7 ms·

This is great. More competition is great for me, the consumer. Recently Lyft and Uber have bother offered flat rate rides for $5-7 anywhere in SF. When peopl

by habosa 12y ago

This is great. More competition is great for me, the consumer. Recently Lyft and Uber have bother offered flat rate rides for $5-7 anywhere in SF. When people ask me how it can be so cheap, I always joke it's because it's a $15 ride but you're splitting it with a venture capitalist. I wonder if either company has any serious long-term plan to make sure they are not competing in a commoditized space. Currently the services are basically indistinguishable. Sure most people have a preference one way or the other, but it's not a preference they'd stick to if the other service was a few bucks cheaper. They seem to be in lock step, doing the same things and alternating who makes the first move. If they're not careful they will become like the airline industry. 40 years ago airlines were a glamorous new way to travel. Now they are reduced to who can offer the cheapest point-to-point ticket with 17" of leg room, customer service is an unexpected bonus.

conanbatt 12y ago
I wouldn't compare cabs to airlines. 10% price difference between one airline to the other can be 100 to 200 dollars in a single buy , where in cabs it could be spread out in an entire year. I agree that airline competition has been so price focused that value to consumer has been eroded, but cabs are fundamentally a simple, less pricey , decision. I hope they become commodities regulated for safe driving and rather modern cars (no older than x years). The rest really IS icing on the cake.
- bsbechtel 12y ago
  I would argue airline competition focus on pricing is due to the marketing/purchasing methods presented to consumers when they go to buy a ticket. Expedia, Orbitz, Priceline, etc all show a big graph listing the prices of all flights taking place on the dates you want to travel. If you list a comparison of any product to consumers with little information about the varying products other than price, most consumers are going to make their purchasing decision based on price alone. Having said that, I'm not at all arguing that price isn't important in the airline industry. $200 is a big chunk of change for an airline ticket. However, consumers might be a little more flexible about price if they had a better idea of what other value they are getting on the trip.
calcsam 12y ago
"San Francisco is an assisted living community for the young." -- Startup L. Jackson https://twitter.com/StartupLJackson/status/408137232533303296 https://twitter.com/StartupLJackson/status/40813723253330329...
- xasos 12y ago
  Startup L. Jackson is so awesome.
abalone 12y ago
The difference is there's a network effect. Uber & Lyft are not actually transportation companies anymore than Airbnb is a hotel company. They're networks. So it's not just about price. It's about the size of the network, which means availability -- how fast can you hail a ride. The more drivers on the network the better the availability, so that's where the consumers look first, and so that's where the new drivers join, and so on in a virtuous cycle. Once one network reaches a tipping point and becomes dominant it will be harder for upstarts to enter the market and match the availability of the winner's gigantic network. That's the theory at least. All this VC money is about trying to get to that tipping point where one of them takes the whole transportation network.
- woah 12y ago
  Many drivers drive for multiple networks simultaneously.
  - abalone 12y ago
    Some do. Some people list on Airbnb and competing services simultaneously too. But once that tipping point is reached then the competing networks collapse and it's not even worth bothering with them. Case in point: Airbnb's direct competition (listing services) are totally ineffective at this point. "105bookings with Airbnb, 1 with Roomorama, 0 with with the others"[1] [1] http://www.quora.com/Who-is-Airbnbs-biggest-competition http://www.quora.com/Who-is-Airbnbs-biggest-competition
    - Lucadg 12y ago
      this may be true in some cities and for some top hosts, but for the rest of vacation rentals owners Airbnb is just another provider. It's an extremely fragmented space.
- ilghiro 12y ago
  Uber is more vulnerable to external price competition. Airbnb doesn't set the price of accommodation across the network and so there's not much of a risk of a competitor entering the market at a lower price point. Internal price competition is as intrinsic to their model as price uniformity is to Uber. I'm not at all suggesting Uber adopt a "Drivers Set Prices" feature but rather pointing out that companies that adopt an internal market have providers that are competing with one another and against other companies on price. Having an "internal monopoly" means the entire company is vulnerable to a lower priced competitor.
joelthelion 12y ago
Merging?
kashkhan 12y ago
the competition is an illusion. The airlines are shafting customers while making more money than ever before. There isn't serious competition domestically in the US like there is in europe. There is no Ryanair here. http://hub.aa.com/en/nr/pressrelease/american-airlines-group-reports-highest-quarterly-profit-in-company-history http://hub.aa.com/en/nr/pressrelease/american-airlines-group... http://www.latimes.com/business/la-fi-airlines-fuel-hedging-20150128-story.html http://www.latimes.com/business/la-fi-airlines-fuel-hedging-... http://aviationblog.dallasnews.com/2014/09/sevem-u-s-carriers-among-the-worlds-most-profitable-airlines.html/ http://aviationblog.dallasnews.com/2014/09/sevem-u-s-carrier... If it was a honest competitive market the fuel cost savings would be passed on to the customers.
- deleted 12y ago
  [deleted]
- coob 12y ago
  Spirit is the US equivalent of Ryanair. http://www.spirit.com/ http://www.spirit.com/ http://www.npr.org/blogs/money/2014/02/14/276973956/episode-517-the-fastest-growing-least-popular-airline-in-america http://www.npr.org/blogs/money/2014/02/14/276973956/episode-...
- hnnewguy 12y ago
  >The airlines are shafting customers while making more money than ever before. Air travel in the US is hardly a lucrative business. It's a tough racket: "Domestic passenger airline operations lost $10 billion from 1979 to 1989, made profits of $5 billion in the 1990s and lost $54 billion from 2000 to 2009. To put these numbers in context, at the end of 2009, the entire book value of U.S. passenger carriers’ assets was about $163 billion and the book value of shareholder equity was $10 billion. Even at the end of 2000, after six consecutive profitable years, their assets were $159 billion and shareholder equity was $40 billion." http://freakonomics.com/2011/06/24/why-do-airlines-always-lose-money-hint-its-not-due-to-taxes-or-fuel-costs/ http://freakonomics.com/2011/06/24/why-do-airlines-always-lo...
- otterley 12y ago
  > If it was a honest competitive market the fuel cost savings would be passed on to the customers. This, in fact, did happen during the oil boom of the mid-to-late 2000s. Southwest had the foresight to purchase a ton of oil futures back when it was cheap, and nearly slaughtered the primary carriers by pricing fares at levels they couldn't hope to match in the current market. http://www.nytimes.com/2007/11/28/business/worldbusiness/28iht-hedge.4.8517580.html http://www.nytimes.com/2007/11/28/business/worldbusiness/28i... With respect to "shafting consumers," airfare is cheaper than it's ever been. And if you've ever followed the market, airlines have rarely been steady bastions of profit like banks or (recently) Apple or Google - it seemed like at least one was going bankrupt every year until recently. http://www.aei.org/publication/even-with-baggage-fees-the-miracle-of-flight-remains-a-real-bargain-average-2011-airfare-was-40-below-1980-average/ http://www.aei.org/publication/even-with-baggage-fees-the-mi...
cmsmith 12y ago
>This is great. More competition is great for me, the consumer. Recently Lyft and Uber have bother offered flat rate rides for $5-7 anywhere in SF. When people ask me how it can be so cheap, I always joke it's because it's a $15 ride but you're splitting it with a venture capitalist. Competition to reduce prices by increasing efficiency is great for the consumer. Competition to increase market share by offering things at below market value by burning VC money or taking advantage of drivers is fine in the short run, but will have long term problems.[1] The other shoe has to drop, and it will either look like a huge price increase to make these companies profitable or investors losing a bunch of money. [1] see Groupon et al.
minthd 12y ago
One decent bet about this market is that it will become a true ride sharing(UBERpool And liftLine are working on that) market. That market have pretty decent network effect(because you need that shared trips will be as optimal as possible for all users, and people will be quite sensitive to longer AND more expensive trips, and it could also help if you met fun people,etc). Some also say that many ,even with self driving cars might use shared transport. Hard to tell.
pbreit 12y ago
I think this is a mis-read of the market. First, if they can get many/most of their rides to include 2+ passengers, $14/trip is easily supportable without VC subsidies. Next, if you study Lyft a bit harder you will see that is expending a lot of energy in differentiation and getting good results, especially around driver and rider experience. Following your airline analogy, Lyft hired Virgin America's creative guy.

by habosa 12y ago

conanbatt 12y ago

I wouldn't compare cabs to airlines. 10% price difference between one airline to the other can be 100 to 200 dollars in a single buy , where in cabs it could be spread out in an entire year. I agree that airline competition has been so price focused that value to consumer has been eroded, but cabs are fundamentally a simple, less pricey , decision. I hope they become commodities regulated for safe driving and rather modern cars (no older than x years). The rest really IS icing on the cake.

bsbechtel 12y ago
I would argue airline competition focus on pricing is due to the marketing/purchasing methods presented to consumers when they go to buy a ticket. Expedia, Orbitz, Priceline, etc all show a big graph listing the prices of all flights taking place on the dates you want to travel. If you list a comparison of any product to consumers with little information about the varying products other than price, most consumers are going to make their purchasing decision based on price alone. Having said that, I'm not at all arguing that price isn't important in the airline industry. $200 is a big chunk of change for an airline ticket. However, consumers might be a little more flexible about price if they had a better idea of what other value they are getting on the trip.

calcsam 12y ago

"San Francisco is an assisted living community for the young." -- Startup L. Jackson https://twitter.com/StartupLJackson/status/408137232533303296 https://twitter.com/StartupLJackson/status/40813723253330329...

xasos 12y ago
Startup L. Jackson is so awesome.

abalone 12y ago

The difference is there's a network effect. Uber & Lyft are not actually transportation companies anymore than Airbnb is a hotel company. They're networks. So it's not just about price. It's about the size of the network, which means availability -- how fast can you hail a ride. The more drivers on the network the better the availability, so that's where the consumers look first, and so that's where the new drivers join, and so on in a virtuous cycle. Once one network reaches a tipping point and becomes dominant it will be harder for upstarts to enter the market and match the availability of the winner's gigantic network. That's the theory at least. All this VC money is about trying to get to that tipping point where one of them takes the whole transportation network.

woah 12y ago
Many drivers drive for multiple networks simultaneously.
- abalone 12y ago
  Some do. Some people list on Airbnb and competing services simultaneously too. But once that tipping point is reached then the competing networks collapse and it's not even worth bothering with them. Case in point: Airbnb's direct competition (listing services) are totally ineffective at this point. "105bookings with Airbnb, 1 with Roomorama, 0 with with the others"[1] [1] http://www.quora.com/Who-is-Airbnbs-biggest-competition http://www.quora.com/Who-is-Airbnbs-biggest-competition
  - Lucadg 12y ago
    this may be true in some cities and for some top hosts, but for the rest of vacation rentals owners Airbnb is just another provider. It's an extremely fragmented space.
ilghiro 12y ago
Uber is more vulnerable to external price competition. Airbnb doesn't set the price of accommodation across the network and so there's not much of a risk of a competitor entering the market at a lower price point. Internal price competition is as intrinsic to their model as price uniformity is to Uber. I'm not at all suggesting Uber adopt a "Drivers Set Prices" feature but rather pointing out that companies that adopt an internal market have providers that are competing with one another and against other companies on price. Having an "internal monopoly" means the entire company is vulnerable to a lower priced competitor.

joelthelion 12y ago

Merging?

kashkhan 12y ago

the competition is an illusion. The airlines are shafting customers while making more money than ever before. There isn't serious competition domestically in the US like there is in europe. There is no Ryanair here. http://hub.aa.com/en/nr/pressrelease/american-airlines-group-reports-highest-quarterly-profit-in-company-history http://hub.aa.com/en/nr/pressrelease/american-airlines-group... http://www.latimes.com/business/la-fi-airlines-fuel-hedging-20150128-story.html http://www.latimes.com/business/la-fi-airlines-fuel-hedging-... http://aviationblog.dallasnews.com/2014/09/sevem-u-s-carriers-among-the-worlds-most-profitable-airlines.html/ http://aviationblog.dallasnews.com/2014/09/sevem-u-s-carrier... If it was a honest competitive market the fuel cost savings would be passed on to the customers.

deleted 12y ago
[deleted]
coob 12y ago
Spirit is the US equivalent of Ryanair. http://www.spirit.com/ http://www.spirit.com/ http://www.npr.org/blogs/money/2014/02/14/276973956/episode-517-the-fastest-growing-least-popular-airline-in-america http://www.npr.org/blogs/money/2014/02/14/276973956/episode-...
hnnewguy 12y ago
>The airlines are shafting customers while making more money than ever before. Air travel in the US is hardly a lucrative business. It's a tough racket: "Domestic passenger airline operations lost $10 billion from 1979 to 1989, made profits of $5 billion in the 1990s and lost $54 billion from 2000 to 2009. To put these numbers in context, at the end of 2009, the entire book value of U.S. passenger carriers’ assets was about $163 billion and the book value of shareholder equity was $10 billion. Even at the end of 2000, after six consecutive profitable years, their assets were $159 billion and shareholder equity was $40 billion." http://freakonomics.com/2011/06/24/why-do-airlines-always-lose-money-hint-its-not-due-to-taxes-or-fuel-costs/ http://freakonomics.com/2011/06/24/why-do-airlines-always-lo...
otterley 12y ago
> If it was a honest competitive market the fuel cost savings would be passed on to the customers. This, in fact, did happen during the oil boom of the mid-to-late 2000s. Southwest had the foresight to purchase a ton of oil futures back when it was cheap, and nearly slaughtered the primary carriers by pricing fares at levels they couldn't hope to match in the current market. http://www.nytimes.com/2007/11/28/business/worldbusiness/28iht-hedge.4.8517580.html http://www.nytimes.com/2007/11/28/business/worldbusiness/28i... With respect to "shafting consumers," airfare is cheaper than it's ever been. And if you've ever followed the market, airlines have rarely been steady bastions of profit like banks or (recently) Apple or Google - it seemed like at least one was going bankrupt every year until recently. http://www.aei.org/publication/even-with-baggage-fees-the-miracle-of-flight-remains-a-real-bargain-average-2011-airfare-was-40-below-1980-average/ http://www.aei.org/publication/even-with-baggage-fees-the-mi...

cmsmith 12y ago

>This is great. More competition is great for me, the consumer. Recently Lyft and Uber have bother offered flat rate rides for $5-7 anywhere in SF. When people ask me how it can be so cheap, I always joke it's because it's a $15 ride but you're splitting it with a venture capitalist. Competition to reduce prices by increasing efficiency is great for the consumer. Competition to increase market share by offering things at below market value by burning VC money or taking advantage of drivers is fine in the short run, but will have long term problems.[1] The other shoe has to drop, and it will either look like a huge price increase to make these companies profitable or investors losing a bunch of money. [1] see Groupon et al.

minthd 12y ago

One decent bet about this market is that it will become a true ride sharing(UBERpool And liftLine are working on that) market. That market have pretty decent network effect(because you need that shared trips will be as optimal as possible for all users, and people will be quite sensitive to longer AND more expensive trips, and it could also help if you met fun people,etc). Some also say that many ,even with self driving cars might use shared transport. Hard to tell.

pbreit 12y ago

I think this is a mis-read of the market. First, if they can get many/most of their rides to include 2+ passengers, $14/trip is easily supportable without VC subsidies. Next, if you study Lyft a bit harder you will see that is expending a lot of energy in differentiation and getting good results, especially around driver and rider experience. Following your airline analogy, Lyft hired Virgin America's creative guy.