I just do not understand how ridesharing cannot turn a profit. Let's look at unit economics:
~25% take rate on a ride ($15 average): $3.75 take
Payment processing: 2.5% + 30c = $0.68
Servers / datacenters: $0.20 (for a margin-sensitive business, you should be colo'ing your own servers, or using cheap alternatives like OVH/Hertzner)
Customer support: Automate as much as possible (auto refunds up to a certain point; for lost items, connect directly to driver); assume 1 in 50 rides require manual human support with a $3 cost = $0.06 support cost per ride
Fraud/refunds: Assume a 2% fraud rate that cannot be reclaimed; thus $0.30 cost for fraud. Refunds for things like driver purposefully took a longer route can be clawed from the driver.
Gross COGS: $1.24
Gross profit: $2.51
What am I missing?? Marketing? Fuck marketing when you can't turn a profit. Everyone knows about Uber or Lyft already, you need to turn a profit, not waste $30 per CAC.
You're missing roughly 30,000 employees to run a service that, at steady state, probably needs about 30 software developers and a few hundred second or third level customer support folks, with first level being handled by outsourced local-language companies.
And then there's Uber self-driving. Uber AI; Uber electric airplanes. Uber freight, Uber restaurant delivery, Uber grocery delivery, Uber this and Uber that. Oh, and Uber scooters.
Uber eats? Scooter integration? Mass transit support? Scheduled rides? Commuter cards? If you were building the app with 30 developers you'd simply not bother with those features.
I can only see giving up on Uber Eats as being foolhardy, that is a profitable business with a solid business case, yet lacking those other features would not really cause me to prefer traditional taxicabs telephone dispatch over using an app.
There's legitimately a reasonable argument that Uber rides has a worse business case than Uber Eats. If I were in Uber's shoes I would be clinging onto both.
Delivering time sensitive goods from many locations to many other locations is not an easy business model. Especially when you do not control the provider of the sensitive goods or the delivery provider.
Logistics is a tough business so I’m bearish on Uber eats.
eBay looks like a platform that is at least an order of magnitude simpler: No realtime data streams like GPS updates, no matching algorithms, no demand-based pricing or incentives, no ETA calculations. Uber is operating in the real world which means that weather, traffic, protests, construction, events and so on affect the operation.
The eBay business requires no boots on the ground, Uber Eats does because they have to equip riders. And eBay has almost no market-specific laws/regulations which change every couple of months to worry about.
I think eBay doesn't process payments, that is outsourced to PayPal.
It looks like eBay is in about 25 markets, Uber is available in 85 countries.
Serious question: Why does eBay have so many employees? It's just a search engine for a user generated product catalog where users can place bids on the items. My guess is that most Uber employees aren't high-paid developers, it is more likely that they are in support roles.
eBay can get away with relying on third parties for advertising, selling, and transporting goods. They are just an online marketplace.
Uber has to market themselves which needs local expertise, if nothing else to liaise with a local PR firm. Then they need local legal expertise to actually operate in the country (eBay transactions happen online, and the transport agency hired by the seller figures out how to get the package to its destination). Uber then has to have maps for every country it operates in, as well as change their standards to match local expectations.
eBay is arguably a bad example because they sure could do with a proper overhaul of their software that is halfway modenised with a bunch of rough edges accumulated over decades.
I will agree that 'receipts' is part of the core product and should be retained. I didn't mention it because I'm sure we can agree it's within the capabilities of a 30-person team!
I ignored the other stuff because I don't know WTF "pickup special cases" or "on-trip experience business logic" or "growth features" are. So I'm not informed enough to guarantee they aren't part of the core product offering - although you can probably guess my intuition on the matter.
This kind of "how hard could it be" analysis is what causes people espousing it to go surprised-Pikachu-face when their nose is ground into fractal complexity requirements. The closer to the coalface you get, the more "huh, who would have thought?" is murmured. A huge chunk of this comes from only thinking about happy path logic in one setting.
The software that runs the world and gets actual work done day-in, day-out behind the scenes, is riddled with edge case handling. In really mature codebases impacting many stakeholders (not just direct users), the product team can categorize 1% or less of the stakeholder population by a tiny fraction of a commonly-used feature set they use. On that basis, the coding and maintenance effort for the edge cases can sometimes outweigh the sliver of features used by that sub-population of stakeholders.
We aren't talking about a web scraper or run of the mill DevOps here. Anytime you work with lots of business rules in multiple jurisdictions impacting the same processes, the edge case counts go up rapidly, and combinations of processes that you never thought would intersect but are forced to by specific jurisdictions also appear more frequently.
I mean this is still arguing over 3 orders of magnitude difference in employee count though. Uber is incredibly heavy on non-"provides a ride from point A to point B" compensations.
Due to the lack of Operations having a real seat at the social hierarchy table at most companies, it isn't hard to see why you can have such a vast difference when dealing with many jurisdictions.
Here is how it works in most of my clients. Management is at the top of the heap. Business/sales/marketing comes next. Developers/engineering after them. Way down at the bottom of the heap, sits Operations. They're the "grunts".
The default dynamic is developers code up a system and toss it over the wall to Operations. When informed by operations of some edge case that comes up frequently on the sad path, developers roll their metaphorical eyes and tells Operations to "just" develop and follow some "SOP".
Cue "One Decade Later..." in French accent meme...
After enough of those edge cases over enough time, it isn't hard to see why all those manual intervention edge cases result in an operations-oriented staff bloat. These are especially challenging to address, because everyone is looking for a silver bullet and very few people in charge of writing checks will accept the reality that this is every bit as much technical debt as the code that runs on the systems, and working off that debt with interest is a slog of expensive unwinding.
Uber gets hit on multiple fronts with this dynamic. More jurisdictions, in an incumbent industry that has accreted more baroque government interfacing, that has simultaneously famously resisted making any of its relevant data available in any form whatsoever beyond paper and microfiche. Sometimes it will take more people than you can imagine.
Scheduled rides never actually allocates a driver for me; just a time range and it books a normal ride right when that range starts. Then the driver comes late!
Whatsapp used to service 900 million users with literally 50 engineers. Instagram had 13 employees when it was acquired. The old canard is true if you focus on a core product and make smart architectural choices. (in Whatsapp's case they credit a lot of their efficiency to Erlang).
Simplistic messaging apps aren’t really a good model to run off of. Designing WhatsApp and Instagram are common system design questions because they’re trivial in comparison to design Uber/Lyft, etc.
Even Waze isn't complex enough to compare with Uber. Waze has to process real time data but doesn't have to deal with processing payments and complying to regulations worldwide.
There's a bunch of reasons why this model doesn't hold up in the long run, and I'll give one of them: accessibility. Once your business decides that your app must be sufficiently accessible to reach the many people who need accessibility work, your backlog explodes.
Technically it isn't: if you run an American business, you are subject to the Americans With Disabilities act as it is pursuant to electronic services [1].
Uber specifically would definitely fall under a "public transportation" service - accessibility is non-optional if someone decides to sue. [2]
>> So ignore accessibility. It's not a legal requirement and it doesn't pay.
Firstly that is just plain incorrect in a lot of areas (of business) and jurisdictions. Secondly your outlook on accessibility is just ... SMH and walks away from keyboard.
says who? accessibility is not that hard to achieve if you know what you're doing and make efforts from the very beginning to build your product in an accessible fashion
Well, the google results when I initially posted it didn't even bring up the choice I would probably use (again). Which is C++ and either a custom hand rolled platform abstraction layer, or maybe something like QT if the application were UI heavy. Which from what I can see of the uber app isn't.
That is because its very well supported on both platforms, and one of the few language ecosystems that can actually create native looking/acting applications on both.
Yes, the initial development may be a bit slower, but that is common with C++ because what the smart people are doing is usually creating an application specific "language" out of C++. Then once that core bit is done the actual development would probably outpace many of the other choices. I've done this a couple times with native development toolkits, the "customer" in one case was really questioning how much work was actually going on when 1/2 way through the contract it barely had a single "screen" in a data collection/reporting application working. But, then another few weeks went by, and literally in the space of about 2 days the application went from looking like it had just been started, to being basically feature complete. That is because the C++ engine was complete and it took ~12 hours to fill out the few 10s of thousands lines of boilerplate ui descriptions that actually formed the UI (in that case it was a custom textish/declaritive application description language, most of the c++ code was parsing it and doing layout/drawing in response. Super happy customer too, once they understood that their inhouse "IT" people could update/change the app with little more than a text editor against some fairly simple to understand rules).
And many of the functions the GP was asking about are the kinds of things one could contract out. Aka, why not just use google maps API for the routing/etc.
Frankly, given what I saw a couple years ago when I went poking around in the iphone app store, it seems just about every region taxi company had reimplemented large parts of the uber interface in their own apps. Maybe not always as slick, but the core parts were in many of them, and I doubt random regional taxi companies can afford the engineering effort uber apparently is spending on.
>> You're missing roughly 30,000 employees to run a service that, at steady state, probably needs about 30 software developers and a few hundred second or third level customer support folks, with first level being handled by outsourced local-language companies.
This comment is insane for any real app in the real world transacting in real dollars. There are a hundred countries with 100 regulations. Accounting/P&L/bookkeeping for the United States ALONE would take 30 developers for a revenue base this size.
Revenue 6854
Cost of Revenue 4026
Operations and Support 574
Sales and Marketing 1263
Research and Development 587
General and Administrative 632
Depreciation & Amortization 254
Total Costs 7336
I wonder (and am too lazy too try to find out) what portion of sales and marketing is driver-focused. One could maybe argue (as the grandparent did) that they should be spending less on rider marketing, but marketing to get drivers in the door seems pretty important. Dunno what their driver churn rate is, but keeping the pool of drivers large is critical for their service.
From what I’ve come to understand you are right on the money. All these “sharing economy” models rely heavily on churn and burn like many other less than solid business models like MLM.
I would love to see the breakdown of drivers and their immigration status, because from what I can gather, what is happening here is not any different than in the past of America’s history where the whole business model relies on the exploitation of “immigrant” labor that knows no better and is easily exploited, aka their unrealized labor value is converted into profit, or better states, benefits and riches for the executives.
Bingo. Andrew Chen, formerly of Uber, says exactly that in his excellent new book The Cold Start problem. The driver side is the hard side of the market and must be constantly tended.
Interesting because the taxi business had all that figured out already. It was a profitable business and drivers stuck around for decades. Does Uber have too much overhead to ever be profitable?
The taxi industry had it figured out only on a smaller scale. Rideshare reaches more people and rides than taxis did. In most of America, taxis were never a serious option outside of niche use cases like getting a ride from an airport. Even in NYC, where street hailing is possible, that only ever really worked in Manhattan (and not even all of Manhattan); and medallion caps meant driver supply could never fully meet rider demand, unlike for rideshare, so getting drivers wasn't a realistic problem.
Rideshare expanded the reach of taxi-like services to more regions, people, and use cases. It's now viable to travel without renting a car in many US cities - you can see this by how rideshare affected rental car companies. That's what makes the rideshare business hard: the places where they didn't have existing competition, because that's where the matching is harder and the economics not as easy.
It's a similar story for food delivery: GrubHub/Seamless operated in core areas of cities like NYC for many years (since the 90s in NYC, I think). Uber Eats brings that service to far more places, and that's where the challenge comes from in that business.
>Rideshare expanded the reach of taxi-like services to more regions, people, and use cases.
You don't need rideshare for delivering service to large areas.
In my country we have a taxi app which can be used by any taxi driver. If you request a drive, your call can be seen by all drivers which are at a certain distance from you. That distance can be se by each driver.
One or more drivers will reply to your request and you get to pick the driver.
And you can either pay directly to the driver using cash or card or you can be charged through the app.
The fee for the drivers is very small so almost all drivers use it.
And the money are not subject to tax evasion, they stay in the local economy. Taxi drivers have wages, social insurance, health insurance and pension funds. They also have a valid license to transport people and are regularly checked to be able to hold that license.
Depends on the city/locale. In NYC most drivers don’t own their medallions, they drive shifts for someone else’s medallion.
In fact I’ve had a lot of conversations with Uber and taxi drivers who started as taxi drivers, switched to Uber when the bonuses were lucrative, and then some of them switched back because they liked the predictability of a fixed shift and not being ordered around by a machine. Others felt exactly the opposite.
Sales and marketing should be labeled price discrimination. It’s all incentives to match driver earnings and rider costs to respective minima (maxima).
> The term cost of revenue refers to the total cost of manufacturing and delivering a product or service to consumers. [0]
It sounds like "developing the core product" falls entirely under this bucket, so with what others are saying about what falls under other buckets is right, then the one that looks most cuttable to me is actually "Research and Development". That sounds like the "experimental new stuff that may go nowhere" bucket, and if it's eliminated it would also put them just above break-even. Maybe they could focus on improving profits for their core product for a while before bringing that back.
Maybe there is necessary stuff included in it though, which I guess means that wouldn't be an option.
All tech companies put most of their engineering under “research and development”. It lets you capitalize your expenses and smear them out over many years.
Kinda, they can classify the activity of the engineers project work as r&d, and capilise the appropriate amount on the balance sheet (i.e. does not show under r&d expenses). Over time that would then be shown as depreciation, not r&d. You can't captilise an engineers time that is maintenance work.
A quick look at Ubers annual report states they do not capitalise r&d costs and instead expense it as incurred.
If you look at their financials, they show gross bookings, which include both the full billed values for food and delivery, and transportation of people. Revenues only show their share of that total.
In regards to incentives, it looks like a complicated question, I found an interesting outline[2]
Cost of Good Sold is the variable cost most directly associated with bringing in the revenue. So the raw materials for making a physical product, or the salaries paid to service workers who are billed out hourly. Anything that is strictly mandatory to create the product or service.
Cost of Revenue goes a step further, and includes the next layer of costs that are necessary to cause sales to happen for a given product/service line in a reporting period. That includes things like sales and marketing, and distribution. Basically anything that would cause the revenue to stop coming in fairly immediately if it wasn't done.
Neither includes R&D to create the product/service in the first place, or general overhead.
It's a clever way to disguise their unit economics to look better.
Their marketing budget is mostly going to pay drivers.
Put another way - you could be saying - why not pay drivers EVEN less? Well, they're paying them the least they can already. You can be sure of that.
If they did actually paid the drivers more and not disguise it as marketing - then their unit economics wouldn't look good - and when the business as a whole doesn't look good either - that's not a good look.
They can’t, that “S&M” is heavily focused on getting low information drivers into the service by smoke and mirrors about how wonderful it is to drive for them. They have to keep the rate of influx of new drivers at least above the rate of people realizing what a bad deal it is for them, aka churn.
If I remember correctly they spend a lot of money on marketing campaigns against any law that could hurt their business model. So slashing marketing might actually hurt them even more.
They only need some occasional reminders that might be targeted at the few people that haven't used or heard of friends or family using an Uber before.
Coke is somewhat of an impulse purchase. At least it needs to be in your mind to buy it at the grocery store.
Conversely, I'm not going to take an Uber ride tomorrow because they showed me an ad today. When I need to get somewhere I'll look at my options and choose the best. So long as Uber meets the minimum level of me being aware of it then theyre good.
Coke (and Pepsi) marketing is mainly concerned with affirming that drinking soda makes you sexy and keeping restaurants et al from changing their supplier.
Marketing is as much about keeping your customers from going to rival providers as it is about finding new customers. If you don't want people to leave you need to remind them why you're better than the exciting new company that's spending VC money to take your market share.
- insurance -1 (drivers and riders get generous insurance, not in cabs)
now we have $2.5 per ride to pay fixed costs, not including marketing. in reality, they also give out generous marketing coupons to riders which cabs did not do. $1 per ride on avg discount drops us to $1.5 per ride.
it's probably true that 100 engineers could sustain uber in the US without any new features. 100 * 500k payroll cost = $50M/yr = 33M rides per year.
Lyft alone did >300M rides per year. Uber and lyft combined would be a solid company able to sustain and be profitable. This company would provide a way higher quality service (and safer, and more insured) than it replaced, without monopoly profits being captured by rich medallion holding families.
However, uber and lyft are still pouring money into product development. Shared rides as an example, still hold the potential to improve everything in cities massively. Lower cost than taxi, faster than bus, less congesting than private car.
Both also seem to be expanding outside of ride share, which should be viewed like amazon expanding to aws 15 years ago. if it works, there could be hugely positive impact. if it doesn't, then it's a massive waste of shareholder capital.
They have nearly 30,000 employees, mostly SDEs from what I understand. Its been discussed (and rationalized) here, but I still don't understand how that many are necessary. I read somewhere else that their engineering tend to need to rewrite their software every two years to keep up with the scale, so maybe they need them? it still seems insane to me.
This blows my mind. I used to use Uber a bunch, and I built relationships with drivers such that I could just text them and get a ride at a certain time for a discount.
Ultimately, I wonder if Uber is prime to be disrupted if drivers got together and funded a few engineers to build a city-scale service for the hailing and payment aspect.
>Ultimately, I wonder if Uber is prime to be disrupted if drivers got together and funded a few engineers to build a city-scale service for the hailing and payment aspect.
Apparently a whole bunch of folks are trying to do just that.
I was going to provide just one example, but a web search[0] shows a whole bunch of these efforts in a variety of locales. As such, I just provided the web search results here.
Austin had that for a while when they went and banned Uber/Lyft. They were... ok? The issue ends up being that it's hard to be a one-city service that's mostly used by people who don't live in the city. If I arrive in a random city, the last thing I want to do to get to where I need to go is have to search for which app I need to install and give my CC info to in order to get a cab.
NYC used to have Juno, but it went bankrupt in 2019. I feel like if you can't run a single-city rideshare app in NYC, you're gonna have a hard time doing it anywhere else.
>NYC used to have Juno, but it went bankrupt in 2019. I feel like if you can't run a single-city rideshare app in NYC, you're gonna have a hard time doing it anywhere else.
I haven't used it (I always pay cash, as the drivers are charged ~3-5% per fare for "CC processing" when a card is used), but every NYC taxi has a feature where you can pair with the onboard system and pay with your phone.
Not sure what "pairing" requires, perhaps someone else has used this feature and can comment.
>If I arrive in a random city, the last thing I want to do to get to where I need to go is have to search for which app I need to install and give my CC info to in order to get a cab.
Searching and installing a random app introduces a slight amount of friction, but I don't think payment necessarily has to be that much of a hassle. Just use apple/google pay.
That assumes the app supports on-phone payment options like that. Obviously it's gotten more ubiquitous now, but most of the non-Uber/Lyft apps I've used in the past didn't. They often will require me to make a full account as well, give them name, address, email... I think one of them tried to make me upload a picture of my Driver's License, even thought I was very sure I wasn't signing up to be a driver.
Obviously this all could be easy, but it's amazing how many apps fail to make things easy to onboard. When I've just gotten done traveling for hours and just want to get to some place to relax, the last thing I want is to wrangle new account creation in some app where they're trying to be cheap and haven't hired any UX designers to smooth out the process because "you can rebuild Uber with 3 smart devs" as everyone on HN says.
Already happening in NYC w/ Curb, though many (like me) are staying the fuck away from it and sticking w/ Uber/Lyft. It's a matter of trust and operational complexity (that's not easily "solved" from the ground up), imho
The uber/swift rewrite thread from a couple years ago is highly informative of the company "engineering" culture.
The kinds of decisions taken for granted by the hacker news thread/etc are the kinds of decisions that could sink a self funded company, starting with the fact that they are basically writing multiple copies of the application for each platform (ios vs android) and going from there. This is maybe the problem with VC funded companies (like government contracts) the money just keeps flowing independent of all the bad decisions being made. Also, having enough engineers that whole teams can be split off to rewrite the application for no appreciable benefit except to peoples resume's is itself an upper mgmt problem. If the goal was a single unified application I might see how something like that could be justified, but they choose technology stacks that are to native for that to work.
Don’t forget about lawyers, compliance, lobbying, lawsuits, etc., etc. It’s also likely your assumptions are very wrong. Just think about what will happen when people figure out you auto-refund everything below a certain point.
Competition. Part of Uber's biggest expenses is "driver and customer incentives" which is corporate speak for bribing people to stay on the app. We know from economics that competition drives down profits and rid hailing services are a dime a dozen.
For a simplified version of the app with arguably no worse user experience, it's not THAT farfetched.
Uber has an absurd amount of logging & analytics.
If the app was simply drop a pin, get a ride - it wouldn't be that crazy.
Uber has 3.9M drivers world wide. There's probably very rarely more than 1M drivers active at any time. Probably less than 300k people looking for a ride at the vast majority of times.
Assuming you can update the driver's location 1 time per minute - that's
~1.5B requests per day - less than 25k requests per second (including user bookings).
That's like ~2TB of bandwidth per day. That's less than $200 per day. Almost everyone spends more than 5% of their cloud bill on bandwidth. Meaning, the rest of a drastically simplified (but nearly equally useful) Uber could run for ~$4000 per day in server expenses.
That's a $1.4M / year data center. Uber has revenues of >$11B.
They could be making a lot of money. They just aren't because they're spending AT LEAST 50x more on servers and product engineering than they NEED to.
They paid for growth for a long time. They have a monopoly now. There's not a lot of growth left to get. At some point the axe will come down.
It just does not work that way. I was an SRE at a similar company. You need driver locations, passenger locations, cost calculators (including ML models), ads serving, respect user preferences, geofencing, ride sequencing, analytics, compliance, fraud detection (you'd be surprised at the amount of fraud and clever tactics people employ). This is just a very minimal set of services (I'm guessing <10% of what you need) and you need to run this somewhat reliably.
Cost of revenue in just terms of infrastucture was measured in $/ride and minimizing it reliability is difficult, especially if you're a fast growing startup and on cloud providers. Unfortunately, if you're a fast growing startup you also don't usually run bare metal (even though I'm a fan of colo/OVH/Hetzner).
Don't forget that money used to free, with the way interest rates and investors were. It's far more difficult cutting down, than it is to throw money around, obviously.
It’s also a denial strategy. The bleeding edge that also forces your competitors out of the market because they cannot get past the network effect and name recognition hurdle is worth its weight in gold.
Most people will say they’re going to get an Uber, even if they end up having to use Lyft, no? Ubers, as well as others’, expressed strategy has long been not only first mover, but also monopolization of all aspects of their space, expressly anti-competitive. Part of that is not only being the leader, first to mind, but also draining the enemy/competitor’s resources and undermining their efforts to even challenge you. It’s a total market domination strategy that shouldn’t even be allowed, but they’ve also paid off politicians and captured government in other ways too, so don’t expect anything from there either. There used to be other ride sharing services, I don’t even know if they exist anymore, but even before the Great Monopolization, aka COVID, they were barely scraping by on crumbs in a few local markets while the likes of Uber worked in basically every market, especially in the high spending business travel and entertainment segments.
Maybe that was their thinking? Have massive loses while killing all competition including taxi drivers and capture the market and after that just cut features and jack up the prices while paying less money to drivers?
Fortunately it haven't worked. But could it work assuming the VC investors would be able and willing to pour much more money into it?
You're way overoptimistic in your expenses calculation - Maintaining a "real-time" app is 100x more complex than that.
100x, bringing their opex to hundreds of millions on billions of revenue. They should still be able to cut the fat and actually turn a handy profit, but they won't.
What is the set of information that makes you say this? Because I would put money that Uber's data team has run an experiment with lower realtime status updates (realtime is expensive, these companies aren't filled with idiots, they test things). And based on that, I think it's reasonable to assume that critical metrics are negatively impacted by not having realtime updates.
So I'm curious if you have any knowledge, or if what you are saying is "I don't need realtime", or perhaps more charitably, "I can't imagine realtime being valuable to users". I push back on the 2nd, and I strong push back on the idea that someone with can reach the conclusion that Uber is wasting money on things that don't drive user value.
Unless, of course, you work/worked there and worked on these projects, and saw firsthand that Uber decided to waste a bunch of money internally.
In a major metro like Boston 1 minute further down the road could mean a 5 minute longer wait. I think your point stands however with 6x traffic increase to once every 10 seconds.
I'm not sure that's true. Almost every rideshare I've gotten in the last few years outside of an airport pickup has been in motion when they got assigned to me, and usually already on another ride. Even many of my airport rides were being picked up by someone who was dropping off someone else at the airport right before.
You also don't know for-sure what route they're taking. Almost every driver I've had was using Waze or some other mapping app that usually took a different reasonable route than whatever Lyft was showing when I booked it.
Surely you don't think a modern and complex app requires just a single API endpoint that triggers once a minute? And that it's that simple a thing for the driver/ passenger?
I wonder why all backends are now web based even if the frontend apps are not web based?
If someone does a mobile or desktop chat app (think Whatsapp or teams) he will use web technologies on the backend. But IRC is very old and still works like a charm without using web technologies.
Likewise, if email was invented today, it would be just calling some REST api instead of using SMTP.
When I worked as a game developer, the server side of our games was a slow and ineficient PHP crap becouse the founders were friends with a PHP programmer. I had to jump through many hoops to mask huge latencies from web server or even the web server not replying at all.
I think using web for anything can add a massive overhead.
I can see the advantage of the web, though. You don't need to implement a server, you just think in terms of HTTP requests and the framework will transform those for you in data and transform the data back into replies.
But if you need something real-time you have to use web sockets, and at that time the simplicity goes away and you can use OS sockets just as good.
I am arguing that using web frameworks for an app which won't have a web fronted adds almost the same kind of overhead as using Javascript for mobile and desktop apps. It's doable, yes. It's the best usage of resources, no.
Normally I should be the last one to complain since I architect and develop web apps for living.
But I do like efficiency, I think that sometimes many layers of virtulization, abstraction, indirection, protocol encapsulation are hurting both the performance and the speed of the development.
And I also know how to develop a server side app without using an HTTP server and a web framework.
I wonder if the root of the problem is that apart from the the people doing mobile apps, the rest are mainly learning a frontend or backend framework and they can't do or are not willing to do anything besides that. Or, even worse, new developers are just learning dynamic laguages such as Javascript or Python or PHP which catters mostly to the Web.
If you only have a hammer, everything looks like a nail.
When I had to design a tool to masquerade the real people data in our microservice based app, everyone from my team was amazed I wrote a console app instead of a Web based application. But since there it wasn't a need for that tool to be called through an API, why should I have made it a web app? Just to use curl instead of command line arguments?
It's a horrible business - why would I even want to enter it? And if I was insane and did, why would anyone use my Uber app?
Uber is a monopoly that already has all the drivers and spent $10B+ to aquire them - plus all the riders - they're already trained to open that app - already have it downloaded. No one can compete with that without spending $1B+ - at which point - you'd need a 50% margin for years just to return the value. Maybe I'm uncreative, but I cannot think of a worse business to enter.
It's equally amusing to me that you seem to assume Uber is efficient just because it's a public company.
A smaller and leaner model could work at small scale by focusing on via drivers focusing on their returns with word of mouth marketing.
If you use Uber a bunch, then it is a great way for good drivers to get repeat business privately. A simple platform which is driver-friendly which focused on the whale customers (like myself when I was spending $500/mo+ for commuting) could squeeze the Uber even more. When I started working with a few drivers via text, I was able to save money whilst the driver made more money
Comments like this, boring and dismissive and with absolutely no effort put into them (often responding to one that does have a lot of effort in it), are not big HN energy and don't belong here. Zero value.
Okay, OVH is not realistic, but at Uber scale, you can certainly roll your own data-centres and get costs lower than, or similar to OVH, even when including the cost of sysadmin and maintenance.
Yes, it means you won't get all the shiny quality of life services offered by cloud providers, but you're in a _margin sensitive business_. Deal with it. Optimize every cost.
Also, you don't need expensive engineers re-inventing the most basic things (I know Uber had a huge not-invented-here syndrome). Use the boring tools for the job. Only reinvent what is necessary. You don't need engineers practicing resume-driven-development.
Marketing. At first people needed to know about Uber. Then they needed to trust Uber. But now they need to carry on using Uber instead of the competitors.
I think if the tech investment bubble bursts (if it is a bubble) then this makes it easier for Uber in terms of competition as ride prices will tend towards the original "Taxi" prices and people will have to get used to that. And then Uber can make their profit (and also the drivers can make a reasonable living).
In my country Uber is more expensive than taxis. Sometimes much more expensive during rush hours or busy days or holidays. A lady I know payd 10x the price for a taxi ride because it was new Years Eve.
Are these numbers made up? Everyone is pointing out the indirect costs but I suspect that’s only a piece of it.
A big chunk of that $15 goes to driver incentive promotions. Not the steady state cost, but the sign bonuses and what not. Given high driver churn, this is always a big line item.
Google first result says just 3% of drivers drive for them for more than a year.
driver cost is a lot more than $3.75. you think really drivers are working for 75% of a $10 ride per active hour? they're publicly measured to make 4x that
Please don't cross into personal attack in comments. Making substantive points without swipes is essential to the kind of forum we're hoping to have here.
Uber doesn’t make money. The bigger their enterprise is the less money they make. They should be firing anyone who says they need more complicated systems to scale when the idea could run on a PC under their desk.
Do you have an MBA or other similar business experience? Because you can’t “fuck marketing.” Without marketing you have no business. How are people going to find out about your product?
How did people find out about Google, YouTube, Facebook, Whatsapp, Waze, Instagram, when they have started?
I think it was because they provided an unique service and word of mouth was enough.
I remember when Gmail was in beta. There was no marketing. I was fortunate to receive an invite and once I get 5 invites, friends were begging me to send them one.
Exactly! As a SWE pursuing MBA, I was surprised to learn how critical marketing is to the existence of a business, and that it's way more logical, quantitative and data driven than people realize.
You can write a hugely popular app with great UX, and super scalable backend but if you don't align your marketing parameters you won't make ends meet.
>Exactly! As a SWE pursuing MBA, I was surprised to learn how critical marketing is to the existence of a business
And you are wondering that people who are in business to teach you something tell you how vital is what they are teaching you? All salesmen sell things that are vital for your success, health, well being if you trust what they are telling.
There's a talk a couple years old now by an Uber engineer called something like "what I wish I knew before scaling to 10k microservices", I haven't watched it in a while but when I saw it I remember thinking "these people are absolutely insane". I've since heard some crazy stories about things like new services being built because people would rather build a new service than talk to the devs that owned the existing one. I don't know if this is true or not or how widespread this was, but the impression I get is that Uber has massively over-built in an effort to look more like a "tech" company rather than a "taxi" company to investors.
We have a couple of local companies in NY with their own ride-sharing apps. They aren't as polished as Uber, but they do work and the companies that built them have about 1% the staff of Uber.
If Uber is covering 200x the market globally as a local NY company that has 1% the staff, it seems like Uber is more efficient on a sales/employee basis.
I doubt NY is 1% of the phone-hailed taxi market globally.
The point of the tech industry's relatively high valuation is that headcount isn't supposed to linearly scale with sales! If you need to add one employee for every 100 customers, then you're not Microsoft, you're McDonalds.
If Uber has to staff up a hundred person office in every country they operate in, this is bad, and guarantees they won't ever be profitable!
Well sure...but the thing about software that's different from say taxis or commercial real estate is that once you build a product the marginal cost to scale it up is close to zero. This is what drives the valuation multipliers of growing tech companies. If your software requires 10x the engineers to support 10x the usage I'd say such valuations are not justified.
Particularly something like Uber where there's a natural sharding that can happen at about the scale a regular taxi business would service anyway. There's some overhead in when payment methods start changing, and complying with local laws in a new metro, but it's pretty damn close pure geo sharding.
"About 24 percent of Uber’s bookings—all the money that customers pay through the app and in cash, including driver earnings—occur in just five cities: New York, Los Angeles, San Francisco, London, and São Paulo." 2019
I recently got a ridiculous coupon code for 50% off Postmates (Uber Eats) orders, when I did a Google search for Postmates. 5 orders, up to $100 savings on each order, and the code worked on my wife's account too so we get 10 orders. For weeks I've been ordering $200 meals from fancy steakhouses and paying $100, with leftovers for days. Somehow they haven't stopped subsidizing their customers yet.
The code is FEAST if anyone cares to try it. Probably expired by now. It doesn't seem to work on Uber Eats, only Postmates.com on desktop web.
The FEAST code has a few things to note, as the actual discount doesn't come out to 50% off. Which is fine, just have the right expectations before using it.
- It's for delivery only
- Discount applies only to the food
- The service, delivery, "temporary local fee", and "temporary fuel surcharge" stay the same
To test this, I put together a $67 order of Thai food, which had $17.88 of fees added onto it, coming out to $84.88. With the coupon, it's $51.38. If I was to order it directly from the restaurant (so I'm only paying tax), it's $74.79.
So it's not horrible, $84.88 (no coupon) to $51.38 (with coupon) is a 39% discount. And 31% off compared to ordering directly from the restaurant.
This is all true. But if you max out the discount (which is easy if you have a large family and/or want lots of leftovers and/or like fancy restaurants) then it's still a screaming deal and way cheaper even than eating in at the restaurant. I can't believe the code is still going...
And you can wait for it to show up. Around here a Doordash or Uber Eats delivery is at least an hour, maybe 90 minutes. So you need to plan ahead a bit.
If they stop subsidizing, then revenue growth may slow, stop, or turn negative. If the latter happened to Uber/Lyft for even a quarter, they may struggle to continue operations. After all, what's worse than a business losing billions of dollars? A shrinking business losing billions of dollars.
For comparison, I ordered 10kg (22lb) of premium beef, different cuts, organic-ish (not certified) from a farm for about AU$200 (US $140-ish) a few years back.
I always figured by now there would be some sort of centralized "trust" entity, ala credit bureaus, where you can build apps on top of that using the same "trust".
Supposing such a thing existed, then drivers could simply offer their own driving services by themselves. Perhaps that's the next evolution here.
I used to drive a pretty boring, but predictable route in the morning and in the late afternoon. I would've loved to drive people who are near my destination both ways, but without anyway to trust them, no way.
Surely someone has tried to implement this before and failed and I just don't know?
That was really common at Microsoft in the late 90s (and may still be) to be able to use the HOV lanes when driving from Redmond to Seattle. It worked well because you were picking up colleagues, which sort of established a certain level of trust.
I don't know how it is now, because I've left since then. But in pre-covid times, Microsoft was pushing/advertising this carpool app they partnered with called Scoop. Similar idea, except it can include workers from other companies as well, and it isn't for making money for the driver, but just to cover the cost of gas + to be able to use the HOV lane.
As a passenger, you schedule your approximate time to go to work (or from work, or both, depending on how you want to use it), and the app matches you with a driver for the next morning who is going to about the same area, but maybe a different building. So they pick you up, drop you off, and go along their merry way, and you are only out of about $5-7 or so (that was the rate for going from Seattle downtown to Redmond, which is about a factor of 6-8 cheaper than an uber/lyft was at the time).
I used it as both a driver (a few times) and as a passenger (many times). Feels like a pretty great idea that worked well. If I was driving, I didn't mind a 5 minute reroute to pick up or drop off someone nearby, and those $7 + (more importantly) HOV lane access were totally worth it. I estimated that the HOV lane access alone saved me significantly more time than I lost by going out of my way to pick up/drop off the passenger. And the fact that those people are guaranteed to not be randos, but either other MSFT employees or employees of other nearby companies made it much more trustworthy for me (the app required work email to sign up).
Obviously, this wasn't meant to be an uber/lyft alternative, as it is only useful for going to/from work and only during specific days/hours. And you gotta schedule/get matched with a driver the night before, you cannot just wake up and spontaneously get a ride. Which makes sense given the context, because people typically want to have their commute to work planned the night before.
My understanding is that it's also still very common in DC's beltway, for similar reasons (lots of civil servants going to similar areas, living nearby each other).
huh. I've never heard of this. thanks for the link. though, what I'm describing ideally could be beyond driving. the same sort of "trust" would also be helpful for selecting someone to take care of your children, clean your house, etc.
I swear this country is going to try to implement all of the worst aspects of China's authoritatiran system and claim it's all 'ok' because it's capitalist and to serve business instead of the govt.
Implementing a Chinese style societal "social credit" system is not a good thing. Even if it would make it a bit cheaper to undercut Uber. Making every action and interation you have in life tracked and rated is not a net plus. The constant visibility and permanance of everything is part of why middle school and high schoolers are having such trouble now. They can't develop as teenagers as they are already part way to living in '1984' with every action tracked via social media.
> The Chinese Communist Party has been constructing a moral ranking system for years that will monitor the behavior of its enormous population — and rank them all based on their "social credit."
> But at the moment the system is piecemeal and voluntary, though the plan is for it to eventually be mandatory and unified across the nation, with each person given their own unique code used to measure their social
credit score in real-time, per Wired.
> The exact methodology is a secret — but examples of infractions include bad driving, smoking in non-smoking zones, buying too many video games, and posting fake news online, specifically about terrorist attacks or airport security.
> Authorities banned people from purchasing flights 17.5 million times by the end of 2018, according to the National Public Credit Information Centre, as the Guardian reported.
> And in July of 2018, a Chinese university denied an incoming student his spot because the student's father had a bad social credit score for failing to repay a loan.
*Please* fellow tech people. Whether you work in ML, DS, or software for a random business or open source project please think through the societal impact and long-run end state of what you propose and produce. We really have to move past the days of "I'm just an engineer I'll only focus on the tech and ignore the impact of my work on society". Implementing China's societal wide social credit system is a bad path. And of course the argument will be, "well anyone who doesn't want to use it doesn't have to". And then that will turn into, "well most companies offer discounts if you use it." Then to "well most companies offer higher rates if you don't use it". Then "most companies won't serve you if you don't use it". Then it's universal in society just as if govt mandated, but people will consider it less horrific because it was slipery slope implemented vs via a mandate.
Through a credit system that is centralized, just like China's credit system. Except it's not even run by elected officials so there's no representation.
it's a terrible idea and Boiled Cabbage makes a very good point
The issue is that, while there's certainly reason to be worried about something like China's system, there's always going to some amount of ad-hoc or official systems of trust. Criminal background checks, sex offender registries, credit reports, professional licensing, your eBay buyer/seller rating, your religion, and whether or not someone looking at you just thinks you look creepy.
It's certainly reasonable to think a system as massive and in-depth as what China is working on is too far, but the alternative in the far extreme is just looking at someone and going "do I trust this person", which isn't a great solution either, and is prone to the "you don't look like you're from around here" sorts of defaults.
As with most things, the question isn't "should this exist at all". There will always be some sort of explicit or implicit system of trust. The question is where do you draw the lines between something like China's system and randomly picking someone and hoping they don't have a history of serious crimes/don't even know how to do whatever you need them to do. There's plenty of existing systems I think go too far, but I also would want to know that the person picking me up for a car trip had a driver's license.
So you're against the idea of Uber, eBay, Care, Lyft, etc? Since what I'm describing already exists. Not to mention the credit bureaus. You'd prefer arbitrariness? If anything a single place for the trust would be better as it would be more thoroughly examined.
Dating apps retain liability and ban people. Not to mention using a dating app does not inherently imply a physical meetup like using an Uber. Not to mention with dating apps you can get them yourself.
There was Waze carpool, which I used as a passenger. It was not meant to be profitable as a source of income for drivers, but helped cover the cost of gas and such. I don’t remember the exact sign up requirements but both the driver and rider had a decision in who to pick up, when and where. Not sure if it’s still in existence but it sounds like it would be worth a look for you.
At one point, I think people did this crossing the Bay Bridge in SF. It didn't need a VC-funded startup with a bunch of expensive engineers though. I think people just parked in a known location and people pooled.
I remember there being signs on Spear St at Folsom with specific destinations for carpools. I can see them on Google Street View in 2021, but they appear to be removed in 2022. (or maybe they're designated on the paper you can't read on street view right now?)
A chicken and egg problem of data acquisition. If I'm a user, why would I share data to such a service without concrete services to unlock? If I'm a service provider, why would I pay for a service without users?
Really such data is obtained only by service providers, credit bureaus being an edge case. And if I've built a service that acquires such data, why would I sell it rather than build more services to sell?
Hey, BlaBlaCar Daily engineer here. This still is an attempt we are running in France, now with thousands of trips happening every day. When did you use it? Perhaps if you give it another try you may find someone this time. :)
I also would love to hear your feedback. What do you think we should do to improve the experience of drivers and passengers, and to get more people to share their commute?
Yeah, that's the biggest challenge, kickstarting specific regions. Oftentimes at first there are drivers but no passengers or vice-versa.
What you can do is set your commute and leave the app installed in the background. Others can send requests to you once they join or the app can eventually remind you that there are others along your route.
I used to do that with QuickRide in Bangalore. Very popular and fairly simple to use. As a rider, you can put up your origin and destination points. You are shown people with cars who have a high overlap with your origin-destination route and you can send them requests to join.
Usually 1/4th the price of a cab and the app has information about where each rider/car owner works (mostly MNCs), that works as a trust factor.
I guess, but would I rather just click on an app when I need a ride or call some guy (who may or may not pick up) to see if he's available (may or may not be) at a given time (I guess I call a few hours ahead).
And if he's not available, I guess I just open the app and request a ride? Easier to just do that from the start?
I garuntee you the reliability of the Uber network of drivers is higher than a single person who may be asleep when you need them.
I've lived in NYC and I've lived in < 2k person remote towns where business card drivers are more common than a Lyft. Trying to deal with the individuals in the small towns is always a nightmare
Sure, but they solve different needs. If I'm in a random location and need a car now? Easier to use Uber/Lyft. If I know I'm going to need to be picked up after a concert when surge pricing is going to be brutal? Much easier to call a driver friend ahead of time and offer them cash to be ready to pick me up at a set location.
Here's my question: how much will this hurt AWS? Oh, Uber and Lyft alone won't, of course, even though IIRC their IPO's revealed staggering AWS bills. But, there are a lot of goofy ideas out there masquerading as companies, and the VC spigot just turned off. That spigot was pushing VC money, via a very complex system of middlemen, to AWS.
If AWS has half their customers disappear, what does that do to Amazon's bottom line?
A lot of those goofy idea companies convinced everyone else that they should spend nearly unlimited amounts on AWS because of opex or other reason, and now everyone believes they need to migrate to cloud as well. Maybe they do, what do I know? I don’t feel a need to contribute to that huge margin that AWS makes, but based on their growth and the interest from lots of legacy businesses in moving to the cloud, I wouldn’t be too worried about them.
if 0.01% users are 1% of their revenue, that's a huge concerning consolidation. AWS IS indeed in this situation when the full discretionary spending sector struggles.
AWS might be super high margins, but it does not exist in a vacuum. AWS cross subsidization powers AMZN retail to be able to run at a <1% margin.
Any business on Amazon that uses AWS has to “pay” for AWS services as part of its cost of doing business. It’s counted as AWS revenue and an Amazon retail cost.
> For example, internal AWS accounts are known as Isengard accounts, after the fortress in “The Lord of the Rings” eventually controlled by the corrupted wizard Saruman. When internal game development teams use Isengard accounts, they must pay (via internal accounting) the same rates for AWS compute cycles that outside retail customers pay, according to people close to the teams.
You will often here Disney talk about “transfer costs” to Disney Studios from Disney+ when talking about Disney+‘s content costs. This is similar.
Could you elaborate? I don't seem to grasp your point.
>AWS cross subsidization powers AMZN retail to be able to run at a <1% margin.
I've never truly understood that number, how come they have such low margins where most of the products I see there have a 10-20% markup (at least) vs. the same product in classic "offline" retailers (costco, walmart, etc...)?
"But they send it to your home", yeah but they charge you for that too.
Because in my area Amazon (including amortized cost of prime) is always cheaper and this includes wholesale clubs like Costco and GFS. Like if you need something right now the usual story is to go to a physical store and have them price match Amazon for a 10-30% discount.
If I could save money by not shopping on Amazon it would be a no-brainer but it isn’t. Like I’m paying less for the conscience of having it shipped to me.
The revenue generated from "lift and shift" enterprise migrations to AWS, where large companies pay accenture to move them to AWS in the least efficient way possible probably dwarfs startup revenues.
Not much. Uber largely runs its own data centers with some multi cloud. Travis Kalanick
was paranoid that Uber would end up competing with Amazon or Google eventually and did not want to be beholden to them for tech infrastructure.
I believe Lyft is entirely on AWS but they are much smaller overall because they’re only in a limited number of markets.
AWS revenue is mostly per usage, not per customer. A handful of ML plays excepted, all those startups were tiny things with very little actual resources required. Most of Amazons money surely comes from giant customers like Netflix and Facebook (hell, even Uber and Lyft are probably lost in the noise, they don't stream anything).
The P2P transportation market is an ideal one for a workers' cooperative. The fact that Uber and Lyft are running at a loss (...for now) does not make them any less rent-seeking in their business model.
From the jobs page of the first link for a software engineer position: "The position is salaried up to $72,000 a year depending on geography. Fixed-term contracts are available."
Sorry, but you're not buying competitive talent with 72k/year salary. Uber can squeeze out tons of marginal efficiencies via better routing/matching, price discrimination, and surge algorithms. Implementing those algorithms means hiring good talent, especially in ML. Having a fancy frontend is only 10% of the picture if you want drivers to have good utilization.
> which will never scale past the size of a single US state
People live in a city and take cabs in that city. Build a city-scale app. For extra credit, add federation APIs to interoperate with other city-scale worker-owned co-op apps.
Only a tiny 0.1% of people (including Uber's dumb investors) think that being able to use the same app in every city on earth is a killer feature.
It kinda is a big feature though. I'd imagine people who need a rideshare service are over-represented in people who travel a lot for either business or pleasure, and likely do so to multiple random cities.
I remember traveling to a city in Canada 4-5 years ago when they didn't have Uber or Lyft, and there was a local app that was vexing to try to use if you didn't already live there, and assumed you had a local address. There were a lot of places I just didn't end up going to because I couldn't work out the app, and couldn't find a normal taxi on the street that didn't require cash that I didn't have.
For a lot of people, the times you're calling a cab are a stressful experience already - you're in a new place, maybe with a new language, often under time pressure to get somewhere. There's definite advantage to using a familiar app in that use case.
You don't even need multiple apps. Even if a Postgres DB only scaled to a single city, which is wrong to begin with, you could shard it per city/state/country pretty easily.
I think most of those efficiencies can be done better by a human dispatcher. The key thing which made Uber take off was a combination of convenience and better cars. Solve the convenience and that can take you a far way for many people.
I don't really think humans are better equipped to route 10-15 cars in a region factoring in drivers' preferences for direction, pickup and dropoff zone attractiveness to drivers, and traffic. See this research on human solutions to the vehicle routing problem: "When comparing the human performance with the optimal solution and classical heuristics (nearest neighbor, savings, and sweep), we see that participants typically perform better than the worst heuristic and worse than the best heuristic" [1]. All of these algorithms are pretty naive baselines and you can do a lot better with actual routing software. And this being a low margin winner take all business, Uber being slightly better with algorithms makes it substantially better as an option compared to the coop.
Also I think you're underestimating the difficulty of consistent hiring. You can definitely find a good dispatcher in NYC, but can you scale that level of skill to the entire US?
I am sorry, but there is not way a workers' cooperative can build a safe product for passenger and drivers. All of the leading rideshare companies have invested 10s if not 100s of millions into safety platforms that leverage the latest face recognition, fraud algorithms, and more to ensure that everyone can have a safe ride.
Both passengers and drivers robbed and murdered each before these investments were made to keep the bad guys off and the good guys safe.
...you know why they need to do that? Because they have an incentive to let basically anyone join and have an adversarial relationship. A workers cooperative can be a faceless organisation, but unlike a company it is also an actual community, so things like vetting who let in I'd much more feasible to do you'd do in a community than in a "startup family" trying to squeeze their drivers. It could be as simple as requiring somebody to vouch for you and being responsible for whatever fuckups you do.
How are cooperatives not incentivized to "let basically anyone join"?
The more drivers a co-op has means shorter wait times and higher geographic coverage for the passengers. If passengers have to wait too long, they will lose faith in the reliability of the co-op and be forced to use other forms of transit.
The more passengers a co-op has means drivers have to idle less or shorter (unpaid) distances to travel to pickup a passenger.
It is always better for the co-op to have more active drivers and more active passengers. The growth comes in the form of "let basically anyone join".
I never said a co-op would not care about safety. I am saying that they lack the resources to implement low-cost safety solutions.
None of the co-ops listed have industry standard safety systems for telematics (unplanned stops, detour detection, or unsafe driving), face recognition, or audio recording.
Feel free to address the original point of how co-ops have the same incentives as Big Tech for letting anyone on the platform.
This seems very optimistic about the likelihood of a "community" to vet itself properly vs. covering things up "for the good of the community". Obviously it can work out, but there's bountiful examples of communities ranging from schools to churches to workers unions that have a pretty well established history of systematic abuse and coverups.
The thing is, as a co-op in a small and competitive market, it's not like you have much leeway for reputational damage. Unlike Uber, you can't really survive a scandal by filling in with profits from other cities or drivers.
And what you said is true, but it's also a vapid statement without looking at percentages and incentives. Individual bad examples exist everywhere, but a workers coop of drivers in a City has social incentives (if a driver from your coop robs someone who goes to the same church as you, you'll hear from it) and constraints (if your cooperative gets boycotted in your town, what will you do, move everyone next postcode?) which uber lacks (if there's a boycott in one town, bad for the drivers, but you just put out a press blurb, do a promotion and donate to a charity and wait until things die down)
We'll, in my native country, Taxis are actually working fine, they are regulated but with no cap on the licenses - uber eventually needed to apply for those as well. And we also have public transport and walkable cities. So it's not like gig-economy driving is the only possible way to have a working system
It'd be interesting to see actual statistics on rideshare crimes before and after the introduction of these intended mitigations. Anecdotally, the number of gruesome news stories seems to have remained roughly constant.
Taxi cabs pre-Uber were awful, at least in the 3 cities I used them most (NYC, Boston, Vegas). Dirty cars and often unmaintained. Regularly taken in circuitous routes to raise the meter charge. “Broken” credit card machine. Very difficult to find a taxi if you weren’t in popular areas. Calling a dispatcher for a taxi only to wait an hour and have them not show up.
Having apps solved all of the above problems. I would give 0% chance of any similar improvements under the monopolistic medallion system that exists in the old regime. Uber forced innovation that was so much better the politicians folded despite intense lobbying from the old hands.
In Eastern Europe there is no Uber nor Lyft. Waiting time is 2-10 minutes on average in a fairly large city. Cars are definitely not dirty nor unmaintained, they have the reputation of having cars that are almost new, and so forth. Prices have increased of course.
> Very difficult to find a taxi if you weren’t in popular areas. Calling a dispatcher for a taxi only to wait an hour and have them not show up.
Funny timing. I just attended a wedding where the hotel was in Annapolis, Maryland, and the venue was about 5 miles outside Annapolis. The couple had recommended using Lyft due to limited parking, and had even given everyone a voucher to offset the cost. Getting from hotel -> venue at 4pm was no problem at all.
We started trying to get a return ride at a few minutes before 10pm. First the app took about 4 minutes to match us to a driver, then rapidly cycled through a handful of drivers before ensuring us that our driver was 11 minutes away. For the next 20 minutes, that driver seemed to patrol up and down a street near downtown, with his ETA bouncing between 10-12 minutes. My guess is he accidentally accepted my "bad" (outside of downtown) ride and was hoping I'd cancel? I didn't, and he finally did.
The app spins for a few minutes and then tells us someone is 15 minutes away. This person calls me and asks where I'm going, specifically am I going to DC. I answer that I'm not, I'm headed to downtown Annapolis, and he says he'll be right there. He made 3-4 minutes of progress toward us, then the app abruptly cycled through two more drivers. After another few minutes, I guess another driver cancelled on us, leaving the app to spin for several minutes unsuccessfully.
At this point I cancelled the ride and was about to call a traditional cab. It was 10:45, the wedding had ended at 10:30, and it was starting to rain. Luckily, another couple at the wedding had correctly predicted that we wouldn't be able to get a ride back downtown. They had gotten a three-row SUV ("Lyft XL" or something) to get to the wedding, then gotten contact details from the driver so they could privately hail him after the wedding. Assuming we weren't too particular about obeying seatbelt laws, they had plenty of space for us.
I'm not sure why people think the ride-"sharing" services have solved so many problems. I hope to never have to do business with these apps again.
Which was cheaper? In my experience, in addition to being much worse in many ways (love to be called and told my cab driver is ready to pick me up when I am already boarded and sitting in a plane, after the dispatcher repeatedly told me they were 10 minutes away for an hour, and then I managed to just street hail a cab at 5 am) cabs were also about 50% more expensive.
However, my local cab company got an app, it’s a piece of shit, but it shows where the cab is in a map as it comes to you, which really was the killer feature for Uber/Lyft for me. So good riddance Uber, you served a purpose for a time, but normal cabs stepped up their game just a little bit, and I have basically negative loyalty to you.
In NYC the call taxi companies were cheaper than uber/lyft even in the prime discount days of those apps. Of course the user experience was much worse.
In NYC my user experience with Lyft has been much worse than taxis.
Cost more, longer waits, cherry on top of a Lyft driver waiting five minutes on the other side of a long block away from pickup, and canceling the ride because I allegedly refused to show up. That I had to talk to CS to reverse the charge with.
I took taxis for the rest of my time in NYC, and I can't see any reason not to keep doing so.
>>people don't actually want to pay the premium for that better level of service
> See air travel in general.
At least in Europe, currently having a provider get you from A to B as per your booking is the key, "premium" / "better level of service" is completely irrelevant.
I'm back to booking everything as cheap as possible. If it's all going to go wrong, I want to have paid peanuts for it so I can just walk away and not bother having to try and claim anything back.
Paying more for a better seat makes sense, paying more for a better airline really doesn’t unless you’re rich af or a business traveler and want double xl super platinum diamond plus premium status.
Intra-Europe you're going to have to look long and hard to spot the difference between the "business class" seat at the front of the aircraft and the cheaper seats further back.
You will (probably) get an inch or two extra legroom, the middle seat next to you will likely be blocked so there's more personal space, and you'll get something to eat and drink.
Whether that's really worth spending a few hundred $$$/€€€/£££ extra is between you and your wallet.
> 5 hours is about the floor so I will pay for more comfort/relaxation
I've got miles with both OneWorld and Star Alliance so can redeem on quite a lot of different airlines. At present, having a seat booked is not much of a guarantee of getting to your destination on time - or indeed at all.
On the one hand you've got legacy carriers struggling to operate their published schedules[0][1][2] and on the other major European hubs are also struggling, AMS halted ticket sales in order to avoid complete meltdown[3][4] due to lack of trained staff, and FRA is also chaotic due to staffing issues and strikes[5][6]
Low cost carriers such as Easyjet are also having to cancel hundreds of flights.[7][8]
To be frank, air travel in Europe is a total mess, it's seems like it's going to take a while for the operators to get a grip.
> Very difficult to find a taxi if you weren’t in popular areas.
Yes, now it's impossible to find a taxi anywhere unless you have a smartphone and an Uber/Lyft account. I miss the days when I didn't have to have a lifelong relationship with my cab.
People are pointing out that Lyft and Uber often brought car service to towns without taxies and that is true (and good I suppose).
But I do not think that's the business we should be sad about disrupting - Lyft and especially Uber have been fighting hard against all sorts of public transit systems across the US because they view them as competitors. It's unclear how effective they have been, but I also have no love for their intention - which is to lock the public into their service.
If you’re big enough to be a Lyft and Uber market, you’re big enough for taxis. Outside of NYC they’re usually just not that visible; normal cars, dispatched via phone.
I am not an Uber fan in terms of their ethics and how they got to where they are. That said I think disrupting taxis was a good thing, for the consumer.
The medallion ponzi scheme is dead. You now know more about your driver, I presume it has made things safer. It has allowed people to do rides as part of the commute they are doing anyway, so probably good for the environment. It has encouraged ride sharing. It may have made some people not buy a car where they would have before, which is probably good.
The rideshare is probably a good example of real value being added. A lot of pure "internet only" marketplaces are just seeking rent on some subset of ecommerce. At least Uber added a map, routing, automatic pricing and stuff.
I don’t see the problem. The cab companies needed to die. Uber and Lyft will raise their prices to become affordable - back to the price of cabs - and still be a lot better than what they replaced.
We’re killing hundreds (thousands?) of individual cab companies so that we can consolidate the entirety of the cab industry into 2 tech conglomerates. I don’t see how that’s a win.
I would take hundreds regional monopolies over one global monopoly any day. At least if you're banned from the taxi service in Boston you can still catch a cab in New York.
I've been noticing more drivers going independent. When I landed at LAX recently and waited at the taxi area for a Lyft, there were a bunch of drivers coming up and offering people rides, but not through Uber or Lyft. I thought "why not", took one of these independent rides home, and paid the guy through Square. It wasn't a "cheap" ride, but it was cheaper than the Lyft ride I cancelled and I'm sure he made a greater profit than through a "ride share" company.
That's just one example, but I've noticed this drastically increase in the last year. Whether I'm at the airport, a train station, or a bus depot, I've been seeing way more independent drivers.
What's stopping more drivers from doing this? If it's the "trust" aspect that comes from Uber, then surely there's some system that can meet us halfway that doesn't apparently need large sums of VC money and high fees but at least provides trust and safety for riders.
It's different when you're a large company with a legal team doing something not clearly illegal - than when you're a single individual doing something clearly illegal.
You didn't have to have a taxi medallion to be a black car driver and pick people up at locations upon request - which, originally, is what Uber was, exactly.
The whole point of a taxi medallion is to be able to pick people up off the street - which is what these independent drivers at the airport and train stops are doing.
> It's different when you're a large company with a legal team doing something not clearly illegal - than when you're a single individual doing something clearly illegal.
If this is sarcasm it’s too subtle for me to recognize.
I mean, even beyond the OP's point, it's the difference between something going wrong and being able to pursue a company with assets for recompense / damages versus some random guy on the street.
The medallion system was to limit the cars that wandered around the roads cluttering them up while looking for riders, as taxis do. Uber/Lyft/etc are prearranged rides that go directly between points. That's where the grey area is: black car services aren't taxis, they also work with prearranged trips between points instead of roaming the streets, but Uber/Lyft/etc can do that so quickly by app that it feels more taxi-like than black-car-like.
i did that a few times at DFW. times were not reliable. sometimes you'd get a ride right away; others, you're waiting a while for no reason. also depended on how well the driver knew how to use square...which you definitely couldn't rely on. also, didn't feel like i'd have much recourse if they did something crazy.
I think we're about to see a lot of tech ideas with questionable economics come back to earth. When the cost of capital was below a single digit, "parking" money in a growth bet could vaguely make sense. After all, someday Uber would figure it out, or get AVs, or .. something? Better than leaving the money in a .01% money market for 10 years, or parking the money in something with no path for growth like industrials.
This problem isn't restricted to startups however, even big tech has big expensive forays into questionable markets. Meta is building something for a few billion a year, Google has hundreds of strange an unprofitable businesses, and B2B SaaS is full of startups which may actually just be consultancies.
A 10-12% cost of capital means that you either need to have a real plan to turn profit in 3 years or investors won't care. Just breaking even means an opportunity cost of 30%.
Comparing Meta and Google, to Lyft and Uber isn't an apples to apples comparison. The former have cash cow businesses and have captial that they can deploy to find the next $100 billion dollar business. Its essential for their long term survival to keep diversifying and reinventing themselves.
I think that's the point. That even these well funded, relatively sovereign companies will be punished for their moonshots and that means the future will be devastating for these magical unicorns.
One wonders what government policies preventing this from happening are doing to the future. I don't have any way to objectively measure this, but my general sense is each day interest rates remain artificially low, the downside becomes greater. I'd be curious if you know a way to quantify this effect.
Interest rates are not being kept "artificially low": central banks have already raised rates, and have signalled that they intend to continue raising rates.
There is a separate book you can read that attempts to go back 2000 years. Interest rates have never been this low in recorded human history, and there's an obvious reason why. The point of interest rates is to compensate the lender for deferring consumption. In a world without government manipulation, it makes no logical sense for a lender to be willing to lend money and receive zero or even negative interest.
The US government is artificially keeping interest rates low because recessions have become politically untenable, and the wealthy have totally captured the mechanisms of government. The end result is monetary policy which inflates assets for the wealthy while impoverishing the poor and middle classes. Other countries have been forced to adopt the same policies to avoid their currencies appreciating.
Worse yet, government is implicitly and explicitly backstopping and even socializing industries owned by the wealthy through fiscal policy. This is where you get "green energy credits" and "privatizing space," both of which have served only to enrich a couple billionaires. It's the western version of Russian oligarchs.
Exactly right! An unintended side effect of the artificially low cost of capital was that labor seemed expensive. All the long shot ideas that tried to "improve productivity" - whether by replacing drivers with driverless cars, or robots flipping burgers are entirely uneconomical when cost of capital goes up.
Now, capital has become more expensive and labor is also more expensive. It's a perfect shitstorm for a lot of projects.
Three different flavors of big bet. Meta realizing their core business, while massive, has peaked, loudly reorienting their business around a dubious moonshot bet.
Google burning cash in a moonshot division, dubiously betting that creating startups within Google is easier than outside of it.
Uber/Lyft subsidizing customers for a long while to take over the market, which... pretty much worked? Of the three "big bets" this seems most promising. Even if the market decreases, it's not going away, nor is it going back to regional taxi companies.
Its worth considering that 3 is actually quite common within large companies as well. I can think of a few industries dominated by big tech that have never turned a profit or even positive free cash flow.
The thing that actually puzzles me is that in the post-Kalanick era, Uber didn't more aggressively pivot to essentially being a taxi company where drivers supply their own vehicles. You've got a working app--how many people do you need to maintain/enhance it? Self-driving isn't happening in an economically interesting time horizon--certainly not reliable door-to-door in cities. So raise prices, cut costs, and have what's a fairly attractive taxi business for many places.
Of course, that may not have been what investors wanted to hear.
Seems unsurprising. The check had to come due eventually. It’ll be interesting to see whether riders keep using it in enough volume to keep them afloat.
Aside from them spending money on boondoggle after boondoggle, these guys both still have no moat. They had to burn a ton of cash buying up competitors and there's absolutely nothing stopping a third player from entering and eating their lunches. The core premise of hailing taxis via GPS is very simple and very appealing. The could have run these as lean, low-margin businesses and earned a tidy profit forever, but instead they decided to play the valuation game.
It wasn’t about taxis, man, it was changing everything.
Listen to the old Ben Thompson podcasts from when Uber was taking over life itself. Private cars, self driving, blah blah blah. Why go to a restaurant when Uber can fly one to you?
It'll be interesting to see in a number of cities where traditional medallion licensed yellow taxis almost entirely disappeared, and the drivers went to go be Uber or Lyft for a period of some years, how much of it reverts back to the traditional system of taxis. I can foresee something like a lot of heavily used 300,000 mile Honda Accords with all city miles on them getting sold cheap. Buyer beware.
The medallion system was completely broken before the ride apps appeared. Traditional car services were reliable and easy to reach via phone. A lot of them have still survived.
It's more expensive but I always use a traditional car service to get to the airport. Super-reliable, comfortable, clean, good drivers. They're always pre-scheduled (which is fine for the airport) but I've never had problems with getting them to make changes when flight stuff happens.
Why would it be any different from auto/auto part supply chains in general? (Which, yes, from personal experience are a considerable issue at the moment.)
There are plenty of other vehicles. Yes, the limo companies liked the unibody limos but there's no shortage of different models they can use. I'm certainly not especially picky in general.
In Vancouver BC where petrol costs have always been considerably higher than the other side of the border in WA, taxis switched almost entirely to Prius as far back as 2004. Even before that it was very common to see CNG modified taxis.
If you’re arriving at an airport or other high traffic area, you will almost always get a better price and timelier service by simply jumping in a standard taxi. I’d say this has been the case for at least 6-9 months.
The airport taxi hates short hop ride. The taxi drivers got visibly frustrated and angry after hearing my destination is not long distance. I just get a Uber/Lyft to avoid the airport cartel.
That may be true, but I’d much rather ride in an Uber or Lyft with less timely service and a higher price, than in a nasty yellow Crown Victoria from the dawn of time itself, with that ugly, rough, stained interior that smells like cigarettes and vomit. Taxis don’t even offer phone chargers or water.
IMO, Taxis would have long since died as an industry if it weren’t for governments propping them up artificially.
Last time I tried taking an Uber from SFO to SF, the quoted price was $150.
Taxi downstairs was $40 and was waiting for me to get in. Didn’t smell like vomit. But if it did, I’d roll down the window and remember I’m saving $110 for a 20 minute ride.
That’s lovely but what if you live somewhere like KCMO or Columbus that doesn’t have established cab infrastructure and does have a ton of Uber drivers?
That works when you are at the first point in your trip. Now get that taxi to show up in a timely manner at your house or the house of someone you visit.
A taxi for me is a maximum 1-2 years old black typically German car summoned and paid in an app.
If your taxi is a monopoly using old cars, where card readers are “broken” and who don’t have apps - it’s your taxi that is broken, not the concept of taxi. Many US and European cities have bad taxis, but many also have good taxis.
I would ride in a professionally-serviced Crown Victoria over a Prius with bald tires, obviously ruined steering joints, and no windshield wipers, which is a true and faithful description of the last Uber I suffered.
I wonder how much of this transfers to the music industry. It's much more complicated than the taxi industry, but in broad strokes, VC-subsidized companies basically undercut the combination of record publishers and musicians, setting the price and revenue-per-listen to levels much lower than they would have been without subsidization. But it's also been happening for longer, so I think that it's more like as-if all the taxi drivers had already been driven out of the business and the taxis junked. With taxis, you know if there are no rides available, but with music, you don't really realize all the great music that isn't being written.
> but with music, you don't really realize all the great music that isn't being written.
Musicians have long complained that their share of record sales was negligible in the old system, at least until they became large and established acts. The money (such as it is) has always been in touring and merchandise.
I've had over 10,000 Uber rides, all black, some SUV since 2011. I would have no problem if they just focused on the higher end of the market where there's profit to be made. I never thought their going down market was a good idea.
Smart. I’ve adopted the same stance - I aggressively use whatever app/service offers me steep discounts and cashbacks with no intention of ever being a long term customer once the discounts dry up.
Taxicab companies don’t have to pay the Bay Area salaries of engineers, data scientists, MBAs, etc. nor do they have massive advertising and marketing overhead.
It is in the article: "Uber and Lyft have been a crude proposition all along: Subsidize unprofitable taxi rides with venture capital money, claw for market share, and eventually figure something out that will make such taxi rides profitable despite the huge corporate structure of well-paid executives and engineers, a thing traditional taxi companies with already razor-thin margins didn’t have."
I read the article, but that's not the level of explanation I want. I want to know how, for example, at the scale Uber and Lyft are operating at, the salaries of executives and engineers are more than the efficiencies it seems like they would gain. On paper, you shouldn't need to add a linear amount of overhead every time move into a new city: with taxi companies, you have to add physical buildings, admin, dispatchers, service personnel, and a bunch of other costs every time. You'd think Uber and Lyft could be a lot leaner than taxi companies, even though engineers make more than dispatchers: why not?
Less overhead. Maybe an office and a garage in a cheap part of town and a few dispatchers and potentially a mechanic, etc.
Uber has to maintain its servers and has a massive crew of white collar workers in expensive cities writing code, maintaining the servers, designing apps, marketing, lobbying, litigating, modeling potential business models, etc.
So does this mean it's going to begin to become cheaper to use the services of old taxi organizations, who arguably aren't going to have the shareholders to appease to to pad revenues with profits?
I really think, in all cases of online platforms, that laws requiring the platform to be transparent with all costs - including how much they keep as a platform, how much they give the actual driver, how much the restaurant gets (if doing delivery) etc. would be highly beneficial, if not necessary, to not only society but also to potential investors.
E.g. How sustainable are their prices, and are the billions invested simply subsidizing lower fares to outcompete based on price for a temporary time while fighting over to capture as much of a market (artificially and temporarily?) until the shareholders come knocking asking for the profit tap to get turned on?
It's the VC-finance industrial complex, where the incentives aren't aligned with the sources of the money.
Arguably being transparent at the per-transaction level which allow everyone and their mother to then do simple math to understand that such a business model isn't sustainable - but they're not currently paying enough attention, just in a very shallow way - they see Uber or Lyft on the news plenty, maybe use the services themself - until it's too late.
All of this should be educating people giving their money to institutions or stockbrokers to make sure their money and whomever they're giving the power to dictate where it goes is aligned with long-term results, and arguably not at all on per-transaction buy/sell actions.
I think a lot of our problems today stem from there being such an abundance of wealth/riches that enough people could become lazy and relatively inattentive with their money, blindly trusting others without understanding the underlying mechanisms enough - and perhaps blindly believing government institutions like the SEC would protect them - instead perhaps trusting long-time existing brand names as some sort of measure of trust.
Bitcoin et al are the next evolution the VC-finance industrial complex has latched onto quite successfully, so far.
For the most part, unsophisticated investors aren’t buying individual stocks. They are buying mutual funds and most of them are buying index funds. Neither Uber or Lyft are part of the S&P.
Only “qualified investors” are allowed to buy pre-IPO stock and they should know what they are doing. If they lost money, it’s on them.
Even if you did what you suggested, how should a company allocate fixed expenses? Allocate per mile?
Wait a minute! That was just temporary while the service hyperscaled. I read on HN that Elon Musk’s fully self aware self-driving would take over from drivers starting in 2019 and cost like $9,000!
Uber cratered the value of the taxi medallion. The main benefit the medallion gave you was the right to pick people up on the street, unlike other kinds of car services that you had to call for. Since anyone using a taxi could probably afford a cell phone and a credit card, taxis were vulnerable. Does this mean that the cost of entry into the taxi business is lower? Sure. Will it matter? WHo knows.
These industries usually get captured via regulation imposed by lobbyists of the biggest players, to make the barrier of entry more costly to keep out potentially new entrants.
I know a few taxi drivers who are medallion holders - which are now worthless - they of course have been put in a shit position, and the Cities don't particularly care anymore because whatever lobby structure that got the medallions in place to begin with basically no longer exists - they're not necessary to get today's lobbyist funded politicians into play, positions of power.
I don't use Uber. In my country we have a taxi app which can be used by any taxi driver. So I do have the benefits of Uber - using an app, having a larger pool of drivers to pick from, paying the ride through the app, without any of the downsides of using Uber.
The taxi drivers follow local regulations, they have the proper permit to transport people (this requires checking), I don't see ridicoluos price surges and price hikes at rush hours, taxi companies don't evade local taxes like Uber does, the money remain in the local economy, drivers have wages, social insurance, health insurance and pension funds.
My favorite feature of Uber and Lyft the last several years is that it's essentially a crowdsourced way to transfer wealth from VCs to random users.
Operating every drive at a loss means the rider and drivers benefit and the person holding the bag is some VC who apparently has more money than they know what to do with. Given how many financial structures today seem to flow in the opposite direction and skim a little money from everyone to transfer it to the already-rich, it's nice seeing a system that (completely unintentionally) flows the other way.
the drivers don't really benefit that much, because after you subtract the cost of the purchase of a suitable car, repairs/maintenance, tires, fuel and so on to calculate the fully loaded cost per mile of operating a lyft car for several years, the wage remaining for the driver (after subtracting the US income tax as a 1099) is often under the minimum wage (and far under the living wage) in many major metro areas. Using Seattle as an example and its $15/hr minimum wage.
According to various online calculators, the average operating cost for a Prius is about $0.11 per mile. Includes fuel, depreciation, repair, maintenance, etc...
Uber drivers are doing way better than $0.11 per mile.
That number is very obviously incorrect. Fuel prices alone are currently close to $0.11 per mile for a brand new Prius getting the manufacturer's estimated MPG (58/53). Even if you assume fuel prices at half of what they currently are and zero expenses other than the upfront cost of the car and fuel, it would take 500k miles to hit an amortized cost of $0.11 per mile.
I am extremely skeptical of that calculation because a Prius costs $30,000 or more now. Maybe operating cost but not fully loaded cost including something like a 48 to 60 month car loan.
Acquisition cost of the car is only a consideration if you bought a Prius solely to Uber. If you bought it because you want/need to own a vehicle, and you use it to Uber as well, the depreciation is the relevant factor.
the overall lifespan in miles or km of the car until it's used up and has almost no resale value is a consideration, if you put 200,000 km on a car doing city driving as an uber, that's consuming a considerable portion of the original total purchase price of the car. 11 cents a mile comes nowhere close to account for that, as reflected by the fact that the IRS mileage reimbursement rate for use of personal vehicles for business purposes is presently 58.5 cents per mile.
IRS allotment is famously generous. Depreciation in the figure I provided accounts for the resale value dropping with mileage. If you drive 200,000km for Uber, you're making tens of thousands of dollars.
It's a strong labor market. Nothing stopping lyft drivers from getting jobs in food service or warehouses or a variety of other jobs that have few requirements to qualify for.
I think there's a big reliance on the part of these employers in recruiting and retaining employees who are either less literate, less informed, more gullible, or more servile than the average service industry worker.
Is that in fact is a major differentiator between lyft/uber driving and other jobs (I'm dubious), then it sounds like a major and useful advantage of the platform that is reasonably worth paying for, albeit also one that is fragile.
Isn't that how a majority of inflated startups work? VC money moves the bus for a quite a long time and if profitability can't be figured out, it will come out in the form of layoffs and downturns.
Take Doordash for example, every delivery they do with is powered by VC money.
Yeah, but still not turning any profit. And probably still using leftover VC money. With the stock value way down, I wonder if they have issues pumping cash anymore
Drivers work gogs, as in not being employees. Traditional taxi companies, as shitty as their service might be some places, are risking of being driven out of business. Legislation has been ignored. Thebonly ones not holding the bag are the VCs, and users. Everyone else is. And all that in the pursuit of an elusive monopoly fuel by cheap, and later dumb, money. Oh yeah, talking about dumb money, retail investors are holding the bag as well.
But what makes them so awful? Most likely it was the medallion system that limited competition in the market so maybe there is a system somewhere in-between that and the unprofitable ride share systems that work well for everyone. I just got back from Madrid and taxis were plentiful and metered with a flat fare to and from the airport. They all have the same markings so you can tell they are taxis but there are a variety of vehicles from Teslas to bare bones stick shifters being used. Uber was barely a thing there but there was an app called Free Now that many of the cars had on them.
- Lying about the debit/credit machine being broken in order to receive cash.
- Being unwilling to drive to/from certain neighborhoods.
- Not turning the meter on in order to take advantage of people not from the city/country.
- My (possibly incorrect) perception is that they are harder to hold to account. I do not always know the number of the taxi that picked me up and dropped me off.
- Calling a taxi dispatch does not guarantee one will arrive. If service is slow you end up in a strange limbo of "Is that taxi late or have I been abandoned at 2:30am?"
There's probably more but those are the ones that spring to mind based on my personal experiences with taxis. Even if Uber was only offered as a premium service I would still order one over a taxi.
The difference is there is some regulation around it because they are all metered so everyone is charging the same rates and I suspect it’s a better deal for the drivers and customers overall. Btw I didn’t use the app once as it was just easier to hail from the street.
I always see people coming back to public transit in discussions like this, but there seems to be some kind of fundamental disconnect. Uber/Lyft are for people who don’t have that kind of time.
At markets where Uber has competition. I know Brazil and Mexico. DiDi pays driver more and charges client less. So DiDi takes less cut than Uber and is still profitable.
They're still alive (albeit damaged) in NYC, and in most large cities I've visited. The answer is simple: they don't have thousands of expensive software engineers doing god-knows-what as overhead.
In my experience by cutting corners wherever possible but that leaves a bad reputation. Cars that were beat up, sometimes just didn't show up, no GPS or knowledge of streets, cash payments to avoid some taxes, avoiding unprofitable locations or rides, etc. Uber and Lyft aimed for a better brand image but that is at odds with cheap costs.
I've never had a beat up taxi, but NYC might be an outlier in that regard (due to the yellowcab fleet + TLC regulation). The part about avoiding unprofitable locations is certainly true, however.
OTOH, I've taken a decent number of sketchy Lyft and Uber rides: ones where the driver was clearly not the person on the account (possibly a relative?), where the car didn't match, etc. All in medium to large US cities.
The comparison to Uber in NYC isn't yellow cabs but the call taxi companies which were as I described. Yellow taxis were non-existent outside Manhattan and even then couldn't be scheduled conveniently. Even the yellow cabs often refused to pick up people based on appearance/race, refused to drop off outside Manhattan and had conveniently broken credit card readers. That's not even getting into the true "gypsy" cabs (as they were called) which had no TLC licenses.
I recently had a taxi refuse to take me from the Vegas Strip to a friends house on the North side. It’s because they’ll have to drive back to the city center without a ride.
Seems like they need to double their prices. Or have better model for pricing where those who exploit the system to go to unprofitable locations pay more.
-- in my city the remaining cab companies have contracts with hospitals/the city/companies - can always find a cab outside the dialysis clinic - when I asked why a driver told me the dispatch company accepts a chit from the clinic --
zTrip sounds identical to an app I envisioned in 2010 I called "Yo Taxi!" It would take your phone-reported GPS location and send it out to one of the affiliated taxi services (depending on who serves that location, cost, etc.) who would dispatch a cab to that point.
I'm kind of glad "Yo Taxi!" exists in some form now, what with the wheels (figuratively) falling off Uber and Lyft.
Here in India, its increasingly starting to feel that both Ola and Uber are slowly abandoning the market. Service quality has gone down drastically and Ola seems more interested in making (unsafe) electric scooters
In their heyday, you’d drive around and find that 30-40% of cars on the road were Uber/Ola taxis (cabs here have different colored number plates). Now, its around 5-10%
> the current business model passes off nearly all of the costs of actually running a taxi company onto drivers who pay for their own cars, fuel, and insurance, whereas AVs would have meant both companies would be paying for those things, but that’s a moot point now
I know that Vice is a meme these days, but I can't resist. Where do they think the money is going? Mostly to the fees that are paid to drivers. If those costs are baked in and they are still losing money, it's because they're paying the drivers more than they can afford. They were banking on not having to pay AV drivers wages, sick leave, pensions, have them go on strike, etc etc. Just provide customers a good service for an amount these companies could sustain.
Now, that was a wild bet for sure, but not a bad one for humanity to have tried.
What was good about it? They could have worked with existing taxi companies to sell their technology to create a better market, that would have been a good bet. Betting on making everything worse and hoping to profit from it was a horrible bet.
If they continue what they are doing, I can't wait for them to crash and burn.
They didn't bet on making everything worse. Getting an uber is an unbelievably better option most of the time, and it's also geared up traditional backwards cab firms to make at least half-decent apps and advertise prices up front.
You are only talking about the product from your end. There is a lot of negative aspects that comes with it, most are linked to the awfulness of the gig economy.
It's not Uber that is paying the price so their product can be this convenient.
> Now, that was a wild bet for sure, but not a bad one for humanity to have tried.
I think there is a very literal and material sense in which it was a quite bad bet for us to have tried. How many tens thousands of people skipped medical procedures, lost birthdays and holidays with loved ones, and didn't live as well as they could have because of these companies' cynical abuse of their labor?
Uber is just a dumpster fire. I scheduled an airport ride with them and each driver continuously just kept canceling it when they saw where it was going. Can't imagine how bad it is for someone going to a lower level neighborhood.
Can't count on it anymore - going back to manually calling taxis.
Automation was always a form of "investor story time". Going from a software company to a logistics company that has to buy, store, and maintain a fleet of vehicles across hundreds of cities was never going to happen even if they figured out full self driving.
And automation doesn't solve the issue that such transportation is race to bottom. It will never be high margin business. Or even low one with marginal unit costs...
Former Lyft engineer here. I'm convinced they will go out of business or sell the scraps to someone... however smart acquirers like Elon wouldn't go near it. Rideshare sucks.
The broker model has a yes out in the transportation industry, before Uber and Lyft were a twinkle in someones eye. It's a low margin business and has gained efficiency through tech. Once we understand that the gross margins are probably 20%, you are scalping the drivers and no driver can exist successfully living off brokered rides alone, Uber and Lyft will price like CH Robinson.
In third world countries like India, Uber and Lyft cannot compete with it’s street smart drives. Drivers call you and ask you to cancel the trip and pay them in cash to take you to the destination. They use Uber/Lyft marketing, tracking, and status but give zero dollars in revenue back.
These companies were always net value destroyers. Consumers being subsidized from the pockets of investors was nice while it lasted, but it doesn't make for a sustainable business. Once they go to zero we'll wonder how it ever even appeared to make sense.
Look at initial funding rounds of a hot new startup these days. Especially in areas like web3. There will often be participation from dozens of VCs and angels, mostly random names and funds that came up a couple of years ago.
There is really way too much cheap and dumb money sloshing around the tech industry. Money that cheap can’t create long term value - it just creates zombie companies and bad operational habits.
This was always the idea. I remember Jason Calacanis saying on This Week In Startups months ago that Uber is in growth mode, eventually when push comes to shove they'll increase the price to get to profitability and have the market share to stick it out.
For example, food is expensive, and we have to tip, but restaurant is tough business, and the servers don't make enough for living. Like why the heck is this not viable?
“I’m not loyal,” said Sergio Avedian, who has driven for seven apps, including Uber and Lyft, and writes about his experience on The RideShare Guy blog for drivers. “Nobody is loyal.”
> The fundamental problem Uber and Lyft keep running into is that most people are not willing to pay the fares it would cost to run a profitable taxi service with the overhead Uber and Lyft require
More or less, though it did move the needle forward. Now most taxi services are easier to use thanks to Uber. But they were always in the business of selling dollar bills for $0.90. Soon as they want to make a profit it turns out to be more expensive than running a local taxi service and they aren’t price competitive. In the meantime taxi services got their own apps/app integrations while maintaining their competitive advantage.
You left out the part where they're siphoning capital from their drivers:
> Here is the thing about Uber and Lyft (and much of the “sharing economy”).
> They don’t pay the cost of their capital.
> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.
> These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills.
yeah sadly it seems to be a scam on the people who don't do the fully-loaded cost per mile of operating a modern sedan in city traffic, including the purchase cost of the car, repairs and maintenance, fuel, tires, subtracting the eventual small resale value of a 250,000+ mile "used up" ex-Uber car.
Writing as somebody who was working in network engineering and IT/tech stuff during the dotcom 1.0 VC funded boom and crash from 1997-2002 none of this is particularly surprising.
it sure has been amusing to watch, however.
maybe we can pay for future uber and lyft rides in beenz and flooz
25.
Uber and Lyft Are Out of Ideas, Jacking Up Prices in Desperation for Profit (vice.com)
127 points by elsewhen 2 hours ago | flag | hide | 179 comments
Above is what I saw on the HN front page minutes ago. Then I started reading the comments thread and suddenly the submitted article has changed. It is now pointing to WSJ instead of VICE.
Looks like the original VICE article has even been scrubbed from HN entirely.
"[...] eventually figure something out that will make such taxi rides profitable despite the huge corporate structure of well-paid executives and engineers, a thing traditional taxi companies with already razor-thin margins didn’t have."
There we go, the punch ...
"[...] a sensible business with an obvious if limited market and profit potential. It is also an idea that has already existed, once run by a plucky startup that focused exclusively on Black Car services from experienced, fully licensed and insured drivers paid a living wage. You may have heard of it. It was called Uber."
That's because the Vice article talks about the WSJ article. Often, HN moderators will point to the original source, particularly when the following article tends to be click-baity.
