For Uber and Lyft, the Rideshare Bubble Bursts
nytimes.com
nytimes.com
What other company needs to justify its existence this much besides "our customers find us useful"? I know Uber and Lyft has made my life better, otherwise I wouldn't have used them. I imagine the same is true for the millions that have used their product.
Let's be honest what attacks on ride sharing is about. It's the remnants of grievances regional taxi companies had over facing competition. And it was strangely picked up by large newspapers. I'm old enough to remember taxi cartels pre-Uber. I remember being unable to find a taxi in a bad neighborhood, or going to a less populated area or when its raining. I remember the inefficient routes, the dangerous unaccountable driving, the "broken" credit card machines. Others remember not being able to get a cab because their skin is the wrong color or not being able to drive a cab without renting out a medallion from a medallion hoarder or having to take a second mortgage out on their house to afford a medallion.
Taxis existed since the invent of cars. I don't see why an app to book taxi rides should draw such scrutiny.
Sure, let's.
Ride sharing is only profitable if Uber and Lyft don't pay the drivers as much as taxi drivers. The fares are cheaper than taxi fares, so they can't be making as much income as Taxi companies do. So they have to take more of a cut of the fare, and pay the driver less, or the business just doesn't work. Their revenue is going to the overhead of an app, a swarm of lawyers, and some remote workers who set new drivers up. They don't even pay for fleet maintenance. All of this is backed up by the fact that they've never made a profit.
It is an unsustainable public service funded by VC dollars and supported by underpaid drivers. So the attacks are mainly about the exploitation of drivers - both the Uber/Lyft drivers, and the Taxi drivers nobody cares about. (Granted, there are plenty more things to attack them over, like increased traffic congestion and pollution, and reduced public transit)
If that was true then how do you explain that there are countries where Uber rides are actually provided by taxi cabs?
In those places they've lost their legal battle and can only provide taxi service. It's better to have some service than none at all, even if it's more expensive. The ubiquity of the app is its own selling point. Over time they will continue their legal battles and eventually the market will open up again, and the app will already be in use. Keeping people on the app also keeps it open for other products, like Uber Eats. It's sort of the opposite of a loss leader.
Uber and Lyft were profitable in many cities pre-covid.
Pre-Uber/Lyft to become a “taxi” all you had to do was take your car down to JJ at weights and measures where he’d make sure your meter was accurate, the rates were posted on the car and you had the proper commercial insurance. Then he’d give you the paperwork to get your “Z”license plate (not entirely sure how the plate thing worked since I never actually asked anyone) and a sticker for the back window. Bingo, now you’re a cab.
There were tons of what we called “gypsie cabs” (which, apparently, was a little racist) running around ripping people off left and right because as long as the rate was posted you could charge whatever you wanted legally.
Then Uber/Lyft came along and didn’t go see JJ, didn’t carry expensive commercial insurance and didn’t post their rates so they could charge whatever they wanted willy-nilly.
Not really sure how it is “ possible for a driver to make more money with lower fares by increasing the percentage of time that passengers are in the car” when the nature of the business is taking people to where they want to go and hoping there’s another fare in the immediate area else you go deadhead to a better area. Oh, and trying not to get burned on a fare and/or raped and murdered or just straight up robbed.
People don't like getting ripped off or having the fare change while en-route. Uber/Lyft at least told you upfront what you would pay and it was generally much less expensive than cabs. This increased ridership in most cities and thereby made it more likely drivers would have a passenger waiting at the destination.
But mostly it was the independent cabs ripping people off because they didn’t know to not get into Disco Cab because they were drunk and the cars (purposely) looked the same as the honest cabs.
So, yeah, Silicon Valley subsided rides were a lot cheaper because their whole plan was to drive out the competition and then raise prices to the actual cost of what it takes to haul people around which, surprisingly, is what the cab companies used to charge before Covid pretty much killed them off for good. Last time I was in Phoenix I couldn’t even get a cab to come pick me up…
Did you miss the part about taxis not picking up minorities or going to poor parts of town? The drivers aren't the ones being exploited...
When they've said they're profitable in any city, they're ignoring major administrative overhead.
"Drive me somewhere" is not a brandable business. It's a commodity. It's a race to the bottom on both sides of the market (drivers and passengers) which is why it has never been a profitable business without the reduced competition of a medallion system.
> Uber’s disclosure comes after Lyft Inc. LYFT posted its first profit on the same basis in this year’s second quarter, and food-delivery rival DoorDash Inc. DASH surpassed the ride-hailing giant’s market capitalization last week.
https://www.wsj.com/articles/uber-says-it-will-post-its-firs...
This exact topic was also directly addressed in the article which you apparently still haven't read.
From the article:
> "After burning through billions of venture capital dollars, Uber said it was on a path to profitability last year, using an accounting metric that ignores many of the costs that actually make it unprofitable. By the same measure, chief executive Dara Khosrowshahi is projecting this quarter could be profitable. That remains to be seen."
There is a Gizmodo article that explains in more detail[1] exactly what accounting tricks Uber is using to tell people they have positive EBITDA.
Lyft is doing the same thing[2].
1. https://gizmodo.com/uber-says-its-on-track-to-maybe-make-a-f...
2. https://www.marketwatch.com/story/uber-and-lyft-are-staging-...
all companies have to justify their value - some have less clear justifications and that means more discussion. this isn't the conspiracy you make it out to be.
There's no need to "argue" a companies value, you speak best by shorting/longing.
Why? It's market forces controlling the price, they aren't driving the hands of players.
Wrt the measurable externalities (traffic, pollution, etc) - don’t these exist due to the stronger data capture (app based) and public scrutiny? I have a difficult time believing Uber/Lyft are worse on these metrics relative to traditional taxis
I disagree. Ridesharing promised sharing a car. That is the whole concept: anyone with a car could pick up passengers and be rewarded by it. See also carpooling.
This is not what Uber or Lyft do, because that business was regulated out of existence by the taxicab lobby. We're talking about an established monopoly which fought any ride hailing service that was presenting any competition to their business.
What Uber and Lyft ended up getting away with was ride hailing services. They got away with it by leveraging existing legislation on vehicle rentals with their own driver. Still, that business is only available to licensed companies, not the regular public.
Getting back to ridesharing, the underlying thesis and the main value proposition of carsharing is that the service provided a way for everyone with a car to monetize their ride by picking up a passenger in exchange for a small fee. Instead of going through your commute with your car empty, you could pick a passenger willing to pay you for your trouble. That would take cars from the street, lessen traffic congestions, and change the way public transportation was used.
If you'd read the article, you'd know it was a review of all the forecasts made by Uber and Lyft. The journalist didn't forecast anything.
So I guess your comment should say:
Uber and Lyft need to find a new hobby. Forecasting is not for them.
The article mentions that so far Uber has burned through over $20 billion since 2009 and still hasn't turned a profit.
The article also points out that Uber and Lyft's own projections didn't showed a profit this year.
Unless you expect a company to be perpetually kept afloat by generous millionaire investment rounds, either the cash flow adds up or the current trajectory points to bankruptcy.