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Comment by mjburgess | Hacker News Reader

I don't think the claim would be about quarterly profits. It has had profitable quaters before.

Consider, eg,

>Uber on Tuesday posted a profit of $394 million during the second quarter, compared with a loss of $2.60 billion a year earlier

This really doesn't answer or refute any questions around their business model.

The final question is: what's the moat?

It's trivial to create these "automate contract labour" apps, and many now exist. It seems an industry designed to reach, at its height, tiny profit margins.

I suspect regulation is heading in the direction of making it easier for people to move their data between apps too -- if that happens, the "social-data" moats of these bizes will disappear.

They'll be left with IP that teens could compete with

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> The final question is: what's the moat?

I mean, it's a 2-sided market. That's inherently a moat.

There's a reason why it took Amazon to displace Ebay, and Facebook to displace Craigslist. It's a very expensive and difficult market to get into.

> It seems an industry designed to reach, at its height, tiny profit margins.

There are plenty of industries like that. Grocery, for example. That doesn't mean that the business is a bad one by itself.

> I suspect regulation is heading in the direction of making it easier for people to move their data between apps too -- if that happens, the "social-data" moats of these bizes will disappear.

IMO, that wouldn't change anything.

If I could export all of my Facebook data (maybe I can, I haven't checked), it wouldn't cause me to abandon the platform - I'm there because of the other people on the platform.

Riders use Uber because it has the drivers. And the drivers use Uber because it has the riders. The ability to export ride history or reputation isn't going to change that fact.

You're not on Uber because of all the other users. Heck, you're not really there because of most the drivers, you're only there because there are enough drivers such that requesting a ride won't be a hassle. It's quite different from Facebook (I think WhatsApp in Europe is a better example these days) where you just expect everyone, including somebody you just met, to be.

> And the drivers use Uber because it has the riders.

You make it sound exclusive, but I've seen many drivers use a few different apps at the same time, often with different phones. You just need some temporary incentives and you've bootstrapped your network, because as explained above, the problem is only the initial bootstrapping.

Concrete example: two months ago I hadn't heard of "Free Now". I've now used it twice in two different European countries, last time because Uber was exactly four times as expensive (maybe that explains their new profits? They just raised their prices, hoping users won't notice?). I'm not often in a taxi so this is just anecdotal, but there's very little friction when switching to another service.

There's no foundational IP at uber that prevents a competitor from copying them (and many do), but the network effect is a non-trivial moat in itself, particularly for a two-sided market like that. Ebay has no foundational IP either, but it has been the marketplace for online auctions for a long time because of that network effect.

> It's trivial to create these "automate contract labour" apps

Just another HN Tuesday I see. It’s so easy that it’s still duopoly in US since the inception of the market.

It's so easy that there's like 5 or 6 of them that I know of in Romania alone and drivers will swap between 2-3 of them every day. So yeah, it's pretty trivial. While there's no reason to start one if you can't undercut Uber or whoever's already cutrate prices, that doesn't mean Uber has a lot of room to increase prices/profits.

It is pretty peak HN to assume the world is only the US. Outside the US there are plenty of taxi apps. So, yes, we know from evidence that they are easy to build. The trick is getting customers and drivers for your app.

Do this exercise. Pick any country. See how many taxi apps available. They may not be called Uber and Lyft, but I bet there are only a handful at best, anywhere you pick (see Careem). That's the nature of the business.

It's not easy if you want one app that deals with a market containing many different legal jurisdictions with widely varying tax and safety and labor and consumer protection requirements. Plus different countries might need different payment system and need localization to different languages.

But if the market you want to deal with is just one city or metro area or similar then it is not a difficult app.

There's not a huge network effect between cities though and there's high fixed costs for each one so it's not a great technology business.

> Just another HN Tuesday I see. It’s so easy that it’s still duopoly in US since the inception of the market.

I'd suggest that this is not necessarily related to how hard the tech side is. Both major incumbents have (until now!) been throwing away VC money without any clear path to profitability, so there hasn't exactly been much of an incentive to build yet another money pit.

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