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Comment by jppope | Hacker News Reader

Regarding the lack of "innovation" concept this article is hocking... pretty sure before Uber/Lyft I couldn't click a button and know how much my ride to a place would cost then, book it and pay for it.

(I still remember cabs in NYC where the driver "knew a shortcut" that ended up adding $10/$15 to a ride... I've never seen uber/Lyft pull that move)

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At first, for many years actually, neither Uber nor Lyft offered an upfront quote. The other feature, to press a button on your phone and book a cab to your location instantly, existed in a taxi hailing app that I used in Los Angeles around 2010, which I think was called "MyTaxi". I'll admit it wasn't as reliable as getting an Uber or Lyft now is, but it was still 2010.

Funny enough, before the upfront fares on Uber/Lyft, I did see drivers try to pull that "shortcut" move! In either case you just have to be firm and have them stick to your route.

Uber and Lyft opened up some supply and juiced everything by subsidizing rides with cheap VC money. You can call that innovation if you'd like to.

It's covered in the article. When they say "lack of innovation" it's alluding to the fact that nothing Uber does is necessarily exclusive to Uber. Uber is entering into an massive existing market with a low entry barrier and high competition that often already out performs Uber in terms of cost and efficiency.

You could say the same about Facebook when there were a hundred clones available after it was made. Everyone was building social networks back then.

Being able to repeat the technology part is a tiny percentage of the business. Which demonstrates a lack of understanding of tech businesses, or business in general.

I think the writer understands business in general. His main point is that Uber may have innovated in small ways but they failed to innovate in a way that solves the major problems of making a profit in the transport business

Network effects in social media are high and protect Facebook from competition.

Barriers to entry in the taxi industry are lower.

"Uber incurs huge start-up costs with each new city and country it enters."

In other words - people won't use the next Uber unless it has drivers available every time you open the app, but drivers won't be available unless they know there will be riders paying them fares. To fill in the gap, rideshare apps have to pay drivers when they enter a market, even if there are no riders yet.

This is also covered in the article - it costs uber huge sums of money to enter a market because they offer driver incentives that are uneconomical, they have a huge advertiser budget and they use below market rates to achieve growth. It also costs them a lot because they don't move into a market to be in that market, they move into a market to dominate it.

That dynamic isn't true for its competitors. Any current driver for Uber can go "fuck this" get an off-the-shelf taxi company app and start working for themselves. Since Uber is paying minimum wage and still making a loss, there's a strong incentive to do this the second Uber raises prices in an area. At which point Uber has to go back to its incentives to regain its dominant position in the market. The result is they can't sustainably raise prices or lower costs without destroying the growth that justifies their tech-like valuation.

Beyond that, if you're travelling you can do the same but in a place where previously you couldn't even speak the same language as your driver and you would almost certainly get scammed in what you paid.

Uber is a better product than what existed before, perhaps it's fair to say it didn't solve any big problem but rather lots of small problems.

It’s worth noting that this isn’t really a technical innovation. Taxicab pricing and metering is heavily regulated. Before, it often would’ve been illegal for a cab company to use a smart phone app (or anything other than the required meter) to calculate the fare. Also, there are regulations around how taxi cabs accept riders. In many places a taxi can can only accept a street jail.

Uber got many of these regulations loosened for cab companies, because they entered the markets and widely ignored them to start with. It’s more regulatory innovation than technical innovation

To me the biggest "innovation" of Uber is how they were able to strong-arm municipalities into allowing regular people to use their cars effectively as taxis without having to deal with any special regulation or taxes. Whether this is good or bad is up for debate.

The other aspect -- being able to hail a car from an app and know (within reasonable bounds) how much the ride will cost in advance -- is not much of an innovation technically, but considering that the cab companies could have something similar and failed to do so, the innovation is showing that the logistics of it can work

Uber/lyft's big innovation is shared rides.

For ex: "223 million of first billion Lyft rides were shared through Lyft Line"

http://www.businessofapps.com/data/lyft-statistics/

But when we look at the market as a whole, Via, a new company, took this trend and improved it(more people per ride).

So maybe UBER has no moat.

The major innovation is being able to book shared rides through a smartphone app.

Ambiguously legal gypsy bus services have been around for ages.

But shared, on-demand rides offer a much shorter trip time than a gypsy bus, by matching people going on the same route.

1. The article addresses this: "Although Uber may have been an early adopter of smart-phone-app-based cab hailing, this service has been easily replicated by other companies, including traditional cab operators, and Uber has no significant advantage here. More importantly, there is no evidence that any of it creates meaningful efficiency gains, or that similar technologies led to major competitive upheavals in any other industry."

2. You can use Apple Maps (or Yandex Maps or any competing app) to get an indication of the best route and its length today. So, I'd say the problem of "shortcuts" is solved by the smartphone, not only/primarily by Uber.

I think the question is whether the amount of innovation Uber has spurred was in line with how much money it has taken to get there. From the article:

"Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business."

For reference, Intel, which arguably represented foundational innovation, raised $6.8 Million ($42M in 2019 dollars) in their IPO alone.

> pretty sure before Uber/Lyft I couldn't click a button and know how much my ride to a place would cost then, book it and pay for it.

I did that with my local traditional taxi co in 2008. Couldn’t pay in the app until a few years later though. Uber weren’t the first taxi company in my town with app booking+quotes. They probably weren’t even in the first 5.

Uber's app sucks at routing, so people frequently accuse drivers of malfeasance. https://www.npr.org/2014/09/18/349560787/drivers-passengers-...

Some drivers ARE taking longer routes; you don't pay for it, but Uber does. https://thepointsguy.com/news/why-your-uber-driver-is-purpos...

That has nothing to do with Uber/Lyft, and everything to do with mobile phones. I have an app called "mytaxi" on my phone that does all of that with taxis.

I also remember several of my friends telling me about their idea of exactly that app shortly after the iPhone was introduced, so it's not like everyone got that idea from Uber/Lyft.

The "innovation" Uber/Lyft added was undercutting taxis by replacing employees and a fleet of cars with "self employed" drivers bringing their own cars and subsidising the whole shebang with huge amounts of investor dollars. Oh, and flouting laws and regulations.

Then again, things like "vomit fraud" didn't exist before Uber.

Yes, but that's not an innovation worth billions of dollars, like real high tech innovation that takes billions of dollars to get off the ground (e.g. the semiconductor industry back in the days). Instead it's pretty much straightforward functionality that could be implemented by any small team of programmers.

I’ve felt that way about Twitter since the beginning. The core idea is like 1000 lines of RoR. Yet year after year, nothing displaces Twitter. Network effects are real and powerful.

Network effects are crucial to social networks like Twitter. But why should that apply to Uber? The network effect on Twitter etc. comes from the fact that each additional user increases value for existing users. But Uber is a two-sided market, and while each additional driver benefits existing riders they are also additional competition for existing drivers.

Network effect for Uber is having the app installed. It is more comparable to a central market for a single, homogenous good.

The article makes that point, too:

> [Uber etc.] also have none of the Facebook-type network effects (following what is known as “Metcalfe’s Law”), by which each new user makes the network more valuable to all other users, which makes it nearly impossible for smaller competitors to survive.

However, I think that's wrong. If I'm in a city with two "ride sharing" companies, but one has twice as many cars on the road, I'd expect to wait longer for a taxi from the company with fewer cars, right (or, if I check both, most of the time the one with more cars will show a shorter waiting time). Thus, as a customer I'd be inclined to choose the one with more cars.

But shouldn't most drivers be working for both companies?

I mean it was recently decided that uber drivers are contractors (not employees), so they should be free to do that.

Yep, but all else being equal you would also choose the one with fewer other customers. So in terms of the first-order effects, each additional user (as in, rider not driver) actually makes things worse for existing users! There's the secondary effect that each additional user encourages more drivers to sign up, but while this might compensate for the first-order effect it's not going to overcompensate.

For another perspective, you can look at things empirically. Has Uber used network effect to dominate the market and force out competitors? No; Lyft, traditional taxis, and foreign ride-sharing companies are still around. To the extent that Uber is winning, it's because it has a better product (for a definition of better that includes burning VC money to lower prices).

Contrast this with Facebook: the only major similar product in recent history is Google+, which died pretty quickly. All other successful social networks differentiate themselves in some way, because they have to.

Drivers don't really compete with each other. Maybe in some extreme future case, but its hard to imagine driver/rider ratio going out of control. So far more drivers just means lower ETAs which means more riders.

Twitter is a free product that has global network effects and they deliver a digital good which has near zero marginal costs.

Uber, on the other hand, delivers physical services to consumers that cost money and they do not have economies of scale or other innovations (e.g. self-driving vehicles) which would help them lower price.

> they do not have economies of scale or other innovations (e.g. self-driving vehicles)

Not yet. They're on it, having invested about $1B so far. https://www.bloomberg.com/news/articles/2019-04-11/uber-has-...

Not on Uber scale. You should watch some Uber presentations from developer conferences before writing comments like yours.

lots of "uber scale" is self-induced over-engineering. I'm pretty sure for any enterprise piece of software that exists there is a parallel uber solution that does the same thing.

Given that their basic product is a smartphone app that connects car drivers and customers the size of the entire operation is quite ridiculous.

You should keep in mind that innovation exists in the context of the cost that is associated with it. Building giant software systems alone isn't enough.

Scale is all about numbers. Solutions that work for small scale don't always translate to large scale. Plenty of information about Uber scale is publicly available on the blog and YouTube.

Uber's application can be almost perfectly sharded because the problem they are solving is mostly local. This simplifies the problem significantly.

What to do if data center in one region goes down? Should Uber not support users in that region because of sharding? Most probably that's not acceptable solution.

Even with sharding the scale is significant. The QPS is massive because everything is real-time. Optimized matching and routing decisions based on many factors are instantly made on a large scale even locally.

> Instead it's pretty much straightforward functionality that could be implemented by any small team of programmers.

This is some pretty extreme gatekeeping on innovation. You don’t have to invent brand new technology to innovate. Applying existing technology to solve a problem is innovative. Coming up with any new way of doing something is innovative, regardless of how small of an engineering team you need to implement it.

> that's not an innovation worth billions of dollars

Small ideas at scale can easily be worth billions. Marginally-improved ball bearings, for instance. Or the idea of a supermarket.

Until they can sell their service profitably, whether it is truly “worth” billions is questionable.

That's the problem with today's economy. Investors are not using their dollars to support true innovation, but instead they try to grab markets.

Uber definitely changed the user experience of calling a car service for the better. Everybody has an app now and lots have predefined pricing. It’s the stuff they did after that (the so-called “sharing economy”) that went off the rails.

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