Comment by jomamaxx | Hacker News Reader

Comment by jomamaxx | Hacker News Reader

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Yeah, neither Uber nor AirBnB area a zero sum game, esp. ABnB.

There is some 'growing the pie' at the margins, but I'd suggest that Uber Corp. grabs more than what is created, and that drivers et. al. are holding the losing end of the stick.

The power imbalance between Uber Corp. and drivers is quite massive. Esp. without employment status.

Uber is designed to suck every last penny of real margin out of the system, and leave drivers with the absolute minimum.

Worse: because many drivers make short term decisions about their costs, and don't calculate wear and tear into their decisions, it's probably that Uber driving is borderline unprofitable.

Imagine if there was one factory in the world where you could work. You got $10 an hour - just enough to stay alive. But - you are going to get sick and die in 10 years from the toxicity. Well, the real 'market price' for such dangerous work might be $20/hour - enough to pay for health insurance and medicine, but because of short term decisions made by workers who are desperate - it's $10/hour i.e. a 'long term money losing venture' to work in the factory.

I generally like Uber as a concept, but we can't ignore these issues.

Remember that Uber replaced a model (taxis) wherein drivers not only where also independent contractors, as they had to pay at the start of each day to rent a medallion, not knowing if they would earn enough to compensate.

Uber's model seems strictly better than what has existed for decades.

You're missing the most important difference: Taxi market is regulated, and numbers are controlled. This keeps some degree of profits backed into the market.

The other difference is that taxi drivers have generally stable work. A guy can drive a cab consistently for years. The pay is not good, but the economics have to work out.

Cab companies and owners have enough wherewithal to make long term decisions, moreover, the 'drivers' - the ones on the end of the chain - if they are not owners - are not responsible for the fixed costs of the cars etc..

Finally, cab companies are by nature, small - and don't have hyper-leverage over drivers. Cab companies have to compete efficiently for talent among their drivers. If you can call it talent.

Uber is a hyper-capitalists dream - you take 105% of the surplus from a market.

You're missing the most important difference: Taxi market is regulated, and numbers are controlled. This keeps some degree of profits backed into the market.

The number of medallions (ie, jobs) is controlled, which means their owners reap those profits, not the drivers, who must compete with each other for access to those medallions. Uber's breaking of the monopoly expanded the market and created more jobs.

The other difference is that taxi drivers have generally stable work. A guy can drive a cab consistently for years. The pay is not good, but the economics have to work out.

There's no stability, the cost for leasing a medallion was constantly increasing, as was the number of people with licenses to drive (competitors).

Cab companies and owners have enough wherewithal to make long term decisions, moreover, the 'drivers' - the ones on the end of the chain - if they are not owners - are not responsible for the fixed costs of the cars etc..

Where do you think the money comes from? Not being responsible just means they don't get to make choices - they're forced to accept whatever the car owner says.

Finally, cab companies are by nature, small - and don't have hyper-leverage over drivers. Cab companies have to compete efficiently for talent among their drivers. If you can call it talent.

Then why was medallion ownership the single best investment in the last 30 years? Compete for talent? Where?

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This article from the NYTimes is rather informative, and being from 1995, it's not a submarine for Uber et all: http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-di...

You're wrong on all points.

+ That there are market controls ensures the viability of the system, that alone doesn't speak to necessarily how it was distributed. But you've contradicted yourself - and I don't think you grasp my argument: Uber vs. drivers is an infinitely large imbalance than cab-owners vs. drivers.

Putting the 'profits' in local cab owners - all things equal - is still better than putting all the profits in Uber.

+ "Where do you think the money comes from? Not being responsible just means they don't get to make choices - they're forced to accept whatever the car owner says."

Again you contradict yourself: Uber drives are more forcibly required to 'accept what uber says' - then any cab driver is forced to accept what an owner says. But again you missed point point: Cab companies and drives are businesses, and they can make longer term decisions about insurance and capital allocation. Cab owners will not run their business at a loss. Many Uber drivers, probably are running their business at a loss.

"Then why was medallion ownership the single best investment in the last 30 years? Compete for talent? Where?"

+ One, I don't believe you, and two, they compete for talent (i.e. drivers) like any other entity. Drivers can work for another owner, another cab company. There is a massive diversity of Cab owners in any region. This diversity creates competition. Uber is a de-facto monopoly in the service that they provide, given them even more power.

"Uber has crated jobs" - Uber has created a means for people to get around regulatory issues - earn mostly less than minimum wage, by making short term decisions about their work vs. long term investment in capex (i.e. cars) - and reaps 100% of the profits from a system.

Now - if we want to have a discussion about whether or not cab companies regulatory framework are appropriate, that's fine. But make no mistake - almost all of the benefit from Uber goes to Uber, and Uber riders, not the drivers.

I fully admit I may be wrong, though I don't believe I have contradicted myself.

Are Uber drivers running at a loss? Perhaps. At least the analysis I've seen (such as [1]) don't point to that, especially if we assume drivers aren't buying an extra car exclusively for Uber (just wearing it more). The earnings are crap, but then again, the NYT article I linked above mentioned pre-tax income of $19k, which would be around $11/h today. And there more people driving, so the overall effect is positive.

The monopolization effect is worrying, but while it may be naive, I believe it's a short-term concern. Uber has no "moat" - especially as they refuse to actually hire people, hence they can "hop" between apps -, and while some competitors may be in dire straits, others are still popping up (around here, the new one is Cabify).

I don't like Uber; they're dishonest and I'll probably stop using it as soon as new competition arrives. But I think the medium term consequences will be beneficial to both drivers and users, at the expense of middle men.

[1] http://therideshareguy.com/what-are-your-rideshare-expenses/

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