Farewell, Millennial Lifestyle Subsidy | Hacker News Reader

Farewell, Millennial Lifestyle Subsidy

nytimes.com

20 pointsghaff7 comments

While the headline is obviously calculated to grab attention, the basic point seems to be valid. While they may or may not still be better than traditional alternatives, a lot of the app-enabled services are seeking their market rates which will probably make them less interesting for a lot of people, and therefore with smaller networks, and therefor unsustainable or at least luxury services.

Ultimately, these services compete with taxies, public transit, driving a car, getting a hotel and picking up your own pizza. If they are not competitive with alternatives, they won't be trillion dollar companies and won't justify their stock prices. There is an optimum price if the sharing economy companies want to be everyday conveniences instead of occasional luxuries.

>optimum price

But there is no guarantee that a revenue-maximizing price is actually above the cost to deliver the service. There are a ton of personal services that US middle class people would like but aren't willing/able to pay what it costs.

In the case of Uber specifically, I'm not sure why the price wouldn't settle somewhere around the price of taxis, given that's what they effectively are and which aren't a high margin business.

Calling Ubers taxis seems a bit off to me. They are both transportation, but really not the same service. Have you ever tried to hail a cab while stuck on a street corner for 30 minutes? Ever tried to phone for a cab just to wait an hour? Ever see a line of cabs at a taxi stop just waiting for customers when there are no customers in sight? The app and algorithms provide enough optimization that the cars are exactly where they need to be to prevent drivers and passengers from waiting too long. That changes the cost to deliver the service (as does using private vehicles instead of fleet vehicle, though that may be more of an externalization than a reduction).

As you say, taxies are low margin businesses. If Ubers manage to have even lower expenses than taxies, they choose to continue charging less. Uber has always gotten a nonlinear amount of increased business as a result of its lower price.

I find it incredibly difficult to feel bad for venture capitalists trying to artificially pump the market by generating volume.

I find it just as difficult to feel bad for people who now have to park their own car or do their own laundry.

Seriously, I feel like I make a good living but I would never think about doing these things. Absolutely lavish.

I don't believe we're supposed to feel bad for folks who no longer have access to subsidized app economy services. I think we're just supposed to see how absurd some of the businesses in this sector were (are?).

Obviously businesses offering discounts to tempt customers is an old technique. I think when a new bakery opened near me I got a flyer in the mail with coupons for 50% off. Some people will use those coupons, not be impressed enough with the product to buy it at full price and never return. Some folks will really like it, and become regular customers at full price. Even if the bakery loses money on those coupon purchases, it was (hopefully) worth their while to acquire customers.

The crazy thing is how long Uber and Lyft played this game. Growth being prioritized over profitability meant years of selling rides at 50% off (or whatever the actual discounted rate was). Long enough for folks to think that was the regular price, and now there's confusion when people see rides that cost much more than they're used to. The open question is whether it was worth spending all of that money on customer acquisition - do people like ride hailing services enough to pay full price, or have Uber and Lyft sabotaged themselves by conditioning customers to expect unrealistically low prices?

And you had the Groupon problem where you had the coupon clippers who were just never interested in general at purchasing full-price.

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