An examination of Uber’s economics

Regarding the lack of &quot;innovation&quot; concept this article is hocking... pretty sure before Uber&#x2F;Lyft I couldn&#x27;t click a button and know how much my ride to a place would cost then, book it and pay for it.<p>(I still remember cabs in NYC where the driver &quot;knew a shortcut&quot; that ended up adding $10&#x2F;$15 to a ride... I&#x27;ve never seen uber&#x2F;Lyft pull that move)

I’m bearish on Uber and I read the entire article, but it’s full of a lot of bald assertions with no supporting evidence and the only real point it makes, and it makes repeatedly is that Uber is only “successful” because they offer below cost rides subsidized by investors who were pushing growth at all costs because they wanted to flip their shares to dumber money in the future.<p>I don’t feel like he needed that many words to say that.

Honest question: how isn&#x27;t this dumping? I thought that anti-dumping measures were a thing. Couldn&#x27;t it be argued that nine years of losses mean fares are being sold below cost to push out competition, and therefore this is not ok? In particular in the context of Uber being a US-based company operating in lots of other countries (as in, being international trade, etc).

This is a really great article digging into the economics of Uber. The unsustainable economics of the industry were a lot more obvious to obvious in markets where Uber had well funded local competitors and ultimate failed like China. When Uber and Didi were competing everyone was using car service to get around. A 45 minute ride could cost 1 us dollar. You had people in jobs making 600 USD a month riding to work in 100k usd Teslas when previously they would take the bus or subway for 15 cents. Everyone was taking advantage of subsidies. When Uber left China, DiDi prices went up a lot of most people stopped using it exclusively and regularly. Taxis in many cities are both faster to hail and cost less money.<p>The issue I take with the article is that the authors appear to believe in some god-given right to car-based public transit. For example, people what work night shifts at low paying shouldn’t have to pay the surges prices a rich person trying to leave a club would pay. They also believe that adults shouldn’t be able to get themselves into money losing business deals (which is what sounds like is happening for both drivers and Uber equity holders). They also believe that people should not use money raised voluntarily in the market to subsidize services.<p>It is not clear to me that those beliefs are self evidently true.<p>As an example: Regulation that subsidies late night taxis for low wage night shift workers economically distorts just like uber drivers that are receiving food stamps. Why is the former okay but the later is not? Both are subsidies to employers who can have a job filled by paying a lower wage than the market would otherwise bear.

They are truly innovative in the sense that they finally exposed the fact that much of tech startup funding is just a ponzi scheme by pushing it all the way to the IPO with no plan to ever make money. That&#x27;s a new thing, usually only microcap companies were able to pull off that scam in the past.<p>Get out between series A&#x2F;B if you want maximum return, the only losers in these phony companies that never make money are the last round of investors who get left holding the bag.<p>And if you&#x27;re an employee looking at stock options in a startup just say no. Stop surrendering real money for fictional money. Get a higher base salary instead. Employees with equity plans are always at the bottom of the list to get paid out.

I don’t know, Uber Share and it’s integration with Google Maps has been a money&#x2F;time saver for me. Although I do agree about Uber’s valuation part. The whole private equity and exit on listing to stock exchanges is a charade. It must be broken and do away with. Or stock market listings are meaningless

Frankly I hate the modern way of doing business. &quot;Operating 25% in the red is fine as long as we&#x27;re growing 200% a year&quot; and just keep doing that until your company implodes and your investors have moved on to something else.

Do a image search for “cab company owner.” Hint, you won’t be get a bunch of pictures of guys in Ferraris.

I can&#x27;t understand why the model of &quot;build an outstanding App, then reduce engineer team to &lt; 100&quot; is not a thing. If they could do this, they&#x27;d be profitable. And I think they could do this, if their codebase wasn&#x27;t a mess.<p>Heck, I bet 25 excellent googlers could make a run a service like this with 99% uptime (obviously there would need to be a large support staff still).

Jobs! They created millions of jobs over the years, that&#x27;s something entirely missed here.

&gt; Customers correctly perceived that Uber offered greater availability and reliability than traditional cab companies used to, but failed to recognize that all of these improvements required billions of dollars in unsustainable subsidies. If a new entrant in any other established industry suddenly offered much more service at much lower prices than incumbents ever had, the normal response would be to demand evidence about the productivity breakthroughs making this possible.<p>This paragraph is baffling to me. Why shouldn’t consumers want lower prices subsidized by billions of dollars of VC money? There are other industries with huge subsidies (American agriculture, for instance) where consumers are also happy to buy the artificially cheap products indefinitely, and the only people complaining are conservative&#x2F;libertarian think tanks and public health groups.<p>Investors had reason to question Uber’s efficiency, but it’s tough to argue that they weren’t aware the prices were too low to be profitable, as it was their money subsidizing it!

Hypothetically speaking in a world where vehicles are autonomous (no human supervision)and&#x2F;or electric would Uber be profitable?

<a href="http:&#x2F;&#x2F;archive.is&#x2F;NizFV" rel="nofollow">http:&#x2F;&#x2F;archive.is&#x2F;NizFV</a>

&gt; Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business.<p>Yeah, it ought to be less &#x27;efficient&#x27;, the Uber business model is <i>far</i> less exploitative than the taxi model.

This article is ... long.<p>I&#x27;m inclined to agree with some of these other comments in the thread, that the innovation of app-ifying taxi services is indeed extremely valuable. I suspect most of us that detract from the success of Uber are really more concerned, among other things, about the political means by which they gained their marketshare. The &quot;ask for forgiveness not permission&quot; philosophy and their willingness to ignore existing regulations is, I think, bad form - and the article rightly calls out that they did kind of hijack a techno-libertarian mindset to moralize what they were doing.<p>Still, is it easier for me to safely get home after a happy-hour with some friends? Sure. Am I able to more easily and reliably move about major cities - especially ones without major public transit infrastructure - absolutely. My gripe with Uber today is mostly that they appear to treat their employees like crap, if they consider them &quot;employees&quot; at all. I don&#x27;t too much care how much they are worth, as I&#x27;m not an investor and don&#x27;t plan to be one.<p>As an aside, this magazine has some ... interesting content. A sampling:<p><a href="https:&#x2F;&#x2F;americanaffairsjournal.org&#x2F;2019&#x2F;05&#x2F;the-new-shame-of-our-cities&#x2F;" rel="nofollow">https:&#x2F;&#x2F;americanaffairsjournal.org&#x2F;2019&#x2F;05&#x2F;the-new-shame-of-...</a><p><a href="https:&#x2F;&#x2F;americanaffairsjournal.org&#x2F;2019&#x2F;05&#x2F;chinas-city-clusters-pioneering-future-mega-urban-governance&#x2F;" rel="nofollow">https:&#x2F;&#x2F;americanaffairsjournal.org&#x2F;2019&#x2F;05&#x2F;chinas-city-clust...</a><p><a href="https:&#x2F;&#x2F;americanaffairsjournal.org&#x2F;2019&#x2F;05&#x2F;houellebecqs-unfinished-critique-of-liberal-modernity&#x2F;" rel="nofollow">https:&#x2F;&#x2F;americanaffairsjournal.org&#x2F;2019&#x2F;05&#x2F;houellebecqs-unfi...</a>