I don't understand how the Uber business model isn't profitable besides mismanagement. Taxi companies all over the world are profitable, and Uber doesn't even have to handle the regulation that they have
The reason Uber initially blew taxi companies out of the water is because taxis greatly limited their service to what was profitable and we're incredibly difficult to work with should you be outside one of their comfort zones. You could always count on Taxis near an airport or for an intra-downtown route but good luck getting a cab to pick you up at your house to take you to another suburban destination. It's not that they'd ignore your call because they sucked at customer service, it's that your call is only worth it to them if there's literally nothing else going on. Even then they might not show up if your request isn't going to end with them back in a profitable starting point for another ride.
I worked for 3 years as a part time taxi driver in first world mega city while doing my post grad at University. Taxis are heavily regulated. If I had refused a fare, I could be taken to court. Especially if the passenger belonged to a certain category like disabled or children needing a ride home after school.
This was pre GPS days so I had to pass 4 different computerised exams about the city and major roads. I had a through police check and had to display my taxi driver license on the dash.
There was proper commercial driver & vehicle insurance that was automatically taken out the day's earning. There was camera in the car including infrared mode. There was a panic button to start broadcasting location, video and audio.
Uber's advantage was completely ignoring any regulations. No insurance. No driver check. No driver safety infrastructure.
And their best move was the marketing bullshit. Even now people like you spout the same talking points.
I put in my card and boom! Done! I see the number on the screen - I pay that number, not that number plus customary tips.(99% of the time completely unearned, BTW)
In civilized places, it was the other way around. Taxis exchange privileged position for certain requirements city demands them to meet as a part of city transportation infrastructure - requirements which include having proper insurance, servicing unprofitable routes, or adapting their vehicles for passengers with disabilities. One of the ways Uber saved money was by completely ignoring these market segments.
But of course, the major way Uber "blew taxi companies out of the water" is through their ability to offer below-market-rate prices by losing money on each ride, thanks to unending supply of VC money.
Uber definitely increased the availability and coverage of end to end car hire in my region. As far as I’ve seen, the evidence suggests that Uber is more equitable for geographic and demographic access.
Yeah but from Uber's perspective they aren't paying drivers as salaried employees but contractors only for a completed fare. So Uber isn't incurring any overhead expense by having cars in less desirable pick up points, or having a car travel 10-15 minutes for a pick up before they can start a fare.
Also keep in mind that the majority of Uber's revenue is from metropolitan areas, not rural areas. And in the metro areas there was a lot of convenience to be gained from their app and matching supply and demand side of the equation and a lot of those areas were underserved by the TLC and specifically car services because taxis didn't even operate there. So they actually took the pent up demand and created a better system.
Now they are still grossly unprofitable, but not for the reason you cited here.
>And in the metro areas there was a lot of convenience to be gained from their app and matching supply and demand side of the equation
Yes, people forget about the pre-app days when hailing a taxi involved finding a suitable street corner and sticking your hand in the air while often competing with others doing the same. And even in midtown Manhattan, perhaps the best-served area in the country, try hailing a cab during rush hour when it's raining. Taxi services have largely caught up and have apps now, but it was a nightmare for a long time.
Exactly, this hits on an incredibly important point that gets constantly ignored in “disruptive” business models: if a particular market segment is “underserved” then it often means that there are poor cost economics in play. Sure, Uber can reduce those costs through algorithmic central routing and planning, but that only goes so far and some markets are just never going to be profitable to serve (at a given quality of service).
The model is profitable, the price point isnt. It's predatory pricing, sell at a loss to hurt and eliminate competition, when you prevail you own the market.
