Uber and Lyft’s new road: Fewer drivers, thrifty riders and jittery investors | Hacker News Reader

Uber and Lyft’s new road: Fewer drivers, thrifty riders and jittery investors

wsj.com

213 pointselsewhen463 comments

I just do not understand how ridesharing cannot turn a profit. Let's look at unit economics:

~25% take rate on a ride ($15 average): $3.75 take

Payment processing: 2.5% + 30c = $0.68

Servers / datacenters: $0.20 (for a margin-sensitive business, you should be colo'ing your own servers, or using cheap alternatives like OVH/Hertzner)

Customer support: Automate as much as possible (auto refunds up to a certain point; for lost items, connect directly to driver); assume 1 in 50 rides require manual human support with a $3 cost = $0.06 support cost per ride

Fraud/refunds: Assume a 2% fraud rate that cannot be reclaimed; thus $0.30 cost for fraud. Refunds for things like driver purposefully took a longer route can be clawed from the driver.

Gross COGS: $1.24

Gross profit: $2.51

What am I missing?? Marketing? Fuck marketing when you can't turn a profit. Everyone knows about Uber or Lyft already, you need to turn a profit, not waste $30 per CAC.

You're missing roughly 30,000 employees to run a service that, at steady state, probably needs about 30 software developers and a few hundred second or third level customer support folks, with first level being handled by outsourced local-language companies.

And then there's Uber self-driving. Uber AI; Uber electric airplanes. Uber freight, Uber restaurant delivery, Uber grocery delivery, Uber this and Uber that. Oh, and Uber scooters.

The Uber app alone would probably need much more than 30 developers, see here : https://news.ycombinator.com/item?id=25376346

A lot of that is optional complexity, though.

Uber eats? Scooter integration? Mass transit support? Scheduled rides? Commuter cards? If you were building the app with 30 developers you'd simply not bother with those features.

Just like Twitter is one guy hacking on RoR for two days... we've heard this old canard before.

Whatsapp used to service 900 million users with literally 50 engineers. Instagram had 13 employees when it was acquired. The old canard is true if you focus on a core product and make smart architectural choices. (in Whatsapp's case they credit a lot of their efficiency to Erlang).

[1]https://www.wired.com/2015/09/whatsapp-serves-900-million-us...

Yes, it would be impossible to do something as complex as the Uber app with only 10,000 employees. Better to run the company into the ground.

It’s just some text on the web! And they wonder why software engineers are bad at estimates

> 30 software developers

- iOS rider app

- android rider app

- iOS driver app

- android driver app

- ride/driver matching

- routing/supply

- security/compliance

- fraud detection/prevention

- backend rides services

- backend user services

^ 10 teams of at least 10 people off the top of my head. Amazing how underestimated engineering resourcing needs are.

Plus all the back end billing and payments, including integration with some third-party enterprise expense management systems.

https://www.google.com/search?&q=android+ios+cross+platform

Wow that was easy.

IIUC, Uber employs 2000 engineers. I'm not sure how that's only 6% of the company.

If you're looking to trim fat - surprisingly - there might be better opportunities outside of engineering.

>> You're missing roughly 30,000 employees to run a service that, at steady state, probably needs about 30 software developers and a few hundred second or third level customer support folks, with first level being handled by outsourced local-language companies.

This comment is insane for any real app in the real world transacting in real dollars. There are a hundred countries with 100 regulations. Accounting/P&L/bookkeeping for the United States ALONE would take 30 developers for a revenue base this size.

FWIW Uber sold its autonomous vehicle research division in 2020. https://www.npr.org/2020/12/08/944337751/uber-sells-its-auto...

LOL. Just regulatory compliance will be more than 30 software engineers.

From Uber's Q2/2022 report:

  Revenue                     6854
 
  Cost of Revenue             4026
  Operations and Support       574
  Sales and Marketing         1263
  Research and Development     587
  General and Administrative   632
  Depreciation & Amortization  254
  Total Costs                 7336

I wonder (and am too lazy too try to find out) what portion of sales and marketing is driver-focused. One could maybe argue (as the grandparent did) that they should be spending less on rider marketing, but marketing to get drivers in the door seems pretty important. Dunno what their driver churn rate is, but keeping the pool of drivers large is critical for their service.

From what I’ve come to understand you are right on the money. All these “sharing economy” models rely heavily on churn and burn like many other less than solid business models like MLM.

I would love to see the breakdown of drivers and their immigration status, because from what I can gather, what is happening here is not any different than in the past of America’s history where the whole business model relies on the exploitation of “immigrant” labor that knows no better and is easily exploited, aka their unrealized labor value is converted into profit, or better states, benefits and riches for the executives.

Bingo. Andrew Chen, formerly of Uber, says exactly that in his excellent new book The Cold Start problem. The driver side is the hard side of the market and must be constantly tended.

Sales and marketing should be labeled price discrimination. It’s all incentives to match driver earnings and rider costs to respective minima (maxima).

What does Cost of Revenue means?

> The term cost of revenue refers to the total cost of manufacturing and delivering a product or service to consumers. [0]

It sounds like "developing the core product" falls entirely under this bucket, so with what others are saying about what falls under other buckets is right, then the one that looks most cuttable to me is actually "Research and Development". That sounds like the "experimental new stuff that may go nowhere" bucket, and if it's eliminated it would also put them just above break-even. Maybe they could focus on improving profits for their core product for a while before bringing that back.

Maybe there is necessary stuff included in it though, which I guess means that wouldn't be an option.

[0] https://www.investopedia.com/terms/c/cost-of-revenue.asp

Cost of revenue is mostly insurance costs [1].

If you look at their financials, they show gross bookings, which include both the full billed values for food and delivery, and transportation of people. Revenues only show their share of that total.

In regards to incentives, it looks like a complicated question, I found an interesting outline[2]

[1] https://seekingalpha.com/article/4293755-insurance-primary-b... [2] https://news.bloombergtax.com/financial-accounting/rideshari...

Cost of Good Sold is the variable cost most directly associated with bringing in the revenue. So the raw materials for making a physical product, or the salaries paid to service workers who are billed out hourly. Anything that is strictly mandatory to create the product or service.

Cost of Revenue goes a step further, and includes the next layer of costs that are necessary to cause sales to happen for a given product/service line in a reporting period. That includes things like sales and marketing, and distribution. Basically anything that would cause the revenue to stop coming in fairly immediately if it wasn't done.

Neither includes R&D to create the product/service in the first place, or general overhead.

Mostly the payments to drivers.

Slash Sales and Marketing by 50% and they'd be profitable.

Marketing is not what you think it means.

It's a clever way to disguise their unit economics to look better.

Their marketing budget is mostly going to pay drivers.

Put another way - you could be saying - why not pay drivers EVEN less? Well, they're paying them the least they can already. You can be sure of that.

If they did actually paid the drivers more and not disguise it as marketing - then their unit economics wouldn't look good - and when the business as a whole doesn't look good either - that's not a good look.

They can’t, that “S&M” is heavily focused on getting low information drivers into the service by smoke and mirrors about how wonderful it is to drive for them. They have to keep the rate of influx of new drivers at least above the rate of people realizing what a bad deal it is for them, aka churn.

If I remember correctly they spend a lot of money on marketing campaigns against any law that could hurt their business model. So slashing marketing might actually hurt them even more.

Sales and marketing affect revenues, you know.

Fyi, should say Q1/22, the report from March/22.

You've missed the following:

Take rate ~40% = $6

- payments -0.7 (correct)

- servers -0.2 (correct)

- refunds -1 (driver is indemnified, not in cabs)

- shared rides -1 (on avg, not in cabs)

- insurance -1 (drivers and riders get generous insurance, not in cabs)

now we have $2.5 per ride to pay fixed costs, not including marketing. in reality, they also give out generous marketing coupons to riders which cabs did not do. $1 per ride on avg discount drops us to $1.5 per ride.

it's probably true that 100 engineers could sustain uber in the US without any new features. 100 * 500k payroll cost = $50M/yr = 33M rides per year.

Lyft alone did >300M rides per year. Uber and lyft combined would be a solid company able to sustain and be profitable. This company would provide a way higher quality service (and safer, and more insured) than it replaced, without monopoly profits being captured by rich medallion holding families.

However, uber and lyft are still pouring money into product development. Shared rides as an example, still hold the potential to improve everything in cities massively. Lower cost than taxi, faster than bus, less congesting than private car.

Both also seem to be expanding outside of ride share, which should be viewed like amazon expanding to aws 15 years ago. if it works, there could be hugely positive impact. if it doesn't, then it's a massive waste of shareholder capital.

¯\_(ツ)_/¯

> without monopoly profits being captured by rich medallion holding families.

Then we'd have a(n) (inter)national tech monopoly. Soooo much better.

Uber's take can average ~45% depending on the day: https://missionlocal.org/2021/07/as-rideshare-prices-skyrock...

I agree and am not quite sure where it's going (other than software).

They have nearly 30,000 employees, mostly SDEs from what I understand. Its been discussed (and rationalized) here, but I still don't understand how that many are necessary. I read somewhere else that their engineering tend to need to rewrite their software every two years to keep up with the scale, so maybe they need them? it still seems insane to me.

Lyft only has 4500 employees

Uber has 3500 ish engineers. Then a huge amount of operations personal.

Best source I could find: https://www.themuse.com/profiles/uber/team/engineering

It can turn a profit, but not the sort of profit the investors and top stake holders want i.e. Microsoft and Google type margins and profit.

But then Uber wouldn't be a Tech Company, they would be another lowly profitable company.

The uber/swift rewrite thread from a couple years ago is highly informative of the company "engineering" culture.

The kinds of decisions taken for granted by the hacker news thread/etc are the kinds of decisions that could sink a self funded company, starting with the fact that they are basically writing multiple copies of the application for each platform (ios vs android) and going from there. This is maybe the problem with VC funded companies (like government contracts) the money just keeps flowing independent of all the bad decisions being made. Also, having enough engineers that whole teams can be split off to rewrite the application for no appreciable benefit except to peoples resume's is itself an upper mgmt problem. If the goal was a single unified application I might see how something like that could be justified, but they choose technology stacks that are to native for that to work.

What happens when VC money stops flowing in? Do all these unprofitable companies collapse?

> What am I missing?

Don’t forget about lawyers, compliance, lobbying, lawsuits, etc., etc. It’s also likely your assumptions are very wrong. Just think about what will happen when people figure out you auto-refund everything below a certain point.

> Fuck marketing

Possibly the bravest thing ever said on HN.

Uber has a compliance department?

Of course?

How else would they know which laws in which locales are most profitable to skirt.

I am sure AirBNB has one for the same reason.

>What am I missing??

Competition. Part of Uber's biggest expenses is "driver and customer incentives" which is corporate speak for bribing people to stay on the app. We know from economics that competition drives down profits and rid hailing services are a dime a dozen.

You’re missing the cost of engineering, for one thing. Also “host Uber at OVH” isn’t remotely realistic.

For a simplified version of the app with arguably no worse user experience, it's not THAT farfetched.

Uber has an absurd amount of logging & analytics.

If the app was simply drop a pin, get a ride - it wouldn't be that crazy.

Uber has 3.9M drivers world wide. There's probably very rarely more than 1M drivers active at any time. Probably less than 300k people looking for a ride at the vast majority of times.

Assuming you can update the driver's location 1 time per minute - that's ~1.5B requests per day - less than 25k requests per second (including user bookings).

That's like ~2TB of bandwidth per day. That's less than $200 per day. Almost everyone spends more than 5% of their cloud bill on bandwidth. Meaning, the rest of a drastically simplified (but nearly equally useful) Uber could run for ~$4000 per day in server expenses.

That's a $1.4M / year data center. Uber has revenues of >$11B.

They could be making a lot of money. They just aren't because they're spending AT LEAST 50x more on servers and product engineering than they NEED to.

They paid for growth for a long time. They have a monopoly now. There's not a lot of growth left to get. At some point the axe will come down.

Lyft is even worse. They're ~1/3rd the size.

It just does not work that way. I was an SRE at a similar company. You need driver locations, passenger locations, cost calculators (including ML models), ads serving, respect user preferences, geofencing, ride sequencing, analytics, compliance, fraud detection (you'd be surprised at the amount of fraud and clever tactics people employ). This is just a very minimal set of services (I'm guessing <10% of what you need) and you need to run this somewhat reliably.

Cost of revenue in just terms of infrastucture was measured in $/ride and minimizing it reliability is difficult, especially if you're a fast growing startup and on cloud providers. Unfortunately, if you're a fast growing startup you also don't usually run bare metal (even though I'm a fan of colo/OVH/Hetzner).

Don't forget that money used to free, with the way interest rates and investors were. It's far more difficult cutting down, than it is to throw money around, obviously.

It’s also a denial strategy. The bleeding edge that also forces your competitors out of the market because they cannot get past the network effect and name recognition hurdle is worth its weight in gold.

Most people will say they’re going to get an Uber, even if they end up having to use Lyft, no? Ubers, as well as others’, expressed strategy has long been not only first mover, but also monopolization of all aspects of their space, expressly anti-competitive. Part of that is not only being the leader, first to mind, but also draining the enemy/competitor’s resources and undermining their efforts to even challenge you. It’s a total market domination strategy that shouldn’t even be allowed, but they’ve also paid off politicians and captured government in other ways too, so don’t expect anything from there either. There used to be other ride sharing services, I don’t even know if they exist anymore, but even before the Great Monopolization, aka COVID, they were barely scraping by on crumbs in a few local markets while the likes of Uber worked in basically every market, especially in the high spending business travel and entertainment segments.

You're way overoptimistic in your expenses calculation - Maintaining a "real-time" app is 100x more complex than that.

100x, bringing their opex to hundreds of millions on billions of revenue. They should still be able to cut the fat and actually turn a handy profit, but they won't.

Surely you don't think a modern and complex app requires just a single API endpoint that triggers once a minute? And that it's that simple a thing for the driver/ passenger?

I wonder why all backends are now web based even if the frontend apps are not web based?

If someone does a mobile or desktop chat app (think Whatsapp or teams) he will use web technologies on the backend. But IRC is very old and still works like a charm without using web technologies.

Likewise, if email was invented today, it would be just calling some REST api instead of using SMTP.

When I worked as a game developer, the server side of our games was a slow and ineficient PHP crap becouse the founders were friends with a PHP programmer. I had to jump through many hoops to mask huge latencies from web server or even the web server not replying at all.

I think using web for anything can add a massive overhead.

I can see the advantage of the web, though. You don't need to implement a server, you just think in terms of HTTP requests and the framework will transform those for you in data and transform the data back into replies.

But if you need something real-time you have to use web sockets, and at that time the simplicity goes away and you can use OS sockets just as good.

I am arguing that using web frameworks for an app which won't have a web fronted adds almost the same kind of overhead as using Javascript for mobile and desktop apps. It's doable, yes. It's the best usage of resources, no.

Normally I should be the last one to complain since I architect and develop web apps for living.

But I do like efficiency, I think that sometimes many layers of virtulization, abstraction, indirection, protocol encapsulation are hurting both the performance and the speed of the development.

And I also know how to develop a server side app without using an HTTP server and a web framework.

I wonder if the root of the problem is that apart from the the people doing mobile apps, the rest are mainly learning a frontend or backend framework and they can't do or are not willing to do anything besides that. Or, even worse, new developers are just learning dynamic laguages such as Javascript or Python or PHP which catters mostly to the Web.

If you only have a hammer, everything looks like a nail.

When I had to design a tool to masquerade the real people data in our microservice based app, everyone from my team was amazed I wrote a console app instead of a Web based application. But since there it wasn't a need for that tool to be called through an API, why should I have made it a web app? Just to use curl instead of command line arguments?

Okay, OVH is not realistic, but at Uber scale, you can certainly roll your own data-centres and get costs lower than, or similar to OVH, even when including the cost of sysadmin and maintenance.

Yes, it means you won't get all the shiny quality of life services offered by cloud providers, but you're in a _margin sensitive business_. Deal with it. Optimize every cost.

Also, you don't need expensive engineers re-inventing the most basic things (I know Uber had a huge not-invented-here syndrome). Use the boring tools for the job. Only reinvent what is necessary. You don't need engineers practicing resume-driven-development.

Uber does use its own data centers.

You’re missing very large categories like G&A, R&D etc but just look at their most recent SEC 10K or 10Q filings and you can see where the money goes.

I don't think he's missing that. Why does an app to connect drivers to passengers that's been around for a decade need R&D?

Now this is not about self driving or whatever else, it's about a ride hailing app. The point is there is no reason ride hailing can't be profitable.

Now, using any company to prop up r&d and investor hype for a moonshot, that's a whole other idea...

Marketing. At first people needed to know about Uber. Then they needed to trust Uber. But now they need to carry on using Uber instead of the competitors.

I think if the tech investment bubble bursts (if it is a bubble) then this makes it easier for Uber in terms of competition as ride prices will tend towards the original "Taxi" prices and people will have to get used to that. And then Uber can make their profit (and also the drivers can make a reasonable living).

In my country Uber is more expensive than taxis. Sometimes much more expensive during rush hours or busy days or holidays. A lady I know payd 10x the price for a taxi ride because it was new Years Eve.

Are these numbers made up? Everyone is pointing out the indirect costs but I suspect that’s only a piece of it.

A big chunk of that $15 goes to driver incentive promotions. Not the steady state cost, but the sign bonuses and what not. Given high driver churn, this is always a big line item.

Google first result says just 3% of drivers drive for them for more than a year.

Colo of servers might not be cheaper. Either way the server cost should and could be minimal per ride.

Legal, finance, HR, R&D, facilities, comms, support, endless vendors for all of the above…

And no, you can’t just automate support. Refunds are not the only issue.

You're missing insurance costs, which dwarf payment processing, fraud, and support.

The 25% take is likely only in their best markets.

Most of their markets are terrible markets.

driver cost is a lot more than $3.75. you think really drivers are working for 75% of a $10 ride per active hour? they're publicly measured to make 4x that

He said Uber is taking 3.75. that means the driver is getting 11.25.

You flipped the values. The driver is making a bunch, and that's per ride, not per hour

Insurance?

> Marketing? Fuck Marketing

Do you have an MBA or other similar business experience? Because you can’t “fuck marketing.” Without marketing you have no business. How are people going to find out about your product?

How did people find out about Google, YouTube, Facebook, Whatsapp, Waze, Instagram, when they have started?

I think it was because they provided an unique service and word of mouth was enough.

I remember when Gmail was in beta. There was no marketing. I was fortunate to receive an invite and once I get 5 invites, friends were begging me to send them one.

Exactly! As a SWE pursuing MBA, I was surprised to learn how critical marketing is to the existence of a business, and that it's way more logical, quantitative and data driven than people realize.

You can write a hugely popular app with great UX, and super scalable backend but if you don't align your marketing parameters you won't make ends meet.

>Exactly! As a SWE pursuing MBA, I was surprised to learn how critical marketing is to the existence of a business

And you are wondering that people who are in business to teach you something tell you how vital is what they are teaching you? All salesmen sell things that are vital for your success, health, well being if you trust what they are telling.

There's a talk a couple years old now by an Uber engineer called something like "what I wish I knew before scaling to 10k microservices", I haven't watched it in a while but when I saw it I remember thinking "these people are absolutely insane". I've since heard some crazy stories about things like new services being built because people would rather build a new service than talk to the devs that owned the existing one. I don't know if this is true or not or how widespread this was, but the impression I get is that Uber has massively over-built in an effort to look more like a "tech" company rather than a "taxi" company to investors.

We have a couple of local companies in NY with their own ride-sharing apps. They aren't as polished as Uber, but they do work and the companies that built them have about 1% the staff of Uber.

If Uber is covering 200x the market globally as a local NY company that has 1% the staff, it seems like Uber is more efficient on a sales/employee basis.

I doubt NY is 1% of the phone-hailed taxi market globally.

The point of the tech industry's relatively high valuation is that headcount isn't supposed to linearly scale with sales! If you need to add one employee for every 100 customers, then you're not Microsoft, you're McDonalds.

If Uber has to staff up a hundred person office in every country they operate in, this is bad, and guarantees they won't ever be profitable!

Well sure...but the thing about software that's different from say taxis or commercial real estate is that once you build a product the marginal cost to scale it up is close to zero. This is what drives the valuation multipliers of growing tech companies. If your software requires 10x the engineers to support 10x the usage I'd say such valuations are not justified.

"About 24 percent of Uber’s bookings—all the money that customers pay through the app and in cash, including driver earnings—occur in just five cities: New York, Los Angeles, San Francisco, London, and São Paulo." 2019

I recently got a ridiculous coupon code for 50% off Postmates (Uber Eats) orders, when I did a Google search for Postmates. 5 orders, up to $100 savings on each order, and the code worked on my wife's account too so we get 10 orders. For weeks I've been ordering $200 meals from fancy steakhouses and paying $100, with leftovers for days. Somehow they haven't stopped subsidizing their customers yet.

The code is FEAST if anyone cares to try it. Probably expired by now. It doesn't seem to work on Uber Eats, only Postmates.com on desktop web.

The FEAST code has a few things to note, as the actual discount doesn't come out to 50% off. Which is fine, just have the right expectations before using it.

- It's for delivery only

- Discount applies only to the food

- The service, delivery, "temporary local fee", and "temporary fuel surcharge" stay the same

To test this, I put together a $67 order of Thai food, which had $17.88 of fees added onto it, coming out to $84.88. With the coupon, it's $51.38. If I was to order it directly from the restaurant (so I'm only paying tax), it's $74.79.

So it's not horrible, $84.88 (no coupon) to $51.38 (with coupon) is a 39% discount. And 31% off compared to ordering directly from the restaurant.

This is all true. But if you max out the discount (which is easy if you have a large family and/or want lots of leftovers and/or like fancy restaurants) then it's still a screaming deal and way cheaper even than eating in at the restaurant. I can't believe the code is still going...

And you can wait for it to show up. Around here a Doordash or Uber Eats delivery is at least an hour, maybe 90 minutes. So you need to plan ahead a bit.

If they stop subsidizing, then revenue growth may slow, stop, or turn negative. If the latter happened to Uber/Lyft for even a quarter, they may struggle to continue operations. After all, what's worse than a business losing billions of dollars? A shrinking business losing billions of dollars.

Wow, just looked this up and this is insane. Guess I’m gonna be eating out for a bit. Thanks for the tip

For comparison, I ordered 10kg (22lb) of premium beef, different cuts, organic-ish (not certified) from a farm for about AU$200 (US $140-ish) a few years back.

Huh, I wonder if these long-expiry promo code campaigns are actually intentional referral marketing. Not accusing, just noting how it worked here!

Oh Jesus, I mean thanks for the code, wow

I always figured by now there would be some sort of centralized "trust" entity, ala credit bureaus, where you can build apps on top of that using the same "trust".

Supposing such a thing existed, then drivers could simply offer their own driving services by themselves. Perhaps that's the next evolution here.

I used to drive a pretty boring, but predictable route in the morning and in the late afternoon. I would've loved to drive people who are near my destination both ways, but without anyway to trust them, no way.

Surely someone has tried to implement this before and failed and I just don't know?

It totally exists, it's just not a tech company

https://en.wikipedia.org/wiki/Slugging

That was really common at Microsoft in the late 90s (and may still be) to be able to use the HOV lanes when driving from Redmond to Seattle. It worked well because you were picking up colleagues, which sort of established a certain level of trust.

huh. I've never heard of this. thanks for the link. though, what I'm describing ideally could be beyond driving. the same sort of "trust" would also be helpful for selecting someone to take care of your children, clean your house, etc.

Are there any open source solutions that could enable this to be offered as a non profit platform?

There was Waze carpool, which I used as a passenger. It was not meant to be profitable as a source of income for drivers, but helped cover the cost of gas and such. I don’t remember the exact sign up requirements but both the driver and rider had a decision in who to pick up, when and where. Not sure if it’s still in existence but it sounds like it would be worth a look for you.

Waze was bought by Google. They're allowed to coexist, but got squashed as a competitor into irrelevance

At one point, I think people did this crossing the Bay Bridge in SF. It didn't need a VC-funded startup with a bunch of expensive engineers though. I think people just parked in a known location and people pooled.

I remember there being signs on Spear St at Folsom with specific destinations for carpools. I can see them on Google Street View in 2021, but they appear to be removed in 2022. (or maybe they're designated on the paper you can't read on street view right now?)

A chicken and egg problem of data acquisition. If I'm a user, why would I share data to such a service without concrete services to unlock? If I'm a service provider, why would I pay for a service without users?

Really such data is obtained only by service providers, credit bureaus being an edge case. And if I've built a service that acquires such data, why would I sell it rather than build more services to sell?

In France, there was an attempt at something close to this concept[0].

Despite having thousands of people doing my same commute, I have never been able to to get anyone to drive me to/from work.

[0] https://blablacardaily.com/

Hey, BlaBlaCar Daily engineer here. This still is an attempt we are running in France, now with thousands of trips happening every day. When did you use it? Perhaps if you give it another try you may find someone this time. :)

I also would love to hear your feedback. What do you think we should do to improve the experience of drivers and passengers, and to get more people to share their commute?

Thanks!

That works in Spain and it's more or less the same. Of course, Spain is a much poorer country, so it makes more sense to share a vehicle there.

Isn't this the plot of a Black Mirror episode?

https://en.wikipedia.org/wiki/Nosedive_(Black_Mirror)

I used to do that with QuickRide in Bangalore. Very popular and fairly simple to use. As a rider, you can put up your origin and destination points. You are shown people with cars who have a high overlap with your origin-destination route and you can send them requests to join. Usually 1/4th the price of a cab and the app has information about where each rider/car owner works (mostly MNCs), that works as a trust factor.

https://quickride.in/

Sounds like a great way to kidnap victims with high paying jobs

I've had many Uber drivers give me a business card.

The whole point of Uber is that you don't have to call around for a ride, though; a rolodex of business cards is not a good substitute for Uber.

>Surely someone has tried to implement this before and failed and I just don't know?

In Europe there is BlaBlaCar

Waze Carpool!

Here's my question: how much will this hurt AWS? Oh, Uber and Lyft alone won't, of course, even though IIRC their IPO's revealed staggering AWS bills. But, there are a lot of goofy ideas out there masquerading as companies, and the VC spigot just turned off. That spigot was pushing VC money, via a very complex system of middlemen, to AWS.

If AWS has half their customers disappear, what does that do to Amazon's bottom line?

A lot of those goofy idea companies convinced everyone else that they should spend nearly unlimited amounts on AWS because of opex or other reason, and now everyone believes they need to migrate to cloud as well. Maybe they do, what do I know? I don’t feel a need to contribute to that huge margin that AWS makes, but based on their growth and the interest from lots of legacy businesses in moving to the cloud, I wouldn’t be too worried about them.

>If AWS has half their customers disappear

Nah, they're not even 1% of AWS. Plus AWS is profitable AF.

if 0.01% users are 1% of their revenue, that's a huge concerning consolidation. AWS IS indeed in this situation when the full discretionary spending sector struggles.

AWS might be super high margins, but it does not exist in a vacuum. AWS cross subsidization powers AMZN retail to be able to run at a <1% margin.

Any business on Amazon that uses AWS has to “pay” for AWS services as part of its cost of doing business. It’s counted as AWS revenue and an Amazon retail cost.

https://www.lastweekinaws.com/blog/the-aws-service-i-hate-th...

> For example, internal AWS accounts are known as Isengard accounts, after the fortress in “The Lord of the Rings” eventually controlled by the corrupted wizard Saruman. When internal game development teams use Isengard accounts, they must pay (via internal accounting) the same rates for AWS compute cycles that outside retail customers pay, according to people close to the teams.

You will often here Disney talk about “transfer costs” to Disney Studios from Disney+ when talking about Disney+‘s content costs. This is similar.

Could you elaborate? I don't seem to grasp your point.

>AWS cross subsidization powers AMZN retail to be able to run at a <1% margin.

I've never truly understood that number, how come they have such low margins where most of the products I see there have a 10-20% markup (at least) vs. the same product in classic "offline" retailers (costco, walmart, etc...)?

"But they send it to your home", yeah but they charge you for that too.

The revenue generated from "lift and shift" enterprise migrations to AWS, where large companies pay accenture to move them to AWS in the least efficient way possible probably dwarfs startup revenues.

exactly. there are some stodgy bigcos paying >$10M/mo on AWS. They'll be fine.

same for Stripe. and Twilio. and Segment

b2b companies that coasted on free reign will struggle a ton

Not much. Uber largely runs its own data centers with some multi cloud. Travis Kalanick was paranoid that Uber would end up competing with Amazon or Google eventually and did not want to be beholden to them for tech infrastructure.

I believe Lyft is entirely on AWS but they are much smaller overall because they’re only in a limited number of markets.

AWS revenue is mostly per usage, not per customer. A handful of ML plays excepted, all those startups were tiny things with very little actual resources required. Most of Amazons money surely comes from giant customers like Netflix and Facebook (hell, even Uber and Lyft are probably lost in the noise, they don't stream anything).

The P2P transportation market is an ideal one for a workers' cooperative. The fact that Uber and Lyft are running at a loss (...for now) does not make them any less rent-seeking in their business model.

https://drivers.coop/

https://ridefair.io/

From the jobs page of the first link for a software engineer position: "The position is salaried up to $72,000 a year depending on geography. Fixed-term contracts are available."

Sorry, but you're not buying competitive talent with 72k/year salary. Uber can squeeze out tons of marginal efficiencies via better routing/matching, price discrimination, and surge algorithms. Implementing those algorithms means hiring good talent, especially in ML. Having a fancy frontend is only 10% of the picture if you want drivers to have good utilization.

> which will never scale past the size of a single US state

People live in a city and take cabs in that city. Build a city-scale app. For extra credit, add federation APIs to interoperate with other city-scale worker-owned co-op apps.

Only a tiny 0.1% of people (including Uber's dumb investors) think that being able to use the same app in every city on earth is a killer feature.

All postgres needs to handle is a large metro area and then is trivial to shard and scale out.

> edit: and the second link advertises using Postgres, which will never scale past the size of a single US state

to be fair depending on the exact implementation details you probably could do everything you need, including management using Spanner and BigTable.

I think most of those efficiencies can be done better by a human dispatcher. The key thing which made Uber take off was a combination of convenience and better cars. Solve the convenience and that can take you a far way for many people.

this assumes Uber can only hire silicon valley engineers. $72k is plenty money in a cheap gas/food/rent no state tax city like Dallas

> ideal one for a workers' cooperative

I am sorry, but there is not way a workers' cooperative can build a safe product for passenger and drivers. All of the leading rideshare companies have invested 10s if not 100s of millions into safety platforms that leverage the latest face recognition, fraud algorithms, and more to ensure that everyone can have a safe ride.

Both passengers and drivers robbed and murdered each before these investments were made to keep the bad guys off and the good guys safe.

...you know why they need to do that? Because they have an incentive to let basically anyone join and have an adversarial relationship. A workers cooperative can be a faceless organisation, but unlike a company it is also an actual community, so things like vetting who let in I'd much more feasible to do you'd do in a community than in a "startup family" trying to squeeze their drivers. It could be as simple as requiring somebody to vouch for you and being responsible for whatever fuckups you do.

How are cooperatives not incentivized to "let basically anyone join"?

The more drivers a co-op has means shorter wait times and higher geographic coverage for the passengers. If passengers have to wait too long, they will lose faith in the reliability of the co-op and be forced to use other forms of transit.

The more passengers a co-op has means drivers have to idle less or shorter (unpaid) distances to travel to pickup a passenger.

It is always better for the co-op to have more active drivers and more active passengers. The growth comes in the form of "let basically anyone join".

This seems very optimistic about the likelihood of a "community" to vet itself properly vs. covering things up "for the good of the community". Obviously it can work out, but there's bountiful examples of communities ranging from schools to churches to workers unions that have a pretty well established history of systematic abuse and coverups.

But now it sounds like you're advocating for Taxis.

It'd be interesting to see actual statistics on rideshare crimes before and after the introduction of these intended mitigations. Anecdotally, the number of gruesome news stories seems to have remained roughly constant.

Let's not forget that this kind of venture also destroys the business it was meant to disrupt, at least while the venture money is flowing.

Uncreative distruction.

Somehow it seems wrong that people can make enough money to buy an island without actually making money.

Taxi cabs pre-Uber were awful, at least in the 3 cities I used them most (NYC, Boston, Vegas). Dirty cars and often unmaintained. Regularly taken in circuitous routes to raise the meter charge. “Broken” credit card machine. Very difficult to find a taxi if you weren’t in popular areas. Calling a dispatcher for a taxi only to wait an hour and have them not show up.

Having apps solved all of the above problems. I would give 0% chance of any similar improvements under the monopolistic medallion system that exists in the old regime. Uber forced innovation that was so much better the politicians folded despite intense lobbying from the old hands.

In Eastern Europe there is no Uber nor Lyft. Waiting time is 2-10 minutes on average in a fairly large city. Cars are definitely not dirty nor unmaintained, they have the reputation of having cars that are almost new, and so forth. Prices have increased of course.

> Very difficult to find a taxi if you weren’t in popular areas. Calling a dispatcher for a taxi only to wait an hour and have them not show up.

Funny timing. I just attended a wedding where the hotel was in Annapolis, Maryland, and the venue was about 5 miles outside Annapolis. The couple had recommended using Lyft due to limited parking, and had even given everyone a voucher to offset the cost. Getting from hotel -> venue at 4pm was no problem at all.

We started trying to get a return ride at a few minutes before 10pm. First the app took about 4 minutes to match us to a driver, then rapidly cycled through a handful of drivers before ensuring us that our driver was 11 minutes away. For the next 20 minutes, that driver seemed to patrol up and down a street near downtown, with his ETA bouncing between 10-12 minutes. My guess is he accidentally accepted my "bad" (outside of downtown) ride and was hoping I'd cancel? I didn't, and he finally did.

The app spins for a few minutes and then tells us someone is 15 minutes away. This person calls me and asks where I'm going, specifically am I going to DC. I answer that I'm not, I'm headed to downtown Annapolis, and he says he'll be right there. He made 3-4 minutes of progress toward us, then the app abruptly cycled through two more drivers. After another few minutes, I guess another driver cancelled on us, leaving the app to spin for several minutes unsuccessfully.

At this point I cancelled the ride and was about to call a traditional cab. It was 10:45, the wedding had ended at 10:30, and it was starting to rain. Luckily, another couple at the wedding had correctly predicted that we wouldn't be able to get a ride back downtown. They had gotten a three-row SUV ("Lyft XL" or something) to get to the wedding, then gotten contact details from the driver so they could privately hail him after the wedding. Assuming we weren't too particular about obeying seatbelt laws, they had plenty of space for us.

I'm not sure why people think the ride-"sharing" services have solved so many problems. I hope to never have to do business with these apps again.

That however is why they were cheaper. It seems, from the article, people don't actually want to pay the premium for that better level of service.

> Very difficult to find a taxi if you weren’t in popular areas.

Yes, now it's impossible to find a taxi anywhere unless you have a smartphone and an Uber/Lyft account. I miss the days when I didn't have to have a lifelong relationship with my cab.

People are pointing out that Lyft and Uber often brought car service to towns without taxies and that is true (and good I suppose).

But I do not think that's the business we should be sad about disrupting - Lyft and especially Uber have been fighting hard against all sorts of public transit systems across the US because they view them as competitors. It's unclear how effective they have been, but I also have no love for their intention - which is to lock the public into their service.

The great thing about the free market is you get to choose not to use them!

My city didn’t have taxis, but we have Lyft and Uber.

If you’re big enough to be a Lyft and Uber market, you’re big enough for taxis. Outside of NYC they’re usually just not that visible; normal cars, dispatched via phone.

That isn’t realistic. Galveston Texas — calling for a taxi can take 1-2 hours to arrive. Uber— 15 minutes. Taxis are terrible.

I am not an Uber fan in terms of their ethics and how they got to where they are. That said I think disrupting taxis was a good thing, for the consumer.

The medallion ponzi scheme is dead. You now know more about your driver, I presume it has made things safer. It has allowed people to do rides as part of the commute they are doing anyway, so probably good for the environment. It has encouraged ride sharing. It may have made some people not buy a car where they would have before, which is probably good.

The rideshare is probably a good example of real value being added. A lot of pure "internet only" marketplaces are just seeking rent on some subset of ecommerce. At least Uber added a map, routing, automatic pricing and stuff.

I don’t see the problem. The cab companies needed to die. Uber and Lyft will raise their prices to become affordable - back to the price of cabs - and still be a lot better than what they replaced.

We’re killing hundreds (thousands?) of individual cab companies so that we can consolidate the entirety of the cab industry into 2 tech conglomerates. I don’t see how that’s a win.

Those cab companies offer worse services and are monopolistic and the whole medallion system.

There are plenty of horror stories where minorities can’t get a cab in the middle of NYC.

https://www.nydailynews.com/new-york/ny-metro-cabbies-fines-...

This is not a problem with Uber.

I've been noticing more drivers going independent. When I landed at LAX recently and waited at the taxi area for a Lyft, there were a bunch of drivers coming up and offering people rides, but not through Uber or Lyft. I thought "why not", took one of these independent rides home, and paid the guy through Square. It wasn't a "cheap" ride, but it was cheaper than the Lyft ride I cancelled and I'm sure he made a greater profit than through a "ride share" company.

That's just one example, but I've noticed this drastically increase in the last year. Whether I'm at the airport, a train station, or a bus depot, I've been seeing way more independent drivers.

What's stopping more drivers from doing this? If it's the "trust" aspect that comes from Uber, then surely there's some system that can meet us halfway that doesn't apparently need large sums of VC money and high fees but at least provides trust and safety for riders.

There’s the risk they take you somewhere and rob you. Happened to someone I know in NYC.

I’m all for scrappy bootstrapers but the middle aged adult in me just sees a licensing and insurance nightmare.

Yeah, no. I will pay the premium to Uber/Lyft for safety.

Doesn't that make you an illegal taxi?

What do you think Uber was for years and years?

It's different when you're a large company with a legal team doing something not clearly illegal - than when you're a single individual doing something clearly illegal.

You didn't have to have a taxi medallion to be a black car driver and pick people up at locations upon request - which, originally, is what Uber was, exactly.

The whole point of a taxi medallion is to be able to pick people up off the street - which is what these independent drivers at the airport and train stops are doing.

Not insured. Not tracked. Who knows whose car you’re getting into.

i did that a few times at DFW. times were not reliable. sometimes you'd get a ride right away; others, you're waiting a while for no reason. also depended on how well the driver knew how to use square...which you definitely couldn't rely on. also, didn't feel like i'd have much recourse if they did something crazy.

I think we're about to see a lot of tech ideas with questionable economics come back to earth. When the cost of capital was below a single digit, "parking" money in a growth bet could vaguely make sense. After all, someday Uber would figure it out, or get AVs, or .. something? Better than leaving the money in a .01% money market for 10 years, or parking the money in something with no path for growth like industrials.

This problem isn't restricted to startups however, even big tech has big expensive forays into questionable markets. Meta is building something for a few billion a year, Google has hundreds of strange an unprofitable businesses, and B2B SaaS is full of startups which may actually just be consultancies.

A 10-12% cost of capital means that you either need to have a real plan to turn profit in 3 years or investors won't care. Just breaking even means an opportunity cost of 30%.

Comparing Meta and Google, to Lyft and Uber isn't an apples to apples comparison. The former have cash cow businesses and have captial that they can deploy to find the next $100 billion dollar business. Its essential for their long term survival to keep diversifying and reinventing themselves.

I think that's the point. That even these well funded, relatively sovereign companies will be punished for their moonshots and that means the future will be devastating for these magical unicorns.

One wonders what government policies preventing this from happening are doing to the future. I don't have any way to objectively measure this, but my general sense is each day interest rates remain artificially low, the downside becomes greater. I'd be curious if you know a way to quantify this effect.

Exactly right! An unintended side effect of the artificially low cost of capital was that labor seemed expensive. All the long shot ideas that tried to "improve productivity" - whether by replacing drivers with driverless cars, or robots flipping burgers are entirely uneconomical when cost of capital goes up.

Now, capital has become more expensive and labor is also more expensive. It's a perfect shitstorm for a lot of projects.

Three different flavors of big bet. Meta realizing their core business, while massive, has peaked, loudly reorienting their business around a dubious moonshot bet.

Google burning cash in a moonshot division, dubiously betting that creating startups within Google is easier than outside of it.

Uber/Lyft subsidizing customers for a long while to take over the market, which... pretty much worked? Of the three "big bets" this seems most promising. Even if the market decreases, it's not going away, nor is it going back to regional taxi companies.

I think you’re right. I couldn’t imagine using taxis when traveling for work ever again. Uber sends the receipt straight into Concur for me.

Pre-Uber I remember having to get Taxi drivers to write me a freehand paper receipt to expense.

Its worth considering that 3 is actually quite common within large companies as well. I can think of a few industries dominated by big tech that have never turned a profit or even positive free cash flow.

The thing that actually puzzles me is that in the post-Kalanick era, Uber didn't more aggressively pivot to essentially being a taxi company where drivers supply their own vehicles. You've got a working app--how many people do you need to maintain/enhance it? Self-driving isn't happening in an economically interesting time horizon--certainly not reliable door-to-door in cities. So raise prices, cut costs, and have what's a fairly attractive taxi business for many places.

Of course, that may not have been what investors wanted to hear.

Seems unsurprising. The check had to come due eventually. It’ll be interesting to see whether riders keep using it in enough volume to keep them afloat.

Aside from them spending money on boondoggle after boondoggle, these guys both still have no moat. They had to burn a ton of cash buying up competitors and there's absolutely nothing stopping a third player from entering and eating their lunches. The core premise of hailing taxis via GPS is very simple and very appealing. The could have run these as lean, low-margin businesses and earned a tidy profit forever, but instead they decided to play the valuation game.

> there's absolutely nothing stopping a third player from entering and eating their lunches

Any challenger is going to be ten years behind on market and platform development with no access to cheap capital for customer acquisition.

It wasn’t about taxis, man, it was changing everything.

Listen to the old Ben Thompson podcasts from when Uber was taking over life itself. Private cars, self driving, blah blah blah. Why go to a restaurant when Uber can fly one to you?

It'll be interesting to see in a number of cities where traditional medallion licensed yellow taxis almost entirely disappeared, and the drivers went to go be Uber or Lyft for a period of some years, how much of it reverts back to the traditional system of taxis. I can foresee something like a lot of heavily used 300,000 mile Honda Accords with all city miles on them getting sold cheap. Buyer beware.

The medallion system was completely broken before the ride apps appeared. Traditional car services were reliable and easy to reach via phone. A lot of them have still survived.

It's more expensive but I always use a traditional car service to get to the airport. Super-reliable, comfortable, clean, good drivers. They're always pre-scheduled (which is fine for the airport) but I've never had problems with getting them to make changes when flight stuff happens.

If you’re arriving at an airport or other high traffic area, you will almost always get a better price and timelier service by simply jumping in a standard taxi. I’d say this has been the case for at least 6-9 months.

The airport taxi hates short hop ride. The taxi drivers got visibly frustrated and angry after hearing my destination is not long distance. I just get a Uber/Lyft to avoid the airport cartel.

We live 10 minutes from LAX. Taxi drivers get somewhat annoyed, but we give them $20 and that seems to make them feel better.

Also, we have a favorite taxi company we use to get to LAX. We make reservations a few days in advance, and they have always showed up on schedule.

My coworker got yelled at by a taxi driver recently at DCA airport for this.

Which is dumb because DCA is like 10 minutes from downtown, so I’m not sure why they would expect most travelers to be headed to the suburbs.

That may be true, but I’d much rather ride in an Uber or Lyft with less timely service and a higher price, than in a nasty yellow Crown Victoria from the dawn of time itself, with that ugly, rough, stained interior that smells like cigarettes and vomit. Taxis don’t even offer phone chargers or water.

IMO, Taxis would have long since died as an industry if it weren’t for governments propping them up artificially.

Last time I tried taking an Uber from SFO to SF, the quoted price was $150.

Taxi downstairs was $40 and was waiting for me to get in. Didn’t smell like vomit. But if it did, I’d roll down the window and remember I’m saving $110 for a 20 minute ride.

That’s lovely but what if you live somewhere like KCMO or Columbus that doesn’t have established cab infrastructure and does have a ton of Uber drivers?

The last Uber I rode in was a beat up Prius that smelled like pee. Uber has lowered their standards.

That's not at all my experience in Raleigh in particular. Walk to the cab line, get in, pay with card. No fussing around with an app and waiting.

That works when you are at the first point in your trip. Now get that taxi to show up in a timely manner at your house or the house of someone you visit.

By "fussing with an app" you mean about three clicks?

A taxi for me is a maximum 1-2 years old black typically German car summoned and paid in an app.

If your taxi is a monopoly using old cars, where card readers are “broken” and who don’t have apps - it’s your taxi that is broken, not the concept of taxi. Many US and European cities have bad taxis, but many also have good taxis.

I would ride in a professionally-serviced Crown Victoria over a Prius with bald tires, obviously ruined steering joints, and no windshield wipers, which is a true and faithful description of the last Uber I suffered.

They'd still exist because there is a demand for the service. Someone would satisfy the demand.

Depends on the airport. Cab services in some cities are very poor.

I wonder how much of this transfers to the music industry. It's much more complicated than the taxi industry, but in broad strokes, VC-subsidized companies basically undercut the combination of record publishers and musicians, setting the price and revenue-per-listen to levels much lower than they would have been without subsidization. But it's also been happening for longer, so I think that it's more like as-if all the taxi drivers had already been driven out of the business and the taxis junked. With taxis, you know if there are no rides available, but with music, you don't really realize all the great music that isn't being written.

> but with music, you don't really realize all the great music that isn't being written.

Musicians have long complained that their share of record sales was negligible in the old system, at least until they became large and established acts. The money (such as it is) has always been in touring and merchandise.

I've had over 10,000 Uber rides, all black, some SUV since 2011. I would have no problem if they just focused on the higher end of the market where there's profit to be made. I never thought their going down market was a good idea.

> I've had over 10,000 Uber rides, all black, some SUV since 2011

10000/11/365 = 2.5 per day, is this your main means of transportation?

Some people have their company/firm pay for the rides. Why not take it as the main means of transportation?

Yes, and most/many were corporate reimbursed. I lived in SF for 10 years without a car.

Why so many???

Why not, if your company's paying for it? It's just another way of extracting wealth from VCs.

I would like to read an explanation for how Uber and Lyft can't be profitable when taxicab companies can be.

Taxicab companies don’t have to pay the Bay Area salaries of engineers, data scientists, MBAs, etc. nor do they have massive advertising and marketing overhead.

It is in the article: "Uber and Lyft have been a crude proposition all along: Subsidize unprofitable taxi rides with venture capital money, claw for market share, and eventually figure something out that will make such taxi rides profitable despite the huge corporate structure of well-paid executives and engineers, a thing traditional taxi companies with already razor-thin margins didn’t have."

I read the article, but that's not the level of explanation I want. I want to know how, for example, at the scale Uber and Lyft are operating at, the salaries of executives and engineers are more than the efficiencies it seems like they would gain. On paper, you shouldn't need to add a linear amount of overhead every time move into a new city: with taxi companies, you have to add physical buildings, admin, dispatchers, service personnel, and a bunch of other costs every time. You'd think Uber and Lyft could be a lot leaner than taxi companies, even though engineers make more than dispatchers: why not?

Less overhead. Maybe an office and a garage in a cheap part of town and a few dispatchers and potentially a mechanic, etc.

Uber has to maintain its servers and has a massive crew of white collar workers in expensive cities writing code, maintaining the servers, designing apps, marketing, lobbying, litigating, modeling potential business models, etc.

Overhead. Taxi drivers get a return on their time. Uber needs a return on payouts which is hard money.

taxicab companies aren't spending billions of dollars a year on bubble-inflated tech salaries.

So does this mean it's going to begin to become cheaper to use the services of old taxi organizations, who arguably aren't going to have the shareholders to appease to to pad revenues with profits?

I really think, in all cases of online platforms, that laws requiring the platform to be transparent with all costs - including how much they keep as a platform, how much they give the actual driver, how much the restaurant gets (if doing delivery) etc. would be highly beneficial, if not necessary, to not only society but also to potential investors.

E.g. How sustainable are their prices, and are the billions invested simply subsidizing lower fares to outcompete based on price for a temporary time while fighting over to capture as much of a market (artificially and temporarily?) until the shareholders come knocking asking for the profit tap to get turned on?

Why? It was “transparent” from the day that Uber and Lyft went public that they weren’t profitable and losing billions .

They were always Ponzi schemes and retail investors who naively believed the hype were the “biggest fools”.

It's the VC-finance industrial complex, where the incentives aren't aligned with the sources of the money.

Arguably being transparent at the per-transaction level which allow everyone and their mother to then do simple math to understand that such a business model isn't sustainable - but they're not currently paying enough attention, just in a very shallow way - they see Uber or Lyft on the news plenty, maybe use the services themself - until it's too late.

All of this should be educating people giving their money to institutions or stockbrokers to make sure their money and whomever they're giving the power to dictate where it goes is aligned with long-term results, and arguably not at all on per-transaction buy/sell actions.

I think a lot of our problems today stem from there being such an abundance of wealth/riches that enough people could become lazy and relatively inattentive with their money, blindly trusting others without understanding the underlying mechanisms enough - and perhaps blindly believing government institutions like the SEC would protect them - instead perhaps trusting long-time existing brand names as some sort of measure of trust.

Bitcoin et al are the next evolution the VC-finance industrial complex has latched onto quite successfully, so far.

Wait a minute! That was just temporary while the service hyperscaled. I read on HN that Elon Musk’s fully self aware self-driving would take over from drivers starting in 2019 and cost like $9,000!

Uber cratered the value of the taxi medallion. The main benefit the medallion gave you was the right to pick people up on the street, unlike other kinds of car services that you had to call for. Since anyone using a taxi could probably afford a cell phone and a credit card, taxis were vulnerable. Does this mean that the cost of entry into the taxi business is lower? Sure. Will it matter? WHo knows.

These industries usually get captured via regulation imposed by lobbyists of the biggest players, to make the barrier of entry more costly to keep out potentially new entrants.

I know a few taxi drivers who are medallion holders - which are now worthless - they of course have been put in a shit position, and the Cities don't particularly care anymore because whatever lobby structure that got the medallions in place to begin with basically no longer exists - they're not necessary to get today's lobbyist funded politicians into play, positions of power.

I don't use Uber. In my country we have a taxi app which can be used by any taxi driver. So I do have the benefits of Uber - using an app, having a larger pool of drivers to pick from, paying the ride through the app, without any of the downsides of using Uber.

The taxi drivers follow local regulations, they have the proper permit to transport people (this requires checking), I don't see ridicoluos price surges and price hikes at rush hours, taxi companies don't evade local taxes like Uber does, the money remain in the local economy, drivers have wages, social insurance, health insurance and pension funds.

I think we need to stop comparing Uber to Lyft. To me, this is more of a Lyft problem as Uber has diversified way more.

My favorite feature of Uber and Lyft the last several years is that it's essentially a crowdsourced way to transfer wealth from VCs to random users.

Operating every drive at a loss means the rider and drivers benefit and the person holding the bag is some VC who apparently has more money than they know what to do with. Given how many financial structures today seem to flow in the opposite direction and skim a little money from everyone to transfer it to the already-rich, it's nice seeing a system that (completely unintentionally) flows the other way.

the drivers don't really benefit that much, because after you subtract the cost of the purchase of a suitable car, repairs/maintenance, tires, fuel and so on to calculate the fully loaded cost per mile of operating a lyft car for several years, the wage remaining for the driver (after subtracting the US income tax as a 1099) is often under the minimum wage (and far under the living wage) in many major metro areas. Using Seattle as an example and its $15/hr minimum wage.

If it didn't work for them, they wouldn't drive.

According to various online calculators, the average operating cost for a Prius is about $0.11 per mile. Includes fuel, depreciation, repair, maintenance, etc...

Uber drivers are doing way better than $0.11 per mile.

It's a strong labor market. Nothing stopping lyft drivers from getting jobs in food service or warehouses or a variety of other jobs that have few requirements to qualify for.

The VCs made plenty of money in the IPO. It’s the shareholders who are left holding an empty bag.

Yep. I own both UBER and LYFT stock. They have been some of my worst investments.

Isn't that how a majority of inflated startups work? VC money moves the bus for a quite a long time and if profitability can't be figured out, it will come out in the form of layoffs and downturns.

Take Doordash for example, every delivery they do with is powered by VC money.

DoorDash IPO'ed 18 months ago.

I felt the same way until the IPO.

I once had uber x drives (that’s what the solo is called right?) in San Diego going… at least 5 miles. Sorrento Valley/La Jolla.

After a month or two I started having rides discounted to literally as low as $3.12

All I could think was that “somebody is definitely losing a lot of money here & it’s not me”

Was very interesting. I know the driver wouldn’t be doing that if he was making $3 for the trip.

VC funds are constantly being spent like this. The main unavoidable flow in the other direction is taxes and inflation from printing money.

VCs get rich, but they risk a lot of their own money doing so.

VCs are generally not risking their own money these days. They raise funds from many other people, and sometimes that includes <gulp> pension funds.

Drivers work gogs, as in not being employees. Traditional taxi companies, as shitty as their service might be some places, are risking of being driven out of business. Legislation has been ignored. Thebonly ones not holding the bag are the VCs, and users. Everyone else is. And all that in the pursuit of an elusive monopoly fuel by cheap, and later dumb, money. Oh yeah, talking about dumb money, retail investors are holding the bag as well.

> Traditional taxi companies, as shitty as their service might be some places, are risking of being driven out of business.

This is not the downside you think it is. So help me if I could snap my fingers and make this happen I just might do it.

It could also be seen as a very convoluted way to subsidize the car industry and to stall the push for better public transit.

I always see people coming back to public transit in discussions like this, but there seems to be some kind of fundamental disconnect. Uber/Lyft are for people who don’t have that kind of time.

The early VC's cashed out and made billions. Retail investors are paying for these losses.

Aaaand the disruption to the faltering regulated Taxi system, eating that for lunch.

Travis K is still out there. Doing things.

At markets where Uber has competition. I know Brazil and Mexico. DiDi pays driver more and charges client less. So DiDi takes less cut than Uber and is still profitable.

Are traditional taxicab services still alive? How did they survive until this time?

They're still alive (albeit damaged) in NYC, and in most large cities I've visited. The answer is simple: they don't have thousands of expensive software engineers doing god-knows-what as overhead.

Or all the servers etc.

They just needed a (usually tiny) little office and 1 person to answer the phone.

In my experience by cutting corners wherever possible but that leaves a bad reputation. Cars that were beat up, sometimes just didn't show up, no GPS or knowledge of streets, cash payments to avoid some taxes, avoiding unprofitable locations or rides, etc. Uber and Lyft aimed for a better brand image but that is at odds with cheap costs.

I've never had a beat up taxi, but NYC might be an outlier in that regard (due to the yellowcab fleet + TLC regulation). The part about avoiding unprofitable locations is certainly true, however.

OTOH, I've taken a decent number of sketchy Lyft and Uber rides: ones where the driver was clearly not the person on the account (possibly a relative?), where the car didn't match, etc. All in medium to large US cities.

In the Boston area, taxi drivers often ask you two things:

1) Where you goin'?

2) How do you get there?

Which is... if you're new to the area or going someplace new, how do you answer that second one?

They win bids for Medicaid car services and airport concessions.

Plus, there’s a 50 year old woman making $19/hour to smoke cigarettes and dispatch cars, a mechanic, and a bookkeeper.

-- in my city the remaining cab companies have contracts with hospitals/the city/companies - can always find a cab outside the dialysis clinic - when I asked why a driver told me the dispatch company accepts a chit from the clinic --

Sometimes they offer a better service. Flew to Honolulu, called Uber. No one grabbed it for 15 minutes. I grabbed a cab that was there at the airport.

Also many cab services have started leveraging apps like zTrip.

zTrip sounds identical to an app I envisioned in 2010 I called "Yo Taxi!" It would take your phone-reported GPS location and send it out to one of the affiliated taxi services (depending on who serves that location, cost, etc.) who would dispatch a cab to that point.

I'm kind of glad "Yo Taxi!" exists in some form now, what with the wheels (figuratively) falling off Uber and Lyft.

Here in India, its increasingly starting to feel that both Ola and Uber are slowly abandoning the market. Service quality has gone down drastically and Ola seems more interested in making (unsafe) electric scooters

In their heyday, you’d drive around and find that 30-40% of cars on the road were Uber/Ola taxis (cabs here have different colored number plates). Now, its around 5-10%

> the current business model passes off nearly all of the costs of actually running a taxi company onto drivers who pay for their own cars, fuel, and insurance, whereas AVs would have meant both companies would be paying for those things, but that’s a moot point now

I know that Vice is a meme these days, but I can't resist. Where do they think the money is going? Mostly to the fees that are paid to drivers. If those costs are baked in and they are still losing money, it's because they're paying the drivers more than they can afford. They were banking on not having to pay AV drivers wages, sick leave, pensions, have them go on strike, etc etc. Just provide customers a good service for an amount these companies could sustain.

Now, that was a wild bet for sure, but not a bad one for humanity to have tried.

> but not a bad bet

What was good about it? They could have worked with existing taxi companies to sell their technology to create a better market, that would have been a good bet. Betting on making everything worse and hoping to profit from it was a horrible bet.

If they continue what they are doing, I can't wait for them to crash and burn.

Fuck the "Gig economy".

They tried that and the big taxi companies weren't interested. Similar situation to Blockbuster and Netflix.

They didn't bet on making everything worse. Getting an uber is an unbelievably better option most of the time, and it's also geared up traditional backwards cab firms to make at least half-decent apps and advertise prices up front.

> Now, that was a wild bet for sure, but not a bad one for humanity to have tried.

I think there is a very literal and material sense in which it was a quite bad bet for us to have tried. How many tens thousands of people skipped medical procedures, lost birthdays and holidays with loved ones, and didn't live as well as they could have because of these companies' cynical abuse of their labor?

I am not convinced they treat their drivers worse than medallion taxi companies. In fact, I’m about 95% sure the reverse is true.

Okay I'll bite. How many?

Uber is just a dumpster fire. I scheduled an airport ride with them and each driver continuously just kept canceling it when they saw where it was going. Can't imagine how bad it is for someone going to a lower level neighborhood.

Can't count on it anymore - going back to manually calling taxis.

This was inevitable without automation right?

Inevitable even with automation. As the article points out, automation would mean they'd have to actually own, maintain, insure, etc. the cars.

Automation was always a form of "investor story time". Going from a software company to a logistics company that has to buy, store, and maintain a fleet of vehicles across hundreds of cities was never going to happen even if they figured out full self driving.

And automation doesn't solve the issue that such transportation is race to bottom. It will never be high margin business. Or even low one with marginal unit costs...

Former Lyft engineer here. I'm convinced they will go out of business or sell the scraps to someone... however smart acquirers like Elon wouldn't go near it. Rideshare sucks.

The broker model has a yes out in the transportation industry, before Uber and Lyft were a twinkle in someones eye. It's a low margin business and has gained efficiency through tech. Once we understand that the gross margins are probably 20%, you are scalping the drivers and no driver can exist successfully living off brokered rides alone, Uber and Lyft will price like CH Robinson.

In third world countries like India, Uber and Lyft cannot compete with it’s street smart drives. Drivers call you and ask you to cancel the trip and pay them in cash to take you to the destination. They use Uber/Lyft marketing, tracking, and status but give zero dollars in revenue back.

I have a first hand experience of this, not hypothetical.

These companies were always net value destroyers. Consumers being subsidized from the pockets of investors was nice while it lasted, but it doesn't make for a sustainable business. Once they go to zero we'll wonder how it ever even appeared to make sense.

Look at initial funding rounds of a hot new startup these days. Especially in areas like web3. There will often be participation from dozens of VCs and angels, mostly random names and funds that came up a couple of years ago.

There is really way too much cheap and dumb money sloshing around the tech industry. Money that cheap can’t create long term value - it just creates zombie companies and bad operational habits.

This was always the idea. I remember Jason Calacanis saying on This Week In Startups months ago that Uber is in growth mode, eventually when push comes to shove they'll increase the price to get to profitability and have the market share to stick it out.

After Uber and Lyft will fall, I can see a better model coming up.

An open source base for a riding/taxi app for which local companies can add their own modules for billing to comply with local regulations.

It would be the WordPress of ride sharing / taxi apps.

Totally unsurprising and still both unprofitable businesses (Lyft, and Uber) 3 years after IPO. [0]

[0] https://news.ycombinator.com/item?id=21328967

Western countries have such a weird problem

A seemingly boring business seems unviable.

For example, food is expensive, and we have to tip, but restaurant is tough business, and the servers don't make enough for living. Like why the heck is this not viable?

Well, that's just not true.

I'm in the Midwest and a server at a decent restaurant can pull in $300/night in tips.

I have been told that we tip because servers can't make a living.

If we don't tip, we are killing them.

Why do we tip 20% again? It seems like we can tip 5% and the servers would still make bank.

“I’m not loyal,” said Sergio Avedian, who has driven for seven apps, including Uber and Lyft, and writes about his experience on The RideShare Guy blog for drivers. “Nobody is loyal.”

I love threads like this. It assured me of job security in accounting y'all. Thanks for giving me confidence in strange quarters.

Shocker! A product is more popular that is sold below cost and you actually need to charge more for a product than it costs to produce?

Of course they need to make money, they cant subsidise everyone forever

So have they hit price-parity with traditional taxis, yet?

Uber and Lyft already dumped their bags on your 401k.

So they made a full circle ... back to taxis?

Increased by how much?

> The fundamental problem Uber and Lyft keep running into is that most people are not willing to pay the fares it would cost to run a profitable taxi service with the overhead Uber and Lyft require

[surprisedpikachu.gif]

You mean this was all a scam to enrich early shareholders and incinerate $30B+ in capital!?

pearl clutching intensifies

More or less, though it did move the needle forward. Now most taxi services are easier to use thanks to Uber. But they were always in the business of selling dollar bills for $0.90. Soon as they want to make a profit it turns out to be more expensive than running a local taxi service and they aren’t price competitive. In the meantime taxi services got their own apps/app integrations while maintaining their competitive advantage.

You left out the part where they're siphoning capital from their drivers:

> Here is the thing about Uber and Lyft (and much of the “sharing economy”).

> They don’t pay the cost of their capital.

> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.

> These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills.

https://www.ianwelsh.net/the-market-fairy-will-not-solve-the...

The incineration was just a byproduct.

I do wonder in so many of these cases, how much is:

- Completely cynical fleece the suckers

- Irrational optimism that things will be different because self-driving or whatever

- Fake it till you make it (which is related but slightly different)

Writing as somebody who was working in network engineering and IT/tech stuff during the dotcom 1.0 VC funded boom and crash from 1997-2002 none of this is particularly surprising.

it sure has been amusing to watch, however.

maybe we can pay for future uber and lyft rides in beenz and flooz

Yes, exactly.

always_has_been.jpg

   25.
   Uber and Lyft Are Out of Ideas, Jacking Up Prices in Desperation for Profit (vice.com)
   127 points by elsewhen 2 hours ago | flag | hide | 179 comments

Above is what I saw on the HN front page minutes ago. Then I started reading the comments thread and suddenly the submitted article has changed. It is now pointing to WSJ instead of VICE.

Looks like the original VICE article has even been scrubbed from HN entirely.

https://news.ycombinator.com/from?site=vice.com

Below is the original article.

https://www.vice.com/en/article/m7vmpb/uber-and-lyft-are-out...

"[...] eventually figure something out that will make such taxi rides profitable despite the huge corporate structure of well-paid executives and engineers, a thing traditional taxi companies with already razor-thin margins didn’t have."

There we go, the punch ...

"[...] a sensible business with an obvious if limited market and profit potential. It is also an idea that has already existed, once run by a plucky startup that focused exclusively on Black Car services from experienced, fully licensed and insured drivers paid a living wage. You may have heard of it. It was called Uber."

... and the knockout.

That's because the Vice article talks about the WSJ article. Often, HN moderators will point to the original source, particularly when the following article tends to be click-baity.

The WSJ article is the original source which is what the guidelines ask people to post.

weird

Url changed from https://www.vice.com/en/article/m7vmpb/uber-and-lyft-are-out..., which points to this.

I can proudly say that I've NEVER ONCE used these NeoSlavery services and never will.

Reply on news.ycombinator.com