IMHO, that's what makes it a good example. It can only make money by driving its drivers' wages well below what they themselves will accept or what competing, traditional taxi companies currently pay. With the spigot of VC cash turned off, Uber is exposed as having little viable business model besides straightforward exploitation. There's basically nothing innovative or original about them that lets them make money off nothing but an app for coordinating other agents' labor. The drivers are either incredibly exploited wage-workers or independent contractors who therefore don't need Uber, but can't be both.

They behave as if they are attempting this, IMHO.

>> They are a cab company

I believe, depending on which way the wind was blowing, they might dispute this. Their argument is that they are not a cab company, merely a service for connecting drivers and potential passengers. This is how they avoid pesky things like employment laws.

>> Any other company can do that too, if they want.

Few others have the access to VC money that Uber do - I would consider this reliance on an absolute ton of investment, which allows them to operate at the prices they do, to be something of a market distortion.

Yeah, Uber is different because of its insane amount of investor money but losing money is still losing money; it can't go on forever. So saying it doesn't mean anything is a bit shortsighted in my opinion.

> It's a place for absurdly wealthy people to park vast sums of cash on the bet that Uber will continue to gobble up marketshare from taxi companies, etc., until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with.

Seems like an extremely risky bet to me. I'm unconvinced they'll be able to make any decent amounts of money in this service especially considering the majority of auto manufacturers are working on similar capabilities; they'll be able to drive the price down far below Uber ever could unless they start manufacturing their own vehicles.

Any time there's a business transaction involving more than two entities, at least one of them is getting fucked.

The problem here is that ridership at current prices is rather higher than ridership at 2x current prices... and 2x current prices only brings you up to break-even. you want to bring that up to the point where Uber is making billions? ridership is going to fall off a cliff.

I use uber a lot mostly because it's really cheap; For five bucks? yeah, for five bucks, I'll have someone drive me to work. if that goes to $10 or $20? Yeah, I'll still use it when I go to the bar or when my car is broken or something, but for that kinda scratch I'm probably taking a shuttle, driving myself, or using a bicycle to go to work.

The point here is that Uber's competition isn't really lyft or the cab companies, it's the car I have sitting in my own driveway.

They're not losing money on rides.

Uber is two things. A moderately profitable ride sharing company, and a loss-making VC-backed R&D enterprise working on things like self-driving cars. If they shut down or spin off their R&D they could continue on as a ride sharing company indefinitely -- they could probably lower prices because they're not using that money to supplement the VC money they're spending on R&D.

But you only separate the R&D if you think it won't ultimately lead anywhere. If they eventually actually get self-driving cars working then it's obviously to their advantage to be the same company that people are already using for car service.

Odd. I see their network effect as rather strong. Why would a driver use a new competitor app if the customers aren't there? Why would a customer download another app they haven't used before or heard of, especially if the rides aren't there?

Uber and Lyft are far from profitable. Some people have described Uber as a public charity.

You also misunderstand what Uber is doing beyond building a simple app and opening signups. They spend an enormous amount of money (many billions) marketing, which is necessary to keep both sides of the market. Without enough drivers, riders will leave. Without enough riders, drivers will leave. They need to keep both sides engaged.

They're also putting a lot of effort into lobbying and getting around taxi laws. It's expensive and legally risky.

Finally, both Uber and Lyft have tested subscriptions and seem to have decided against them.

Because driving individual people around in expensive cars burning expensive fuel is not a profitable business (in the economic sense). Where are all the billion dollar taxi empires? It's a tough racket. It's equally laughable that Uber's "killer app" is going to be food delivery.

Uber is consistently losing money, as it has been for several years now. It is an example of that strategy failing spectacularly - Uber was able to gain market dominance and has been spectacularly unable to translate that into actual money.

Financially speaking, all they've managed to do so far is give away billions of dollars.

This is just guesswork. May it be related to the VC funding that holds them afload, where at every turn they need to think about the future (and quick-as-possible) 10x return on investment that is in the fine-print of the VC contracts?

Or they may be so imbibed by startup-culture "Greed is good" mentality from the very start, that it is unthinkable to consider not squeezing it, and shaving off for every penny.

I disagree that there is no network effect. When one travels to another country it is much easier to use Uber rather than to find what local brew of 'carpooling' service is available, create an account, put in credit card info etc.

Their tech is easily replicable but their global presence is not.

Really? Because every analysis I've seen has suggested that Uber is basically subsidizing rides with VC money until some new element (the main hope seems to be self-driving vehicles) let's them transform their business into something that could be profitable.

It never was a level playing field, not as long as Uber has been around in any case. Taxis are propped up artificially by city laws and airport regulations and that has resulted in low competition and poor service. I don't see why Uber or its customers should have to respect the unfair city+industry collusion.

That gets insanely expensive in their most profitable city as you not only forgo profit you also need to drop the pice enough that people pick you. And it’s never going to be just one company in just one city that tries to compete. The might be able to pull it off, but not while being a 100 Billion dollar company.

Remeber, long term their options are be profitable or fail. They can’t continue to attract money if they had a monopoly and still can’t be profitable.

How can Uber be doing the same thing if Uber is losing money doing the thing and the other companies make money doing it?

Even if one or more sections of Uber are profitable, it's likely that those sections rely on functions performed by unprofitable sections of the company. Disentangling those elements isn't simple. It's possible that Uber as-it-exists-now can never transition to profitability but a company-like-Uber-in-some-ways could be profitable in the future.

Law was unjust, they had a moral imperative to break it.

>Furthermore Uber's competitive advantages are fueled by incredibly dangerous financial practices.

And if Uber was seeking a monopoly this might be relevant, but they opened the market up for anyone, including those not doing scary financial practices.

>the new kid on the block typically isn't infused with tens of billions of VC.

Yes, so it should have been the case that the taxi monopolies were broken up decades ago. Not waiting around for VC capital to do it.

Assuming all this is correct (leaks sometimes are not) this does not solve the competition problem. The more money they make in a market the more attractive it comes for someone else to enter that market.

>You are right that there are low barriers to entry in this market - it's why most drivers do both Uber and Lyft. The underlying technology is the same, and the capital (drivers) is not proprietary and can be shared between different companies. However, if Uber were to stipulate that drivers sign an employment contract, and then enforce that they were not working for the competition, this would raise the barriers to entry for competitors. Likewise, there isn't much differentiation in the taxi market. It's nice if a driver comes with water and a nice-smelling car, but ultimately it's not a deal breaker.

The problem is the parts of their business that are unique have low barriers to entry, while the other parts are inherently inefficient (having each driver pay all the capital and running costs is more expensive than centralising). Sure the current taxi industry was ripe for innovation, but once that genie is out of the bottle there is nothing stopping someone else out ubering Uber. How does Uber stop this happening?

I don't understand or like this attitude. A company creating a moat by breaking the law to gain an advantage over people following the law is not something to be admired or celebrated.

(If I've misunderstood your tone I apologise but your final sentence gives me this impression).