Uber’s IPO means higher fares for rides | Hacker News Reader

Uber’s IPO means higher fares for rides

latimes.com

49 pointsturtlegrids84 comments

The last time I had this feeling was when shorting groupon. The emperor has no clothes, I can't see how UBER ends up being materially different from a donut.

The only thing I can see being successful for them is JUMP. It's an awesome service, there's no better way to get around San Francisco -- and Seattle! I assume it's as effective in other cities too. On the other hand scaling and acceptance seem pretty far off.

It might be hard to compete with municipal systems; the one in my city already has electric bikes, and it costs €25/year (~$30). The advantage of JUMP is being able to leave them anywhere, but that probably won't last once cities get enough complaints. The bikes are nicer too, but not enough to justify the massive price difference.

Go to Berlin and see how amazing dockless bikes are for getting around when the city doesn't artificially limit their availability. It's trivial to find them when you need them.

The problem here isn't the product. It's governance.

you're kidding, right? I gave up on using jump bikes for my own travel needs long time ago, better off just walking and getting some exercise instead of hunting down some random thing in some random direction. But I try to use the bikes (the actual ride is pretty good, if you manage to get one) to show my friends around SF when they visit. In my experience, it's almost impossible to get two (or more, god forbid) bikes without spending up to an hour dragging through the dirties parts of Tenderloin just to hunt down the thing. By the time we manage to line up two bikes, everyone is fed up and sick of shitty neighborhoods, too - easier to just uber and go where we actually need to go.

Your difficulty in finding available bikes might be because they're very popular and constantly in use, no?

It's also government artificially restricting supply to certain numbers. Asymptotic regulations are bad regulations. Variable regulations are better. For example, instead of saying that there can be N bikes allowed, they should instead determine metrics they want to achieve like utilization (rides per day) or complaints per number of bikes and let operators put as many bikes on the streets so long as the quality of life metrics they establish are satisfied.

Take another look, they’ve doubled the number of bikes in the city. They were originally limited by the city as part of their pilot program which is since expanded.

Don't be ridiculous, donuts are both tasty and worth paying for.

Donuts are very unhealthy for humans

Am immediately suspicious that you may travelled here from a very long way away in order to steal all the donuts.

"Uber's success has been based on two unsustainable tactics: subsidizing fares and exploiting drivers"

Considering Uber loses a billion dollars a quarter, I think the only people that are being 'exploited' are investors. Investor money is going straight to drivers and riders.

Investors presumably know the risks involved. On the other hand, many drivers are inexperienced and do not know the full cost of driving for Uber (vehicle depreciation and increased liability).

> Investors presumably know the risks involved.

Except for working stiffs who are going to end up with Uber stock stuffed in their retirement accounts by unscrupulous portfolio managers.

That is absolutely a known risk of investing in anything other than very low-risk investments (and index funds I guess?).

In a way, everyone's being exploited except the rider. The drivers are barely making minimum wage once all expenses are factored in, the investors money is being set ablaze. The riders, on the other hand, get to enjoy taxi-like service for about half what it costs to deliver.

That doesn't follow. It's absolutely possible for drivers to be net losers.

Imagine than in some quarter Uber collected $3 billion of fares, received $5 billion in services from drivers, paid the drivers $4 billion, and made up the $1 billion shortfall with investment.

Obviously drivers are making the free decision to drive for Uber, but it's no more implausible to think that some are working on mistaken assumption or will come out behind in the end than to think the same of investors. (Actually, if anything, it's more plausible, given the disparity in information and resources between the average Uber investor and the average Uber driver.) And certainly it's clear that some drivers are not coming out ahead here once you take account vehicle deprecation, running costs, opportunity costs, etc.

I'm not saying that's true, but to suggest that a company that is losing money can't also be exploiting their suppliers or employees seems obviously wrong. :)

I couldn't care less about these kind of predatory investors.

I forgot where I read the article, but someone mentioned that the Softbank strategy seems to be to geared towards having 2 major players in ridesharing/delivery in each market. The idea was that when these companies go public, they will stop subsidizing rides as much in order to show profit, and will become viable businesses.

Because these companies have a new war chest of money, if any new upstarts come into the game, they can have a short-term price war to drive these players out. The US seems to be the first market where this strategy will play out.

is that sustainable though?

Honestly, I have no idea.

Lots of people have gotten very used to taking Uber/Lyft places. Once the prices go up, will that behavior change? The original iPhone sold at 500 to 1500 for the XSMax 512 GB. Obviously it isn't an apples to apples comparison, but I think the crux of the strategy depends on how inelastic ridesharing is.

I've always used Uber because I've assumed that it's cheaper than Lyft and other rideshare services. I just realized I have no idea how much it is compared to others. Does anyone have a formal comparison up online?

Lyft is often cheaper for me.

In the ultimate 'fuck you' to customers, you will get cheaper rides on Uber under Android if you have the Lyft app installed...

Because on iOS they can't detect apps, as far as I know.

Not using App Store legal APIs anyway. But its not like they've let _that_ stop them in the past...

AFAIK what they do on iOS is track 'behaviors' -- i.e. you get to the quote screen, app-switch, then come back a few seconds later, they know you're price-shopping and can re-quote and lower their prices.

If Uber has access to file storage, can't it look for file names specific to Lyft?

Uber does not, iOS apps are sandboxed.

Further more, if you use `canOpenURL` trick to check for anything but trying to fallback when you're actually trying to open the url/app, they will flag you during the review.

It depends on the market, time of day, and other factors. In my experience, Lyft is actually generally cheaper, but the two are usually within 5-10% of each other in cost.

I mean higher fares happened a long time ago on both Uber and Lyft. I used to take regular UberX all around SF for <$10. Now I never see a regular Uber for less than $15 and regularly more than $20.

I won't, since I can already use Bolt, Kapten or Cabify. The idea that Uber will somehow manage to keep people from building an app and competing is silly. There's almost no barrier of entry.

There is a barrier to entry: building a network of drivers.

If there is no drives, nobody will buy a ride over your app, drivers will then not install it because nobody is buying rides.

Wouldn't this also have prevented Uber and others from getting started?

I believe there may be a missing element here, namely marketing.

Drivers are not exactly emotionally attached to Uber, you will be surprised how often they have multiple apps. I regularly see cars with at least two of Uber, Taxify, Ola signs in Sydney.

Why wouldn't drivers install it, when it costs them nothing? And then if they're at the end of an uber ride and a notification for the other service pops up, they can take that.

Installing an app and entering your bank details for payouts is quite a burden on the driver. Not permanent and not physically but emotionally.

Not just that - you also have to tell drivers you even exist in the first place, and that level of marketing is not cheap.

It's not really that expensive, because you can expand city by city, and do local advertising only - billboards, bus ads, etc. We're talking six figures even in the most expensive areas.

I don't get it, why?

Signing up for a service requires you hand over some personal details. That is friction.

If you want to be a driver, you also need to hand in payment details. More friction.

These things are friction because the user has to make not only an active effort to do them but also it gives them time and reason to reevaluate their decision to download the app. Especially when privacy leaks are happening left and right in SV.

This in sum comes together as a burden for people to even sin up to your service as drivers.

I mean, sure, any new product faces some friction, but that's a slender reed to support monopoly ambitions, and it's not the same as claiming drivers won't install it if there are no riders.

The reality shows otherwise: my city already has three competitors to Uber, and all of them have enough drivers (the waiting times are similar), without any having made massive ad campaigns. And there's no reason to assume we're a special case.

I think drivers would jump simply to pursue a market realm with far fewer suppliers (initially, at least), knowing they can go back anytime, or toggle between sites in response to incentives.

I think you overestimate how rational drivers are.

Every driver drives for every service in each city. There's no cost to them doing so. The only thing actually motivating them to stick to one service or another is Uber and Lyft have quota-based payouts promotions. Make your quota, get a bonus. Once they do, though, they're back at timesharing.

There is the cost of signing up to each service and entering bank details for payout. Additionally drivers aren't rational market players with perfect information. The quota alone could be enough emotional incentive for a driver to stick to only 2-3 apps.

True, though that hasn't been my experience in SF. I usually see most cars with both Lyft and Uber stickers, and I'm relaying what each driver I've spoken with has told me. Admittedly it's a small sample size.

2-3 apps per driver is huge; that might mean 5-6 apps on the market, more than enough to provide fierce competition and keep prices low.

Uber has shot itself in the foot here because the network is not a moat. It is in fact easier to enter the market BECAUSE of the network. For most non-Uber cabs I take, the driver also drives for Uber.

Uber's competition is quickly growing and people is realizing is just a matter of downloading an app and you get cheaper alternative, in Latin America a service called beat is giving cheaper car rides, a service called pickup is usin motorbikes instead of cars and is cheaper for both driver and users, all in all Uber doesn't have a leg to stand on and is becoming clear all it is is piramid scheme in a gigantic scale.

Less expensive does not mean those other competitors are making money. For example, Grab is burning through billions of investors cash, just like Uber [1].

Uber has motorbikes in other countries. It had a huge presence in Vietnam, until Grab took over their un-profitable business. It is just that it isn't popular in the US to take a ride from someone on a motorbike.

[1] https://techcrunch.com/2019/03/05/grab-vision-fund/

Grab is already more expensive than conventional taxis in some places I've been recently.

...or is it that taxis have lowered their pricing to compete?

Don't think so, for example in Bangkok the taxi rate is regulated and I believe it hasn't changed for ages.

http://archive.is/WfBip

Mmmm... unlikely. Here is where the growth helps. More drivers => more passengers => more productive use of car miles. The more time where a passenger is in the car the better, and when you factor in shared rides it gets better. Even if you factor in competition by "branding" as they say, the increase in growth is a benefit even if promotions are scaled back. If there is any place you will see increases in prices, it will probably be medium sized cities where Uber/Lyft have not achieved a great driver count and don't care to invest as much anymore.

Otherwise I would be surprised to see any major metropolitan areas ever be more expensive in the future than they are now.

That and any upstart will have a tough time getting enough Pool-type fares to keep everyone happy.

In the end you will have a service costing the same as a regular Taxi but without all the benefits of them being licensed. Taxi licensing may be screwed up and unfair in the US but in many parts of the world it works well.

Cost was not the only driver for the push towards Uber. The fact that the licensing scheme was ineffective at providing a safe, positive experience in almost every market I visited was the major driver.

If I'm paying the same as a cab it doesn't matter, as long as the driver is accountable for their behaviour, state of their vehicle and driving it is and always will be a superior experience to traditional cabs.

I also find it doubtful that the Uber experience will ever cost as much, unless they completely kill off all competition (not going to happen). They have no moat - the network effect does not enable them to have a true monopoly, or even duopoly because the concept is simple enough to implement with an app and a team.

If Uber cost the same as a taxi, I would still use Uber. They're much quicker to show up, have an app (vs. calling a dispatch center and trying to explain where you are), and the quality has been much better than taxis in my experience.

Taxis have the "broken" card machines, the ads playing on the little screen, and the 30 minute wait for a ride if you're not in a high-density urban center.

A 30 minute wait... to find that the taxi decided to take someone else's fare 20 minutes ago.

I've been using MyTaxi app in Germany, and it seems to provide the same major upsides (map for pickup and destination, fare approximation known beforehand, pay via app). Feels more trustworthy too.

I'm fine with Uber costing the same as a regular taxi. Riding in a taxi is a garbage experience compared to uber. Drivers making excuses not to take you after learning your destination, rude drivers, drivers who have no clue how to navigate, drivers who pretend the card machine is broken, or try to take you on winding routes to increase the fare.

Despite all the supposed downsides of ridesharing, it continues to be immensely more popular than the traditional taxi service even as the price gap closes. Because the traditional taxi service is a garbage rent seeking incumbent that needs to die for the good of all.

I catch cabs or ridesharing on a daily basis for work, and cabs are just fucking awful compared to ridesharing.

This. Cabs that are not part of Uber, they just wont agree to take you. I still dont know these drivers rationale behind denying the ride. I understand its their prerogative to refuse a ride, but they do it so often which makes me wonder, how are they making money by refusing rides again and again.

In my country, a taxi driver is legally required to drive you to your destination unless it exceeds reasonable distances (around 50km, which far above what anyone would use a taxi for here). Drivers with broken cashier machines or taxameters aren't allowed to take passengers, especially a broken taxameter might mean that passenger will pay a very much reduced fare. Most of them have GPS, and if they don't they can be liable for excess distance travelled.

Most taxi services here have excellent apps themselves and are cheaper than what Uber offered while they were allowed to operate (they are not just a glorified taxi service since non-taxi drivers aren't allowed on their service).

In my country, the driver is also legally required to drive you to your destination. It doesn't stop them from making random excuses like 'oh sorry my gps is broken'. That is an actual excuse I got from not one but two cab drivers in a row when travelling between offices in the city.

But such violations result in sanctions against the medallion holder via a transparent process.

For example (last time I was there, and I doubt that it has changed much), if you get in a cab at JFK, he had to take you anywhere in Manhattan / Queens / Brooklyn / Bronx, regardless of time of day, likelihood of a return fare, disabilities, etc. Otherwise, the medallion faced sanctions.

A rideshare can simply decline.

Yeah, some countries had decent taxi services already; but many others do not, even in the EU, and you can build a quite profitable business just on those.

I don't have to relinquish all my identity and GPS location to ride a Taxi though.

I always use fake data for services like Uber.

How do you use fake payment data?

Via Paypal. So unless Paypal sells them my real data, I'm covered. I do the same with mytaxi which is quite popular in Europe.

had this happen to me using ride-sharing. needed to be picked up at sfo. guy who was going to be my driver learned i wanted to go back in the city and he told me it was late and he was looking for down the peninsula. i just said fine since no point in driving with a dude who'd get mad at picking me up.

another time it was early in the morning and i needed to go to oakland airport and there were very few drivers available. the one who was suppose to pick me up took 20 minutes to get over there, and when he kept missing my intersection for some reason he just dropped the ride. i complained to the company and they didn't do shit. (think this one was lyft though).

It really depends on where you are. My favorite comparison (because I experienced both) is Germany vs South Africa.

In Germany, the cabs belong to the company and drivers are employees (not going in debt for medallions like in the US). The cars are usually in good shape Mercedes and the system is 2-tiered: Taxis and Funkmietwagen (callable cabs). Taxis are allowed to use taxi only roads, can wait for walk-by passengers, are more expensive and pay higher licensing fees. Both can't just tell you "No" without very good reason.

Funkmietwagen have to follow normal car rules, can only be called in advance, usually have slightly cheaper cars, but are cheaper.

Uber tried disregarding the laws in Germany, was told "No" and now is only active in some very few cities and only with their higher end service, operating as normal Funkmietwagen.

The only thing they accomplished was improving the app situation.

In South Africa, it's very different. Taxis cost 3-5 times what you pay for an Uber, are often old, shoddy cars and certainly like to decide not to pick someone up (which I think is technically illegal).

Uber is thriving and mostly seems like a safer and better solution there.

> Riding in a taxi is a garbage experience compared to uber. Drivers making excuses not to take you after learning your destination, rude drivers, drivers who have no clue how to navigate, drivers who pretend the card machine is broken, or try to take you on winding routes to increase the fare.

This may be true in some places, but where there is taxi competition this isn't true. You wouldn't ride with that taxi company again, and just pick another one (Where Uber might just be the other one as it's just another taxi company). I think it's a bad idea to try to argue whether Uber has a global market niche without looking at global circumstances. This varies in cities across the globe. The experiences in say London, Stockholm and Los Angeles are very different.

I'm in Bangkok right now and they have Grab. The Grab price is over-priced by 10-30% compared to what a metered taxi will cost.

But I'll take Grab anyway. The taxi experience is really garbage. It doesn't help that there is a language issue too.

Taxis had artificially restricted supply. I think you're forgetting how expensive taxis were.

https://www.theawl.com/2012/07/how-much-more-do-taxi-fares-c...

2012 $2.50 first 1/5 mi. $2.50 per mile. $0.50 per 1 min.

uberX 2019 (without counting inflation - ~10% since 2012): Per Minute: $0.66 Per Mile: $1.46 Minimum Fare: $7.19

Taxis are competitive for very short trips, but 3+ miles they're almost double (175%)!

Uber pricing is not actually based on the distance and time for most trips, it is a set amount decided ahead of time, usually much more than that base cost.

Not where I live, here it's entirely based on distance and time except for rides to the airport.

Hopefully the increase goes to the drivers...

...the article is very, very clear that it absolutely will not.

...which will then push Uber customers to Lyft/Cabs. Uber doesn’t have monopoly leverage.

As well as walk, bus, train, using own car and not drinking, etc.

Defs, I used to use Uber until it become cheaper to drive and pay for carpark, and mind you, parking in Australia is extortionist.

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