In Silicon Valley Now, It’s Almost Always Winner Takes All

If you can get rides with Uber instantly versus waiting 20-30mins with the competition, then Uber can raise prices a bit and not lose many customers. People are impatient and Uber has already trained a vast audience that you click a button and get a car in 10mins or less. Once you get used to it, you won't settle for an inferior network where you have to wait 2x or 3x for a couple bucks less.

If people are interested in the economics behind these things, I can't recommend this book highly enough:

http://amzn.to/1Vqy2J2

Hal Varian has gone on to be the chief economist at Google.

I'm not the one who downvoted, but I would imagine this is why.

* Overnight is a bit too quick. Uber's service has grown so quickly partly because they have an organization behind it to fight against regulations which is part of what made their rapid growth possible.

* Implementing a standardized "blockchain" protocol to guarantee all of those things is a non trivial task

* Go outside of SF Bay, whip out your phone with a group and tell them that you're about to order a "distributed reputation system cab" and they're just going to look at you like "wat" then open the Uber app and get an Uber that already works with their credit cards and lets them split the fare. They maybe have heard of Lyft, and most likely have Uber, not the blockchain app.

* Uber has hordes of information available that lets them tell drivers where to be and when, it also prices the rides based on demand. The block chain app has none of that.

* Traditional cab drivers are terrible, the cars smell, they don't show up on time, they drive you in circles to up the fare, sometimes they take off when they hear where you want to go. An app is not going to change this overnight, though eventually the reputation system might change it.

* Rent seeking is annoying but they are still much cheaper than traditional cabs, at least everywhere I have used them.

Maybe it's winner takes all, maybe not. It remains to be seen whether the legal system has just been slow to react to Uber and its ilk or if it will not react at all. I think the end of this in the short run is that Uber takes > 90% of the market, Lyft takes the majority of the rest, and the cab companies continue to operate at a smaller scale with less profits. This is after local and state governments wake up and impose more modern, but less restrictive taxi-style regulations on these companies to enforce some level of accountability for when the shit hits the fan or whatever.

The end of this market in the much longer term seems to be self driving cars and some form of shared ownership. I could see premium ride sharing clubs where you pay more to ride in an Audi or something with common ride sharing clubs where you ride in a van. It is this much longer term that I see Uber having more potential competition.

An interesting problem of working with "real" cabs is that you have to compete with street hails (that is, people doing the traditional stand-on-the-curb-and-wave-their-arms deal). This is a surprisingly big issue.

During slow times, it's not a big deal. But during slow times, you also aren't providing very many rides to the cabbies. And also pricing, which I'll come back to.

During peak times, it's very likely in a dense urban environment that a taxi driver will see a prospective customer and want to bail on your ride.

It's hard to make drivers not do this. You can easily get bogged down in a war of you trying to prevent them from bailing on people during peak hours (but remain hailable) and them trying to game you back.

Passengers will only use you if you can reliably get them a ride during peak hours, quickly. Also, taxis have mandated rate structures, and they will likely be more expensive than UberX or Lyft during non-peak hours, so the only time that you'll be able to really get a lot of passengers is during peak hours, and that's the time when all your drivers are at their most flakey.

Source: I spent two years as the lead engineer of Flywheel's server team. Flywheel being an Uber competitor that works with real cabs. Disclaimer: I've been away from Flywheel for more than a year, so my experiences are not current.

I think most of it is coming from capitalization. go find a venture company that will fund you to be the 10th player in a market.