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Comment by dumbfoundded | Hacker News Reader

I think NYT misses the point. The problem with Uber isn't some cultural issue, it's that they're in an extremely tough and competitive business. It's really a race to the bottom.

The logic I kept hearing repeated is ride-sharing is a winner take all market. Like once you have a network of drivers setup giving people the lowest times for rides, you can force other competitors out and raise prices.

Time has proven how wrong this thinking was. It's almost impossible to stop competitors in ride-sharing because the cost of switching for customers is low, there are no legal or capital ex competitive barriers, and you can be picked apart city by city. Even drivers are incentivized to download as many of these apps as possible.

The whole situation seems awfully similar to Living Social and Groupon.

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Ironically, if the drivers were actual employees, it’d be an actual barrier.

I was just thinking this. In treating their workforce as disposable they themselves became disposable.

Not necessarily. Growth depends on the price charged to the customer. The unit economics of using "contactors" to circumvent labor (minimum wage) laws, probably offers this model to provide the cheapest price to customers. When you take into account car depreciation, the median Uber driver earns something like half of the minimum wage.

"It's almost impossible to stop competitors in ride-sharing because the cost of switching for customers is low, there are no legal or capital ex competitive barriers, and you can be picked apart city by city."

This is so true. I only ever take rideshare to/from airports, and those trips are sufficiently expensive that it makes sense for me to spend the extra minute to launch the four different ridesharing apps I have installed and comparison-shop the cheapest one. It's a no-brainer to spend a minute to potentially save $40 or more, depending on surge conditions.

And four might be a little extreme, but I hardly know anyone who uses rideshare at all who doesn't at least have both Lyft and Uber installed. And even two players in a competitive market can drastically fight prices to the bottom. Ridesharing is not a duopoly situation.

I was the "only has Uber" ride share user for a long time. Then I landed at Orlando and Uber was going to be $60+ for a 15 minute ride. Even though my company was paying for it, that was BS and I added Lyft on the spot. Lyft now gets probably 70% of my rides.

That afternoon was a very costly surge for Uber.

Would a taxi have cost $60? They tend to also have the pro of already being at the airport.

I don't think "anti-taxi" was why most people picked up Uber, rather it was cheaper. So if that isn't the case then going to a taxi rank makes a lot of sense in many cases.

If Lyft was not reasonably priced, I'd have checked on the taxi situation. It turns out Lyft was $21 and change and I gave a $4 tip. If a cab was going to be $60 each way as well, I may have even gone and rented a car.

I am spoiled by the ride hailing apps; a medallioned taxi is a distant last resort for me personally. I may never call for a cab again in my life and that'll be just fine for me. Walking up to an airport cab stand is convenient and certain, so that's still in play.

At least in my area the taxis have rebranded to "zTrip" and similar and they all have apps very similar to Lyft/Uber. There might be room in the market now for a fare aggregator to cut down on the number of apps.

In my experience, taxis are crappier cars and the drivers aren't as friendly. Have you ever had a taxi driver offer you a bottle of water?

I think the main reason people start using Uber isn’t that it’s cheaper than a taxi, it’s that they want a ride and there are no taxis around. I can’t catch a taxi at my house (which is like two miles from downtown Oakland, not the middle of nowhere) but I can get an Uber there easily.

It's probably a mix. I don't use them a lot but, when I do, it's mostly because taxi dispatch tends to suck, payment can be a pain when the card reader is "broken" (and in any case is usually a less straightforward process). The main time I'll often still use cabs is from the airport because they're right there; I use pre-booked private cars to and from my own airport. So price isn't really a factor.

But, to the degree that some people are using them to replace other forms of transportation, including car ownership at the margins, price does matter. A lot of rides people take today would probably not be taken at 2x pricing.

The cultural problem is with the investors that are willing to spend $100B to win a cut-throat $10M/year profit market.

Perhaps this is an example of a "dollar auction":

A dollar bill is auctioned with these two rules:

1. (As in any auction) the dollar bill goes to the highest bidder, who pays whatever the high bid was. Each new bid has to be higher than the current high bid, and the game ends when there is no new bid within a specified time limit.

2. (Unlike at Sotheby’s!) the second-highest bidder also has to pay the amount of his last bid – and gets nothing in return.

[...]

This peculiar game leads to a bad case of buyer’s remorse. The highest bidder pays far more than a dollar for a dollar, and the second-highest bidder pays far more than a dollar for nothing.

http://www.heretical.com/pound/dollar.html

or they don't have a good place to park their money, looking for the NBT.

It feels like there are two classes of Uber investors, and money is flowing from one to the other. Maybe that was the point all along, versus disrupting taxis.

This isn't necessarily "The NYT." It's an excerpt from the book that Mike Isaac (https://twitter.com/MikeIsaac) wrote about Uber for the past 3 years.

Still, they are making an editorial decision that the book is worth reviewing and/or excerpting.

Because Mike is the NYT beat reporter for a number of tech companies like Facebook or Uber.

also the value chain of driver->dispatcher->rider just doesn't have a lot of extra margin to squeeze out of the ride-hailing business to make it really profitable (this should have been obvious from the beginning to VCs).

once uber/lyft cut out the dispatcher, reduce no-shows a tiny bit, increase utilization a bit, off-loaded cap ex/risk to drivers, where do the killer profits come from?

when you do a five forces analysis, the only place they have some leverage is on the drivers (supplier-side), whom they've already squeezed down to below minimum wage (on average).

walmart can eek out huge profits from a low-margin business because they provide essentials that are hard to subsitute at their price point. ride-hailing is not nearly as essential and has a number of substitutes available in most places.

I don't suppose we'll ever really know, if only because people are so good at adjusting their memories as needed but...

One does wonder if the self-driving promise here was:

1. A cynical con job to get investors on board from the beginning

2. Not quite so cynical but nonetheless recognized by management as a hail mary pass

3. Uber just got swept up in the overall industry overoptimism/groupthink around self-driving dates and capabilities

all of the above, probably.

but there was basically zero chance that self-driving cars of the sophistication and scale needed by uber would be widely deployed within 10 years (i'd wildly guess a 50% chance of its existence in 30 years), as anyone employing a critical mind for more than a few minutes could surmise.

It seemed obvious to me based on a combination of what some disinterested expert observers were saying and the sort of situations I see driving every day, especially in big cities, needed to get door to door without human intervention.

However, you've only had to read this site over the past few years to see the huge number of people who bought the Level 5 is right around the corner story hook line and sinker. In all fairness, I attribute a lot of this to people who so wanted to believe they'd never need to own or drive a car that they weren't as critical as they should have been.

I find it "interesting" how quickly the narrative has shifted. A lot of the same people who were more or less making the aggressive promises pretty much all changed their stories in near-unison. One suspects they all knew or had come to known at some level but felt they had to wait for others to back off too lest they be seen as laggards.

This makes a lot of sense. A large business doesn't rely on the average employee. The employee relies on the business for food, shelter, healthcare...everything.

It's just an inherently large imbalance, and the only way it doesn't exist is if there is a shortage of employees in the sector and the ROI per employee is high. This is a pretty small percentage of jobs.

Unions are one way to try to curb exploitation, but I don't know how effective they are in practice. If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union?

Unions work well if a large part of the workforce in that sector are members, see the nordic countries for examples.

It's a bit like herd immunity.

If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union?

We know the answer to that because film extras (and most screenwriters) are of a comparable replaceability to retail workers but the Hollywood unions are strong.

> I don't know how effective they are in practice. If retail workers tried to unionize what is to prevent the millions of people who are equally qualified from replacing the entire union?

See the strike of grocery workers at Stop and Shop earlier this year: https://en.wikipedia.org/wiki/2019_Stop_%26_Shop_strike

They are effective in practice.

(Some possible first-principles reasons why this might be true: training replacement workers is hard and the labor market is not quite that liquid; new workers will want union representation too; new workers will want good wages too; the fact that the Teamsters respected the strike and union truckers refused to deliver across picket lines meant they'd have to find replacement non-union truck drivers too.)

I rode in a cab in Chicago that was a regular cab, Uber, and Lyft. I was amused.

If it's so easy to compete, why aren't there more competitors with a larger market share? I don't know of any ride share market with more than two major players.

US: Uber / Lyft

South East Asia: Grab / GoJek

Australia: Mainly just Uber (lots of smaller players but none with very significant market share)

In NYC Via is making a big dent, and is actual ride sharing to boot.

It's easy to compete with the company, but hard to compete with the VC money Uber pulls in. Uber's only competitive advantage is the $24b they were given to keep them alive.

If VCs keep funding Uber, Uber is unstoppable. But as soon as that money runs out, they're just another taxi company. Except they're a taxi company who loses $350 million dollars every month. That's not hard to compete against.

Or are they a taxi company that makes $100MM/month and spends $450MM on R&D that they could stop if they aspired to only be a taxi company?

(I think UBER is comically over-valued, but I also think their core business is probably quite profitable.)

In this situation I don't think it really matters. If the VC money stopped, Uber would either go out of business or shrink back down to being a taxi company, in which case they have no competitive advantage and no network effects, making switching costs extremely low.

Being a more profitable taxi company doesn't mean much when most of your employees are also employees of your competitors, and most of your customers are also customers of your competitors. There's just no lock-in.

They're spending a lot of money on subsidizing rides still. More than on speculative R&D.

"R&D" sounds grandiose but what meaning does it actually have in this context? I think that's the bet on autonomous cars? Problem is, they won't be the only one to have them, and not even among the first and best ones it seems. Nor is it clear how anything but complete autonomy could solve their problems. Actually, not even if that actually worked it's clear why Uber's Über-ambitious plans would work out. As far as I can tell that "R&D" money is just wasted - but I'm mainly saying this in order to hear counter-arguments, not because I know (I don't really)...

"R&D" typically includes software and application development, so it's probably not all wasted.

Uber is worldwide - I’ve used it on 4 continents. I actually signed up for it when in South Africa.

Considering they sold their business to Grab, I think you could safely say Uber+Grab are as close to a global service as you can get, and probably represents a significant fraction (though maybe not 50%+) of the global market

Uber and Lyft are running huge deficits. Of course they can keep the competition at bay so long as they don't have to make money.

india: ola

What about Europe?

Completely agree re competitors. If you look at when Uber and Lyft left Austin, almost overnight, competitors willing to follow the local laws sprung up and soon began providing equivalent service. In my opinion, it's going to be impossible to establish a moat (aside from incumbency) in ridesharing (absent some kind of regulatory change heavily favoring incumbents). The second someone thinks they can do it better, they will try (provided the capital is available).

I was in Austin many times over the period that Uber and Lyft were not there.

One of my takeaways was that building a mobile app which feels polished and actually works as advertised is _hard_ - not one of the local competitors managed it. Most of them didn’t even bother to distribute their app outside the US App Stores (a common issue with American companies) making it next to impossible to use for international visitors.

Uber and Lyft are not immune to some of this though - Lyft still do not appear to accept international credit cards correctly, though fortunately they do accept Apple Pay which is a reasonable substitute. And Uber’s GPS navigation is unspeakably bad in most metros, offering idiotic routes.

random data point from Berlin...multiple US friends cannot use JUMP bikes (owned by Uber) using their USA uber apps. Something just doesn't work. So I think this must be hard for companies to get right.

Probably hard. And the general rules about the effort to handle all the edge cases.

It's also reasonable, especially if you're prioritizing time to market and especially if you know you may have a small window, you may decide that a lot of the edge cases just aren't very important. How much does JUMP really care if US visitors to Berlin can use their bikes or not?

Yeah, true.

> ...Uber’s GPS navigation is unspeakably bad in most metros, offering idiotic routes...

On this tangent: I took a few Lyfts around LA recently, with the driver following Lyft navigation. For the longer airport rides, that navigation was indeed "unspeakably bad", diverting onto surface roads that ended up adding 15 minutes to a 45-minute trip.

Not being in a hurry, I let it play out on two trips. I looked at traffic conditions on my own phone and there was no construction or accident that would cause the diversion.

Are Uber and Lyft using their own nav solution, or are they contracting it out?

I believe Uber used to use Google maps and switched away from it to something else.

Where I live now, it doesn’t understand that Uber cars are registered as minicabs and can therefore use a variety of roads closed to normal cars. Consequently what should be a 2-3 minute pickup is often quoted as 15 or more as it suggests the driver will be going around the entire city perimeter when they can actually go across. Fortunately the drivers (usually) know that and completely ignore the GPS!

I (mostly) disagree. I always prefer to take RideAustin now because they pay their drivers more and donate a large amount of money to local charities with their round up feature.

RideAustin was most definitely sub-par when it first came out, but considering it was rushed on a teeny shoe-string, non-profit budget, that's not surprising. I'm sure Uber and Lyft had lots of issues when they first launched, too.

Point being these days RideAustin is 100% adequate. It gets me from A to B at a fair price, quickly.

It’s only 100% adequate if you can download it and it takes the payment you have. During the entire period Uber was away, this was not the case for me, making it 100% useless instead.

During that period, I rented a car each time I flew in.

I suppose this is just one person's opinion, but I had the opposite experience. My first time in Austin, I landed at the airport, brought up Uber, and got the message that it was not allowed. But almost immediately upon exiting the plane, I saw someone had left behind cards for RideAustin and Fasten with promo codes for each. Downloaded the app from the QR codes, opened the app, and the rest of the UX felt familiar to me. Switching was seamless.

Winner Takes “All” is an incomplete sentence. All what? All profits or all losses?

It's a common term.

It's an English expression.

https://en.wikipedia.org/wiki/Winner-take-all_market

All rise !

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