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by pisarzp
3359 days ago
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I beg to differ here. Once you get the scale like Uber, and you don't have to spend billions on marketing, this is a very high margin business. Minimal costs to maintain infrastructure and 20% cut on millions of ride's a day. The only reason Uber was struggling is because it wanted total global domination. It was a land grab, and they played it quite well. Failed in China, but succeeded in quite large portion of the globe. |
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I think that this is the reality:
1. There are lots of reasons why customers may not take an Uber. They could take a Lyft, they could take their own car, they could take public transportation, they could take a taxi, and they could in many cases just not go out or substitute a closer destination.
2. Uber achieves high ride volumes in the face of #1 by heavily subsidizing both drivers and passengers, even in the case of relatively mature markets. This drives their profit margins down to extremely thin levels, or in fact negative.
3. Their proposed technological solutions to their margin problem have either not been broadly popular (Uber Pool) or have major roadblocks to even existing (self-driving cars).
4. Their proposed business model solution to their margin problem (being a logistics company) have the problem that nobody wants to be their customer.
5. All of the above are true even in the developed world, where a ride might average $15 and Uber's cut before subsidies might average $3. All of their expansion opportunities now (and in the last few couple of years) are in areas where a ride might average $5 and Uber's cut before subsidies might average $1 (or worse), making it harder and harder to recover the relatively fixed costs of expansion.
6. There is obviously a profitable business in being a taxi company. It's just not a $70B business, and indeed I'm not sure it's a $7B business.