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by newfoundglory 2932 days ago
Uber has a low cost because they are not charging you enough to cover their own costs, they are making up the difference with VC money. Any factors that make the cost of providing an Uber lower than the cost of providing a taxi are unimportant because they are not pricing based on the cost. If they had to pay for taxi medallions they could still undercut existing taxis if they wanted to.
1 comments
xapata 2932 days ago
> not charging you enough to cover their own costs

Are you an Uber employee revealing private information? If not, it seems you're making a big assumption about the proportion of their expenses that are marketing and growth versus steady-state marginal cost.

Amazon didn't make profit for a while and everyone wondered if they could. Oh, it's a low margin business, they'll never be profitable, blah, blah. Turns out they can, in fact, make a bit of money. Maybe Uber and Lyft can, too. Delta can, even though flights are a commodity business.

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newfoundglory 2932 days ago
wow, you're really attached to this narrative you have, to be so desperately reaching for a reason to discredit the impact of VC money on their operation. I think my previous comments have already said everything relevant about the breakdown of their marketing costs vs steady state marginal costs.
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xapata 2932 days ago
> really attached to this narrative you have

Oddly enough, I was thinking the same thing.

You've asserted that they're ignoring cost in their pricing, but have provided no evidence for it. Uber and Lyft have claimed to be profitable in their biggest markets. Doesn't that suggest they set prices above marginal cost?

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newfoundglory 2931 days ago
Wow. They were apparently profitable for two minutes in 2016, might be what you're referring to? I haven't provided any evidence because I assumed you had access to the same real world information as I do, but if you don't have internet I can mail you some stuff.
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xapata 2931 days ago
You're confusing company aggregate profit for profit within each market.
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newfoundglory 2931 days ago
No, I'm referring to the US market. They have never been profitable overall but for a very brief period in 2016 they claimed that the US operation was profitable.
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