5 ms·

This price war between uber and lyft seems foolish and unsustainable, but as a consumer, I'm down.

evv 12y ago
I agree, until Lyft runs out of money, Uber wins, and the price skyrockets. Plus there's Sidecar, which will surely die soon because nobody even knows it exists.
- gojomo 12y ago
  ...and the price skyrockets. Maybe. But maybe instead: Routing and capital intensity (lack of car idle-times) continues to improve. Shared-rides in larger-vehicles (vans) grow in proportion and convenience. Cities expand pick-up/drop-off zones for car services. Attempts at monopoly price hikes spur freelance/coop/upstart competitors along the most profitable corridors, able to snipe Uber rides via overlay apps/services. So costs and prices stay low long enough until... Driverless vehicles become the major mode of urban short-trip car travel. Driver costs are eliminated, insurance costs reduced, and capacity/intensity further improved – with high-capacity vehicles that tirelessly reposition without breaks/distractions. Automated rides stay nearly as cheap as 'mass' transit on dedicated rails, indefinitely.
  - dougabug 12y ago
    Who owns the cars? Who is liable for problems which arise? If I'm anywhere near home, I'm using my own self-driving car, not something used by tens of thousands of unknown people. If I'm somewhere else, I'd like to use a restricted set of cars of people that I know and trust and vice versa. Probably just trade favors and pay for gas/charging rather than a straight up fee. Would be nice to coordinate with a place to stay, so I don't have to do two separate tasks (esp if I'm visiting somewhere I have friends or family nearby). Also, it seems like regulated utilities have been more effective at providing essential services widely at low cost than large private oligopolies such as cable and wireless, so I have no particular desire for an Uber/Lyft duopoly.
    - gojomo 12y ago
      Whoever wants to be in the business owns the cars, like every other rental/service offering. Whatever the liability challenges, they are likely less than current cars-with-drivers, after removing human error, emotions, and criminality. You aren't likely to want to own your own self-driving car in a major city, unless you're an eccentric rich person, or a car hobbyist, or a old fogie. Urban garage/parking space is expensive for an asset that's idle 22+ hours of every day, and fueling/maintenance/looking-for-parking are likely not the best marginal use of your time. What's your dislike of "something used by tens of thousands of unknown people", as long as it's well-maintained? Do you avoid libraries, sidewalks, parks, airports, shops, and restaurants? Right now, Uber and other transport-network-providers are becoming "people I know and trust", because their systems have consistently delivered quick, clean, reasonably-priced rides across many times/places. App-dispatching a suitable-quality autocar from the nearest competitive local provider is going to save a lot of time/energy/pollution, compared to coordinating loaners from friends/family. If transport regulators like city councils and taxi commissions were better at this sort of thing, they'd have bootstrapped a similarly rapid and ubiquitous ride-service years earlier, using their unique governmental coordination powers. Instead, they let a patchwork of inferior alternatives fester for decades. I'm not sure of the eventual market structure of autocar-dominated city streets. Automation and standardization might make room for many providers, or just a few. Regulators could easily screw things up, by locking in specific practices or incumbent providers based on early guesses, biases, and corruption. We'll just have to let lots of things be tried and see what works. For rapidly exploring the possibility space, the vigorous investor-fueled competition we're seeing now is very helpful.
      - dougabug 12y ago
        Do you spend most of your life sleeping on public beds, lounging on public sofas, and public furniture? Eat most of your meals in restaurants? Rent your clothes? I'll spend some time in a hotel if I have to (i.e. far from home, no friends or family where I'm going), but I don't pay to sleep in a hotel or couch surf in my own neighborhood, nor do I rent cars unless I'm out of town. I own my own home, means of transportation, eat most of my meals at my own table...the idea of being a renter of all the major environmental necessities of life is simply not appealing to me in the slightest. I'd rather sleep in my own natural latex, bed bug free bed, and sit on my own sofa or read a book on my own chair, call me crazy. There's never sticky goo on mine, or weird smells. I like private ownership. For me, Uber is the opposite of "people I know and trust," and I have no desire to have them monetize my movements.
- baddox 12y ago
  I don't see why that would necessarily happen, because the barrier to entry for new competitors in the smartphone-app-ride-sharing industry is relatively low. Of course, it could happen if Uber ironically manages to get regulatory favors that increase barriers to entry to would-be competitors.
  - intelliot 12y ago
    Agreed, except that we shouldn't ignore network effects. Drivers go for one smartphone-ride-sharing-app over another because it has more riders, and riders likewise: because it has more drivers. That can be very hard to shake.
pbreit 12y ago
Yeah, seems dangerous for Lyft to get sucked into a price war. But I do see a lot of potential longer term value in getting riders and drivers accustomed to multiple pickups.
rtpg 12y ago
You shouldn't, the end result is that drivers will end up with shitty salaries (and no, most drivers aren't going to be retrained as computer programmers when they realise Uber can't help them pay for their SF rent). Not to mention that these people are contractors (illegal) so have more personal taxes to pay. In my eyes Uber and Lyft have lost all moral high ground. These companies are just not following regulations to make more money. This money was going towards drivers, but it's clear that that's no longer the case. If you have any moral qualms about Walmart's treatment of employees, I don't see how you cannot have issues with Uber.
- philwelch 12y ago
  It's not clear to me that the contracting model for drivers is illegal. Drivers choose their own hours, own their own cars, and don't have to be exclusive to either Uber or Lyft--many drivers drive for both more or less simultaneously. That's the most clear cut example of a valid, legal contractor model I've seen.
  - colinbartlett 12y ago
    If working your own hours, with your own equipment, for one or two companies is illegal then myself and a lot of Hacker News are working illegally.
    - rtpg 12y ago
      working almost 40 hours of week for only one company as a contractor _is_ illegal. In the eyes of the IRS you are an employee, not a contractor. But this is illegal for the employer rather than the employee in this case.
      - throwaway90999 12y ago
        That's not true. Working 40 hours in a week is not a problem. A contractor can put in an unlimited number of hours if they wish. 20, 40, 80 - it doesn't matter. The differentiator you're probably thinking of is whether the worker chooses which hours they work. If the worker decides independently how much they will work and at what times then the IRS doesn't tend to consider the relationship employment -- regardless of how much time is put in. This is precisely how these driving services operate. If the employer is scheduling a fixed schedule, say 9-5 M-F, then the IRS considers it an employment arrangement. Regardless of the number of hours worked. But that is not at all how these services operate.
stolio 12y ago
There's a logic to unsustainable price wars - your competitors might not sustain them as well as you can. Price wars can be horrible for consumers, that's why some forms of them are illegal[0]. If Lyft and Uber talk to each other about gutting prices to put cabs out of business it's illegal. If they read the same econ books and independently come to the conclusion that it's the best thing to do, it's legal. We regulate the cab industry to insulate it from this type of thing, because once the high prices and bad service that come with market concentration happen it may be months or longer before better options become available. [0] - http://en.wikipedia.org/wiki/Predatory_pricing http://en.wikipedia.org/wiki/Predatory_pricing
- baddox 12y ago
  I'm not sure how tin-foil or revisionist this belief considered, but I've suspected for a while that predatory pricing simply isn't a thing that is remotely common or effective. There is far too little historical evidence of it happening, and even less of it being effective.
  - stolio 12y ago
    In some quick googling the Cato Institute are the only ones saying it's a myth. But I'd expect that from them. I'm sure the Austrians deny it, too. It's fairly basic game theory and strategy. If it's not empirical enough for you then Economic theory in general might not make the cut either :)
    - baddox 12y ago
      I don't know. The Wikipedia article is pretty short and sparse. There is a short list of "examples of alleged predatory pricing," but that doesn't seem to support the certainty with which the economic theory is generally presented. Even in non-empirical economic theory, the idea doesn't sound particularly obvious or sound to me. Obviously predatory pricing by a large firm can drive small firms out of business, but the large firm doesn't actually make profit from that until they raise their prices again, which sends a signal to others to start competing. And yes, there are barriers to entry, but it doesn't seem like the resources a small firm spends to enter a market would be destroyed when that firm gets driven out of business by the large firm's predatory pricing. Assets will get liquidated, sold to someone else, and potentially used to start competing again when the large firm raises its prices.

evv 12y ago

I agree, until Lyft runs out of money, Uber wins, and the price skyrockets. Plus there's Sidecar, which will surely die soon because nobody even knows it exists.

gojomo 12y ago
...and the price skyrockets. Maybe. But maybe instead: Routing and capital intensity (lack of car idle-times) continues to improve. Shared-rides in larger-vehicles (vans) grow in proportion and convenience. Cities expand pick-up/drop-off zones for car services. Attempts at monopoly price hikes spur freelance/coop/upstart competitors along the most profitable corridors, able to snipe Uber rides via overlay apps/services. So costs and prices stay low long enough until... Driverless vehicles become the major mode of urban short-trip car travel. Driver costs are eliminated, insurance costs reduced, and capacity/intensity further improved – with high-capacity vehicles that tirelessly reposition without breaks/distractions. Automated rides stay nearly as cheap as 'mass' transit on dedicated rails, indefinitely.
- dougabug 12y ago
  Who owns the cars? Who is liable for problems which arise? If I'm anywhere near home, I'm using my own self-driving car, not something used by tens of thousands of unknown people. If I'm somewhere else, I'd like to use a restricted set of cars of people that I know and trust and vice versa. Probably just trade favors and pay for gas/charging rather than a straight up fee. Would be nice to coordinate with a place to stay, so I don't have to do two separate tasks (esp if I'm visiting somewhere I have friends or family nearby). Also, it seems like regulated utilities have been more effective at providing essential services widely at low cost than large private oligopolies such as cable and wireless, so I have no particular desire for an Uber/Lyft duopoly.
  - gojomo 12y ago
    Whoever wants to be in the business owns the cars, like every other rental/service offering. Whatever the liability challenges, they are likely less than current cars-with-drivers, after removing human error, emotions, and criminality. You aren't likely to want to own your own self-driving car in a major city, unless you're an eccentric rich person, or a car hobbyist, or a old fogie. Urban garage/parking space is expensive for an asset that's idle 22+ hours of every day, and fueling/maintenance/looking-for-parking are likely not the best marginal use of your time. What's your dislike of "something used by tens of thousands of unknown people", as long as it's well-maintained? Do you avoid libraries, sidewalks, parks, airports, shops, and restaurants? Right now, Uber and other transport-network-providers are becoming "people I know and trust", because their systems have consistently delivered quick, clean, reasonably-priced rides across many times/places. App-dispatching a suitable-quality autocar from the nearest competitive local provider is going to save a lot of time/energy/pollution, compared to coordinating loaners from friends/family. If transport regulators like city councils and taxi commissions were better at this sort of thing, they'd have bootstrapped a similarly rapid and ubiquitous ride-service years earlier, using their unique governmental coordination powers. Instead, they let a patchwork of inferior alternatives fester for decades. I'm not sure of the eventual market structure of autocar-dominated city streets. Automation and standardization might make room for many providers, or just a few. Regulators could easily screw things up, by locking in specific practices or incumbent providers based on early guesses, biases, and corruption. We'll just have to let lots of things be tried and see what works. For rapidly exploring the possibility space, the vigorous investor-fueled competition we're seeing now is very helpful.
    - dougabug 12y ago
      Do you spend most of your life sleeping on public beds, lounging on public sofas, and public furniture? Eat most of your meals in restaurants? Rent your clothes? I'll spend some time in a hotel if I have to (i.e. far from home, no friends or family where I'm going), but I don't pay to sleep in a hotel or couch surf in my own neighborhood, nor do I rent cars unless I'm out of town. I own my own home, means of transportation, eat most of my meals at my own table...the idea of being a renter of all the major environmental necessities of life is simply not appealing to me in the slightest. I'd rather sleep in my own natural latex, bed bug free bed, and sit on my own sofa or read a book on my own chair, call me crazy. There's never sticky goo on mine, or weird smells. I like private ownership. For me, Uber is the opposite of "people I know and trust," and I have no desire to have them monetize my movements.
baddox 12y ago
I don't see why that would necessarily happen, because the barrier to entry for new competitors in the smartphone-app-ride-sharing industry is relatively low. Of course, it could happen if Uber ironically manages to get regulatory favors that increase barriers to entry to would-be competitors.
- intelliot 12y ago
  Agreed, except that we shouldn't ignore network effects. Drivers go for one smartphone-ride-sharing-app over another because it has more riders, and riders likewise: because it has more drivers. That can be very hard to shake.

pbreit 12y ago

Yeah, seems dangerous for Lyft to get sucked into a price war. But I do see a lot of potential longer term value in getting riders and drivers accustomed to multiple pickups.

rtpg 12y ago

You shouldn't, the end result is that drivers will end up with shitty salaries (and no, most drivers aren't going to be retrained as computer programmers when they realise Uber can't help them pay for their SF rent). Not to mention that these people are contractors (illegal) so have more personal taxes to pay. In my eyes Uber and Lyft have lost all moral high ground. These companies are just not following regulations to make more money. This money was going towards drivers, but it's clear that that's no longer the case. If you have any moral qualms about Walmart's treatment of employees, I don't see how you cannot have issues with Uber.

philwelch 12y ago
It's not clear to me that the contracting model for drivers is illegal. Drivers choose their own hours, own their own cars, and don't have to be exclusive to either Uber or Lyft--many drivers drive for both more or less simultaneously. That's the most clear cut example of a valid, legal contractor model I've seen.
- colinbartlett 12y ago
  If working your own hours, with your own equipment, for one or two companies is illegal then myself and a lot of Hacker News are working illegally.
  - rtpg 12y ago
    working almost 40 hours of week for only one company as a contractor _is_ illegal. In the eyes of the IRS you are an employee, not a contractor. But this is illegal for the employer rather than the employee in this case.
    - throwaway90999 12y ago
      That's not true. Working 40 hours in a week is not a problem. A contractor can put in an unlimited number of hours if they wish. 20, 40, 80 - it doesn't matter. The differentiator you're probably thinking of is whether the worker chooses which hours they work. If the worker decides independently how much they will work and at what times then the IRS doesn't tend to consider the relationship employment -- regardless of how much time is put in. This is precisely how these driving services operate. If the employer is scheduling a fixed schedule, say 9-5 M-F, then the IRS considers it an employment arrangement. Regardless of the number of hours worked. But that is not at all how these services operate.

stolio 12y ago

There's a logic to unsustainable price wars - your competitors might not sustain them as well as you can. Price wars can be horrible for consumers, that's why some forms of them are illegal[0]. If Lyft and Uber talk to each other about gutting prices to put cabs out of business it's illegal. If they read the same econ books and independently come to the conclusion that it's the best thing to do, it's legal. We regulate the cab industry to insulate it from this type of thing, because once the high prices and bad service that come with market concentration happen it may be months or longer before better options become available. [0] - http://en.wikipedia.org/wiki/Predatory_pricing http://en.wikipedia.org/wiki/Predatory_pricing

baddox 12y ago
I'm not sure how tin-foil or revisionist this belief considered, but I've suspected for a while that predatory pricing simply isn't a thing that is remotely common or effective. There is far too little historical evidence of it happening, and even less of it being effective.
- stolio 12y ago
  In some quick googling the Cato Institute are the only ones saying it's a myth. But I'd expect that from them. I'm sure the Austrians deny it, too. It's fairly basic game theory and strategy. If it's not empirical enough for you then Economic theory in general might not make the cut either :)
  - baddox 12y ago
    I don't know. The Wikipedia article is pretty short and sparse. There is a short list of "examples of alleged predatory pricing," but that doesn't seem to support the certainty with which the economic theory is generally presented. Even in non-empirical economic theory, the idea doesn't sound particularly obvious or sound to me. Obviously predatory pricing by a large firm can drive small firms out of business, but the large firm doesn't actually make profit from that until they raise their prices again, which sends a signal to others to start competing. And yes, there are barriers to entry, but it doesn't seem like the resources a small firm spends to enter a market would be destroyed when that firm gets driven out of business by the large firm's predatory pricing. Assets will get liquidated, sold to someone else, and potentially used to start competing again when the large firm raises its prices.