 5y ago
    Pretty sure he means cost efficient—as in the cab companies had optimized the cost structure of their business by negotiating large orders for fleet vehicles, insurance, etc., which should be more efficient than asking the same number of Uber drivers to do it independently.
• lisper 5y ago
  About the same time that Uber launched I tried to launch a similar startup except that it was purely a dispatch service. Our plan was not to have any cars, but rather to just provide centralized dispatch for cab companies. The economics were win-win for everyone but we couldn't get a single cab company to sign on with us because each one was happy with its little fiefdom that was blissfully free of competition. The result was universally terrible UX. So regardless of whether or not Uber is actually better than what it displaced IMHO it's a net win simply for having displaced the old ossified cab companies. Maybe Uber will be swept away and replaced with something better, maybe it won't, but at least now we have a shot.
• mr_peppers_ 5y ago
  This article is 3+ years old
• noduerme 5y ago
  >> Uber was not pursuing more liberal entry and pricing rules but working to effectively nullify any form of governmental oversight. This meant eliminating the public’s right to establish standards for market competition, safety, insurance, driver licensing, vehicle maintenance, or obligations to provide services to all people and neighborhoods in a city. Former cab driver here. I was astonished and disgusted by exactly this set of issues when Uber emerged. Taxi drivers had to take tests, undergo frequent safety checks, random stops. We had to take calls in all neighborhoods while on shift. And driving was a full time job. There was no surge pricing. Meanwhile, when Uber came out, I remember everyone in the general public hating on taxis as being too expensive, or dirty or old fashioned or something. People didn't understand what they were trading away, or that they were only temporarily getting something for nothing. Pre-Uber, (and pre smart phone) I had the idea of building an SMS based service that would distribute pickup requests to drivers who paid a small fee for it. The trouble was, that would have been illegal, because it ran afoul of decades of regulation around how calls were fairly dispatched and who could dispatch them. Uber just came and broke all the laws for consumer protection and got away with it, through a combination of threats and bribery of local officials.
• alexvoda 5y ago
  Here is an issue I do not see anyone else mentioning. There is no way to contact them for unusual problems. You either have the chatbot solve your issue or you are f**ed. In my city, for some reason there is a location that is wrongly labeled as the railway station. There is nothing there, just residential blocks. Yet when searching, this option is always ahead of the real railway station. Triped me up several times already.