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Comment by mwsherman | Hacker News Reader

I don’t see much network effect with Uber. I see a liquidity effect, to a degree, but the barriers of entry are low on both supply and demand side.

To the extent Uber has a network effect it’s O(n) at best. I don’t have a connection to other Uber users. I like that there are enough users to make it worth the drivers’ while – again, liquidity, not network.

On Facebook, network effect is probably O(n^2). The connections exist and themselves have value.

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Uber Pool and Lyft Line are now the majority of rides in SF, not sure about other cities - but there is definitely a network affect there

SF is not the rest of the world.

you don't say. I'm sure this is the way it will go in any location with high enough density to get the network effects

Network effects for ridesharing are overstated. Its a commodity that'll race to the bottom. It already occurs in markets where both Uber and Lyft are present.

Source?

From August: http://www.forbes.com/sites/ellenhuet/2015/08/18/inside-lyft...

I guess I don't see how liquidity effect and network effect are different here. If there aren't enough riders then there aren't enough drivers. If there aren't enough drivers then pickup times are too high and the service dies. It really comes down to how important pickup times are.

The ultimate test for a monopoly is if the monopolist could raise prices significantly and not lose significant business to competitors. I don't think Uber could pass that test.

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

I think the keyword is significantly. If Uber tripled or quadrupled their prices, I think they'd be fairly vulnerable to regional competitors. Even an increase of 1.5x seems like it'd be hard to pull off.

Speaking anecdotally, I know for sure that I'd use a cheaper alternative to save $5 even if it took an extra 10 min.

Lyft Line recently added this option. You can wait 10 extra minutes to save a few dollars.

Uber keeps dropping their prices, not raising them.

It depends on the market you're in. Every market has different economics due to population, density, city layout, socioeconomic landscape, etc.

In many cities Uber is losing money, but in many others they are doing very well. They probably adjust prices to optimize for growth in the cities where they're trying to gain traction. In established cities (as in SF), they tend to raise prices slowly.

i'm not too sure what you're getting at with the use of big-o notation here. what exactly are you saying is being "upper bounded"?

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