Or he is quite happy to have cashed out instead of wasting his life away trying to run a low (if any) margin, weak network effects business with local competitors and regulators nibbling at your sanity.
The whole lease situation is kind of fucky though, they're like a sharecropper.
Not from US, could it be Uber being more widely known?
( Why hasn't Lyft expanded beyond US ? )
In other words, based on my understanding of the brands, the only reason for me to install Lyft would be if I wanted to boycott Uber. And I already have Uber, but not Lyft, and I would likely have to keep Uber because I go to cities where Uber exists and Lyft doesn't.
So some network effect is there, but I don't see how it justifies the insane valuation of the company. AFAIK they're still operating at a loss.
Their strategy seems to be having the network when self-driving cars come around, but any competitor offering (safe) self-driving rides would get my sign-up just due to novelty. Even if not, $100B buys you a lot of new-user incentives.
Uber has to solve completely different issues than a self-driving cab: A self-driving cab company can just flood a market with cars to ensure a smooth experience for new users, offer a bunch of free rides in a limited time to get people to sign up, then move the excess cars to the next city (can't simply do that with human drivers).
No need to recruit and manage drivers, deal with driver fraud, settle disputes when a driver claims a passenger puked in the car and the passenger claims they didn't (if they take a picture after the passenger leaves). All the tracking and fraud detection systems of Uber are worthless.
Writing an app that can show a map and let people press a "I want a car" button may not be trivial, but it isn't going to cost a billion dollars.
Uber: 1) You drive to a surge area for an extra reward and as soon as you get there it disappears. Your presence eliminates the need for a surge reward. Chasing the surge is for rookies. 2) Most of the time I get let's say X for taking someone to the airport. On a surge I am supposed to get X + Y, however they'll pay me 75% of X + Y. Isn't that great that I made Y extra! actually no, they reduced X. It's straight up robbery.
Lyft 1) I drove out some rural roads to a scheduled pickup. The rider didn't show up. Before I had a chance to cancel the ride and get some payment, the algorithm cancelled the ride paying me nothing. This does not happen on Uber. I always get paid for cancelled rides there. 2) I got a pickup in an area I was not currently in. I went there. The pickup point was inside a cemetery at night. I'm not going to drive into a cemetery at night and get robbed. I get a message "You are in a very high demand area (the neighborhood next door) Why don't you stay there and wait for a ride?" The zombie pickup went away with no comment from Lyft. Lyft sneakily lured me into an area (an unsafe lure too) 3) There were too many drivers waiting at the airport. Lyft created a high demand reward area in a town next to the airport. It didn't make sense to me, but I went there and waited. I noticed a bunch of other Lyft drivers parked there waiting. No one getting any rides. So Lyft created a false high demand reward area to siphon excess drivers from the airport waiting lot (keeping the peace with folks that live around there)
I'd say the Uber algorithm is less dishonest than the Lyft algorithm. The odd thing to me is that they don't want to hear from techie drivers that could serve as beta testers, but neither Lyft or Uber want to hear from drivers. At all. They are losing business because good drivers (smart drivers) won't take some actual legitimate rides or cancel them because of these games.
The one area where I have been able to draw a distinction and for me this is the most important is customer service. When I have had issues with Uber I found the customer service to be completely worthless. It seem to consist of nothing more than canned email responses from a support center in India. Case in point I had a psychopath Uber driver who kicked me out of car at night and left me on the side of the road when I asked if they could turn on the air conditioning because there was a heatwave. Despite my persistence I was never able to get anything more than a canned email response of "Uber upholds our drivers to the highest standards ..." Every email I sent asking if they could please escalate this as it was serious issue resulted in a new canned email response signed by a different employee name.
Lyft by contrast on the two occasions that I had a somewhat serious issue responded to me by having a customer service representative call me and ask me further details.
For me this matters much more than the fare differential at any given time. In my experience Uber/Lyft feels increasingly more like a race to the bottom and this distinction has become more important to me.
Source? And what do you mean by margins specifically?
> one of the most powerful network effects in business
Disagree. One result of a very strong network effect is that it means higher switching costs for customers/users.
- Rider switching costs are near zero. For example, it's as simple as downloading a new app. If I switch from Facebook to Path (if it was still around), I have to re-establish all of my connections again, which is a massive amount of friction.
- It has one of the frailest controls on its sourcing. Drivers switching costs are near zero (unless of course the drivers are sucked into preferential leasing by the rideshare company).
Ridesharing will become a race to the bottom. Stronger network effects imply margin expansion (see what Facebook did to its gross margin circa 2013-2017).
Ridesharing has always been a race to the bottom, it's just been VC money keeping it afloat longer.
[citation needed]. They’re bleeding billions every year.
Uber has virtually no network effects. One driver is just one more driver without any effect on other drivers or users, in contrast to say, user-driven content generation on tiktok or youtube.
In fact, due to the natural constraints on supply in cities if anything there a negative effect to growing the business, which is of course why there has never been a taxi monopoly, to begin with, and transportation is a traditional small business, high competition sector.
No offence and I don't intend to be rude but literally everything in your statement is comedically wrong. They don't make any money, there are no tech margins because drivers, regulation and advertisement cost pile up linearly, and the competition is brutal. How Uber got butchered by Didi in China is only one example of it, but the ride-sharing industry has had many victims already. Just look at bike-sharing in China.
There would be a network effect if them having more cars would make it much more likely for them to get even more cars, or add value in some other way beyond the fact that they have one additional driver. That is not the case.
For facebook say, it's much easier to get more users because each user themselves increases the value of the business, because the users interact. You don't care if Uber has ten thousand or ten million drivers, it does not improve the service (significantly) apart from increasing supply.
How does youtube have a network effect then? Using your language, youtube has a supply of viewers and a supply of creators. More videos on youtube do not beget more videos, and likewise more viewers do not beget more viewers.
In the same way that the userbase is what gives youtube value in the eyes of the creators, the passenger base gives uber value in the eyes of the drivers.
Given the virality and the way video creators interact with their audience and other video creators I don't think that statement is true. Youtube is not just a one-sided tv channel, it's also a community-driven social network which makes the network defensible.
If your favourite content creator is on youtube or twitch (or your audience if you are one) is on the same platform there's a pretty bad collective action problem to get you to move to a less popular platform.
On a ridesharing app, there's no social interaction, you don't care who drives you and every driver can easily drive for every competitor.
My favourite content creation platforms all have unique creators that I would miss, so I can't leave. Every ridesharing app I have ever used is utterly interchangeable. Not even the theoretical benefits from scale like say better service where ever noticeable.
I prefer Lyft, and still take Uber anyway in parts of the country where there aren't enough Lyft drivers. It can make a meaningful difference in wait times. I'm also unlikely to check back later, unless I think of it.