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Uber CEO Stunned When He Heard Cost of 3-Mile Uber Ride
- npace12 3y agoLast year, I traveled from DC to NY overnight, and it was 2.5x surge pricing. When i got to my destination, I stuck around in the car to see what the driver app was saying. I paid close to $900, driver took ~$250, the entire surge pricing difference went to Uber. I was thinking, that's an crazy markup over their AWS bill but really it's just a robbery.
- barbazoo 3y ago> With Uber, the vast majority of your fare is going to your driver Surely the CEO wouldn't lie to us /s
- DonsDiscountGas 3y agoIsn't (at least part of) the point of surge pricing to bring more drivers out onto the road? Or was that just a lie.
- cryptonector 3y agoWould you drive someone 4.5 hours from DC to NYC for $250? The drive back would be $0, so $250 / 9, minus gas and mileage. It's very little. Meanwhile Uber got $650. I wouldn't do it.
- twelve40 3y agoon the one hand, you're right, and what's worse that if we apply the IRS mileage reimbursement to the whole round trip, that alone is not worth it, plus like 50 bucks for gas. On the other hand, $250 cash in hand, now, without having to run around or idle for customers could be a lot of money for someone. People who drive these things don't work for fangs...
- npace12 3y agoThe driver asked me if his friend could also come because she was on the crew of the same flight and was also going to NJ. She offered to pay for part of it, but I was happy that I made it home and felt bad for the driver taking 1/4 of the money I paid, so I didn't take it.
- jonathankoren 3y agoIt’s a complete lie. On a $116 surge price trip, drivers get an extra $5.[0] THIS is how Uber finally turned a profit. None of that Kalanick bullshit about how only self driving cars can make Uber profitable.[1][2] It’s jacking up prices and pocketing the difference. Never trust a tech bro. They’re all grifters and liars. [0] https://www.tiktok.com/t/ZT8LCks4j/ https://www.tiktok.com/t/ZT8LCks4j/ [1] https://www.usatoday.com/story/tech/news/2016/08/19/s-self-driving-cars-uber-ceo-travis-kalanick-ipo/88967594/ https://www.usatoday.com/story/tech/news/2016/08/19/s-self-d... [2] https://www.cnbc.com/2020/01/28/ubers-self-driving-cars-are-a-key-to-its-path-to-profitability.html https://www.cnbc.com/2020/01/28/ubers-self-driving-cars-are-...
- WillPostForFood 3y agoIt’s a complete lie. On a $116 surge price trip, drivers get an extra $5 It would be helpful to have a better source than hearsay on TikTok from some rando whose gig seems to be ranting about tech bros. Even a an Uber driver on TikTok would be good.
- Firmwarrior 3y agoHow about some secondhand hearsay? I've heard this same thing from Lyft drivers. Their customers are all pissed, the drivers ask why, it's because a $30 ride is costing them $100. Meanwhile, the driver still just gets the usual rate
- jonathankoren 3y agoHow very brave you to dismiss screenshots and take obviously out of touch and responsible billionaire Dara Khosrowshahi over the drivers who have been saying this very thing for literally years now. Seriously. What makes Khosrowshahi believable here, and why do you identify with him?
- bawolff 3y ago> It’s jacking up prices and pocketing the difference. Obviously the way to make profit is to charge more than you spend. Literally the definition.
- twelve40 3y agowho knows? they have a ton of data that we don't have, and can infinitely tweak the pricing and the take-home based on their needs at the moment
- mlinhares 3y agoI hope he found someone doing the way back, that must have been a horrible time.
- acjohnson55 3y agoYou took an Uber overnight from DC to NY? That's wild.
- xwdv 3y agoIf it had not been surged price, it would have been a hell of a deal.
- woodruffw 3y agoThe NE regional is cheaper than that; my round-trip tickets are usually well under $250.
- satvikpendem 3y agoIndeed, I'm not sure whether it was in an emergency situation (or if they're referring to NYC versus NY state when they talk about NY) but I regularly travel from DC to NYC and vice versa on Amtrak and it costs me around 100 bucks each way, even in the middle of the night which has some pretty good deals.
- ecshafer 3y agoGreyhound nyc to dc is like $20 and has a dozen buses a day. Plus you have Amtrak. Why take an Uber?
- woodruffw 3y agoI would also like to know this. Even a flight would have been cheaper!
- midoridensha 3y agoBecause with those other services, you have to be around other people. Americans hate that.
- mcpackieh 3y agoAmtrak at night is quiet, generally pretty empty, and very civilized. Nothing at all like an intracity bus or subway. But I think many Americans would never even give it a chance. Maybe that's why it's so nice...
- freeopinion 3y agoI've tried to give Amtrak a chance. But I don't live in the northeastern part of the USA. So I would have to drive a few hours to get to a train station, then spend 24 hours longer on the train than I could drive in a car. And it would cost me a lot more to ride the train than to drive myself. I think there is more than one reason that Americans "never give it a chance".
- jonny_eh 3y agoNo amount of the surge pricing should go to Uber. They're already earning more due to the increased number of rides. It's almost akin to taking the tips.
- bawolff 3y agoI don't understand why people think this. Uber isn't a charity. Of course they are going to try to take advantage of demand shortages. If drivers want to take in the profit from things like this, they should form a co-op, not be contractors.
- jen20 3y agoThe original (stated) point of surge pricing was to encourage more drivers to start work because of higher rates.
- wordpad25 3y agoThey can buy Uber stock
- jonny_eh 3y agoIt says this on the Uber website: > In these cases of very high demand, prices may increase to help ensure that those who need a ride can get one. This system is called surge pricing, and it lets the Uber app continue to be a reliable choice. The fact that only a fraction of the fare increase goes to the driver is misleading at best. https://www.uber.com/us/en/drive/driver-app/how-surge-works/ https://www.uber.com/us/en/drive/driver-app/how-surge-works/
- bawolff 3y agoIt sounds like they are saying - we increase prices so that less people use the app so we can service all the people who do. It is only a misleading statement if you put words in uber's mouth beyond what they say. I don't see anything here suggesting they increase prices to increase supply instead of decreasing demand.
- coding123 3y agoWith this one comment, and about $50 million in advertising and $50 million in development, you can erase Uber. (the 50MM in advertising is the budget to make ads that convince Uber drivers to get paid the $900 instead of the $250) And the $50 is the app dev budget.
- iepathos 3y agoYeah, it is a crazy markup and it's why they were able to increase their ARR by 58% this last year. I think the more frustrating thing is lack of serious competition in the space to keep them from jacking up the prices down so much. Lyft should be drastically undercutting Uber in order to force them to lower prices or out of the market but they aren't, instead they are on average charging more. Need better startups in the space
- flagrant_taco 3y agoWouldn't that effectively be asking Lyft to jump on a grenade for the greater good? Drastically undercutting the competition means you leave money on the table. Let's just assume a 5% discount isn't enough to win riders but 15% is, should the cut fares but anything over 15% just to screw Uber? And does this risk setting a low enough market cap on Lyft that they could be compelled to take an acquisition offer simply because they so drastically under cut their potential revenue? Startups' job isn't to fix a broken market, it's to either become self sufficientquickly or to 10x investor capital depending on the funding model. The only business model that can really justify cutting fares drastically would be a non-profit, maybe some kind of collective run by the drivers themselves.
- kedean 3y ago> Startups' job isn't to fix a broken market An aside...why are we still referring to Uber and Lyft as startups? They are 14 and 11 year old, extremely well established, multinational companies. They are no longer the little guys disrupting an entrenched market. When do they stop getting the excuse of being startups?
- flagrant_taco 3y agoTotally fair, I tossed startup in there pretty loosely as I was thinking about their goals when they originally opened. I definitely don't consider them startups today.
- wordpad25 3y ago
- npace12 3y agoReceipt: https://imgur.com/nZ9cjQP https://imgur.com/nZ9cjQP
- RockRobotRock 3y agoThought this was going to be about how little Uber drivers were paid
- metadat 3y agoDiscussed 3 days ago: Uber CEO stunned by $52 fare for 3-mile ride - https://news.ycombinator.com/item?id=37000811 https://news.ycombinator.com/item?id=37000811 (101 comments)
- dang 3y agoAlso Uber CEO surprised after Wired reporter pays $51 for a 2.9-mile Uber ride - https://news.ycombinator.com/item?id=36964028 https://news.ycombinator.com/item?id=36964028 - Aug 2023 (32 comments)
- arcticbull 3y agoI mean what was he going to say? "Nice, eh?" At most he was surprised at just how well the revenue management team was doing. The reporter paid it didn't they?
- reducesuffering 3y agoCould someone be the CEO of McDonalds thinking a Big Mac meal in the US costs $3? Big “It’s one banana, Michael, how much could it cost? $10?” Vibes. https://youtu.be/Nl_Qyk9DSUw https://youtu.be/Nl_Qyk9DSUw
- bruce511 3y agoI get that people don't like it when the price of things go up. But surely people can see that the Uber pricing was unsustainable? The VC money was subsidising our transport (yay) but clearly that couldn't last. So, as prictable to everyone , prices go up, drivers get less, and Uber are hoping riders will have grown so used to the convenience so as not to care. Expect a flood of stories along these lines in the coming year.
- jzl 3y agoYeah, that’s exactly what the reporter was trying to get him to admit. He says so basically, but Dara refuses to admit it.
- mixmastamyk 3y agoPrices go up; drivers should get more.
- bruce511 3y agoOf course they -should- get more. But the economics of uber aren't working for either uber or the drivers. Uber is super convenient. And also (used to be) super cheap. Cheaper than taxis, because a) they used VC money to cover costs and b) because they moved vehicle costs to the driver. Driving is fundamentally underpaid (it's basically unskilled labor) but if you ignore vehicle costs (which most drivers do) it looks OK. Factor In vehicle costs and it gets bad. Remove all job security and work-place benefits and it's, well, not good. So uber loses money, the drivers lose money, (or, more charitably, are just badly paid) - the real winners were riders. But the free money is over. So the prices are jacked - the first time to make Uber profitable, and likely the second time to keep drivers from abandoning the system. Customers will bleat, but the -economics- don't lie. It costs a lot for the convenience of anywhere-to-anywhere-anytime-by-yourself transport. If it's not costing the rider a lot then someone us getting screwed. Sure, removing labor will change thd equation (self driving cars), but I fear even then the ancillary effects of "riders with no adult supervision" will add a lot of overhead.
- 3y ago
- marcus_holmes 3y agoBut this was always the plan, wasn't it? Uber has been losing money since it started, subsiding our travel with VC money, I thought clearly always with the plan of "once we get market dominance we can jack up the prices and make all that money back". I don't think they were ever shy about this plan. So now we're at that point. Either we put up with the new prices, or move on to another app, or find another transport solution. I don't think whining at Uber about how expensive they are now is a workable response.
- SV_BubbleTime 3y agoZIRP man… I’m looking forward to more articles like this about companies with models that just might not make sense.
- sheepscreek 3y agoThat part is understandable. What doesn’t make sense is the ratio. Driver pays for the car, gas and their time. And Uber pockets 50% of the fare? I’ve heard this from at least a few vocal drivers. Apple App Store’s 30% cut as a software service provider seems like a bargain.
- marcus_holmes 3y agoUber has never considered its drivers to be employees. I think it sees itself as a marketplace - selling driver time to riders. So it makes sense that the plan was always to take more of the pie for itself once it got enough power to do that. Like Amazon with Audible - if you're the only game in town then you can charge whatever you like, so they do.
- Ajedi32 3y ago> if you're the only game in town then you can charge whatever you like Did I miss Lyft going out of business or something? Or is this more of a duopoly type situation?
- 3y ago
- 26fingies 3y agoProbably was $20 last time he actually took an Uber. He's likely had a driver for a long time.
- BugsJustFindMe 3y agoThis depends extremely heavily on the market. In my city a 4.5 mile ride is nearly always around $15 if it's not raining.
- buidler 3y ago[flagged]
- waihtis 3y agois someone forcing the reporter to ride an Uber? It's not a public good.
- kjkjadksj 3y agoThere’s been times when the surge is so ridiculous me and the driver just work something out in cash and cut uber out of the deal entirely.
- habosa 3y agoThe share to the driver is so small I can’t believe they get away with it (Lyft too). In SF I often see drivers accepting their next fare while I’m in the backseat. A ride that will cost me $15 might get them $6. I know Uber’s part here is not trivial (it’s good software and they do support, etc) but surely the driver should be getting more like 80% or even 90% given that it’s their time, their equipment, etc. Most other marketplaces take smaller cuts.