[treis]

>At a $5 signup bonus that costs like $25,000. You can just be the third app,

Uber can offer those drivers $10 not to switch and their capital will last longer than yours.

[koolba]

I’m not sure they even can do that. Maybe incentive drivers to drive with them but contractually preventing them from driving elsewhere starts smelling a lot like full time employement.

[joshe]

Sure right now. But long term? They don't seem to have any kind of moat at all.

They can't actually do that because it messes with the contractor thing, but they can do what they are doing with the rewards for a certain amount of availability.

But still I could just halve the amount I take from the transaction and give it to drivers. That's surely better for the drivers.

Moat is about them having a long term advantage that makes it hard to compete against them. Lots of capital isn't enough in 2019.

Long term it seems like the restaurant business, where most are just scrounging for minimal profits all the time.

[treis]

>Sure right now. But long term? They don't seem to have any kind of moat at all.

They also have the moat of providing a reasonably good service with network effects. How would you come in and beat the Uber/Lyft duopoly? They can copy any innovation you come up with and have the capital to beat you in a price war.

[joshe]

Businesses where you burn capital on price wars are low margin businesses.

[treis]

(1) Low margin is probably OK given the enormous market Uber/Lyft will share.

(2) They won't actually have to burn capital. No one is going to get into a price war they obviously can't win.

[joshe]

1) We totally agree, ride hailing is a low margin business.

2) Yes! As long as Uber/Lyft act like low margin businesses no one will compete with them. This means they have no pricing power.

[jakear]

Not really. Driver are already nonexclusive, this is just adding one more entity.