This is not the argument you think it is, it fact it is the opposite.
Most of the initial railroad investment was indeed a financial failure for the investors, as the history of the railroad bankruptcies reflected. The state subsidy in the form of the land grants and the similar supports.
The waiving of the hands about the ‘assgrabbing’ numbers is also very silly where there is the public financial information. The costs of the operation of vehicles in the public hire is also not a great mystery.
Mais voila, calling the FT and the WSJ clickbait, fine.
Just on the two points above, the few times I’ve taken Uber, during the trip I got notified that, because of congestion or something, the price will be switching to surge pricing, so the actual amount didn’t match the quote. Sure, the quote was exact (you know, exactly $15 or something) but the final amount wasn’t. Also, there are others here saying that it’s cheaper because Uber is subsidizing the rides.
When Uber got in trouble for some Trump thing, there was a significant move from them to Lyft, big enough that they had to develop account-deleting procedures, which they didn’t have before. Since many Uber drivers are also Lyft drivers, it really opened my eyes to how companies who rely on the gig economy may have a hard time keeping competition out.
Sorry it was not clear, I meant to be sarcastic but it is not obvious, my apologies - in fact I consider it extremely silly to call the analytical articles in the WSJ and the FT to be the clickbait. They can be wrong, yes, but calling them clickbait is silly.
So the problem for Uber is if they paid fair labour costs and the other regulation costs that other Taxi services do they wouldn’t be competitive. They are only able to be cheaper than taxi’s because of first, skirting the labour laws, and second subsidising payments to drivers from their investment capital.
It’s essentially a race for them if they can replace their labour force with self driving cars before they run out of investor money. However they are also big in developing countries India, South East Asia etc and here they don’t have the same problem. Because the price of labour is so much cheaper, and Uber genuinely offers a more efficient way to allocate taxi’s at the correct place and time, they can make a profit and still afford to pay their drivers.
I’ve used Uber quite often, and I’ve never experienced that. But they operate in different ways in different cities, and their policies are also evolving over time.
At one time they used to quote cost as a range (x to y amount), but now they give an exact quote to the cent, which I’m charged at the end. The quote for the same trip may vary according the time of day, or the day of the week, or the particular traffic situation, but the price doesn’t change during a trip.
I took an Uber in California last year and ran into a horrible traffic jam and this did not happen. We felt so bad for the driver that we got out and walked the last half mile. We ended up paying less because of the mutually agreed upon ending of the trip.
I am very doubtful that on a fully costed basis they are actually making a profit in the developing markets. I see Uber in the markets I live and work in the African context and their price is what a local person would pay for a hired car with the driver. And they have to take cash because of the locals reluctance (not the technology) to pay other than in cash or via pre paid cards. The cost of the provision of the vehicles and the maintenance is more elevated, and the systems for this less efficient…
The vision claimed of skipping over the individual car ownership seems to me horribly similar of the same kind of claims I heard in 1999 from the Silicon Valley types about how the internet delivery and systems would allow the African countries to skip over (some subject).
The idea of the Uber as a mass transit solution that this starry eyed NYT article is adopting seems to me nonsense since there is no economy of scale for the car owners and they face much higher ineffeciency costs… (than the fleet investment if it is being well managed, of course it is a big if, but the achieving of the fleet efficiency is quite possible. The achievement of the operating efficiency of thousands of piece-workers in the capital and the resource intensive industries… I do not know of any good model. The Uber model, it is to me just piece-workers, a model of the early stage of the industrialization, and without the capital subsidy [or you can say capital burn], it is problematic in cost for it must structurally lack the efficiency of asset usage on a total cost basis).
(and if you read deeper in the article, the non App habits like the phoning of the driver directly, this is the kind of thing I see in the markets I know)
You are absolutely right and the article makes clear they are not yet making money in developing countries either. My point was merely that it may well be that they do end up making money in developing countries first, and hold on long enough for autonomous vehicles to make them profitable in the west. Essentially it seems to me that is the plan that the people with very deep pockets who are bankrolling Uber are hoping for.
It is hard for me to think they can actually make money with their model right now in these developing markets because of the other severe ineffeciencies, from the payment modes to the cost of the assets.
If the model was changed to be principally one of the enabling of the existing taxi services from the tuk-tuk motos to the actual taxi cars, and it becomes a piggy-backing on the efficiencies of the fleet model, then it seems more sustainable to me for the developing markets.
Otherwise, I think it is an excercise in a very typical silicon valley naivete about the infrastructure asset base they surf on in the developed markets and a very naive idea about what their app based no asset ideas really are benefitting from.
Yep I agree, here in Thailand they have a singapore based competitor called Grab who does exactly what you say. Instead of having dedicated Uber drivers any meter taxi driver (or moto driver) can sign up for grab and get jobs from them as well as other places.
However in the bizarre world we now live in, Uber is likely to keep getting financing as long as they keep growing, in numbers of customers and numbers of drivers, because of the vague idea that sometime in the future they will somehow monetize those customers.
A model assumed in many “App based” businesses all around, that they serve simultaneously as aggregators of Big Data about user and “partner” behavior, and *that *will be the big sell down the road.
Which is melting like a late spring snowstorm - $3B loss since year’s flush of success, no sign of it stopping.
As I said back at the beginning: the victor will look a lot like Yellow Cab the way it *should *have evolved into the 21st century. The brand will be irrelevant.
It is the non pricing in for the fares of the non-driver costs which is the effective capital subsidy. This is the subsidy to the driver by a division of the fare that does not reflect the overall cost.
the drivers and the consumers are not yet bearing the full real costs of the operation, although the drivers who are owning their own private cars are not likely to be covering the economic costs of the furnishing for free to the Uber operation of their asset - the private car - for the taxi usages.
Regarding self driving cars, Uber are currently being sued by Google for stealing their technology, which has led to the revelation that Uber’s self-driving cars are supremely unreliable. Google are streets ahead. The difference in how far the cars can drive without human intervention is something like three orders of magnitude.