6 ms·

It's only a matter of time before Uber and Lyft cease to exist. Lyft lost what, $1.5 billion last year? The trend isn't towards profitability, and they have had

It's only a matter of time before Uber and Lyft cease to exist. Lyft lost what, $1.5 billion last year? The trend isn't towards profitability, and they have had plenty of years to work out the kinks and figure out structural issues. I've said it before, and I'll say it again - if you were to pay for real cost of overhead and to pay the driver, you'd end up with a price that no customer is willing to pay. Uber has briefly entered profitability, but only by absolutely shredding any pay to their drivers, who will jump ship eventually. The reality is that once investors wake up and close their pockets, these companies vanish into dust. It's either that or their drivers will abandon them.

cozzyd 3y ago
I almost never use Uber or Lyft rideshare (sometimes on business travel if no reasonable public transport, but since I'm not paying I'm less cost sensitive there), but Lyft runs the bikesharing system in my city, so hopefully that can be salvaged, since I use that lot...
Scoundreller 3y ago
My guess is that they’re profitable in some regions and losers in others. They don’t need to disappear everywhere if they run out of capital to work with. They probably run real-life experiments to see “what happens if we increase prices 25% in a region” and have a model for how that can be applied everywhere and where they would just have to close up shop if they needed to go into profit-mode instead of maintenance or growth mode.
- potatolicious 3y ago
  I suspect you're right, but there lies the bitter disappointment with these companies. I'm sure Uber in NYC makes money, and DoorDash in NYC makes money... but those are also the places where those services have existed for many decades profitably. The whole promise was that with [insert handwaviness] technology the business model can be made to work in places where it was never sustainable before (i.e., the suburbs and much smaller cities). This... overwhelmingly hasn't panned out. I'm generally skeptical of the oversimplistic "you've invented [thing]" complaints that are often leveled at new tech, but in this case... the shoe does seem to fit. The only places this business model seems to work are places where the business model has always worked!
  - permo-w 3y ago
    my question is: why do we need taxi companies that make money? why can we not have non-profit or publicly-owned taxi apps? I'm not saying make taxis free, just provide the infrastructure without the need to extract any money from workers, or gouge prices for consumers. why do we just accept feudalism with extra steps? why are the bbc and npr the only publicly-owned entities on the web with any presence at all?
    - LightHugger 3y ago
      because public transport is a better investment of public money than taxis, generally?
      - permo-w 3y ago
        the two things are not mutually exclusive
      - xboxnolifes 3y ago
        Publicly funded taxis would be public transport. But, I get your point.
    - potatolicious 3y ago
      I do think you're onto something - though I don't think we actually need non-profit or publicly-owned taxi apps. The chief conceit of Uber is that the technology is what provided value. This justified exorbitant margins for Uber the company while squeezing drivers brutally. This conceit turned out to be ludicrously wrong - the vast majority of the value being provided by drivers, not the app itself. And the market is starting to grok that. For example in NYC you can now hail a cab using the Curb app, which adds the two main user experience improvements Uber pioneered: hailing by phone and paying by phone. The app itself isn't non-profit nor publicly-owned but it does take radically less of a cut of a ride than Uber, reserving the bulk of earnings for the actual driver - as it should be, because it turns out the app is not the primary value creator here. So in a way, "nature is healing" - the market is correcting and starting to (correctly) attribute value back to drivers rather than a parasitic central office. FWIW I think this reckoning is coming for all gig economy companies - the vast majority act like (and charge $$ like) they are the main value creators in the chain when they are not. The entire past decade of the gig economy has been a massive wealth transfer from working-class gig workers to investors and office tech workers who have 100% failed to justify their exorbitant cuts.
Nextgrid 3y ago
> if you were to pay for real cost of overhead and to pay the driver How come taxis existed then? I find it hard to believe that taxis could turn a profit despite being very low-tech and inefficient compared to Uber. I wonder if the real reason Uber isn't profitable is more due to "growth & engagement". How much money is wasted on US-salary engineers playing with microservices in their engineering playground or burned on ads?
- SoftTalker 3y ago
  A old-school taxi service doesn't need a data center to operate. They need some cars and drivers, a phone, a dispatcher, and a radio. Uber isn't profitable because their overhead is higher than a taxi service and they charge less than a taxi service.
  - rafram 3y ago
    > they charge less than a taxi service Depends where. In NYC, taxis are usually cheaper than Ubers.
AmericanChopper 3y ago
Terrible take. Rideshare apps aren’t going anywhere, because they are strictly better than regular taxis, and demand for taxis isn’t going anywhere. Maybe some individual companies might go bust, and probably rideshare prices will continue to increase towards typical taxi prices, but there’s no reason at all to think the apps are going anywhere.
- Night_Thastus 3y ago
  The demand for rideshare apps is enormous. It's the only thing keeping investors interested. But there's no way to make them profitable as it stands.
  - AmericanChopper 3y ago
    Of course there is, once the investor subsidies go away they won’t have to compete on price so much, and prices will go up. All of the services that rideshare apps offer were highly demanded before the apps existed, and they were all delivered at more expensive prices with perfectly decent profit margins. If VC money stops funding these products, then the prices have to go up to something similar to “traditional” prices for those services, but consumers will still choose to use the apps, because the service they provide will still be substantially better than the traditional service.
    - freeone3000 3y ago
      Traditional services have gotten way better — in that, they got an app. Teo went from an obscure local taxi service to a great local taxi service, and now undercuts uber because they don’t have an insane advertising burn to subsidize.
      - AmericanChopper 3y ago
        Part of the value prop of the big rideshare apps is that you can use them basically anywhere in the world (you probably need to have 3 or 4 of them to get most of the world covered). Nobody wants to land at the airport in Toronto, figure out what the local taxi app is, download it and get yourself onboarded, and then order a cab. People just want to step out of the airport and order an Uber.
xyst 3y ago
Their success is largely due to the fact that American cities are built so poorly. Emphasizing suburban sprawl and associated highway, parking, and street infrastructure over safe and walkable/bikable cities. Also investor subsidies due to low interest loans or cheap money from banks. Although that is quickly going away. If it weren’t for these two items, Lyft/Uber would just be another mediocre taxi service.
- rightbyte 3y ago
  Their success is due to the taxi medallion system.

cozzyd 3y ago

I almost never use Uber or Lyft rideshare (sometimes on business travel if no reasonable public transport, but since I'm not paying I'm less cost sensitive there), but Lyft runs the bikesharing system in my city, so hopefully that can be salvaged, since I use that lot...

Scoundreller 3y ago

My guess is that they’re profitable in some regions and losers in others. They don’t need to disappear everywhere if they run out of capital to work with. They probably run real-life experiments to see “what happens if we increase prices 25% in a region” and have a model for how that can be applied everywhere and where they would just have to close up shop if they needed to go into profit-mode instead of maintenance or growth mode.

potatolicious 3y ago
I suspect you're right, but there lies the bitter disappointment with these companies. I'm sure Uber in NYC makes money, and DoorDash in NYC makes money... but those are also the places where those services have existed for many decades profitably. The whole promise was that with [insert handwaviness] technology the business model can be made to work in places where it was never sustainable before (i.e., the suburbs and much smaller cities). This... overwhelmingly hasn't panned out. I'm generally skeptical of the oversimplistic "you've invented [thing]" complaints that are often leveled at new tech, but in this case... the shoe does seem to fit. The only places this business model seems to work are places where the business model has always worked!
- permo-w 3y ago
  my question is: why do we need taxi companies that make money? why can we not have non-profit or publicly-owned taxi apps? I'm not saying make taxis free, just provide the infrastructure without the need to extract any money from workers, or gouge prices for consumers. why do we just accept feudalism with extra steps? why are the bbc and npr the only publicly-owned entities on the web with any presence at all?
  - LightHugger 3y ago
    because public transport is a better investment of public money than taxis, generally?
    - permo-w 3y ago
      the two things are not mutually exclusive
    - xboxnolifes 3y ago
      Publicly funded taxis would be public transport. But, I get your point.
  - potatolicious 3y ago
    I do think you're onto something - though I don't think we actually need non-profit or publicly-owned taxi apps. The chief conceit of Uber is that the technology is what provided value. This justified exorbitant margins for Uber the company while squeezing drivers brutally. This conceit turned out to be ludicrously wrong - the vast majority of the value being provided by drivers, not the app itself. And the market is starting to grok that. For example in NYC you can now hail a cab using the Curb app, which adds the two main user experience improvements Uber pioneered: hailing by phone and paying by phone. The app itself isn't non-profit nor publicly-owned but it does take radically less of a cut of a ride than Uber, reserving the bulk of earnings for the actual driver - as it should be, because it turns out the app is not the primary value creator here. So in a way, "nature is healing" - the market is correcting and starting to (correctly) attribute value back to drivers rather than a parasitic central office. FWIW I think this reckoning is coming for all gig economy companies - the vast majority act like (and charge $$ like) they are the main value creators in the chain when they are not. The entire past decade of the gig economy has been a massive wealth transfer from working-class gig workers to investors and office tech workers who have 100% failed to justify their exorbitant cuts.

Nextgrid 3y ago

> if you were to pay for real cost of overhead and to pay the driver How come taxis existed then? I find it hard to believe that taxis could turn a profit despite being very low-tech and inefficient compared to Uber. I wonder if the real reason Uber isn't profitable is more due to "growth & engagement". How much money is wasted on US-salary engineers playing with microservices in their engineering playground or burned on ads?

SoftTalker 3y ago
A old-school taxi service doesn't need a data center to operate. They need some cars and drivers, a phone, a dispatcher, and a radio. Uber isn't profitable because their overhead is higher than a taxi service and they charge less than a taxi service.
- rafram 3y ago
  > they charge less than a taxi service Depends where. In NYC, taxis are usually cheaper than Ubers.

AmericanChopper 3y ago

Terrible take. Rideshare apps aren’t going anywhere, because they are strictly better than regular taxis, and demand for taxis isn’t going anywhere. Maybe some individual companies might go bust, and probably rideshare prices will continue to increase towards typical taxi prices, but there’s no reason at all to think the apps are going anywhere.

Night_Thastus 3y ago
The demand for rideshare apps is enormous. It's the only thing keeping investors interested. But there's no way to make them profitable as it stands.
- AmericanChopper 3y ago
  Of course there is, once the investor subsidies go away they won’t have to compete on price so much, and prices will go up. All of the services that rideshare apps offer were highly demanded before the apps existed, and they were all delivered at more expensive prices with perfectly decent profit margins. If VC money stops funding these products, then the prices have to go up to something similar to “traditional” prices for those services, but consumers will still choose to use the apps, because the service they provide will still be substantially better than the traditional service.
  - freeone3000 3y ago
    Traditional services have gotten way better — in that, they got an app. Teo went from an obscure local taxi service to a great local taxi service, and now undercuts uber because they don’t have an insane advertising burn to subsidize.
    - AmericanChopper 3y ago
      Part of the value prop of the big rideshare apps is that you can use them basically anywhere in the world (you probably need to have 3 or 4 of them to get most of the world covered). Nobody wants to land at the airport in Toronto, figure out what the local taxi app is, download it and get yourself onboarded, and then order a cab. People just want to step out of the airport and order an Uber.

xyst 3y ago

Their success is largely due to the fact that American cities are built so poorly. Emphasizing suburban sprawl and associated highway, parking, and street infrastructure over safe and walkable/bikable cities. Also investor subsidies due to low interest loans or cheap money from banks. Although that is quickly going away. If it weren’t for these two items, Lyft/Uber would just be another mediocre taxi service.

rightbyte 3y ago
Their success is due to the taxi medallion system.