Easy answer - They are still experiencing rapid revenue growth, they have a clear path to profitability with a simple monetization strategy, and have dominated the market in many territories.
What is it? The problem I see is that there’s zero switching cost. It’s like buying salt at the supermarket. It’s all the same. They have nothing to differentiate them except their brand.
Sure they can charge a little more because of that. National brands charge a bit more than generic. But you can’t raise prices 50+% and hope people will just stick with you so that you aren’t losing money hand over fist and will only _slowly_ circle the drain.
It feels like Uber’s model was a really good one if you’re operating under the assumption that no one else could ever compete. As soon as a competitor came along they seem to have been screwed. The only play left was to pump more money in and hopes that somehow it magically worked out.
> It’s like buying salt at the supermarket. It’s all the same
You can say the same about Coca-cola or McDonalds though. They have a ton of competition and are most certainly not dead. I don't really buy the argument that competition is all that problematic for Uber. Worst comes to worst, taxis made money, so IMHO there's no reason to believe Uber couldn't settle at doing what taxis did in terms of profitability, at a bare minimum.
Coke vs Pepsi are different. Same basic category (cola soft drink) but they taste different. Same with McDonalds vs Burger King. There are differences, you’re buying different products in the same category.
But if I take Lyft, Uber, or use a taxi app it’s all the sane in the end. Start at point A, get out at point B.
It may be a different car. One driver may be better. The only REAL difference is the price. In fact we know a lot of drivers drive for multiple services, so your experience may literally be identical!
> Coke vs Pepsi are different. Same basic category (cola soft drink) but they taste different
There was a study that actually concluded most people can't tell the difference between Coke and Pepsi. And there are similar examples across many product lines: Sprite vs 7up, Dasani vs Aquafina, etc. All of these beverage companies are similar, and cost of switching between brands for colas or bottled water is zero. So why aren't we talking about how COKE is oh so bad of a stock to own? IMHO, it's because switching cost isn't zero, and things like market dominance and brand play a non-zero role.
My point is mostly that COKE doesn't need to monopolize the market to be profitable, and neither does Jarritos, and that similarly, there's no reason to think Uber requires global scale to be profitable when taxis were doing just fine before.
But could either of those raise their prices by 25-50% and still keep their market share? Probably not. They are different from Uber that they are making money and have for very long time... While remaining price competitive compared to other players on market. Uber can't afford that in long run.
thats not true, Coke and McDonalds have barriers to entry - supply chains, buildings etc. Even if you're saying the taste of the food is not unique. Uber has no products/supply chains except for their app, its just randos signing up on the internet and driving with their own car. There are three local apps competing with Uber, and fairly successfully.
In principle then it should also be a cakewalk to replace platforms like Facebook.
The real advantage the first established player has is the network effect - without that you have a catch 22 of needing drivers before passengers can use your service, and needing passengers/customers to encourage drivers to sign up and use the app. Similarly a new Facebook has to get everyone on it before anyone wants to be on it.
Lyft has a fraction of Ubers revenue, and in a lot of territories Uber doesn’t have any competition (eg here in the UK it is just Uber and traditional firms).
Finding an app, installing it, entering your card details and then hailing are switching costs. When I travel, I sometimes try the local app. I usually just use Uber. (In America I default to Lyft, in New York Revel.)
Keep in mind that Uber is profitable in some markets, e.g. New York.
You don’t have to enter your card details. Since they are selling physical goods, they can (and do) use Apple Pay and your credit card is already in your phone.
It’s not like switching from Xbox to PlayStation or Windows to Mac or something. You don’t have to throw away something of value that you purchased and buy something else expensive.
