By the measure of growth and market penetration, Uber has been successful.
By the measure of establishing a globally operating business that employs thousands of people, Uber has been successful (mostly).
By the measure of establishing a profitable business we might argue that they likely will never achieve that.
If you look at their SEA competitors who already earlier on introduced financial debt as a tool to create merchant stickiness (to phrase it kindly), their fall from grace was much harsher.
I've been trying to figure this out for the last few months..
Uber isn't THAT complicated on the technical side. The driver/rider matchmaking is simpler than algorithmic trading code I've worked on, and I'm happy to take 1% on a trade in that space, yet Uber and Lyft are helping themselves to 30% or more.
I was personally thinking it'd be great to offer an Uber competitor that aims for complete transparency with no frills, like the Craigslist to Uber's Amazon/Ebay. Maybe charge $5 + 5% for matchmaking the rider with the driver if they use the app for payment, or free if the passenger pays with cash. I've heard a lot of horror stories about Lyft charging riders surge prices while paying normal prices to drivers, various apps stealing tips, etc.
I haven't tossed my MacBook into my carpet bag and run back to my hometown just yet, though, since I assumed there must be some good reason this hasn't already been done. Maybe it costs Uber $500 to background check and onboard a driver, or they eat 10% in credit card chargebacks, or something else I don't understand since I'm just a code monkey
The complexity is not the depth of the problem, but rather the scope. Matchmaking — while complicated — is a very small subset of the domain. Pricing, demand forecasting, routing, payments, etc. are all equally important on the pax side. Similarly, there are many teams needed to support the overall ecosystem for things like driver onboarding, compliance, and support.
Also comparing a 1% return to a 30% charge isn’t exactly fair. Fixed costs like background checks aside, chargebacks, fraud, insurance, support claims, incentives among others warrant the markup
I could be completely clueless here, but it looks to me like a lot of the Lyft/Uber/etc cut is going to:
1) Overpaid, wasteful software engineering (no offense to us). Like someone here said, there are a lot of cheap software solutions out there to handle this stuff
2) R&D into crazy moonshot ideas
3) Advertising
4) Making a completely opaque techno-dystopian game out of people's livelihoods in order to manipulate drivers into working harder for less money and riders into paying less up front and as much as possible in the long run
If I'm right, I'd ideally like to completely destroy this market for good. Fragment it into a separate crappy home-made app for each city that you find out about via a poster on the wall in the airport when you land. I'm hoping that with enough transparency and flexibility, riders and drivers would keep each other in check and come to a happy and sustainable middle ground without making any VCs rich
(Or maybe Uber/Lyft are operating on a level of efficiency that would make my half-baked idea look like a joke. Ain't nobody disrupting Amazon or Apple from their basement any time soon)
Self-driving cars is not such a moonshot at this point, and indeed may be the only way they reach profitability (still a while off, though, and Lidars need to come down in price)
The one thing that might make it harder to figure out the scale is that literally every market (city, state, country) has different regulations and that is not simple to manage.
Uber is being disrupted by for example Bolt, which is their frugal Estonian competitor. An example close to me is that Uber essentially already lost the Swedish taxi market. They had a couple of years as the the top dog making everyone install an app but due to the huge overhead got undercut.
This is a market with a completely unregulated taxi sector as long as you follow the base regulations. Maybe sometimes a bit archaic but I could finance a car and start driving within a month.
From what I've heard the only way to make a profit is to be a business owning about 50 cars which are staffed 24/7 and on top owning your own service workshops. It's extremely cutthroat.
> An example close to me is that Uber essentially already lost the Swedish taxi market.
One thing that happened in Sweden though is that every single large taxi company made their own app with a big nice button for "I want a car, here, now", connected payment methods, and real-time tracking of the car you ordered.
So for me as a consumer, I can either press the button in a taxi app, and typically get a nice Mercedes or similar, with taxi plates, with a licensed taxi driver, properly insured, connected to a real taxi company with customer service representatives that I can call if anything goes wrong.
Or, I can press the button in Uber, pay the same money, but get a dude in his Toyota. Oh, and if the dude doesn't like me as a customer, he can downvote me, which results in me getting worse service in the future.
Say what you want, but at least the Swedish taxi companies out-competed Uber fair and square, instead of either giving up, or resorting to shitty political games to get Uber banned.
> So for me as a consumer, I can either press the button in a taxi app, and typically get a nice Mercedes or similar, with taxi plates, with a licensed taxi driver, properly insured, connected to a real taxi company with customer service representatives that I can call
if anything goes wrong.
> Or, I can press the button in Uber, pay the same money, but get a dude in his Toyota. Oh, and if the dude doesn't like me as a customer, he can downvote me, which results in me getting worse service in the future.
Just to be precise, the dude in a Toyota will also be a licensed driver with taxi plates with their stuff in order, although exactly to the limit of the legal requirements.
They've just realized that in general very few customers care if the car is a new Mercedes or a new Kia hybrid. The only thing which matters is the cost at the time of pressing the button.
Yeah if you do the math you end up realizing you need to run the cars like airlines run planes - damn near continuously. Idle time is non paid time, and you need to keep everything moving.
The real advantage of self driving taxis isn’t going to be the self driving, it’s going to be the 24 hour/day shifts they can pull.
That doesn't really work for taxis. No matter how much you want to distribute rides across the whole day, no discount is going to be able to get people to commute to work at midnight - most of your rides will happen around 9am and 5pm. So many taxis will have to spend a good chunk of the day idle. With self-driving taxis, at least you're not paying human drivers for some of this idle time (which Uber doesn't either AFAIK, but traditional taxis do).
This is in contrast to air travel, where with the right discounts you can get people to fly at inconvenient times of day.
I think most of rides by volume will be around weekend and special holidays. But even then limited 2h-4h slots, around bar opening and closing times. Having enough supply for these peaks will be impossible to make work.
When Uber and Lyft left Austin briefly to protest the driver background check requirement, it took no time at all for a bunch of alternatives to pop up.
In Russia and some other countries there are cheaper competitors. In Phuket (circa 5 years ago) there were way worse replacements. Thailand had managed to keep Uber out of the tourist areas for many years with their local taxi cartel.
Uber has always struck me as something of an engineer's sandbox. They hire too many engineers who build (and re-build) over-engineered solutions, and who are paid a lot. They have thousands of microservices for example.
I would argue that they only survived their post IPO valuation because stock markets have been artificially propped up.
Interestingly only 25% of shareholders are retail vs 75% institutional.
By the measure of establishing a globally operating business that employs thousands of people, Uber has been successful (mostly).
By the measure of establishing a profitable business we might argue that they likely will never achieve that.
If you look at their SEA competitors who already earlier on introduced financial debt as a tool to create merchant stickiness (to phrase it kindly), their fall from grace was much harsher.