Presumably this is intentional -- Uber could raise prices and make more money, but right now they're choosing to keep prices very low in order to undercut Lyft and the cab companies with the assumption that having a monopoly will return more profits in the future.
At least anecdotally, here in SF Lyft is almost always more expensive than Uber.
I think almost certainly their profitability is dependent on a future of driverless cars, and I'm sure that's what they are pitching investors.
Fearfully, since their survival means going driverless and they are now losing $800 million a quarter, they will race to get driverless cars on the road, it will be rushed, and it could be reckless. I'm thinking the two driverless cars filmed blowing red lights in SF recently (at the very start of their SF driverless program), not to mention possibly many other traffic violations that no one happened to be filming. They are going to wrangle regulators and skirt laws to make it happen with urgency. They now have an advisor to Trump.
I'm just here watching the rushing of driverless cars onto the road by Uber so that their company doesn't collapse. We'll see what happens.
Reckless and non-viable in much of the world. Nobody is going to get an autonomous car working in a winter climate for a long time. Lines on the road can't be seen, there are potholes, driving through deep piles of snow are common, communicating with other drivers and accomidating and anticipating their actions in snow narrowed streets is necessary....
There are plenty of times of year where I'd be wary trusting a human driver from the bay area in a Minneapolis snow storm much less a computer designed by them. I can see how it would be easy not being able to imagine difficult road conditions when you spend your whole life in a place where the worst weather is a tiny bit of rain.
Multiple instances of running red lights right when they start testing? To me that says driverless cars are decades away and some people are so optimistic that they aren't going to see it before there are several tragedies and driverless cars are legislated away.
There are lots of very common driving mistakes that are orders of magnitude more common than stopping for a red light.
Your comment got me thinking that to tackle driving in rough and ambiguous terrains, like snow-covered or muddy roads, they need better integration of vibration and bodily balance sensory signals into the autonomous driving system.
I wonder if the most advanced autonomous vehicles already have those sensors installed and how well the signals are integrated into the prediction and decision making processes.
Uber autonomous doesn't have to be better than the best human drivers in all conditions. They only have to be much better than the average human driver in all conditions. This isn't a very high threshold to meet.
It IS a high threshold to meet. People on HN handwave it all the time, but the fact is that not only are driverless cars still less capable than human drivers, they're also less safe today. And if you believe that that will change in the very new future, your belief is essentially faith.
I would point out that as much as people complain about how well cabbies drive, they have way more hours behind the wheel than most people.
Quick calculation: Lets think about people who drive their whole lives, not city folks. Lets think about work hours driving as it's likely to be the most by quantity, and vacation or pleasure driving should be roughly equivalent.
30 minutes each average way 5 days a week starting at 16, so by 40 they've driven 5/7365 = 260hrs / year. 260 24 years = 6240 hours.
8 Hours a day, 5 days a week, with salaried level vacations is 2000 hours a year. Many drivers are likely to work way more than that. Anyway, 6240 / 2000 = 3.12 years. That means that if you started driving at 18, you'd have the same hours driving as a 40 year old.
This also means that by the gladwell definition of 10,000 hours, you don't become an expert driver till 54.5 years.
However a pro driver becomes and expert after 5 YEARS of driving.
2) But the Gladwell's "10,000 hours rule" was proven wrong (http://journals.sagepub.com/doi/abs/10.1177/0956797614535810). For example, if we follow FAA that recently changed the rules to require 1500 hours for ATP (i.e. airline pilots) license, then you are talking about 3.5 years (for average driver) vs. 9 months (for taxi driver). Not that big of a difference.
This means that on average the US driver becomes an "expert" by the age of 21-22. This actually matches quite well with the insurance company rates that drop drastically at about this age.
This is a false equivalence that I've seen a few times here and elsewhere. It's wrong because:
The majority of car accidents are correlated with someone's fault, related to altered state, inexperience, distraction, or bad judgment. Some types of people are prone to accidents, others are less prone.
But in the self driving car world it's all equal - it's completely arbitrary who is a victim of an accident.
Someone who has never run a red light or had an accident in their life because they are an alert, careful, experienced, defensive driver suddenly has all that stripped from them and now they are driving at just an "above average" level.
Why should the good, consistent drivers be punished? (And they absolutely would if we settle for just "better than average"). I'm all for driverless cars, but only with patience; no one should even entertain mass adoption of self-driving cars without a minimum of multiple years of testing in live traffic with zero accidents or major traffic violations (by fault of self-driving car).
Seeing the traffic violations at the start of the SF program, we probably ought to expect the mass adoption minimum 5 years out, more likely 10-15.
>But in the self driving car world it's all equal...
And that, my friend, is a very good thing. We slowly raise the bar and eventually get rid of bad drivers - because in the future only people with a near perfect driving record will be granted a license.
I would just take Juno. The drivers here in NYC are only doing Uber to get enough ratings to qualify for Juno. Uber went way too far squeezing drivers, it's a mess. I've seen their Uber pool earnings ... It should be illegal.
To some degree, Juno's stated differentiator is being the best ride hail app from the drivers perspective by:
- 50% of founder equity goes to drivers
- 10% vs 20-25% cut of fares
- no pooled concept (this may be purely because they're too small to support it, though it is also unpopular with drivers
Good for you, but a lot of people care about supporting the more sustainable and fair businesses and pay extra for that. Buying only on price and thus personal gain is short sighted and will eventually lead to worse market conditions in many cases.
To put it the other way around, why not care? In NYC Juno is no more expensive than Uber (in fact there's a promo rate on right now), so if I have the option, why wouldn't I choose the option that does best by the person driving me around in their car?
Even if I were entirely selfish it wouldn't be in my interests for them to be stressed and rushing to cram in as many jobs as they can.
This is why I don't get why Uber tries to "undercut competitors". Even if they succeed, the second it stops bleeding money and raises prices competition will reappear. It's not like it is hard to install another app.
except they are already running at a huge loss and they will be stuck in one city forever? plus they came in so late that funding is harder to find as a lot of investors have already made bets in their competitors
Juno is totally non-viable. Being "better for drivers" is not a competitive differentiator. 99% (including me) don't choose services based on which is "better for drivers."
I dunno, I have several friends who consistently use Lyft pool even though the Uber pool in my area is usually less than half the cost, and Juno has a much more credible claim, as far as I can tell, at being ethical than Lyft does.
People spend money on that sort of thing.
That aside, getting drivers is half the battle; even choosing on a selfish basis (and I choose ride-share services on a selfish basis) - if you have more drivers, I have to wait less. For a while, in my area, lyft consistently had more drivers and got there quicker, while uber was consistently cheaper; when I was in a hurry, I'd use lyft.
(my perception is that this has changed and that lyft no longer has that advantage in my area, but point being, if you can't get there in 5 minutes and your competitor can? I might be going with your competitor, even if it's more expensive.)
Well this article makes it clear that Uber isn't shafting the drivers for their profit. It seems no one is making a profit and Uber has figured out how to have drivers help them fund their growth.
Lyft may be more expensive on paper but I always use it instead of Uber where it is available and they send me so many discounts and coupons that I almost never pay the full price.
I didn't see any comment about Uber's main advantage tho, which is a shame...
1. being able to scale supply to meet demand.
In the traditional taxi model, the number of taxis and drivers are mostly fixed. during times of low demand more fixed costs brings more waste (cars driving around not making money) and in times of high demand represent lost profit (cars not capturing market potential).
taxi company's can try and scale 'fixed costs' better, but then they basically just become uber. Having drivers use their daily driving cars as taxi cars allows scaling of supply much much easier than having to use purpose built taxi cars.
The taxi company I used to drive for has embraced the "ride share" model to allow people to use their own cars. They now also lease plain cars that drivers can use with any of the various phone apps.
They also updated their own phone app to provide all the functionality of the upstarts, but with local staff to deal with problems.
So, in many respects taxi companies are essentially becoming Uber in order to compete with Uber. Not shocking.
Cost is not the only factor. In fact, it's not even that important in terms of why Uber is trouncing taxis in terms of ridership. Uber has some very important UX advantages -- much lower wait times, integrated payment, fewer no-shows, ratings, less scummy drivers that people -- are willing to pay a premium for. Price is not the only variable in whether Uber can compete, your first link forgets that. UX is much more important IMO in terms of how shitty cabs are compared to Ubers.
Even only in regards to price, can uber compete on costs? your first link misses the bigger picture. Traditional taxi companies and Uber are efficient at different niches.
Traditional taxi companies (yellow cabs) are best at higher density areas due to being limited by the need for close-by depot, and 'base load' rides due to having a fixed supply of cars and not being able to dispatch new drivers as quickly.
Uber-models are good for all densities, and particularly areas with wide fluctuations in demand.
Taxis will need to adopt many Uber strategies in order to compete. They already have begun as you said. Taxi cabs sucked. Still do. And I would have no issue paying a premium to Uber to fuck it to the taxi cab companies. Especially when we are talking 10% difference in costs. UX dominates in terms of which ill choose to ride with.
Uber models are not going away, even if your first article thinks they will be slightly more expensive in certain scenarios and thus not able to compete at all, lol. What a leap in logic.
That said, will Uber be the long-term company that dominates? Maybe not. But their model will be.
Specifically, Lyft can only deactivate drivers for cause, and it has a clear appeals process through binding arbitration, for which Lyft foots the bill.
I'm not fond of clauses that require arbitration or which prohibit class action suits, but at least Lyft allows for and pays the costs of that arbitration.
Not parent, but years ago after hearing that Uber employees were sending fake Lyft requests I decided I didn't want to support a company that would engage in those types of shady practices
It used to seem to be the drivers of Lyft tended to be more doing it part time and fun to talk to, versus the much more business oriented and cold Uber community made up of former taxi drivers and truckers. I always assumed this had to do with the branding and the way they targeted potential drivers. I liked the Lyft feel a lot more.
But lately they both seem to be a mix of both communities to me, so I don't know if that has changed or if it was even a real effect to begin with.
I am not the person you're replying to, but I used to switch back and forth between Lyft and Uber and use whichever was cheaper at the moment.
But Uber kept sending me drivers who were like 0.5 miles away or more, in SOMA at rush hour, and after the second time I waited ten minutes and then the driver canceled, I decided I was willing to pay a small surcharge to get a drive in less than 5 minutes and for it to, you know, actually happen.
I should probably try out Uber again to see if they've resolved their problems with driver supply. This was SOMA (5th & Bryant) at like 5:15-6:00pm, several times over the course of a month.
I used to slightly prefer Lyft but now greatly prefer Uber. In the beginning, Lyft only drivers were generally a bit more personable and Lyft Line passengers were generally always outside waiting and happy about sharing a ride.
I've mostly been taking Uber recently due to their low prices. However, last month Lyft had a Line promotion and I got to take about 60 rides. The vast majority of the drivers were clearly fired Uber drivers and the experience was way worse. Dirty cars, unable to follow navigation, bad driving, no English, and one driver was just a straight up weirdo. They are clearly passing anyone at the in person interview now. And they all had high ratings of 4.7-4.9. I've had similar bad experiences on Uber but they are much less frequent and the drivers were almost always rated 4.3-4.6.
Have talked to a number of drivers who seem to like Lyft a lot better than Uber.
For one thing, Lyft takes less of a cut and passes more to the driver.
More than one driver I'ved talked to complained that Uber was in the habit of delaying earned payments to drivers. Some complained that Uber was in the habit of under-paying and making drivers spend time to fight for money they've already earned. They do not seem to have similar experiences from Lyft.
In general, all else being equal (and the products are pretty close to equal), I'll prefer siding with the working stiff than multi-billion dollar multinationals.
I tried Lyft the other day, but after they charged me $25 as an "authorization hold" without notification, I cancelled my ride and decided to stick with Uber. Note that Uber's auth charge is usually around $1. $25 may not be a significant amount for some, but it's non-trivial for a college student like myself.
I would have been happy had they just notified me first instead of my bank. Terrible UX to be frank. I actually got in contact with Lyft support on Twitter, but they did not care and just claimed that it was "standard policy".
> I tried Lyft the other day, but after they charged me $25 as an "authorization hold" without notification, I cancelled my ride and decided to stick with Uber. Note that Uber's auth charge is usually around $1. $25 may not be a significant amount for some, but it's non-trivial for a college student like myself.
I've found it more common at interstate gas stations than at local gas stations. E.g. the one that always does it for me is Hooksett, NH; with a Tesla Supercharger, it is more a place that serves everyone and their mother than a lower income area.
It's a horrible idea to use a debit card for electronic payments. The laws that require credit card companies to refund unauthorized charges are much more consumer friendly than for debits from your bank account.
With a credit card your maximum liability for fraudulent charges is $50 even if you don't timely report a stolen card or suspect transaction; $0 if you do. For debit cards, it's unlimited.
So, for example, somebody could fraudulently use your debit card number to buy a stick of gum, hoping the charge goes unnoticed. Then, 60 days later, they drain your entire bank account, and possibly other linked accounts if you have automatic overdraft protection. If you failed to notify the bank for the gum purchase, your entire life savings is lost. Even if the bank account is only used for small purchases and only maintains a small balance, it can still create huge headaches.
Debit cards are for ATMs, and preferably ATMs inside bank buildings. Credit cards are for transactions everywhere else.
For similar reasons, you should be careful who you write checks to--because similar rules that govern debit card transactions also govern ACH transactions. And if you can help it, don't link a checking account on which you draw checks and make other payments to any of your other accounts; or at least, don't then enable automatic overdraft protection.
Oh wow. I wonder how upset you would be when you realize that some gas stations put a $100 hold on your credit card. Btw. a hold is not a charge. A charge is only when it shows up on your credit card bill as a charge and not as a hold.
I do not see what the issue is with having a $25 hold? It's not a charge.
Haha, you're right - I did not phrase that correctly: I use a secured CC sparingly to avoid over-utilization. In this case, I had to use my debit card.
Utilization has no lasting effect on your credit score - if you have 100% utilization one month and pay it off next month, your credit score will be the same as if your utilization was 0% the whole time. It doesn't matter for building credit in the long term.
I use public transport for my daily commute. I use Uber for shopping 2 or 3 times per month, and only on the way back. I think it's tough to save more than that.
If you find yourself starting a comment with “not to sound rude”, you might consider whether skipping the comment altogether is the best way to not be rude.
Uber isn't a cash venture, and several activities in the US require either a credit card upon which temporary authorizations can be placed, or a full (and sometimes, over-)payment on a debit card, the difference being that the debit card isn't backed by a line of credit that becomes due in at least 20 days, but rather it is spent directly out of a checking account.
You need this for:
- gas stations
- hotel stays
- car rentals
- sit-down restaurants or bars
The SV/HN is out of touch argument doesn't fly here. Rather, there is a wide gulf in the spending ability and access to services between a US credit card owner therefore a participant in the mainstream banking system, vs. someone with only a checking account, vs. a person who can't qualify for either and conducts their affairs with cash. This is a problem much older and much more foundational than the Bay Area vs. everyone else and the techies and non-techies divide, and is a significant delineation between the US middle class and lower class.
Is ride-sharing that big of a cost for your day to day?
For a lot of people, it is. The only people I have ever heard say this kind of thing, at least from my experience, are middle-class and well-off, or better. This cohort is the exception, because the norm (especially among millenials) is check-to-check living. $25 is several days' worth of food, two weeks' coffee budget, the price of a full tank of gas for a small car, or numerous other things to many, and $25 can be the difference between your card going through or being declined.
Truly reliable and useful public transit is a luxury in the United States that isn't available to a huge majority of the country.
Walking also isn't an option for many people due to safety, health reasons, scheduling, childcare needs, and not to mention just too much stuff to carry.
Again, if you are cutting it that close you should not be taking "luxury" transportation, barring needing to go to the ER.. in which case, maybe that hold was worth it.
I've never seen a $25 authorization hold before. Usually Lyft does something like $5. In any case, once the charge is captured, the rest of the authorization should go away (and the charge is captured as soon as you rate/tip the driver, or after 24 hours, whichever comes first).
An authorization hold should happen for all rides, but it's normally not very large. The whole point of it is so you can't get a ride and then have their charge fail because you don't actually have any money. Any company that provides a service before payment can be expected to do the same thing (e.g. basically any company that's part of the gig economy). The perfect authorization hold is one that's for the exact amount you'll be paying later, but in most cases that amount can't be predicted, so companies try to slightly overshoot (because they can always charge less than the hold, but if they try and charge more it will fail if you don't have any more money).
If you got a $25 authorization hold from Lyft there's a couple possibilities that come to mind. The first is that Lyft thought your ride would in fact come somewhere close to $25 (after tip). The second is that if you're a new customer, they likely consider you a much higher risk of fraud, and therefore want to err generously on the side of overshooting the estimate, instead of trying to place a lower hold and risk not being able to capture the real cost of the ride. Also, if you hailed your ride without providing a destination, they wouldn't have been able to produce a usable estimate.
It was my first ride, so it was probably an anti-fraud measure. Still, a simple notification like "we will be charging you $25 to verify your card" would have been great.
Interestingly, I use Uber semi-regularly, and they don't hold anything. They probably only did it for the first ride.
I've only used Uber once, out of curiosity really.
It was fine, just like a taxi, the price was a little less but not much.
I asked the driver if he liked driving for Uber and he said it was his last shift, he was going back to driving for a taxi company as he couldn't make any money driving for Uber.
As the city I live in has an over supply of taxis Uber can't exploit the customers, so it sounds like they need to exploit their drivers instead.
It is. It's a war of cash against other companies. The same way the OPEC has been dumping oil on the market to make its price crash to break competitors. So with a price at the barrel two times lower that their break even, oil companies in particular the US shale companies [1], will suffer or even declare bankruptcy and then the OPEC would have got their market share back and then would have raise its price like in 2012-2014. (They failed [2]).
But for Uber apart of China [3], Uber is winning and all VCs will make it that way anyway. Uber is the clear winner and they will continue to pool cash to the winner until it breaks all competitors. And then it will rise its prices and start piles of cash.
Yes but on a simple point of view: the strategy, dynamic, and end results are the same here. And it's the same for oil companies too. With the price starting to go up with the cut from OPEC and other countries, more oil companies start to be created, the old ones have finally more air to breath and start to drill again.
Also with Uber investing on autonomous cars and how they are the only one with real tests with several cars on the road, this is going to be a huge barrier of entry. Even more when we see how the best tech giants like Apple and Google are struggling to develop one.
Would the monopoly plan really work? Is there something that would prevent competition from reappearing when prices are raised? At least from customer perspective it would be pretty easy to use couple of apps and shop between different providers. For drivers this might be of course more difficult, since Uber can use contracts and other mechanisms to prevent them from working with other providers.
IMO no. Others mention the network effect, and while it will certainly be a factor, I don't think it will be anywhere near strong enough to make the monopoly plan work.
The network effect for Uber is really local - at the city level. An "Uber, but only in Austin" service can easily compete with a national-level Uber, since the vast majority of cab rides are taken within a user's home city.
You need a critical mass of cars/drivers to present real competition in this space, but you don't need to do it at national, or even state-level scale. A small upstart that can achieve critical mass in a single city can present real threat to Uber in that city.
The network effect of cabs between cities is so little that while a lot of consolidation of cab companies have occurred in each city, until Uber there was never a major cross-city network. I'm not convinced that a unified worldwide fleet has a significant competitive advantage. It'd be useful for tourists, maybe.
And this is already happening - Juno here in NYC is gaining real traction by charging drivers less, getting drivers to evangelize to each other. Uber won't be toppled by Lyft or any other megalithic ride hailing company, it will more likely be toppled by hundreds of smaller, geographically narrow companies.
I think Uber has a huge advantage. If you start a new transportation service in NYC, Uber can just flip a switch, undercut your NYC prices by $2 per ride, and make up the difference by raising prices $0.10 per ride in other cities without competition.
How do you compete with that? You'd be burning money to compete, and Uber would just wait it out until you're bankrupt.
If you launch a global competitor that gains traction, Uber would just lower prices worldwide. If they can sustain a billion dollar loss every quarter, then you're quickly going out of business, and once that happens, they'd raise prices again and return to be profitable.
>>The network effect for Uber is really local - at the city level. An "Uber, but only in Austin" service can easily compete with a national-level Uber
Not really. Uber customers only pay 41% of the cost of their rides. The rest is subsidized by Uber's investors. This is what allows them to compete with (read: severely undercut) taxi companies.
Local ridesharing won't have this massive advantage.
They likely are banking on the network effect of having the most drivers and users. Having a lot of drivers makes pickup times for riders shorter. Having a lot of user makes it easier to pool people together and give lower prices. Plus more users means the drivers spend less time waiting around to get a pickup. Any new startup needs to (1) get people to download their app and (2) build up enough drivers/users to get pickup times down.
Yes the network effects of everyone being used to using Uber to get anywhere, the verb "Uber it" and the established brand that comes along with it. Any company in future won't have the drivers, car fleet or coverage to compete, which will become increasingly difficult after Uber becomes established and gets embedded in people's minds.
This hits the nail on the head with respect to the monopoly argument. There is plenty of room for other companies to enter the market is Uber jacks up prices.
I just bit the bullet and installed Lyft on my phone. Then I tried to complete the account creation flow, and the app insisted my (Republic Wireless) phone number is invalid. I lose, Lyft loses... While this is admittedly anecdotal, it does not bode well for Lyft's expansion.
> right now they're choosing to keep prices very low in order to undercut Lyft and the cab companies with the assumption that having a monopoly will return more profits in the future.
So they're even shittier and greedier than I thought.
That's such a terrible strategy I can't believe that's really what they're doing.
The short term problem is that they can't burn through money long enough for it to work. The barrier to entry to create an Uber or Lyft competitor is very low - anybody with a car and a laptop can create a viable Uber competitor. Nobody's doing it because Uber, Lyft, and taxis are everywhere, but when there's only Uber, and they're suddenly expensive, they'll get disrupted just like taxis did.
The long term problem is that even if they succeed, purposely creating a monopoly and then raising prices is illegal. It's a great way to get in even more trouble with the government.
The local startups are going to kill them. Juno is so much better in NYC. Nobody misses uber in Austin with Fasten and Fare. Each major city will beat Uber with their own local competitor with better service and better driver relationships.
It's not trivial to make an Uber clone, bit it doesn't take a 20 man developer team two years, either. The basic technology is not super complicated. You can do it with maybe five or six developers in a reasonable time frame. Most of the really interesting stuff that Uber does is scale, and you won't have to deal with that.
Source: was principal server engineer for flywheel, an Uber competitor.
That's a dumb metric. Now, let me be the first to say that Flywheel wasn't very successful in competing with Uber (and there are tons of reasons for that that I could expand upon if anyone is super interested).
But we were plenty successful in creating a system in which people who wanted to get a ride were able to hail our drivers and our drivers could come and pick up the passengers and they could cancel and see ETAs and so forth. We served hundreds of thousands of rides while I was there, and presumably more in the two years since I left.
They've went through periods where in some cities (plus I think they always did this in China) they would pay the drivers more than the customer would pay in order to boost both driver and rider numbers.
At least anecdotally, here in SF Lyft is almost always more expensive than Uber.