[vladd]

Uber and Lyft businesses are a marketplace that benefits from the effects of scale: when lots of drivers and customers are present, supply and demand are near each other and balance out nicely. It also suffers from the chicken and the egg problem in new cities being launched: there's no driver close-enough in order to ensure low latency for new orders.

To mitigate that, Uber and Lyft heavily subsidize launches in new cities by pre-signing up drivers well ahead of initial demand, to ensure low minute order fulfillment. This is done by giving drivers activity bonuses in the initial new-city market formation stage, no matter the actual orders. This ensures order low latency fulfillment for early adopters in new locales, which leads to customer satisfaction, word-of-mouth advertisement and soon enough full marketplace formation (and lock-in).

If you were trying to compete with Uber in New York City, the main problem you would have is that you'd need a lot of capital to have hundreds/thousands of drivers to ensure order fulfillment on average under 5 minutes by having a driver as close as possible to any new order being placed.

Convincing people (using money) to stay idle despite lack of initial order demand (until the marketplace is formed) takes more than $5 per driver.

[joshe]

It's a very local market though isn't it? You just have to be better (cheaper, faster, nicer) than them in your city to win that city. People don't even really travel that much, and when they do, and the guidebook said "use Careem in the middle east", well then they would.