They're not losing money on rides.
Uber is two things. A moderately profitable ride sharing company, and a loss-making VC-backed R&D enterprise working on things like self-driving cars. If they shut down or spin off their R&D they could continue on as a ride sharing company indefinitely -- they could probably lower prices because they're not using that money to supplement the VC money they're spending on R&D.
But you only separate the R&D if you think it won't ultimately lead anywhere. If they eventually actually get self-driving cars working then it's obviously to their advantage to be the same company that people are already using for car service.
I've never understood that. How are they subsidizing it? They take over 25% of what the customer pays and all they have to do is run the app. Whether they charge $10 or $15 for the same ride the cost to them is the same. It doesn't make sense, they don't have any extra cost by making a ride cheaper.
Then leveraging their new-found monopoly by raising rates and becoming profitable....right?
Except that articles like this (and the multitude of others) demonstrate that this simply will not happen. Riders and drivers do the work, pay the costs and will revolt.
Uber has something like 22,000 actual employees. They definitely have to maintain HR departments.
Because driving individual people around in expensive cars burning expensive fuel is not a profitable business (in the economic sense). Where are all the billion dollar taxi empires? It's a tough racket. It's equally laughable that Uber's "killer app" is going to be food delivery.
There was this dream of the internet enabling the smallest players to be able to sell directly but instead we have these powerful institutions that take a huge cut out of every transaction.
it would be better if these platforms were neutral entities that just connected sellers to buyers in an efficient way. But they try to totally control the sellers.
Back to the contracting example. For a while I worked with an agency that took only a 3% cut for filing paperwork with the big company. they provided an efficient service for both buyer and seller (me). But the 30% guys are just parasites that control the market.
What needs to happen is a standardization and commodification of different platforms. I think Elizabeth Warren has this as a part of her campaign.
Being a marketplace, it's hard for another player to capture enough of both sides of the market to gain momentum. Buyers will just go to the big players, which can then take a hefty 20+% commission. It's a hard-to-break circle. Any ideas?
Other examples: Booking.com, AirBnB
Marketing, processes all cost money.
Every party in the chain wants something.
Retail (at least used to) have 30-50% margins
Want to sell ringtones? You pay the channel.
Hire sales? They want a high commission. Lower if you have a big brand / marketing behind you
Code/driving/“the product” is only 20% of the game. And often not the most difficult to do at a sufficient level.
I'm not sure if this was a coincidence, some local policy regarding paying cash vs. card, or Uber doing something shady. But I asked all my friends to compare the price with the driver (or pay cash, although this may be less convenient) if they ever use Uber. I've read articles before that Uber was showing the driver a lower price than the customer in order to give the driver a lower cut. If this is the case then it wouldn't work when paying cash.
For example in US the fare you pay and what the driver gets is completely different.
[0] https://nakedsecurity.sophos.com/2017/04/10/uber-showing-dri...
[1] https://www.theguardian.com/technology/2019/apr/18/uber-lyft...
It may be a breach of contract between Uber and its payment processor, though. Often, credit card merchant agreements prohibit businesses for charging more for credit card payments than for equivalent alternatives. Maybe Uber is just flagrantly ignoring those terms, or maybe it has negotiated its way out of them.
I understand that 2 data point don't really make a reliable dataset.
The question is, if the entire business model does actually work and the good thing about capitalism is that we will see it over next 1-2 years as it's like natural selection. If drivers stick around (or self driving becomes reality), and riders are happy with pricing then both their customer bases are happy and business will flourish.
Otherwise, stock will fall and they disappear.
It works well for companies like Apple, Ticketmaster, etc..
That's what I tried to highlight with my post, which seems very reasonable, so I don't understand the massive downvoting.
For the driver this would just appear like their current destination suddenly changing, which I guess you have no option to deny except for asking them to leave your car and canceling the trip entirely.
Being able to make major trip changes mid-ride is pretty crappy for the driver. I'm also surprised the multiple stop feature isn't just for simply letting someone in/out of your ride. But apparently Lyft actually encourages you to use it to stop at the store. [0]
> Whether you’re picking up a friend or a bottle of vino, just add your stop into the app and your route will instantly update — making it a seamless experience for you and your driver.
The person in the article was driving for Uber. The verbiage on Uber's site for this feature is more focused on passenger pickup/dropoff, but also doesn't make it clear whether you're allowed to spend time visiting a store. I found a rideguru post indicating you're limited to 3 minutes at a stop, but can't find this officially.
[0] https://blog.lyft.com/posts/add-a-stop
[1] https://ride.guru/lounge/p/whats-the-2-stop-rule-on-uber-is-...
Edit, found this on an Uber blog post. Do riders really know, Uber? Do they?
> Riders know that each stop should be less than 3 minutes, so you can get back on the road as soon as possible.
Inaccurate headline
