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Yet, neither do Uber nor AirBnB make money. So it's still entirely based on a greater fool theory of economics.

HWR_14 4y ago
I don't understand how neither of them can make money anymore. When they were offering rides at a loss to build market share I understood how Uber could lose money. But now how can the cut they take from every ride not cover expenses?
- spaceman_2020 4y ago
  Because the rides are legitimately becoming too expensive to attract a large volume of riders. As volume disappears, drivers start leaving the app - no fun being logged in all day and getting no rides. If drivers start leaving the app, Uber has to incentivize them, eating into the company’s margin. Essentially, the real, unsubsidized market for on-demand chauffeured rides is much smaller than anyone anticipated.
  - ghaff 4y ago
    >Essentially, the real, unsubsidized market for on-demand chauffeured rides is much smaller than anyone anticipated. It seemed probable that Uber pricing would approach taxi pricing. Which seems to have largely happened. And while Uber was arguably a better experience than cabs in many cities, it's not clear that just a better experience would cause a lot more usage at the same price.
    - spaceman_2020 4y ago
      The "better experience" argument rests on a false premise - that everyone has the money; they never spent it on cabs earlier because it wasn't easily accessible. This kind of thinking is pervasive among tech startups now, and much of it is deeply embedded among startups founded by financially well-off, living-in-SF folks. The idea that the vast majority of people don't really have enough money to afford fair price cabs (or food delivery or consumer good) seems to be lost on them.
      - HWR_14 4y ago
        I do find a lot of physical goods startups seem wildly overpriced as consumer items. I mean, that's fine if you're planning on selling to SF tech folk, but then they talk about going national in major chains.
- ska 4y ago
  The simplified two step plan is a) subsidize the cost until the market share is big enough followed by b) once you have market share, use your weight to up the cost to a healthy margin. If you overestimate your ability to actually do (b) you are going to have a bad time. You are squeezing both drivers and riders in the uber case, but both of them have other options - if they bail on you, you'll probably have to raise pay/drop fares to counteract it. There is no guarantee the business model actually works at the scale you wanted it to.
  - Ekaros 4y ago
    And in process of getting the market share, you have build organisation too heavy extract reasonable rent from the market. There could be place for these operators, but they have spend too much and continue to spend too much for their fair cut.
AlexandrB 4y ago
> So it's still entirely based on a greater fool theory of economics. A lot of that going around right now.

I don't understand how neither of them can make money anymore. When they were offering rides at a loss to build market share I understood how Uber could lose money. But now how can the cut they take from every ride not cover expenses?

spaceman_2020 4y ago
Because the rides are legitimately becoming too expensive to attract a large volume of riders. As volume disappears, drivers start leaving the app - no fun being logged in all day and getting no rides. If drivers start leaving the app, Uber has to incentivize them, eating into the company’s margin. Essentially, the real, unsubsidized market for on-demand chauffeured rides is much smaller than anyone anticipated.
- ghaff 4y ago
  >Essentially, the real, unsubsidized market for on-demand chauffeured rides is much smaller than anyone anticipated. It seemed probable that Uber pricing would approach taxi pricing. Which seems to have largely happened. And while Uber was arguably a better experience than cabs in many cities, it's not clear that just a better experience would cause a lot more usage at the same price.
  - spaceman_2020 4y ago
    The "better experience" argument rests on a false premise - that everyone has the money; they never spent it on cabs earlier because it wasn't easily accessible. This kind of thinking is pervasive among tech startups now, and much of it is deeply embedded among startups founded by financially well-off, living-in-SF folks. The idea that the vast majority of people don't really have enough money to afford fair price cabs (or food delivery or consumer good) seems to be lost on them.
    - HWR_14 4y ago
      I do find a lot of physical goods startups seem wildly overpriced as consumer items. I mean, that's fine if you're planning on selling to SF tech folk, but then they talk about going national in major chains.
ska 4y ago
The simplified two step plan is a) subsidize the cost until the market share is big enough followed by b) once you have market share, use your weight to up the cost to a healthy margin. If you overestimate your ability to actually do (b) you are going to have a bad time. You are squeezing both drivers and riders in the uber case, but both of them have other options - if they bail on you, you'll probably have to raise pay/drop fares to counteract it. There is no guarantee the business model actually works at the scale you wanted it to.
- Ekaros 4y ago
  And in process of getting the market share, you have build organisation too heavy extract reasonable rent from the market. There could be place for these operators, but they have spend too much and continue to spend too much for their fair cut.

AlexandrB 4y ago

> So it's still entirely based on a greater fool theory of economics. A lot of that going around right now.