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Comment by chairmanwow | Hacker News Reader

I'm not sure that I buy the logic of "Winner take all" in the TNC space. The service is intrinsically localized. There were competitors in NYC that I had never heard of before after living in SF, and SF companies that New Yorkers had never heard of. Furthermore, their is little efficiency to operating such a business at scale. The marginal cost of each ride is the same. I can see some strong network effects from travelers, but that doesn't prevent a service from cropping up in a local market that can compete with Uber.

All of the scenarios that I see where Uber can grind out competitors is by continually operating at a loss? I would imagine that eventually investors would tire of such a position.

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Wait till Uber (and others) launches a rewards points system. All they have to do is to give regular riders some multiple of their number of completed rides. People will willingly lock themselves inside the Uber World network to earn points. Leading the charge will be people like The Points Guy.

Then comes co-branded credit cards.

The endgame is to replicate the airline industry - 4-5 companies controlling everything.

Seems they're already replicating the airline industry by constantly losing money.

This. Airlines are not a favorable model. Airlines irrationally invest, deal with fuel costs they have to partially hedge, can't store capacity... the list goes on.

There is already some of this - some credit card companies have "save x percent on all your uber charges" or "every tenth uber ride is free" promotions.

Uber sort of already experimented a reward system, but limited to customers who own Captial One credit card, at least in my experience. See [1]. They stopped this but it was not a bad reward system when I was consistently using Uber for a while.

1: https://newsroom.uber.com/payment-rewards/

But where are the profits? Uber is already subsidizing rides, while cabs and cab companies have to turn profits. Trying to build loyalty with points just increases Uber's costs, as they can't push that off onto drivers. Retaining customers and increasing ridership by increasing loss per trip is not a sustainable model.

Ride services are completely different from airlines, if only because the capital outlay is incomparable. You could run a ride sharing business and get two hundred drivers driving around New York by December for 250k. That won't even pay for a single flight crew for a year, much less a plane to put them in.

Furthermore, pretty much by definition, pretty much all airline passengers are travelers. Some car hire users are travelers. Many are just people going out for drinks in their local city.

I assume the mix varies by locale.

I don't use taxis etc. a lot when I travel but if I did a single goto brand would be useful. Locally, if Bob's app was the best local taxi service, I don't really care if someone else operates in 500 cities worldwide. (Just like I don't care that the car service I use to get me to the airport covers only a slice of even my local area.)

Uber looks increasingly like a Ponzi scheme, where early investors get all the money (salary) and late investors pay the bills.

I'd not considered it, but you're right. Centralization of any business which absolutely requires physical proximity of the person providing the product and the person receiving it has a pretty poor track record. Sure, there are things like McDonald's, but they will never displace independent restaurants and smaller regional chains and the like.

The Internet and software makes solving the problem of distribution trivial which provides an existential threat to any traditional business which does not absolutely require physical proximity of producer and consumer, but Uber isn't acting in that space. They do not seem to be preparing themselves for a future where they are only one among many (even if the biggest)... would they be likely to be able (or willing) to survive with a smaller piece of the pie?

I've always thought Ubers big problem was that they built it so much like a traditional company when their only actual value was running some servers and knocking down regulatory hurdles which doomed them to be replaced by a much lighter-weight organization taking only a standard 10% 'finders fee' for hooking up a provider and consumer (a standard older than our money)... but now I'm not sure if they'll make it to the point where they get to see that even.

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