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In Search of Uber’s Unicorn

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Re: In Search of Uber’s Unicorn

#61
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…

I have seen some taxi companies trying to add convenience--for example, I tried using TaxiMagic when I was in Denver for a conference. When it worked, it was great! I could see the car on the map as it arrived...But, the next time, I tried it during a mild snowstorm and the cab never arrived. So, I gave up on using them--but I imagine that with time, traditional cab companies will have more reliable apps. So, where will that leave Uber?

I imagine that there must be a floor to what can be charged such that a driver is willing to work for the service and such that Uber can earn a profit. So, let's imagine that the market segments and that Uber wins say 80% of the market and the rest is left between competitors (I say imagine this, because as someone mentioned, there is a STRONG inertia effect. If I already have a taxi app with my information in it, then unless the price/service advantage is large, then I'm unlikely to change.). I imagine that one area that Uber will still maintain an advantage is that they will have a pretty good map in large cities of the traffic patterns (based on tracking of cabs). I imagine that that routing information could be valuable to delivery services in general. While large players like Google, Verizon, UPS, and such already have such data, there must be smaller players for whom it would be useful. Cities themselves might find it useful for traffic planning.

Also, on a scarier note, Uber knows the route that its customers take. If it can link that data to demographics, then that might have some value for advertising along given routes, commercial real estate, etc.

Re: In Search of Uber’s Unicorn

#62
post #31

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…

Driverless cars is exactly the play. Once driverless cars arrive, their margins will jump from 20% to something like 50-80% overnight.

Their costs would fall by that magnitude, sure. But so would everyone else's, so that doesn't immediately translate into higher margins.

I think it would benefit Uber more than rent-a-cars and other such services because of their greater effectiveness at finding rides to match with unused (driverless) cars, but that figure overstates it.

Re: In Search of Uber’s Unicorn

#63
post #59

Earlier quoted context omitted.

You are far more optimistic than me about the future of driverless cars. Given N driverless cars, some fraction p will eventually run over and kill small children. Stand back and watch the hysteria and the end of driverless cars. Also, before driverless cars become widespread, they will need to be first proven and then regulated. Imagine the fantastic force of the driving lobby that will oppose that from happening: t…

You chose to make your point with probability, which is actually what will most likely make people accept driverless cars in the end. It's amusing to read the same reasoning after striking away "driverless": "You are far more optimistic than me about the future of cars. Given N cars, some fraction p will eventually run over and kill small children. Stand back and watch the hysteria and the end of cars." or with eleva…

Good point. I totally agree that if the risk is low, we should adopt the technologies.

I was addressing how I believe these sorts of accidents will portrayed in the news and media, especially if there is an organization with an agenda behind the coverage.

Re: In Search of Uber’s Unicorn

#64

Earlier quoted context omitted.

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 re…

I think the biggest threat to Uber is unionization (or other labor organizing).

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.

Re: In Search of Uber’s Unicorn

#65
post #59

Earlier quoted context omitted.

You chose to make your point with probability, which is actually what will most likely make people accept driverless cars in the end. It's amusing to read the same reasoning after striking away "driverless": "You are far more optimistic than me about the future of cars. Given N cars, some fraction p will eventually run over and kill small children. Stand back and watch the hysteria and the end of cars." or with eleva…

Good point. I totally agree that if the risk is low, we should adopt the technologies. I was addressing how I believe these sorts of accidents will portrayed in the news and media, especially if there is an organization with an agenda behind the coverage.

Yes, I think (automatic) car makers will have to be extremely careful. If we have dramatic accidents to soon, it may be hard to sway the public opinion with statistics (as is the current case with nuclear power).

Re: In Search of Uber’s Unicorn

#66
post #38
post #20

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…

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 d…

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...

[1] http://www.bloombergview.com/articles/2013-06-25/why-are-so-...

Re: In Search of Uber’s Unicorn

#67
post #20

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

Re: In Search of Uber’s Unicorn

#68
post #35
post #28

Earlier quoted context omitted.

That's the amazing thing about Uber: it does increase demand. By making it easier and simpler to ask for a cab, and actually providing an enjoyable experience in a market where expectations are very low, they managed to attract people who didn't really "need a ride" before.

This does come up in every thread that touches Uber, posted from different accounts. But do you have any idea if this is actually the case? It sounds a bit implausible that measurably more people would suddently get a burning desire to call a cab just because the app is so cool. Numbers, or any facts at all, could certainly help make your case.

Definitely true for me, I take more cabs in Providence since Uber became available because the local taxis are so inconvenient/bad I never considered it a real option, and I take more cabs in Boston because Uber is a lot cheaper than the yellow cabs.

Re: In Search of Uber’s Unicorn

#69
post #60

Earlier quoted context omitted.

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

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.

Read again. $1000 / 40 hours a week is without costs subtracted. The drivers end up with about $400. That's $20000/year.

Re: In Search of Uber’s Unicorn

#70

Earlier quoted context omitted.

> Taxi companies that provide a lesser service will die off and be replaced by others that follow the example of Uber. I don't think Uber in its present form will shift the demand curve dramatically. Driverless cars will. A world with driverless cars could follow two models. Let's call them Apple and IBM. Apple: each household owns a driverless car. Perhaps it can be occasionally rideshared via UberX, Lyft, etc. In t…

You are far more optimistic than me about the future of driverless cars. Given N driverless cars, some fraction p will eventually run over and kill small children. Stand back and watch the hysteria and the end of driverless cars. Also, before driverless cars become widespread, they will need to be first proven and then regulated. Imagine the fantastic force of the driving lobby that will oppose that from happening: t…

    “If you look at newspapers from American cities in the 1910s
    and ’20s, you’ll find a lot of anger at cars and drivers, 
    really an incredible amount,” says Peter Norton, the author 
    of Fighting Traffic: The Dawn of the Motor Age in the 
    American City. “My impression is that you’d find more 
    caricatures of the Grim Reaper driving a car over innocent 
    children than you would images of Uncle Sam.”
Same thing happened with the horseless carriage when it first showed up. Didn't stop it.

http://www.collectorsweekly.com/articles/murder-machines/

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