Uber only worked because they found a market that was heavily regulated at the local level.<p>Most industries with this sort of regulation are extremely difficult to disrupt thanks to regulatory capture. But the taxi industry was almost exclusively regulated at the local level. By starting the service in a city with a real taxi problem (and SF has always had a "unique" black car system in that black cars can answer hails off the street) they were able to prove their system worked and build capital. After they did this in a few friendly cities that just needed a taxi solution, they had enough funding and momentum to simply ignore local taxi regulations, pay off any fines, and let public opinion of the new (and super cheap because it's subsidized by Uber for a while in new markets) taxi service do the work for them.<p>That model works great if your regulators are far-flung and small. Most of these taxi regulatory agencies have pretty limited budgets and simply aren't equipped to deal with a company like Uber that has an army of corporate lawyers. The worst they ever thought they would have to deal with is a couple of local taxi companies with limited resources themselves, so they weren't prepared. Because Uber could drown their agency in paperwork for years, many regulatory agencies have adopted a "wait and see" approach with Uber.<p>Try this "ignore the regulators" approach in an industry with centralized national regulation and you're in for a big surprise. Turns out, the federal government has basically infinite money and is not scared by lawyers the way municipal government agencies are. This is exactly how Theranos and 23andme got in trouble -- you ignore the feds at your own peril.
This has all been pretty obvious for awhile.<p>Take Instacart: I pay $100/year for unlimited grocery delivery? Which I'm doing once per week, so that's < $2 per delivery. To deliver this service takes the Instacart shopper/driver at least 30 minutes, probably closer to 60. Assuming a $15/hour wage to the driver, that's $13 of loss per order. Which, again, I'm doing 50+ times per year.<p>And, at the store I order from, prices are exactly the same as in-store so there's not much (if any?) profit they could be extracting on that side.<p>Let's all just enjoy the VC money subsidizing our lives for this (second) brief moment. Just like Kozmo.com back in the day.
I think Manjoo's a bit off the mark here. We're not "witnessing the death of the on-demand dream". The dream was never alive in the first place. It was a zombie that was animated by cheap VC dollars.<p>Is the fact that most of these services are more expensive and less performant than they were two years ago a function of the challenges of maintaining quality while rapidly scaling (Luxe's excuse in the article)? Is it because the cost of expanding into new market segments has exceeded corresponding revenues in the short-term (Instacart's excuse)? Or is it because there are fewer venture capital dollars with which one can buy users?<p>When I hear the paper of record name "not losing money on the bulk of its orders" as an attribute of a startup that is doing well, I start wondering when the music is going to stop.
I've personally never felt that Uber was a particularly innovative business. The ability to temporarily commandeer a vehicle/driver has been a thing since vehicles were invented. The only interesting thing Uber ever did was the replacement of inefficient centralized dispatch of resources with their tech stack that directly connects consumers with suppliers.<p>It does not surprise me in the slightest that it doesn't translate well to other industries. If it did, I would expect to see a greater variety of preexisting businesses utilizing centralized dispatch in a manner similar to how the taxi/black car industry operated pre-Uber. Given that these are few and far between, I can only assume that either nobody thought of doing this before (unlikely) or that it's simply a losing business proposition.
I had a discussion on here about this a while back. The model translates, as it turns out, super super well. The failure is understanding the Uber model.<p>I see uber differently as a company long term. However, this is my attempt at what their current conventional model is:<p>- they are a market maker<p>- the market(service) ois highly variable. E.g All rides are non-standard each ride has a different origin and destination, as well as timeframe. A rake is a standard tool, lot easier to rent that to me than a dynamic ride from downtown boston to southie. Ect.<p>- transparency in cost calculations<p>- convenience<p>- ect.<p>So while Luxe is to some extent trying to replicate this, that isn't totally possible. On top of sort of competing with Uber (i just park in a cheap area and uber to destination) the service is highly limited by inability to calculate randomness of peoples schedules.<p>AirBnB works because tgere is friction, domain specific knowledge, experience, and pricing.<p>Uber for groceries competes with me just getting groceries. A premium payment for a standard service. I am paying for a luxury here.<p>Uber is a market maker in a highly dynamic market. Many "uber for x" are just premium service providers
This makes sense. Almost everyone needs transportation at least once a week. If you don't have a car and use uber to fill the gaps then it's a great service. But if you do have a car and some free time then it doesn't often make sense to spend extra for convenience services like Instacart.<p>Yes there are people to whom every minute is a lot of money, but they are a very small market of all humans. Uber (with its scale and cash reserves) could make spin offs that can handle those needs more than a dedicated startup could.<p>Another issue is that it's pretty common to have an uber drive you to and from work, and if you like your driver, you two can negotiate on the side, saving money for both. I imagine this kind of thing would happen for personal services like housekeeping. If I'm giving someone keys to my house, I want them to be someone I know and trust. Turning gig economy work into an under-the-table job can be absorbed by uber, but it's harder for unprofitable niche competitors.
Every time I ride with an exuberant Uber driver I warn them that wages will erode. Uber's (and competitors') intentions are to monopolize as much marketshare as fast as possible then increase margins. Today's drivers are overqualified for their position and these (already reduced) wages will continue dropping until they are slightly above fast-food wages.
These kinds of articles continue to pop on hacker news. At the end of the day won't most delivery companies go under when Google (fill in: whoever) brings the self driving car to a mass market and develops their own delivery service?<p>What will differentiate Postmates from Doordash from Eat24? Google might just sell these cars to these services but I feel like it is too lucrative for them not to develop their own service
I'm glad somebody finally wrote something on this. I would love to see the incomes for all the delivery workers (drivers / packers etc) broken down revenue and net income minus taxes, gas, vehicle maintenance, benefits, referral fees, and incentives etc. I can't imagine people are really making a solid hourly rate.
Uber worked because it disrupted and undercut taxi monopolies, and a minicab industry with various usability/availability/safety issues.<p>Uber is not only more convenient, but cheaper than the established players.<p>Few other industries are ripe for such disruption.
So doesn't this extend to "services" like Magic, which are just another layer of abstraction from the core product/service?<p>I've personally never understood Magic. Looking at their homepage, none of those use cases work for me. Flights, flowers, pizzas, whatever...each require enough specific information from me that passing it along to a third party - and paying more to do it - seems pointless.
I wrote about this recently: <a href="https://danielcompton.net/2016/01/27/a-context-free-grammar" rel="nofollow">https://danielcompton.net/2016/01/27/a-context-free-grammar</a>. The gist is that you can't copy a business model, tweak a few features and expect it to work in your market. The whole context of the business model matters.
Relevant article from almost a year ago makes almost exactly the same point: <a href="https://pando.com/2015/07/28/homejoy-only-uber-is-uber/" rel="nofollow">https://pando.com/2015/07/28/homejoy-only-uber-is-uber/</a>
It's almost as if having on-demand people to handle the minutiae of everyday life for you instead of you doing it is something that only rich people can have.<p>Who would've thunk it.<p>Edit: To make my point more clear, some things aren't expensive because of an old system or organization that needs to be "disrupted" (I hate that word), some things are just expensive because they're expensive, it's not a conspiracy to keep the common man from having a secretary, it's the fact that said secretary will eventually want to get paid for dealing with all the bullshit you're offloading onto him/her.
Uber got lucky - they banked on millenials being so self-centred, and so naive and myopic on the long-term costs of their actions, that they used them to basically use VC cash (like a billion a year in China alone) to basically buy the cabbie business.<p>Once uber are the only players in town for a cab, and the fares go north, the service drops even further, regulation ignored even more so, those same selfish millenials will be the first to moan (aren't they always...).