[MarkPNeyer]

> This is actually very hard to replicate for new entrants.

I've seen many drivers running both lyft and uber at the same time. A third company comes along that pays drivers better? Why not keep all three apps up. There's no cost to running an additional app. Literally none at all. And if it pays slightly better, or has a fairer reputation system...

The same thing works on the rider side as well. If you've got an app (like what's the fair) that can let you query any number of providers and get the cheapest price, maybe you're happy to wait a few minutes to save money.

[lpolovets]

The problem is that Uber/Lyft make it so that they are cheaper AND faster than a new entrant. I think if a 3rd company came along and it paid drivers better, then drivers would install a 3rd app. But Uber/Lyft's network effects makes that a very expensive proposition. For example, if an Uber driver gets $5/ride and can do 6 rides/hour, they make $30/hour. If a new entrant can only offer 4 rides/driver/hour (at $5/each) because there aren't enough riders using its app yet, then either the riders or the new entrant have to subsidize drivers the additional $10/hour. Riders won't pay extra -- why would they when they can use Uber instead? -- so the new entrant ends up paying 1/3 of each ride to get the network effect going, and that can be quite expensive if you're doing thousands of rides per day in a single city.

There are some complications to consider. Maybe a 3rd company can pay drivers a little less because it treats them more nicely than Uber does, or maybe riders will be willing to pay more or wait more for a 3rd company's cars for some reason (e.g. Lyft's tends to be friendlier while Uber is more formal, and some users are willing to pay more for the former). But in general the more passengers and drivers an app has, the better off both sides of that app's market will be.

[gnicholas]

True in theory, but incumbents can (and do) reward drivers for completing lots of trips. This makes it easier to lock out a new entrant, especially if they're attacking city by city. Just ramp up the rewards for drivers who complete X trips per week, and you can fend off the new guy.

[mkagenius]

Someone if goes bankrupt and then making the app open source and not a taking cut at all..can it kill Uber eventually?

Or the tech benefit of actively working people in Uber will be much better ROI for drivers to give a 20% cut -- which other industry gives such high a cut? (airlines or movie ticket booking doesnt)

[JoshTriplett]

> Someone if goes bankrupt and then making the app open source and not a taking cut at all..can it kill Uber eventually?

Uber and Lyft provide a substantial amount of infrastructure and staffing; they wouldn't function without that. Someone has to keep the server infrastructure running and scaling, and even more importantly, someone has to maintain the support, rating, and qualification system to maintain quality.