With this many billion dollars on the line, one can never be too cynical.
One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less.
I will say that services like Uber have been very beneficial for areas that were previously underserved by traditional taxi companies. But that alone probably doesn't justify this multibillion-dollar wealth transfer operation.
> One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less.
Only works if you manage to get a govt monopoly and exclusive access tot he drivers. If you don't have those two things there's no point in trying to landgrab under cost and price-gouge later.
For something like Uber, I figure a good team might push out a working solution in a month. The barrier to entry is so small, and travellers have literally no brand loyalty, that the minute the price goes too high there'll be someone else trying to get a cut of the (now profitable) business.
I think they were hoping for network lock-in. Drivers might carry 2 phones but probably not 3. Riders will check 2-3 apps at most. Incumbents end up in a prisoner's dilemma where raising prices in concert usually pays off and defection is actually costly.
To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders. Until you reach critical mass. This is what has lost Uber so much money.
I think you're right to a point. During the period Uber and Lyft pulled out of Austin in protest of its background check ordinance, several other companies sprung up immediately and appeared to thrive until the big boys came back.
The barrier to entry is actually incredibly low, assuming you have a base of people willing to drive already as happened in Austin. You don't need to employ drivers or own cars, or anything else in the physical world that eats up capital. It's literally only an app.
> To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders.
That only matters if:
1. You want a larger geographical coverage
2. You want to push out competitors by undercharging.
Local-area Uber clones sprang up like mushrooms in the night when Uber pulled out of certain cities.
> Until you reach critical mass. This is what has lost Uber so much money.
Uber has lost that much money because they were trying to fend off competition and landgrab by charging less. The minute they have to charge what the trip really costs, then the market is suddenly a profitable one and competitors will come in.
My point was that landgrabbing in this market is pointless because you cannot price-gouge later. If Uber decided to raise their rates to become profitable, local-area equivalents will enter the now-profitable market.
No you should always be cynical and assume the simplest dumbest reason. They didn’t think it through this far. They thought driverless would work. They just did what they thought was best along the way.
(Not to suggest that thinking things through this far out from the beginning is a feasible task)
That's the opposite of what I mean by "cynical". That is the charitable view that gives tremendous benefit of the doubt to people who do not deserve it.
One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less.
I will say that services like Uber have been very beneficial for areas that were previously underserved by traditional taxi companies. But that alone probably doesn't justify this multibillion-dollar wealth transfer operation.