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In Search of Uber’s Unicorn

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Re: In Search of Uber’s Unicorn

#11

Post by abakker »

parfe wrote: post #4

>Median uberX Small Business Income Per Year: $90,766 (NYC); $74,191 (SF) http://blog.uber.com/uberimpact Is it pretty much accepted that Uber is outright lying here? Does anyone believe there is a driver out there banking $100,000 driving a taxi? I know the company is shady but hoping they can generate enough new blood to compensate for burnout of drivers chasing the dream seems abusive.

I have no idea how they arrive at that number. I think I read somewhere that its a hypothetical rate, assuming someone worked a given number of hours.

Or else the "Data Driven" company doesn't know what the difference between Median and Maximum are?

On another note, I've met quite a few UberX drivers who have financed their cars. That level of fixed costs make someone significantly less able to absorb any price cuts.

Finally, what is the really Price Elasticity of Demand here? Even when the fares are at surge levels of 2x, how does often does that deter people? Sure, if its 8 blocks, I might walk it, but at a certain threshold (which I assume is the best revenue anyway) the only other alternative is some other mode of service with an almost equally high cost. My guess is that their claim that lower fares = greater ridership has a much lower coefficient than they let on.

Re: In Search of Uber’s Unicorn

#12

Post by jordanpg »

JumpCrisscross wrote: post #7
jordanpg wrote: post #3

Unless I'm missing something, the claim that becoming a taxi driver can become a well-salaried, middle-class job for a significant number of people is patent nonsense . There is a reason that taxis look the way they do and are driven by the people who currently drive them, and regulations and licensing is only a small part of that. Uber might disrupt the taxi industry, maybe for the better, but once equilibrium is re…

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network ef…

But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor.

If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor.

If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not change industries.

And so on.

Re: In Search of Uber’s Unicorn

#13

Post by nemothekid »

jordanpg wrote: post #12
JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network ef…

But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor. If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not…

>But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor.

This may be unrelated but I don't see how technology changes doesn't increase demand. If Uber is convenient/cheap enough that people forgo car ownership and decide to use Uber, doesn't that increase demand. Even if, in the long term, car ownership was cheaper, surely there are people who would rather spend $6 today than sign a loan for $6000.

Re: In Search of Uber’s Unicorn

#14

Post by JumpCrisscross »

jordanpg wrote: post #12
JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network ef…

But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor. If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not…

> But neither network effects nor technology will change overall number of people who need rides

It did with me (granted, N=1). I reduced my own driving to zero and replaced it mostly with Uber. That isn't just a shift in my quantity of rides demanded, it's a shift in my demand curve.

> driving cars is unskilled labor

I would not have given up driving if the alternative were yellow cabs. New York taxi drivers are not knowledgeable about routes. Further, it is not uncommon for a trip to end with a debate over whether the credit card reader works. I will pay extra for even a minimally professional Uber driver over an unprofessional yellow taxi.

The correlation between driver skill and rider experience is one of the problems Uber is running into when it considers scaling. That limitation is one that would be mitigated by driverless cars.

> The drivers will go elsewhere, not find other jobs

Network effects limit the viability of alternatives: there will be less demand on those platforms. As mentioned above, I do not believe most yellow taxi drivers would do well as Uber drivers–the supply is not fungible.

Re: In Search of Uber’s Unicorn

#16

Post by aetherson »

abakker wrote: post #11
parfe wrote: post #4

>Median uberX Small Business Income Per Year: $90,766 (NYC); $74,191 (SF) http://blog.uber.com/uberimpact Is it pretty much accepted that Uber is outright lying here? Does anyone believe there is a driver out there banking $100,000 driving a taxi? I know the company is shady but hoping they can generate enough new blood to compensate for burnout of drivers chasing the dream seems abusive.

I have no idea how they arrive at that number. I think I read somewhere that its a hypothetical rate, assuming someone worked a given number of hours. Or else the "Data Driven" company doesn't know what the difference between Median and Maximum are? On another note, I've met quite a few UberX drivers who have financed their cars. That level of fixed costs make someone significantly less able to absorb any price cuts.…

I think that to a large degree, Uber is competing not against taxis/other ride shares, but against "taking my own car." Most Americans -- even urban ones -- have the ability to drive themselves. And at that point you aren't competing against a firm other cost, but against a squishy composite of "parking cost + annoyance of driving myself + value of being able to drink without worrying about driving home."

Re: In Search of Uber’s Unicorn

#17

Post by dnissley »

shiftpgdn wrote: post #15

Do drivers collect the additional income during surge pricing or does the delta simply line uber's pockets? It seems like you could game the system by simply only driving during surge pricing.

I think that's the point. During times when there is a higher demand, they want to provide extra incentive for drivers to be out there. That way the supply of drivers doesn't just dry up instantly because of the swell in demand.

Re: In Search of Uber’s Unicorn

#18

Post by baddox »

shiftpgdn wrote: post #15

Do drivers collect the additional income during surge pricing or does the delta simply line uber's pockets? It seems like you could game the system by simply only driving during surge pricing.

The supposed purpose of surge pricing is to get more drivers on the street, so that implies that the drivers see some portion of the extra payment.

Re: In Search of Uber’s Unicorn

#19

Post by jordanpg »

JumpCrisscross wrote: post #14
jordanpg wrote: post #12

Earlier quoted context omitted.

But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor. If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not…

> But neither network effects nor technology will change overall number of people who need rides It did with me (granted, N=1). I reduced my own driving to zero and replaced it mostly with Uber. That isn't just a shift in my quantity of rides demanded, it's a shift in my demand curve. > driving cars is unskilled labor I would not have given up driving if the alternative were yellow cabs. New York taxi drivers are not…

If Uber significantly affects demand, then we might see seismic shifts in the demographics of drivers.

As for the existing drivers, my point is that the effects you're touting are temporary. Taxi companies that provide a lesser service will die off and be replaced by others that follow the example of Uber. The overall economics of the thing will not change unless there is a significant change in demand. I don't think this is going to happen due to Uber any more than it did due to ZipCar.

Re: In Search of Uber’s Unicorn

#20

Post by pshin45 »

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.

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