4 ms·

This is not based on any kind of deep analysis whatsoever, but I'm starting to get the same vibe from Uber as I got from Groupon several years ago. Groupon's p

by pshin45 12y ago

This is not based on any kind of deep analysis whatsoever, but I'm starting to get the same vibe from Uber as I got from Groupon several years ago. Groupon's promise to local business owners was that offering a Groupon deal was an easy way to attract new long-term customers en masse, despite the sizable up-front loss. History showed that that did not happen for many businesses who used Groupon. Similarly, so much of Uber's marketing is targeted towards the supply side (i.e. drivers) and the promise of making more than they could at any other available job, with "flexible hours" and other dubious perks. This is just the latest article to show that that is not the case. Groupon's and Uber's business both depend on acquiring and retaining the best local businesses and drivers respectively, and as these kinds of stories keep coming to light, I wonder whether Uber will be able to retain all the drivers they acquire. Lyft has focused from the start on making their drivers happy, which is a smart way to differentiate from Uber's mercenary mindset, but I also wonder if that is enough to really differentiate itself in the eyes of drivers, at least enough to make Uber really worry. In all honesty, I am rooting for someone to beat out Uber. When I first learned about them about 2 years ago, I marveled at their business model innovation and their ability to execute. But everything I read (and personally experience) about Uber tells me that they are becoming the new Investment Bank, both philosophically and culturally.

xorcist 12y ago
> offering a Groupon deal was an easy way to attract new long-term customers en masse What does that even mean, at scale? If it is a money printing press for everyone involved, you have to postulate either that the entire market grows rapidly (for "local businesses", no matter what they do, in this case) or you've (at best!) created a middleman to tax all transactions in the system.
- acchow 12y ago
  You bring up a fundamental difference between Groupon and Uber. Car riding services are actually increasing the size of the taxi riding market.
  - toomuchtodo 12y ago
    Only if the lower costs that enable that increase in the riding market are sustainable, which appears its not (at least until self driving vehicles are here).
2pasc 12y ago
Quite honestly - do you believe that making more than $50,000 per year for a HS grad is a bad thing? I am not saying that they should not make more, but for most non college educated individuals - $50,000 is above US average income. Uber may have shady tactics, and might be deceiving drivers - that's true. But the reality is that the opportunities they are giving drivers are not insignificant. Unfortunately - these drivers are paying with their wages the price of a market equilibrium that has not been found yet in terms of finding the right pricing model to match supply and demand. This is the problem that has existed in all major Internet marketplaces where you deal with people's businesses - with eBay, Uber, Amazon, oDesk, etc....
- kilroy123 12y ago
  How are drivers making $50,000? According to the article it's more like ~$12 an hour. Working full-time, 40 hours a week, that's only ~25k. 12 * 2048 = $24,576
  - 2pasc 12y ago
    1/ They mention drivers making $1000/week. 2/ Smarter drivers are driving very gas efficient cars with much lower gas costs 3/ Wages are way better if you drive during peak hours. I did and it is pretty neat how much you can make.
    - quonn 12y ago
      Read again. $1000 / 40 hours a week is without costs subtracted. The drivers end up with about $400. That's $20000/year.
- foobarqux 12y ago
  Besides the number being wrong, it is precarious employment without benefits and therefore not equivalent to a $X/yr "real" job. Moreover I would expect Uber wages to decrease over time (unskilled, easy to acquire work)
- UrMomReadsHN 12y ago
  Why are you making assumptions about the education level of Uber drivers? 15% of cab drivers in the US hold a bachelor's degree [1] and I'm sure that number will keep rising. I've heard complaints about how increased competition with other drivers and slashing fares are causing driver's salary to dramatically decrease lately. I can't comment on the "average" driver salary however, it is a job that comes with some serious caveats, which is the territory of being an independent contractor - so because of that real salary is significantly lower than that of employees making the equivalent. this may be of interest http://www.washingtonpost.com/local/trafficandcommuting/some-uber-drivers-say-companys-promise-of-big-pay-day-doesnt-match-reality/2014/09/06/17f5d82c-224a-11e4-958c-268a320a60ce_story.html http://www.washingtonpost.com/local/trafficandcommuting/some... [1] http://www.bloombergview.com/articles/2013-06-25/why-are-so-many-college-graduates-driving-taxis- http://www.bloombergview.com/articles/2013-06-25/why-are-so-...
2pasc 12y ago
Quite honestly - do you believe that making more than $50,000 per year for a HS grad is a bad thing? I am not saying that they should not make more, but for most non college educated individuals - $50,000 is above US average income. Uber may have shady tactics, and might be deceiving drivers - that's true. But the reality is that the opportunities they are giving drivers are not insignificant. Unfortunately - these drivers are paying with their wages the price of a market equilibrium that has not been found yet in terms of finding the right pricing model to match supply and demand. This is the problem that has existed in all major Internet marketplaces where you deal with people's businesses - with eBay, Uber, Amazon, oDesk, etc....
7Figures2Commas 12y ago
A key difference between Uber and Groupon is that with Groupon, unhappy business owners simply ceased their dealings with Groupon. With Uber, unhappy drivers may be able to inflict far more damage beyond quitting or jumping ship. Most threatening to Uber's long-term viability are putative class action lawsuits, such as one alleging that drivers were misclassified as independent contractors[1]. If Uber is forced to reclassify its drivers, it could literally upend the economics of Uber's business overnight. Because of the legal and regulatory challenges it faces, I think Uber is actually in a far riskier position than Groupon ever was and Uber's valuation seems to indicate that investors have too significantly discounted these risks. At this point, I actually think Uber might for some investors prove to be a binary investment. That wasn't even the case with Groupon, which still has a $4 billion valuation despite its decline. [1] http://uberlawsuit.com/ http://uberlawsuit.com/
- foobarqux 12y ago
  I think the biggest threat to Uber is unionization (or other labor organizing).
  - 7Figures2Commas 12y ago
    While you can join a union as an independent contractor, independent contractors who are members of a union do not have the same bargaining rights and protections as employees who are members of a union. So here too, the classification of Uber's drivers makes a critical difference.
jessejhernandez 12y ago
Really good points, I feel the same exact way towards Uber. I think if they don't change something they will inevitably fail.
onewaystreet 12y ago
Uber CEO Travis Kalanick has said that human drivers are only a stopgap and will be replaced by driverless cars in the future.

by pshin45 12y ago

xorcist 12y ago

> offering a Groupon deal was an easy way to attract new long-term customers en masse What does that even mean, at scale? If it is a money printing press for everyone involved, you have to postulate either that the entire market grows rapidly (for "local businesses", no matter what they do, in this case) or you've (at best!) created a middleman to tax all transactions in the system.

acchow 12y ago
You bring up a fundamental difference between Groupon and Uber. Car riding services are actually increasing the size of the taxi riding market.
- toomuchtodo 12y ago
  Only if the lower costs that enable that increase in the riding market are sustainable, which appears its not (at least until self driving vehicles are here).

2pasc 12y ago

Quite honestly - do you believe that making more than $50,000 per year for a HS grad is a bad thing? I am not saying that they should not make more, but for most non college educated individuals - $50,000 is above US average income. Uber may have shady tactics, and might be deceiving drivers - that's true. But the reality is that the opportunities they are giving drivers are not insignificant. Unfortunately - these drivers are paying with their wages the price of a market equilibrium that has not been found yet in terms of finding the right pricing model to match supply and demand. This is the problem that has existed in all major Internet marketplaces where you deal with people's businesses - with eBay, Uber, Amazon, oDesk, etc....

kilroy123 12y ago
How are drivers making $50,000? According to the article it's more like ~$12 an hour. Working full-time, 40 hours a week, that's only ~25k. 12 * 2048 = $24,576
- 2pasc 12y ago
  1/ They mention drivers making $1000/week. 2/ Smarter drivers are driving very gas efficient cars with much lower gas costs 3/ Wages are way better if you drive during peak hours. I did and it is pretty neat how much you can make.
  - quonn 12y ago
    Read again. $1000 / 40 hours a week is without costs subtracted. The drivers end up with about $400. That's $20000/year.
foobarqux 12y ago
Besides the number being wrong, it is precarious employment without benefits and therefore not equivalent to a $X/yr "real" job. Moreover I would expect Uber wages to decrease over time (unskilled, easy to acquire work)
UrMomReadsHN 12y ago
Why are you making assumptions about the education level of Uber drivers? 15% of cab drivers in the US hold a bachelor's degree [1] and I'm sure that number will keep rising. I've heard complaints about how increased competition with other drivers and slashing fares are causing driver's salary to dramatically decrease lately. I can't comment on the "average" driver salary however, it is a job that comes with some serious caveats, which is the territory of being an independent contractor - so because of that real salary is significantly lower than that of employees making the equivalent. this may be of interest http://www.washingtonpost.com/local/trafficandcommuting/some-uber-drivers-say-companys-promise-of-big-pay-day-doesnt-match-reality/2014/09/06/17f5d82c-224a-11e4-958c-268a320a60ce_story.html http://www.washingtonpost.com/local/trafficandcommuting/some... [1] http://www.bloombergview.com/articles/2013-06-25/why-are-so-many-college-graduates-driving-taxis- http://www.bloombergview.com/articles/2013-06-25/why-are-so-...

2pasc 12y ago

7Figures2Commas 12y ago

A key difference between Uber and Groupon is that with Groupon, unhappy business owners simply ceased their dealings with Groupon. With Uber, unhappy drivers may be able to inflict far more damage beyond quitting or jumping ship. Most threatening to Uber's long-term viability are putative class action lawsuits, such as one alleging that drivers were misclassified as independent contractors[1]. If Uber is forced to reclassify its drivers, it could literally upend the economics of Uber's business overnight. Because of the legal and regulatory challenges it faces, I think Uber is actually in a far riskier position than Groupon ever was and Uber's valuation seems to indicate that investors have too significantly discounted these risks. At this point, I actually think Uber might for some investors prove to be a binary investment. That wasn't even the case with Groupon, which still has a $4 billion valuation despite its decline. [1] http://uberlawsuit.com/ http://uberlawsuit.com/

foobarqux 12y ago
I think the biggest threat to Uber is unionization (or other labor organizing).
- 7Figures2Commas 12y ago
  While you can join a union as an independent contractor, independent contractors who are members of a union do not have the same bargaining rights and protections as employees who are members of a union. So here too, the classification of Uber's drivers makes a critical difference.

jessejhernandez 12y ago

Really good points, I feel the same exact way towards Uber. I think if they don't change something they will inevitably fail.

onewaystreet 12y ago

Uber CEO Travis Kalanick has said that human drivers are only a stopgap and will be replaced by driverless cars in the future.