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Comment by munificent | Hacker News Reader

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.

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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.

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.

I think there's a big reliance on the part of these employers in recruiting and retaining employees who are either less literate, less informed, more gullible, or more servile than the average service industry worker.

You don't need a work visa to drive an Uber.

Is that in fact is a major differentiator between lyft/uber driving and other jobs (I'm dubious), then it sounds like a major and useful advantage of the platform that is reasonably worth paying for, albeit also one that is fragile.

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.

I am extremely skeptical of that calculation because a Prius costs $30,000 or more now. Maybe operating cost but not fully loaded cost including something like a 48 to 60 month car loan.

Acquisition cost of the car is only a consideration if you bought a Prius solely to Uber. If you bought it because you want/need to own a vehicle, and you use it to Uber as well, the depreciation is the relevant factor.

the overall lifespan in miles or km of the car until it's used up and has almost no resale value is a consideration, if you put 200,000 km on a car doing city driving as an uber, that's consuming a considerable portion of the original total purchase price of the car. 11 cents a mile comes nowhere close to account for that, as reflected by the fact that the IRS mileage reimbursement rate for use of personal vehicles for business purposes is presently 58.5 cents per mile.

IRS allotment is famously generous. Depreciation in the figure I provided accounts for the resale value dropping with mileage. If you drive 200,000km for Uber, you're making tens of thousands of dollars.

That number is very obviously incorrect. Fuel prices alone are currently close to $0.11 per mile for a brand new Prius getting the manufacturer's estimated MPG (58/53). Even if you assume fuel prices at half of what they currently are and zero expenses other than the upfront cost of the car and fuel, it would take 500k miles to hit an amortized cost of $0.11 per mile.

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.

Yeah, but still not turning any profit. And probably still using leftover VC money. With the stock value way down, I wonder if they have issues pumping cash anymore

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.

Spending your own money is called angel investing. VCs spend other people’s money.

Sure - I mean it's their own firm's money under management.

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.

But what makes them so awful? Most likely it was the medallion system that limited competition in the market so maybe there is a system somewhere in-between that and the unprofitable ride share systems that work well for everyone. I just got back from Madrid and taxis were plentiful and metered with a flat fare to and from the airport. They all have the same markings so you can tell they are taxis but there are a variety of vehicles from Teslas to bare bones stick shifters being used. Uber was barely a thing there but there was an app called Free Now that many of the cars had on them.

So basically they had Uber but as a different brand.

If you remove the medallion system, let people drive their own cars, and coordinate with riders via an app, you have Uber.

The difference is there is some regulation around it because they are all metered so everyone is charging the same rates and I suspect it’s a better deal for the drivers and customers overall. Btw I didn’t use the app once as it was just easier to hail from the street.

Off the top of my head:

- Lying about the debit/credit machine being broken in order to receive cash.

- Being unwilling to drive to/from certain neighborhoods.

- Not turning the meter on in order to take advantage of people not from the city/country.

- My (possibly incorrect) perception is that they are harder to hold to account. I do not always know the number of the taxi that picked me up and dropped me off.

- Calling a taxi dispatch does not guarantee one will arrive. If service is slow you end up in a strange limbo of "Is that taxi late or have I been abandoned at 2:30am?"

There's probably more but those are the ones that spring to mind based on my personal experiences with taxis. Even if Uber was only offered as a premium service I would still order one over a taxi.

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.

Today you are one of the lucky 10 thousand: https://youtu.be/RQY6WGOoYis

the fundamental disconnect is you aren’t actually more important than other people just because you were given more money

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.

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