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The Uber Bubble

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Re: The Uber Bubble

#531

Post by AtlasBarfed »

westcort wrote: post #35

My key takeaways: 1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business 2. Individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab 3. Expenses other than drivers, vehicles, and fuel account for 15 percent of traditional taxi costs but Uber charges drivers 25-30 p…

My takeaway is that there is a big reason that the "robotaxi" is still on the leaderboard of VC investment plays.

I'm surprised that Uber/Lyft never tried lowtech self driving: basically have drone operators guide the cars when they are not in use, and then just monitor/track the drivers when they use them.

Then a "sweeper crew" can handle the outliers/stranded cars.

Basically the scooter model but with cars.

Re: The Uber Bubble

#532

Post by ryanyde »

sebastos wrote: post #500
westcort wrote: post #35

My key takeaways: 1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business 2. Individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab 3. Expenses other than drivers, vehicles, and fuel account for 15 percent of traditional taxi costs but Uber charges drivers 25-30 p…

I have absolutely no vested interest in defending Uber, but every time one of these threads pops up I feel compelled to throw cold water on it because this website is so damn obsessed with predicting Uber's doom. I have comments that are 6 years old saying "no, uber is not dying", with a thread full of angry pitchforks sure I am wrong. Nobody cares if Uber as a whole is more "efficient" as measured by some global mea…

The experience is much better as you've mentioned; the question in the article is whether a company needs to exist around making the experience better.

Now that the ideal experience is available, the question is whether people are willing to pay for it.

Right now - it's being paid for (all salaries, etc.) by shareholders as the company runs a massive operating loss.

The question these articles lay out is that - at least in theory - this can't last forever. No one's hoping Uber fails - they're just saying that a company eventually needs to make money, and they don't see a path forward for Uber to do that.

A bank wouldn't keep lending to a borrower that could never pay them back; at some point - without a fundamental change in economics - this situation will happen to Uber.

Re: The Uber Bubble

#533

Post by sebastos »

ryanyde wrote: post #532
sebastos wrote: post #500

Earlier quoted context omitted.

I have absolutely no vested interest in defending Uber, but every time one of these threads pops up I feel compelled to throw cold water on it because this website is so damn obsessed with predicting Uber's doom. I have comments that are 6 years old saying "no, uber is not dying", with a thread full of angry pitchforks sure I am wrong. Nobody cares if Uber as a whole is more "efficient" as measured by some global mea…

The experience is much better as you've mentioned; the question in the article is whether a company needs to exist around making the experience better. Now that the ideal experience is available, the question is whether people are willing to pay for it. Right now - it's being paid for (all salaries, etc.) by shareholders as the company runs a massive operating loss. The question these articles lay out is that - at le…

Yeah, this is a more nuanced critique that could definitely have teeth.

That said, I'm kind of skeptical that it's really true that shareholders are keeping the whole enterprise afloat? Here I admit I haven't delved deep into their financials, but isn't a big part of their operating loss related to huge R&D spend for self-driving plays, outsized engineering dev teams that might eventually be reduced as the app stabilizes, etc.? It seems like riders have been willing to shell out a lot more money for the experience, which I would imagine leaves plenty of margin. They are essentially a global taxi company with good market position and value added. It seems hard to believe there is no way to operate that company profitably, even if they're not currently achieving it. It's not like they're being strongly pressured to reach profitability either, though, so this isn't a particularly fair litmus test as to whether they're capable.

Anyway, you raise a good point that it -could- be true the Uber model is fundamentally unsustainable. I was reacting some of the hotter revisionist takes you see, where Uber was never a good idea, offers no value over a normal Taxi, is a big brogrammer pyramid scheme, etc.

Re: The Uber Bubble

#534

Post by cowuser666 »

kwhitefoot wrote: post #408
funklute wrote: post #401

Earlier quoted context omitted.

> Imagine making the same argument for 7 year old chimney sweeps in Victorian England, and the flaw in your argument becomes more obvious. It doesn't make it any more obvious to me. That 7 year old Victorian chimney sweep still has to eat. If society doesn't have the infrastructure to take care of them, then the other alternative is to starve, possibly to death. Refusing to hire these workers only makes things better…

> That 7 year old Victorian chimney sweep still has to eat. If society doesn't have the infrastructure to take care of them, then the other alternative is to starve, possibly to death. Yet we no longer have 7 year old chimney sweeps. Refusing to hire one now is one part of the process that changes society so that the missing infrastructure that you mentioned gets provided for future potential 7 year old chimney sweep…

I would call that an extraordinary claim.

Re: The Uber Bubble

#535

Post by ElevenLathe »

lozenge wrote: post #422
lelanthran wrote: post #363

Earlier quoted context omitted.

> One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less. Only works if you manage to get a govt monopoly and exclusive access tot he drivers. If you don't have those two things there's no point in trying to landgrab under cost and price-gouge later. For something lik…

The barrier to entry is not small. To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders. Until you reach critical mass. This is what has lost Uber so much money.

I think you're right to a point. During the period Uber and Lyft pulled out of Austin in protest of its background check ordinance, several other companies sprung up immediately and appeared to thrive until the big boys came back.

The barrier to entry is actually incredibly low, assuming you have a base of people willing to drive already as happened in Austin. You don't need to employ drivers or own cars, or anything else in the physical world that eats up capital. It's literally only an app.

Re: The Uber Bubble

#536

Post by cyanydeez »

AmericanChopper wrote: post #59
cyanydeez wrote: post #20

Earlier quoted context omitted.

It's more likely they get a monopoly and use that to leverage a "natural" market. For Uber, that's the taxi industry and they're only got an edge by ignoring all manner of regulation.

How could Uber possibly be described as a monopoly when they have multiple competitions in every market they operate in?

I was refining the posters "natural" language.

The VCs fund these projects are going after monopolies, not some capitalist delusion about "best" outcomes.

It's clarifying: Facebook isn't the "best" social platform, it simply became big enough to box out competition.

This is why corporations are allowed to operate at a loss.

Re: The Uber Bubble

#537

Post by melbournegrad »

harshitaneja wrote: post #366
cjbgkagh wrote: post #359

Earlier quoted context omitted.

Definitely agree. Nowadays I have Uber drivers sit around the corner refusing to show up and calling me to tell me I should cancel so that I have to pay the $5 fine. Sure I can contact support to get that $5 back but it has happened to me so many times there really should be a button for it. It’s hard for me to believe Uber is not aware of this behavior.

I don't know about US but in India the process to review cancellation fee doesn't require interacting with support but rather a two click process to state the reason for cancellation. Works quite well and the only time they don't refund is when you do it too often in a short span of time.

Which goes t to show the mass amount of this happening in India. Ilived there in 2017, drivers didn't understand what Pool was and let everyone out at the first stop.

Re: The Uber Bubble

#538

Post by melbournegrad »

randyrand wrote: post #351
kanbara wrote: post #321

Earlier quoted context omitted.

in europe there are many taxi companies that have started to do uber app features and prepayment and all the jazz that make uber so great. the main issues i have with uber are that it's now almost more expensive than taxis, there's almost no regulation, the drivers are taken advantage of / not making profit and also not getting proper benefits. just because taxis suck doesn't mean uber should replace them. government…

are you saying the drivers are too stupid to calculate they are making net money? that’s quite the (insulting) claim!

I worked for the owner driver regulator of my country. People would take these jobs that they were making a loss on and not realise and be bankrupt in 6 months

Re: The Uber Bubble

#539

Post by Firmwarrior »

skobovm wrote: post #338
Firmwarrior wrote: post #286

Earlier quoted context omitted.

I've been trying to figure this out for the last few months.. Uber isn't THAT complicated on the technical side. The driver/rider matchmaking is simpler than algorithmic trading code I've worked on, and I'm happy to take 1% on a trade in that space, yet Uber and Lyft are helping themselves to 30% or more. I was personally thinking it'd be great to offer an Uber competitor that aims for complete transparency with no f…

The complexity is not the depth of the problem, but rather the scope. Matchmaking — while complicated — is a very small subset of the domain. Pricing, demand forecasting, routing, payments, etc. are all equally important on the pax side. Similarly, there are many teams needed to support the overall ecosystem for things like driver onboarding, compliance, and support. Also comparing a 1% return to a 30% charge isn’t e…

I could be completely clueless here, but it looks to me like a lot of the Lyft/Uber/etc cut is going to:

1) Overpaid, wasteful software engineering (no offense to us). Like someone here said, there are a lot of cheap software solutions out there to handle this stuff

2) R&D into crazy moonshot ideas

3) Advertising

4) Making a completely opaque techno-dystopian game out of people's livelihoods in order to manipulate drivers into working harder for less money and riders into paying less up front and as much as possible in the long run

If I'm right, I'd ideally like to completely destroy this market for good. Fragment it into a separate crappy home-made app for each city that you find out about via a poster on the wall in the airport when you land. I'm hoping that with enough transparency and flexibility, riders and drivers would keep each other in check and come to a happy and sustainable middle ground without making any VCs rich

(Or maybe Uber/Lyft are operating on a level of efficiency that would make my half-baked idea look like a joke. Ain't nobody disrupting Amazon or Apple from their basement any time soon)

Re: The Uber Bubble

#540

Post by lelanthran »

lozenge wrote: post #422
lelanthran wrote: post #363

Earlier quoted context omitted.

> One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less. Only works if you manage to get a govt monopoly and exclusive access tot he drivers. If you don't have those two things there's no point in trying to landgrab under cost and price-gouge later. For something lik…

The barrier to entry is not small. To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders. Until you reach critical mass. This is what has lost Uber so much money.

> To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders.

That only matters if:

1. You want a larger geographical coverage

2. You want to push out competitors by undercharging.

Local-area Uber clones sprang up like mushrooms in the night when Uber pulled out of certain cities.

> Until you reach critical mass. This is what has lost Uber so much money.

Uber has lost that much money because they were trying to fend off competition and landgrab by charging less. The minute they have to charge what the trip really costs, then the market is suddenly a profitable one and competitors will come in.

My point was that landgrabbing in this market is pointless because you cannot price-gouge later. If Uber decided to raise their rates to become profitable, local-area equivalents will enter the now-profitable market.

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