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Originally Posted by Dagger
Really interesting post, and I appreciated you spelling out some of the more hidden nuances. I have a question for you though:
What's your take on what their long-term game is? In the medium-run, won't taxi companies have to reduce their fares in order to compete with Uber's prices? In turn, with how unprofitable Uber has been thus far, they'll presumably raise their own prices, to both become more economically healthy, and reflect additional costs they'll incur to meet regulations should they choose to compete. Won't that be better for consumers in the long run? Is this not competition at work?
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The thing that works great for Uber is that they pass along a lot of the expense and risk of their business model to their "independent contractor" drivers.
Because they don't have a physical product to sell and just take their 20% cut of every dollar spent, it doesn't matter to them if they sell 1,000 rides at $10 each, or 10,000 rides at $1 each. If you're a driver for them though, you'd much rather have 1 ride at $10 than 10 rides at $1 because each ride costs you money to provide.
We've seen in other cities that Uber will drop their prices over time to drive up demand. That's great for Uber because they're still getting 20% of every dollar spent. That sucks for the drivers because they're getting 80% of less without their expenses dropping to match.
It seems like a bit of a pyramid scheme. As long as new drivers keep signing up for the service to replace those that leave, the pyramid will remain stable. If they start losing too many and don't replace them, then it can collapse quickly.
Quote:
Originally Posted by GGG
If the regulation was fixed and there were surge cabs available to meet demand no one would back uber entering the market.
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I doubt that. Uber has been supported in plenty of cities where cabs are extremely plentiful. I'd bet that the cities where Uber has had its most success are the ones where cab service is also the best.
NYC is arguably the biggest taxi cab city in the world, and it's also one of the biggest Uber cities in the world. It's dead simple to get a cab in NYC (I have photos I've taken there where every vehicle in the photo is a yellow cab) and yet the public has embraced Uber there.
There are a lot of great things about Uber style services that make them infinitely better than regular taxis. As someone said in one of the previous threads on this topic, if the taxi industry didn't exist, and you were creating it from scratch today, what you'd create would look almost identical to Uber and almost nothing like the taxi industry today.