10 ms·

Beautiful illusions: the economics of uberX

187 points by aetherson 12y ago

pbreit 12y ago
As usual, the truth is probably somewhere in the middle. Uber's numbers actually seem a lot more believable. The author didn't even appear to be trying to be "reasonable" or "fair". The two biggest problems I see are 1) author doesn't acknowledge that Uber behavior is probably very different from regular yellow cab behavior (ie, has the author even heard of the airport or surge pricing?) and 2) I don't think it's appropriate to allocate all of an auto's expenses as "business" since it's almost always a personal car.
- gedrap 12y ago
  Fair points. I just disagree with >>> I don't think it's appropriate to allocate all of an auto's expenses as "business" since it's almost always a personal car. While it is a personal car, a full-time uberx driver is driving it for business purposes 75% of the time or so. Which makes it more like a business investment.
  - pbreit 12y ago
    But owner has use of car for 100% of personal needs. Only incremental devaluation/expenses should be included, imo (if we're trying to be fair and reasonable, or course).
    - smacktoward 12y ago
      How is that any different from a cab driver who owns his taxi?
      - fludlight 12y ago
        My n=3 sample from conversations with taxi owner/operators in SF is that they find it more profitable to rent out their taxi to other drivers when they themselves aren't driving it. This way, an owner can drive the taxi 8 hours per day and rent it to two other people for the remaining 16 hours. The Camry Hybrid in the article is also a clear favorite due to the perceived high fuel efficiency, cheap and infrequent maintenance, and 200-250k mile battery life.
- tkfu 12y ago
  For (1), how do you think it applies? The situation analyzed is taken from Uber's numbers, and is for an "average" driver that works 70 hours per week. If you're working 70 hours, you're not gaining a huge advantage from surge pricing. For (2), again, this is a vehicle being used 70 hours per week, 40,000 miles per year. If you were looking at the case of a part-time driver it might not be appropriate to allocate all the expenses as business expenses, but in this case I think it is.
  - pbreit 12y ago
    We don't know that they drive 70 hours per week. That was made up by the author. The author is fixated on the 10 mph in Manhattan when we know that Uber drivers have more flexibility on time and geography (they do drive outside of Manhattan, of course). The car still provides for 100% of the owners personal driving needs so completely inappropriate to allocate all costs to "business".
    - tkfu 12y ago
      To me all his assumptions seem pretty reasonable. Since Uber isn't providing a detailed breakdown, all we can do is estimate. And if we're willing to accept the basic assumption that people respond to economic incentives, remember that Uber's incentivized to be as misleading as possible in their favour. Even if it turns out they're completely lying, there's a reasonable chance that the economic benefits from building network by doing so are significantly greater than potential future costs if someone found out they'd lied. Given that context, I think the author was actually being overly generous and deferent to Uber's stated numbers. My father-in-law's an NYC taxi driver, and before that (in the 90s) worked for a black car service. So I can tell you from inside experience that you make more money in Manhattan than anywhere else, period. The fact that Uber drivers have the freedom to go to New Jersey or Far Rockaway or wherever doesn't mean that they actually get any benefit from doing so.
      - MarkPNeyer 12y ago
        the average speeds they are posting are only calculated during the day. uber does WAY more trips at night, when there is less traffic, so the cars can go much faster. source: used to work at uber.
hershel 12y ago
I think the author is wrong about the possibilities for UBER raising prices. One such option combining trips of 2 passengers(or more) who seek a trip from similar starting locations to similar destinations. Such option could easily increase demand, be more cost efficient and higher margin and be highly dependent on market reach , which makes it very difficult to replicate. And i'm sure UBER has some data to demonstrate this and other attractive options to investors[1], which make it much harder for us non-insiders to truly evaluate UBER. [1]A similar example is the nest acquisition, which raised many eyebrows and guesses, but it appears they had a "secret" way to monetize their service - selling demand response services to utilities.
- gedrap 12y ago
  >>> combining trips of 2 passengers(or more) who seek a trip from similar starting locations to similar destinations. I think this is a totally different business modal. I am not sure if many customers would like sharing a cab with a stranger. But it happens in Beijing, especially when the demand is super high (e.g. 2 hours queue in a rail station). Well at least it happened to me :)
  - antsar 12y ago
    It happens in the US (where I live in New Jersey, anyway) as well. And its one of the numerous reasons I refuse to take cabs, as long as Uber or an alternative is available.
- dhehir 12y ago
  Share splitting already exists (at least in SF) http://www.takehitch.com/ http://www.takehitch.com/
  - hershel 12y ago
    AFAIK, not at scale, which makes all that difference in that kind of business.
- potatolicious 12y ago
gedrap 12y ago
This is a really great post. We are talking a lot about regulations, consumers but it's the first time I see a post about the drivers themselves. As it is correctly identified by the OP, it's the main and only asset for Uber. That being said, I would love to read an AMA with a Uber driver.
- jmduke 12y ago
  A pedantic clarification: drivers are the only productive asset for Uber.
- hershel 12y ago
  Two ama's: http://www.reddit.com/r/IAmA/comments/1ypjd5/hi_reddit_iama_uberx_driver_in_the_washington_dc/ http://www.reddit.com/r/IAmA/comments/1ypjd5/hi_reddit_iama_... http://www.reddit.com/r/IAmA/comments/1ztruj/iama_uberx_driver_in_los_angeles_orange_county/ http://www.reddit.com/r/IAmA/comments/1ztruj/iama_uberx_driv...
dgreensp 12y ago
I've been riding Uber since October 2010, and I've chatted with plenty of drivers. Many of them used to be taxi drivers and have told me about how much they prefer driving for Uber. They also tend to be very happy with their income. I remember in particular one recent driver's big grin as he raved about Uber and praised Travis the entire ride for letting him, his wife, and his two kids live such a great lifestyle. His wife would even take the car out and do some Uber driving once in a while while he spent time with the kids. The calculations in the article seem to be based on just a couple numbers -- such as the 40,000 miles per year that Uber gave for the purpose of cost of ownership calculation, which is used to try to calculate the hours drivers work and the fare they earn per hour. Some real numbers about fares earned would help here. The conclusion is not clearly stated in the "Conclusion" section, but here's my interpretation: If you make certain assumptions about an uberX driver, you find they make about as much as a typical taxi driver. This suggests that driving uberX instead of a taxi does not automatically put you in a completely different income bracket, but I think the devil is in the details. Obviously the spread between different drivers is much, much larger than the spread between taxis and uberXs. If we made a histogram of income for each and superimposed them, they would be two humps with a lot of overlap. It would be more interesting to know, for example, how the jobs of top-earning uberX drivers and top taxi drivers compare. Then there are implications that Uber is another Groupon, and its financial success is dependent on a steady stream of investment dollars. Well, Uber is making plenty of money. They write software and do operations and the money just pours in. Every user is a paying customer, and the vast majority of users come away satisfied and happy to have a better way to get from point A to point B. The drivers make money and are thrilled. Some people take Uber literally every day. Seems like a pretty good business to me.
- jnks 12y ago
  You're arguing strawman points the article doesn't make. The primary claims I see are 1. Uber drivers don't make as much as Uber PR claims (based on data Uber provided). 2. Uber the business doesn't seem to be wildly profitable, or at least not in a defendable way (based partly on data Uber provided). 3. The large amount of capital being injected into Uber are not indicators of growing real value, but instead indicators of a weaker-than-acknowledged business. It's possible for all of the above to be true but for drivers and riders to both be very happy with the service. Especially since UberX seems to be offering rides for below market prices but the drivers are getting switching bonuses and per-hour guarantees (see elsewhere in this thread).
rayiner 12y ago
> I should point out that the insurance costs here are surely low — although Uber encourages its uberX drivers to find “standard vehicle insurance” as opposed to livery insurance, the coverages required are nearly impossible to find, especially for someone with poor or no credit working 70 hours a week as a cab driver. Meanwhile, taxi insurance in NYC can run $7,000 – 10,000 per year...
- tkfu 12y ago
  Also, while those coverages might be difficult-to-find-but-available now, that could change in a hurry. Once most insurance companies catch on to the fact that people are paying for regular insurance and then operating essentially a taxi service, they'll add clauses to their contracts specifically forbidding it, and charge something more in line with commercial taxi insurance. It's a lot like what we see with AirBnB, where as it caught on more and more, landlords started fighting back against tenants who were using it.
  - greenyoda 12y ago
    "Once most insurance companies catch on to the fact that people are paying for regular insurance and then operating essentially a taxi service, they'll add clauses to their contracts specifically forbidding it..." My car insurance policy has prohibited using the car for commercial purposes for as long as I can remember. There are also probably state laws requiring commercial drivers to carry commercial insurance, just as it requires them to have a different class of drivers license.
- deleted 12y ago
  [deleted]
  - pistle 12y ago
    Your insurance carrier can likely deny claims (of all sorts) if they find out you were doing livery with a personal vehicle. They all likely ask, directly, do you use your vehicle for work? There will also be a related or subsequent question about the number of miles driven. Are you going to say 40k and it's all "personal"? If you get a liability claim from an Uber user to your adjuster... they should be able to deny your claim. A lie on your insurance application is an easy denial path for the carrier. Oh, and they'll accept your premium during that time. It's playing with fire.
Thaxll 12y ago
Last time I asked a driver if Uber was better than X: he told me that 20 to 30% of people calling for a ride with the regular system don't show up.
- zevyoura 12y ago
  Funny how that roughly mirrors my experiences calling taxis the old fashioned way: about 1 in 4 won't show up.
dnautics 12y ago
I've been lyfting full time for 4 months now, I estimate my annualized income at around 45k, not 90k. It's still better than being a postdoc. (less hours, more gross pay) Incidentally, at 4 months, I've already put on 30k miles, although ~25% of that is personal and of the remainder, 50% are profitable, 50% are not. I drive a honda insight (35 mpg while lyfting) and including maintenance, I estimate operational costs to be around $0.30/mi, my average income floats between $1 and $1.5/mi. I also get a $0.55/mi federal tax income deduction, which means that about a third to a quarter of my income will not be taxable... I consider that to be a reward for having the foresight to purchase a hybrid years ago.
- dnautics 12y ago
  In an additional benefit over being a postdoc, I set my own hours and don't wake up to an alarm, which I think has resulted in a marked improvement in mood and health. Although I work from 11pm-3am many nights out of the week, I get to sleep in every day. The biggest challenge is that the hours when friends are likely to want to be social are also prime money earning hours, so I'm constantly assessing opportunity cost when choosing when to be social. And I've already taken one vacation, a week and a half, I thought making no money would be stressful, but it turned out to be less of a problem than not having my laptop (which got left behind in the TSA line). Like many things in life, it just takes careful planning and saving money beforehand.
  - vellum 12y ago
    I've been lyfting full time for 4 months now, I estimate my annualized income at around 45k, not 90k. I work from 11pm-3am Isn't that still part time? If you doubled your hours, you'd be making closer to 90k.
    - jordan0day 12y ago
      That presumes that they'd be able to get the same fare numbers during those additional 4 hours. I can see 11pm-3am being a fairly high-demand time. Not sure if there's an equivalent time slot with similar demand.
paul 12y ago
It's amusing to see how much skepticism Uber seems to generate. Apparently it's super-hard to understand how a tech company could possibly do something better than the decades old taxi industry, and that the resulting business could have major network effects.
- gdilla 12y ago
  Well, it's not like they're a public company with obligations to report financials. We're at the mercy of their great media handling, PR, and tech-media darling status.
- sliverstorm 12y ago
  I think Uber reminds people of AirBnB, and if you haven't been living under a rock for the past year you should be familiar with some of the reasons opinions on AirBnB have shifted.
  - foobarqux 12y ago
    I am not. What are they?
    - sliverstorm 12y ago
      To sum it up, making money by: - evading regulation through use of loopholes - turning a blind eye to people who violate contracts to provide the service (For example, many AirBnB hosts don't actually have the legal right to lease the place they are listing) - allowing their service providers to skip things like insurance (in other words AirBnB takes a cut of the host's profit, while foisting the risk on the unwitting host) Running a service is cheap & "competitive" when you don't have insurance or even own the property! That comes at the price of risk, but AirBnB isn't the one who assumes that risk...
      - jellicle 12y ago
        I think it is nearly criminal and probably legally actionable for Uber to advise people they only need "regular" car insurance, when regular car insurance very definitely does not cover carrying passengers for money.
PaulHoule 12y ago
It is so much fun to reverse engineer financials.
lifeisstillgood 12y ago
> Market equilibrium in a wholly deregulated taxi industry comes only when the desperate have driven out the good. And that's kind of my whole "can't quite express what is wrong here" issue in a nutshell.
- jessaustin 12y ago
  That argument could be made for any service industry. Do all service industries require regulation? Aren't there some services we can just trust the consumer to choose? I'm not saying that the use of automobiles doesn't require some regulation (although it isn't clear that commercial use requires more than other use), but this particular argument for regulation is weak.
  - vertex-four 12y ago
    I think most service industries where the customer may be subject to any sort of personal harm are regulated to some extent.
- aianus 12y ago
  I've only had one 'bad' experience with Uber (driver didn't speak English properly and went to the wrong address and couldn't issue me a refund). I left a low rating and Uber contacted me out of nowhere and proactively offered me an apology and a refund. I also heard they're pretty ruthless about firing drivers with low ratings. Meanwhile I've had a regular cab driver double-swipe my credit card and one who did a u-turn from the right lane without checking his blind spot and nearly killed us both.
al2o3cr 12y ago
"Let’s go out on a limb and assume that the median full-time uberX driver doesn’t have fantastic credit and would rather forego the credit check." A paragraph later: "Meanwhile, a trip to bankrate.com will reveal that today’s market rate for a 48-month loan is under 3%" Not that it invalidates the piece, but this bit of handwaving bugs the heck outta me. The under 3% loans are available to people with "excellent credit", which it was just assumed didn't describe UberX drivers. myfico.com indicates, for instance, that people with a FICO score under 620 are looking at a rate more like 10-15%.
- ryanobjc 12y ago
  He was using this to point out the discrepancy between the lease rate from Uber's pre-selected finance company (15%) and the best possible rate one could get - 3%. It's just to illustrate the range of finances, and note that the finance company is literally charging 5x! In terms of credit, yes, better credit helps, but also since it's a secured loan, it's not like a credit card.
redwood 12y ago
Why is no one discussing the downward pressure on price if more and more drivers get involved? That's part of why cities cap medallions after all right?
chromaton 12y ago
This guy gets his supposedly objective information about taxicab deregulation from a handful of studies of the taxi deregulation done in the 1960's and 1970's. In particular, he quotes from a paper [1] by Paul Dempsey from 1996 to come to the conclusion that taxi deregulation yields poor results across a variety of metrics. Well, I actually read the Dempsey paper after reading this blog post, and I have come to the conclusion that the poster is deliberately misrepresenting the contents of that paper. Nearly every negative effect mentioned does not apply to Uber/Lyft. For example, an increase in rates is mentioned in this blog post as being an effect of deregulation. In the Dempsey paper, this is attributed to new small time cabbies taking fares at cabstands, hotels, etc. These drivers, in an attempt to overcome the increased competition due to deregulation, would raise their rates. Riders had no easy way to compare rates or get an alternate ride. This simply doesn't apply to Uber/Lyft, as you can see the price right away even before the car shows up. Another example: the paper also mentions increased congestion and pollution due to the increased number of taxis on the road. In the 1960's and 1970's this made sense as taxis would cruise the streets looking for people to pick up or possibly wait with their engines on at taxi stands. Again, modern ridesharing services don't have this problem. The Dempsey paper also mentions many negative effects from new entrants into the taxi business during deregulation not being radio dispatched due to its high startup cost. But every ridesharing service is "radio dispatched". I could go on like this, but in general ridesharing services increase the amount of information that consumers have, thus allowing the market to work in a way that it couldn't 50 years ago. This blogger completely ignores that, and just skips to the conclusions. [1] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241306 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241306
mseebach 12y ago
> that means our hypothetical driver is covering 40,000 miles in 2,000 hours, for an average speed of 20 mph. Meanwhile, the average speed of Manhattan traffic is barely 10 mph A lot seems to hinge on this, but I don't think it's a fair assumption that a NYC Uber never leaves Manhattan. A couple of trips to the boroughs (airports!) and 20 mph average on a regular 40 hour week seems perfectly plausible.
gtirloni 12y ago
I'm wondering how do Uber investors think Uber will do in a, not too distant, future where driver-less cars are readily available. Or even as public transportation improves. It looks like this Uber vs. traditional cabs is a battle with an expiration date.

187 points by aetherson 12y ago

As usual, the truth is probably somewhere in the middle. Uber's numbers actually seem a lot more believable. The author didn't even appear to be trying to be "reasonable" or "fair". The two biggest problems I see are 1) author doesn't acknowledge that Uber behavior is probably very different from regular yellow cab behavior (ie, has the author even heard of the airport or surge pricing?) and 2) I don't think it's appropriate to allocate all of an auto's expenses as "business" since it's almost always a personal car.

gedrap 12y ago
Fair points. I just disagree with >>> I don't think it's appropriate to allocate all of an auto's expenses as "business" since it's almost always a personal car. While it is a personal car, a full-time uberx driver is driving it for business purposes 75% of the time or so. Which makes it more like a business investment.
- pbreit 12y ago
  But owner has use of car for 100% of personal needs. Only incremental devaluation/expenses should be included, imo (if we're trying to be fair and reasonable, or course).
  - smacktoward 12y ago
    How is that any different from a cab driver who owns his taxi?
    - fludlight 12y ago
      My n=3 sample from conversations with taxi owner/operators in SF is that they find it more profitable to rent out their taxi to other drivers when they themselves aren't driving it. This way, an owner can drive the taxi 8 hours per day and rent it to two other people for the remaining 16 hours. The Camry Hybrid in the article is also a clear favorite due to the perceived high fuel efficiency, cheap and infrequent maintenance, and 200-250k mile battery life.
tkfu 12y ago
For (1), how do you think it applies? The situation analyzed is taken from Uber's numbers, and is for an "average" driver that works 70 hours per week. If you're working 70 hours, you're not gaining a huge advantage from surge pricing. For (2), again, this is a vehicle being used 70 hours per week, 40,000 miles per year. If you were looking at the case of a part-time driver it might not be appropriate to allocate all the expenses as business expenses, but in this case I think it is.
- pbreit 12y ago
  We don't know that they drive 70 hours per week. That was made up by the author. The author is fixated on the 10 mph in Manhattan when we know that Uber drivers have more flexibility on time and geography (they do drive outside of Manhattan, of course). The car still provides for 100% of the owners personal driving needs so completely inappropriate to allocate all costs to "business".
  - tkfu 12y ago
    To me all his assumptions seem pretty reasonable. Since Uber isn't providing a detailed breakdown, all we can do is estimate. And if we're willing to accept the basic assumption that people respond to economic incentives, remember that Uber's incentivized to be as misleading as possible in their favour. Even if it turns out they're completely lying, there's a reasonable chance that the economic benefits from building network by doing so are significantly greater than potential future costs if someone found out they'd lied. Given that context, I think the author was actually being overly generous and deferent to Uber's stated numbers. My father-in-law's an NYC taxi driver, and before that (in the 90s) worked for a black car service. So I can tell you from inside experience that you make more money in Manhattan than anywhere else, period. The fact that Uber drivers have the freedom to go to New Jersey or Far Rockaway or wherever doesn't mean that they actually get any benefit from doing so.
    - MarkPNeyer 12y ago
      the average speeds they are posting are only calculated during the day. uber does WAY more trips at night, when there is less traffic, so the cars can go much faster. source: used to work at uber.

hershel 12y ago

I think the author is wrong about the possibilities for UBER raising prices. One such option combining trips of 2 passengers(or more) who seek a trip from similar starting locations to similar destinations. Such option could easily increase demand, be more cost efficient and higher margin and be highly dependent on market reach , which makes it very difficult to replicate. And i'm sure UBER has some data to demonstrate this and other attractive options to investors[1], which make it much harder for us non-insiders to truly evaluate UBER. [1]A similar example is the nest acquisition, which raised many eyebrows and guesses, but it appears they had a "secret" way to monetize their service - selling demand response services to utilities.

gedrap 12y ago
>>> combining trips of 2 passengers(or more) who seek a trip from similar starting locations to similar destinations. I think this is a totally different business modal. I am not sure if many customers would like sharing a cab with a stranger. But it happens in Beijing, especially when the demand is super high (e.g. 2 hours queue in a rail station). Well at least it happened to me :)
- antsar 12y ago
  It happens in the US (where I live in New Jersey, anyway) as well. And its one of the numerous reasons I refuse to take cabs, as long as Uber or an alternative is available.
dhehir 12y ago
Share splitting already exists (at least in SF) http://www.takehitch.com/ http://www.takehitch.com/
- hershel 12y ago
  AFAIK, not at scale, which makes all that difference in that kind of business.
potatolicious 12y ago

gedrap 12y ago

This is a really great post. We are talking a lot about regulations, consumers but it's the first time I see a post about the drivers themselves. As it is correctly identified by the OP, it's the main and only asset for Uber. That being said, I would love to read an AMA with a Uber driver.

jmduke 12y ago
A pedantic clarification: drivers are the only productive asset for Uber.
hershel 12y ago
Two ama's: http://www.reddit.com/r/IAmA/comments/1ypjd5/hi_reddit_iama_uberx_driver_in_the_washington_dc/ http://www.reddit.com/r/IAmA/comments/1ypjd5/hi_reddit_iama_... http://www.reddit.com/r/IAmA/comments/1ztruj/iama_uberx_driver_in_los_angeles_orange_county/ http://www.reddit.com/r/IAmA/comments/1ztruj/iama_uberx_driv...

dgreensp 12y ago

I've been riding Uber since October 2010, and I've chatted with plenty of drivers. Many of them used to be taxi drivers and have told me about how much they prefer driving for Uber. They also tend to be very happy with their income. I remember in particular one recent driver's big grin as he raved about Uber and praised Travis the entire ride for letting him, his wife, and his two kids live such a great lifestyle. His wife would even take the car out and do some Uber driving once in a while while he spent time with the kids. The calculations in the article seem to be based on just a couple numbers -- such as the 40,000 miles per year that Uber gave for the purpose of cost of ownership calculation, which is used to try to calculate the hours drivers work and the fare they earn per hour. Some real numbers about fares earned would help here. The conclusion is not clearly stated in the "Conclusion" section, but here's my interpretation: If you make certain assumptions about an uberX driver, you find they make about as much as a typical taxi driver. This suggests that driving uberX instead of a taxi does not automatically put you in a completely different income bracket, but I think the devil is in the details. Obviously the spread between different drivers is much, much larger than the spread between taxis and uberXs. If we made a histogram of income for each and superimposed them, they would be two humps with a lot of overlap. It would be more interesting to know, for example, how the jobs of top-earning uberX drivers and top taxi drivers compare. Then there are implications that Uber is another Groupon, and its financial success is dependent on a steady stream of investment dollars. Well, Uber is making plenty of money. They write software and do operations and the money just pours in. Every user is a paying customer, and the vast majority of users come away satisfied and happy to have a better way to get from point A to point B. The drivers make money and are thrilled. Some people take Uber literally every day. Seems like a pretty good business to me.

jnks 12y ago
You're arguing strawman points the article doesn't make. The primary claims I see are 1. Uber drivers don't make as much as Uber PR claims (based on data Uber provided). 2. Uber the business doesn't seem to be wildly profitable, or at least not in a defendable way (based partly on data Uber provided). 3. The large amount of capital being injected into Uber are not indicators of growing real value, but instead indicators of a weaker-than-acknowledged business. It's possible for all of the above to be true but for drivers and riders to both be very happy with the service. Especially since UberX seems to be offering rides for below market prices but the drivers are getting switching bonuses and per-hour guarantees (see elsewhere in this thread).

rayiner 12y ago

> I should point out that the insurance costs here are surely low — although Uber encourages its uberX drivers to find “standard vehicle insurance” as opposed to livery insurance, the coverages required are nearly impossible to find, especially for someone with poor or no credit working 70 hours a week as a cab driver. Meanwhile, taxi insurance in NYC can run $7,000 – 10,000 per year...

tkfu 12y ago
Also, while those coverages might be difficult-to-find-but-available now, that could change in a hurry. Once most insurance companies catch on to the fact that people are paying for regular insurance and then operating essentially a taxi service, they'll add clauses to their contracts specifically forbidding it, and charge something more in line with commercial taxi insurance. It's a lot like what we see with AirBnB, where as it caught on more and more, landlords started fighting back against tenants who were using it.
- greenyoda 12y ago
  "Once most insurance companies catch on to the fact that people are paying for regular insurance and then operating essentially a taxi service, they'll add clauses to their contracts specifically forbidding it..." My car insurance policy has prohibited using the car for commercial purposes for as long as I can remember. There are also probably state laws requiring commercial drivers to carry commercial insurance, just as it requires them to have a different class of drivers license.
deleted 12y ago
[deleted]
- pistle 12y ago
  Your insurance carrier can likely deny claims (of all sorts) if they find out you were doing livery with a personal vehicle. They all likely ask, directly, do you use your vehicle for work? There will also be a related or subsequent question about the number of miles driven. Are you going to say 40k and it's all "personal"? If you get a liability claim from an Uber user to your adjuster... they should be able to deny your claim. A lie on your insurance application is an easy denial path for the carrier. Oh, and they'll accept your premium during that time. It's playing with fire.

Thaxll 12y ago

Last time I asked a driver if Uber was better than X: he told me that 20 to 30% of people calling for a ride with the regular system don't show up.

zevyoura 12y ago
Funny how that roughly mirrors my experiences calling taxis the old fashioned way: about 1 in 4 won't show up.

dnautics 12y ago

I've been lyfting full time for 4 months now, I estimate my annualized income at around 45k, not 90k. It's still better than being a postdoc. (less hours, more gross pay) Incidentally, at 4 months, I've already put on 30k miles, although ~25% of that is personal and of the remainder, 50% are profitable, 50% are not. I drive a honda insight (35 mpg while lyfting) and including maintenance, I estimate operational costs to be around $0.30/mi, my average income floats between $1 and $1.5/mi. I also get a $0.55/mi federal tax income deduction, which means that about a third to a quarter of my income will not be taxable... I consider that to be a reward for having the foresight to purchase a hybrid years ago.

dnautics 12y ago
In an additional benefit over being a postdoc, I set my own hours and don't wake up to an alarm, which I think has resulted in a marked improvement in mood and health. Although I work from 11pm-3am many nights out of the week, I get to sleep in every day. The biggest challenge is that the hours when friends are likely to want to be social are also prime money earning hours, so I'm constantly assessing opportunity cost when choosing when to be social. And I've already taken one vacation, a week and a half, I thought making no money would be stressful, but it turned out to be less of a problem than not having my laptop (which got left behind in the TSA line). Like many things in life, it just takes careful planning and saving money beforehand.
- vellum 12y ago
  I've been lyfting full time for 4 months now, I estimate my annualized income at around 45k, not 90k. I work from 11pm-3am Isn't that still part time? If you doubled your hours, you'd be making closer to 90k.
  - jordan0day 12y ago
    That presumes that they'd be able to get the same fare numbers during those additional 4 hours. I can see 11pm-3am being a fairly high-demand time. Not sure if there's an equivalent time slot with similar demand.

paul 12y ago

It's amusing to see how much skepticism Uber seems to generate. Apparently it's super-hard to understand how a tech company could possibly do something better than the decades old taxi industry, and that the resulting business could have major network effects.

gdilla 12y ago
Well, it's not like they're a public company with obligations to report financials. We're at the mercy of their great media handling, PR, and tech-media darling status.
sliverstorm 12y ago
I think Uber reminds people of AirBnB, and if you haven't been living under a rock for the past year you should be familiar with some of the reasons opinions on AirBnB have shifted.
- foobarqux 12y ago
  I am not. What are they?
  - sliverstorm 12y ago
    To sum it up, making money by: - evading regulation through use of loopholes - turning a blind eye to people who violate contracts to provide the service (For example, many AirBnB hosts don't actually have the legal right to lease the place they are listing) - allowing their service providers to skip things like insurance (in other words AirBnB takes a cut of the host's profit, while foisting the risk on the unwitting host) Running a service is cheap & "competitive" when you don't have insurance or even own the property! That comes at the price of risk, but AirBnB isn't the one who assumes that risk...
    - jellicle 12y ago
      I think it is nearly criminal and probably legally actionable for Uber to advise people they only need "regular" car insurance, when regular car insurance very definitely does not cover carrying passengers for money.

PaulHoule 12y ago

It is so much fun to reverse engineer financials.

lifeisstillgood 12y ago

> Market equilibrium in a wholly deregulated taxi industry comes only when the desperate have driven out the good. And that's kind of my whole "can't quite express what is wrong here" issue in a nutshell.

jessaustin 12y ago
That argument could be made for any service industry. Do all service industries require regulation? Aren't there some services we can just trust the consumer to choose? I'm not saying that the use of automobiles doesn't require some regulation (although it isn't clear that commercial use requires more than other use), but this particular argument for regulation is weak.
- vertex-four 12y ago
  I think most service industries where the customer may be subject to any sort of personal harm are regulated to some extent.
aianus 12y ago
I've only had one 'bad' experience with Uber (driver didn't speak English properly and went to the wrong address and couldn't issue me a refund). I left a low rating and Uber contacted me out of nowhere and proactively offered me an apology and a refund. I also heard they're pretty ruthless about firing drivers with low ratings. Meanwhile I've had a regular cab driver double-swipe my credit card and one who did a u-turn from the right lane without checking his blind spot and nearly killed us both.

al2o3cr 12y ago

"Let’s go out on a limb and assume that the median full-time uberX driver doesn’t have fantastic credit and would rather forego the credit check." A paragraph later: "Meanwhile, a trip to bankrate.com will reveal that today’s market rate for a 48-month loan is under 3%" Not that it invalidates the piece, but this bit of handwaving bugs the heck outta me. The under 3% loans are available to people with "excellent credit", which it was just assumed didn't describe UberX drivers. myfico.com indicates, for instance, that people with a FICO score under 620 are looking at a rate more like 10-15%.

ryanobjc 12y ago
He was using this to point out the discrepancy between the lease rate from Uber's pre-selected finance company (15%) and the best possible rate one could get - 3%. It's just to illustrate the range of finances, and note that the finance company is literally charging 5x! In terms of credit, yes, better credit helps, but also since it's a secured loan, it's not like a credit card.

redwood 12y ago

Why is no one discussing the downward pressure on price if more and more drivers get involved? That's part of why cities cap medallions after all right?

chromaton 12y ago

This guy gets his supposedly objective information about taxicab deregulation from a handful of studies of the taxi deregulation done in the 1960's and 1970's. In particular, he quotes from a paper [1] by Paul Dempsey from 1996 to come to the conclusion that taxi deregulation yields poor results across a variety of metrics. Well, I actually read the Dempsey paper after reading this blog post, and I have come to the conclusion that the poster is deliberately misrepresenting the contents of that paper. Nearly every negative effect mentioned does not apply to Uber/Lyft. For example, an increase in rates is mentioned in this blog post as being an effect of deregulation. In the Dempsey paper, this is attributed to new small time cabbies taking fares at cabstands, hotels, etc. These drivers, in an attempt to overcome the increased competition due to deregulation, would raise their rates. Riders had no easy way to compare rates or get an alternate ride. This simply doesn't apply to Uber/Lyft, as you can see the price right away even before the car shows up. Another example: the paper also mentions increased congestion and pollution due to the increased number of taxis on the road. In the 1960's and 1970's this made sense as taxis would cruise the streets looking for people to pick up or possibly wait with their engines on at taxi stands. Again, modern ridesharing services don't have this problem. The Dempsey paper also mentions many negative effects from new entrants into the taxi business during deregulation not being radio dispatched due to its high startup cost. But every ridesharing service is "radio dispatched". I could go on like this, but in general ridesharing services increase the amount of information that consumers have, thus allowing the market to work in a way that it couldn't 50 years ago. This blogger completely ignores that, and just skips to the conclusions. [1] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241306 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241306

mseebach 12y ago

> that means our hypothetical driver is covering 40,000 miles in 2,000 hours, for an average speed of 20 mph. Meanwhile, the average speed of Manhattan traffic is barely 10 mph A lot seems to hinge on this, but I don't think it's a fair assumption that a NYC Uber never leaves Manhattan. A couple of trips to the boroughs (airports!) and 20 mph average on a regular 40 hour week seems perfectly plausible.

gtirloni 12y ago

I'm wondering how do Uber investors think Uber will do in a, not too distant, future where driver-less cars are readily available. Or even as public transportation improves. It looks like this Uber vs. traditional cabs is a battle with an expiration date.