[encoderer]

> it's incredibly unclear how they will make money outside of trying to run taxis companies out of business by subsidizing fares with VC money and then jacking up fares when there is no more competition

If you look at the numbers, all they need to do to reach profitability is increase fares by 7% without increasing the driver's cut.

I'm not suggesting they can just do that overnight without impacting their competitive position, but it's not "incredibly unclear" to me.

[hn_throwaway_99]

"Raising fares 7% without increasing the driver's cut" is a complete fantasy at actually should emphasize how unprofitable Uber is. In many other transportation industries, 7% is just about the total profit margin - if companies in these other industries could raise their revenue by "just" 7% they would double their income. They don't because they can't.

[encoderer]

I disagree. The average $15 fare becoming $16 will just absorb a lot of consumer surplus that Uber is leaving on the table for competitive advantage. Cabs are still generally more expensive.

[hn_throwaway_99]

And you don't see Lyft as seeing an opportunity to sell for $15?

[encoderer]

Actually I think the bigger threat would be lyft charging $16 and paying the drivers more. But outside of a few big American cities Uber dwarfs lyft so they would need to scale up before they could really threaten

[pwthornton]

A huge part of their appeal is unusually low fares. Raising their fares to a point of profitability is going to hurt what many customers like about them. But maybe their increased usability is still more than enough.

Raising fares 7% may get them to profitability, but does it get them to the point where a $70 billion valuation is justified?

[ameister14]

If I remember correctly they are also profitable in the US, but bleeding money in an attempt to corner other markets.

[kartD]

But they have $7.2B in cash, so they can "afford" it