[officelineback]

I believe you're wrong and here's why (maybe the previous poster's way of explaining it wasn't good).

1) Economies of scale. Airbnb has management and overhead but it's spread across thousands of cities. Cab co.s need a full structure for each city in which they operate. 2) Automation. Many of the manual jobs in local cab companies like dispatch and scheduling are automated. You don't call a human when you need a ride, you push a button on an app. So that's also less overhead.

They are also very clever in how they treat their drivers, so labor cost is also low, and of course there is no maintenance on cars (drivers change their own oil, buy their own tires, etc).

So I believe Uber could probably make money just by replacing cabs, but like others have said, they have to compete with other VC money receiving ventures that are wiling to burn money to come out on top.

For now, we the customers are benefiting greatly from the situation.

[vmateixeira]

You forgot: not paying local taxes and being able to operate illegally in some countries (without public transport insurances and legal permits). Which actually also happens to be the case of Airbnb.

[ExactoKnight]

Naked Capitalism made a good argument that Uber cannot experience economies of scale with its costs the way Amazon could when it scaled. Why? Because Amazon's fixed costs were... well.. fixed.

Unlike Amazon, Uber faces massive variable costs in driver recruitment/onboarding, legal regulations and local advertising.

Seriously. The rules needed to onboard a driver in Alberta, Canada are completely different from New South Wales, Australia. You can't automate driver recruitment/onboarding in either of these cities because these markets have passed actual legal regulations to allow ridesharing that require unique, but idfferent things (e.g. like market-specific commercial drivers licenses, background checks... or filling out registration forms made by the jurisdiction).