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Comment by karaterobot | Hacker News Reader

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.

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