Uber is an example of a company that wants to be a tech company, but (1) really shouldn't (2) kinda lacks the technical leadership to really be one.
It feels like the right call, around 2017, was to either:
(A) double down and build a platform for every kind of physical multisided marketplace (matching as a service, maps+routing+locations+geofences as a service, physical product ops as a service, etc) Where Amazon went from books->everything->AWS, Uber could have gone rides->platform-for-all-the-multi-sided-marketplaces.
OR (B) fire every engineer except the 15 or so it takes to maintain the rider and driver apps and a few services, with no new features, port everything over to common cloud companies instead of their DC (shoutout to DCA, the ugly stepbrother of SJC), and just pivot to value extraction and just maintaining it as the simple taxi app it should be.
Instead, they did neither, muddling around building random tech as if they had ads/search/social media margins while losing sight of the customers needs. There's a reason DD crushed them in food.
Edit: Since the primary response seems to be "You don't understand!" I was there 5 year, saw how the sausage was way over-made.
Wow, strong disagree. Having interviewed a couple of candidates from this space, even for just rideshare pricing for both demand and supply sides is an incredibly sophisticated statistics and economics problem, where appropriate modeling can have long term revenue impact.
Even within this vertical it seems you’d need a lot more than 15 engineers.
Thanks for this post. I do a hard eye-roll every time I read one of these "Hey, I could build that company's website in a weekend" or "They should only need a few engineers to keep it running" type posts. If anything it just shows that the commenter has 0 idea what they're talking about.
I'm not at all saying that there isn't a good amount of "fat to trim" at large companies, but often times the hard work at these big companies is making a difficult problem (or, rather, set of problems), especially at scale, look trivially easy.
An example I think proves this: In Austin, TX, Uber and Lyft stopped operations in the city for about a year in 2016-2017 when voters passed a law requiring fingerprint checks (the state legislature eventually overrode this law, which is a common feature of Austin city-Texas state relations). During that time, Austin was flooded with a host of startup rideshare apps, some funded by some technology high-fliers. Even though I liked to use the RideAustin app because it was a non-profit, paid drivers more and funded a charity I support, there is no denying the apps were a far, far cry from Uber and Lyft's apps. Even after a full year there was really no comparison in the quality of the apps.
Just the ride-sharing part of Uber does about 15 million rides a day, in thousands of cities, each with different regulations and legal frameworks. Uber on-boards about 50,000 new drivers a month. Anyone who thinks this can all be managed with "15 engineers" has not thought through the problem.
I remember that time quite well. These alternative apps would always fail over the weekends when demand skyrocketed. They just didn’t work, when most people needed them the most (drunk and trying to get home from bars/clubs). That really hurt their reputation in my eyes and in the eyes of others like me (which in Austin was a lot!). I personally remember wandering around at 4am trying to get a ride back… not an experience you can forget easily.
It also wasn’t just a single weekend thing. These other apps had almost a year to fix themselves and they couldn’t. I guess they just couldn’t muster the capital to build something really solid. But in any case it just made it very clear that this isn’t an easy problem. And when Lyft/Uber came back, the other apps were dropped immediately lol.
> These other apps had almost a year to fix themselves and they couldn’t. I guess they just couldn’t muster the capital to build something really solid.
They really didn't have time or money because everybody simply assumed Uber/Lyft would use their gigantic piles of VC cash to come back shortly and sweep everybody aside even at a loss.
The most important factor that is completely lost in this argument is "scale".
Simple looking things are very complex at large scale.
Even if no new features were built, the current api and apps won't scale to meet the demand as the user base continues to grow. And at any point in time there are thousands of bugs that need to be fixed within months before they cause big issues. 15 engineers will take years to fix them.
Another big factor is cyber security. This alone will require more than 15 people. Monitoring and defending against active threats, updating libs with patches and migrating from deprecated dependencies spanning 100s of services.
Uber was designed to be incredibly overcomplex and scaled from the beginning; you can read people’s accounts of the fancy technology they invented to scale other employees’ stuffing code in nonstop. Of course, those other employees had no reason to write that code, and were just doing it because Uber had a lot of money and decided to hire a lot of people to do random busywork.
If “it could be done in a weekend with less people” is true for anyone it’s true for Uber. They should be replacing systems with ones that may scale worse but are cheaper. Scaling=complexity comes from companies like Google/Meta where the engineers practice promotion-based development.
The problem is legal regulations. Wanna know why SAP is so successful despite their software being practically a legend for horrible UI, slowness and other nightmares at an absurd-seeming price point? Because they invest an absurd amount of money into lawyers, process engineers, developers and QA to keep track on law, judicial precedent and XO changes all across the world, so that their customers only have to pull in the latest monthly update and their processes (assuming they didn't deviate too hard) are automatically compliant with all possible kinds of bullshit.
Uber, AirBnB, Amazon FBA and other globally active marketplace companies deal with the same thing - their business is in facilitating other people's business without having to think about local laws and regulations.
Payment alone is a real hard thing: people wish to pay with whatever payment card scheme is most popular in their specific home country - which may not be the usual Mastercard/Visa duopoly -, they may wish to do so in wherever country they are at the moment, there may be international sanctions at play, different regulations about CC fees, clawback periods, taxes, VAT...
Uber was mainly successful by just ignoring the regulations nobody liked and hoping it’d work out, though. It really looks like they just managed to convince everyone that taxi routing is hard and can only be done by hiring 1000 geniuses to write 1000 queueing systems in Scala.
Wasn't Uber famous for shirking regulations until it had cornered markets?
And FBA appears to be borderline fraudulent for both producers and consumers as Amazon comingles inventory with no guarantees.
That said I can see the legal-based marketing pitch. Not sure how well companies who advertise that actually deliver. There's also the risk it becomes theater or regulatory capture
They're not saying it would take 15 to build, they're saying that maintaining it does not take nearly as many staff as they currently have. Which is correct: if Uber is simply a rideshare company, then with the technology established it should be winding down it's dev teams.
If it's instead a "every market" company then it should be doing that with its considerable on-payroll staff.
I mean I'm reading that as hyperbole - the point is that the head count to keep it running should be a lot lower then the head count to build it, keep building it, etc.
It's mind boggling how most people think it's a simple matching FIFO matching algorithm, instead of how mind bogglingly complex making ride-sharing happen at scale is
Sometimes I wish it were simpler. I’ve had multiple situations where I couldn’t get a ride into my local city recently.
The app says there are rides within 10 minutes, shows me a cheap rate and I hit yes. In 10 minutes no matches have been found. In 10 more minutes it finds someone 20 minutes away. 15 minutes later the driver cancels and I’m back to square one.
Now the thing is the cost of the ride is a pittance and I would gladly pay double the cost just to get to my destination in a reasonable timeframe. Instead I just call a cab now, request a pickup at a certain hour and they send a driver.
FWIW I’m 20 minutes drive from downtown Montreal, so this is not like I’m out in the sticks or anything, and couple years ago it was much easier to find a ride. Unfortunately I don’t think it’s even another ride sharing company taking the drivers, it’s just a lot of drivers pivoted to doing Uber eats instead.
I had a mostly similar experience in the France. The "gladly pay double" would translate in using a different app (the ones provided by traditional taxi companies) depending on the circumstance and the margin of error.
Uber's app was still hands down the best to use, and I had so many issues with the others, like credit card registration being flakky, or the app straight crashing on specific screens. It looked a lot like they paid a dev company a lump sum to make the app and would proceed to pay for some more fixes every six months instead of keeping an ongoing maintenance contract.
I kinda wish that now that the legal frameworks and service viability has been explored, Uber dies completely, and the gap is filled with local startups working closely with the local market to maintain ride services from there.
I think that HN has crossed a threshold where the stereotypical HN reply is not someone condescendingly declaring that some problem they don't understand is easy, but instead someone who admits that they don't know how hard a problem is, condescendingly assuming that the person they're talking to is as ignorant as they are about it, and admonishing them to respect their betters and to make the assumption that the decisions that have been made and the methods that have been used by bigco X are rational.
This is a weird forum. An argument that a company is big and successful so must have some process for making decisions that works well, so criticisms of those decisions by internet randos are necessarily badly informed and egotistically presumptuous because they can't have the understanding of the people directly involved yadda yadda yadda i.e. a standard status quo argument, generalizable to dismiss any criticism independently of the specific facts of any situation or the institution being defended - when you're making that argument, you could be making it to someone very highly placed or otherwise knowledgeable about the institution that you're defending.
I think people don't care about it because at the end of the day all this mind bogglingly complex stuff just exists skim money off a transaction that should ideally be done between two individuals -- a buyer and a seller.
Uber is nothing more than a rent-seeking middle man and no one cares about how complicated their rent-seeking activities are behind the curtain.
Why can my ISP string up fiber optic all over my city and put routers and switches or whatever in boxes that can survive all kinds of inclement weather and end up charging me $100 a month for gigabit internet? Isn't that a much harder business than Uber?
>Uber is nothing more than a rent-seeking middle man and no one cares about how complicated their rent-seeking activities are behind the curtain
The term rent-seeking gets thrown around a lot more lately, mostly from the web3 crowd. Most times its not used right.
It's only rent seeking if the middleman isn't providing any value. Otherwise they're just getting paid for providing a service that people value....
Think about what you're saying. You don't "care how complex it is". Well that complexity determines whether or not it is rent seeking. You say ideally a transaction between two individuals. The major problem being solved here is finding the two best matched individuals based on their current location and destination over time. You need some system to aid this discovery no matter what.
Here's the definition of rent-seeking:
Rent-seeking is the effort to increase one's share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality, and potential national decline
> reduced economic efficiency through misallocation of resources
Uber and Lyft generate 70 percent more pollution than trips they displace[0]
>reduced wealth creation
Uber and Lyft are pushing drivers into poverty[1]
> lost government revenue
How Uber dodges paying tax in Canada[2]
I don't care about the complexity of the the black box algorithm that Uber implements because I know what purpose it serves. The whole purpose of Uber is to make people entirely dependent on it by driving out alternatives like local cab companies and public transit through low prices subsidizes by Saudi money.
I think it's great that Uber has forced cab companies to modernize and make their services more convenient but we both know what will happen if Uber gets a stranglehold on this market. You'll see jacked up prices for the captive market and declining service.
Their skill lies entirely in breaking laws in a way that allows them to make more money than the fines they pay.
In addition to their legal entrepreneurism their next skill lies in hiding externalities. They push costs to everyone else (drivers, riders, cities by massively increasing traffic, everyone who lives in those cities who have to deal with the noise and pollution of the additional traffic, etc) without having to bear any of it themselves.
Where I live you have to work a full 8 hour shift to be a taxi driver.
So the real benefit of Uber was enabling mums to drop off children at school and then work until time to pick them up again (one example), casual self determining work not available to many in other ways.
I live fairly central, guy around the corner from me is retired, hangs at home picking up the odd job as he feels like, great for him, plus he can control his income relative to impacts to benefits.
not if you are retired, the way it works here the marginal tax rate of a pensioner could end up around 80% when means tested pension payments are taken account of.
For someone that has worked all their life and paid a shitload of tax I find that a little offensive and have no problem with them optimising their returns in their golden years.
Now you are talking about getting welfare subsidies when people are retired? I hope when you are retired you have pension pot or a (paid off) house you can leverage so you need to get welfare money from the government
It's called the pension and everyone who has paid tax more than ten years and over a certain age (it's migrating over time, basically 65) who is not means tested out on income and assets is eligible.
But there is a grey area where you partially qualify, the ideal retirement strategy can be to spend your savings at a rate to allow a comfortable life then at a certain point you drop down into pension eligibility and then you supplement your own savings with the pension.
Unfortunately, in the parts of the zone of grey the way it works out is if you earn too much the combined impact of income tax and reduced payments is equivalent to a tax rate of 70 or 80%, so it sort of makes it an incentive not to work in those cases unless you really like it for some reason, but there is every chance you are 75 or 80 by then so I think you've probably done your bit by then and entitled to take it a little easy.
Then ride a cab? You're involving a middle man because they do a pretty damn good job taking you from point A to point B. It's the same reason you might want to use Amazon to buy something and "take money out of your community."
I take the bus, but I noticed lately that I haven't seen a cab in my city in months, whereas pre Uber I used to see dozens of them a day.
For better or worse I think that Uber destroyed the cab industry in my city.
Either way, I still think that we could have some sort of decentralized ride sharing platform that doesn't suck so much money out of local communities.
I think that this would be better for communities and therefore society a a whole.
In what sense? The taxi's and their drivers will still be there, they're locals. They're not completely dependent on Uber so if a vacuum would arise, it would be filled quite fast I believe.
How is Uber anything similar to a utilities company? Those companies are rent seeking because they provide an essential service in a de-facto monopoly. Uber literally created the demand from both sides of the marketplace while facing steep competition from incumbents. There are many things wrong with them but how can you criticize them for rent seeking? They're one of the most capitalistic companies around and their origin story is literally the opposite of rent seeking.
> rideshare pricing for both demand and supply sides is an incredibly sophisticated statistics and economics problem, where appropriate modeling can have long term revenue impact.
This is the fallacy of completeness and sounds vaguely like Wassily Leontief's input-output planning and has been proven to not work [1]. In the absence of complete information - demand and supply, "appropriate modeling" will always fall short. Economics has again and again showed that sophisticated models always fail and simple heuristics based models work far better. I suspect a simple rules driven system would work just as well.
Uber big innovation IMHO was making supply extremely flexible by massively lowering cost to become a driver and making it possible to be a marginal driver. As a society, we should run with that innovation. The rest of stuff, the fancy app, the car tracking, the dynamic pricing is fluff hiding the real value add.
I think the point is that it doesn't need to be. We are seeing that the marginal benefits of extreme price optimization is minimal. Taxis have been simply charging flat rates for time and mileage for decades. Certainly there was room for improvement and Uber already did that and continued deep optimization is probably not worth it. 15 is hyperbole of course as any billion dollar company will need more than that but probably not multi-thousands.
> rideshare pricing for both demand and supply sides is an incredibly sophisticated statistics and economics problem, where appropriate modeling can have long term revenue impact.
This is the fallacy of completeness and sounds vaguely like Wassily Leontief's input-output planning and has been proven to not work [1]. In the absence of complete information - demand and supply, "appropriate modeling" will always fall short. Economics has again and again showed that sophisticated models always fail and simple heuristics based models work far better. I suspect a simple rules driven system would work just as well.
Uber big innovation IMHO was making supply extremely flexible by massively lowering cost to become a driver and making it possible to be a marginal driver. As a society, we should run with that innovation. The rest of stuff, the fancy app, the car tracking, the dynamic pricing is fluff hiding the real value add.
As a customer, I would get the wrong food about half the time in NYC even pre-pandemic. I complained and got a refund the first couple of times but then they stopped refunding me when it kept happening. Clearly thought I was fraudulently trying to get meals for free. Thing is, I’ve been a customer since the black car only days. Been Uber VIP for my high rating as a customer. Problem wasn’t with me. If they can’t get quality control done with their restaurants then they don’t deserve my money. I’d rather go direct. I’ve never had a problem go unresolved going direct. In fact, I’ll often use Uber to find a restaurant near me and then call them direct to order to avoid their lousy customer service.
I had the same thing happen with Deliveroo despite being a "volume customer" ordering multiple times per day and providing proof of the wrong orders every time the app asks.
My conclusion is that these services are based on the idea that the customer will "eat" (pun intended) a certain amount of wrong or missing orders. Completely illegal and in breach of card network regulations (I won a chargeback against Uber for the same reason) but the law doesn't apply to big companies.
Most restaurants are horrendously incompetent when dealing with delivery apps.
I know because I once drove delivery for a few apps for about 6 months. The vast majority of restaurants treat delivery apps as easy side cash and don't take it very seriously. Depending on the restaurant, since the employees don't see you as a real customer, they'll rush things and miss items. They almost never report orders as being ready through the app, which would make it easier for drivers to schedule their drives and get in and out faster. The result is drivers show up and end up waiting because even after 30 minutes the food still isn't ready when they arrive. The tablet the restaurant is using could be completely off or dead but they won't bother signing on to the GrubHub/Doordash website to stop taking orders. Most of the time, restaurant staff doesn't give a fuck, which is stupid because restaurant staff also tends to hate delivery drivers. Why the hell would you not get the manager to sign in to the website and prevent drivers from coming in and wasting your time?
On the other side of the coin, these delivery apps also don't give a fuck. I was way above average in terms of the effort I put in as a delivery driver, but no matter what you're gonna get customers blaming you for things you couldn't have prevented. A bunch of times the customer opened the bag at the door (this was before the pandemic), find an item missing, then scowl at me while telling me they're gonna complain to the app. Not once did I ever get reprimanded by an app or receive fewer orders. I kept in touch with a bunch of other delivery drivers, many of which were far lazier than I was and admitted to screwing things up, and none of them every got so much as an email for forgetting drinks too many times or being way too late. The only way you can really get fired from these apps, absent doing something illegal, is if the area the driver is in just doesn't have enough people ordering food to make it worth paying the driver.
Oh yeah, I did a little driving for Uber Eats, btw. Most delivery drivers I knew at the time looked at Uber Eats as the "slut" of delivery apps. It paid the worst, the customers were cheapskates, but you also got lots of McDonalds and KFC orders through it, so it was only really good for if you could fit one of those orders in on the way to another delivery. I stopped doing it pretty early on because Uber Eats effectively had no meaningful driver support. At least GrubHub could be reached, even if it wasn't always helpful. Good luck reaching Uber as a driver in 2018. IMO, Uber had no business competing in the food delivery space.
I think people overlooked all these issues because we've been in the honeymoon phase of the post-2008 economy with all these "innovative" mobile apps doing amazing things, so we largely overlooked both the bad customer service and ridiculous pricing. Gradually, the rest of the economy will adapt to not rely so much on the likes of Uber unless something changes. And I would say the same thing about a lot of other aspects of the food economy as a whole. Much of it is of underwhelming quality and the customer service tends to suck, and now it's more expensive than it's worth. If you're gonna eat a bunch of carbs and glorified dog meat with some fake cheez product, you might as well do it at home for a third of the price, if not less than that.
I think your NYC centric anecdote kinda reinforces my point, in an old-man-yells-at-cloud kinda way. The eats usecase was supposed to be around delivery for places that did not already offer it. If you are talking about the eats experience vs in house delivery, that's kind of an edge case...
I’m not sure I agree. People in NYC are in for the market - you just have to beat the existing haphazard setup, create a unified payment and support and order taking platform, and do as well as the incumbents in delivery quality.
“Supposed to be around delivery for places that did not already offer it” is beside thee point. It isn’t an excuse to be so terrible across the board (but note this isn’t unique to Uber and DoorDash is pretty terrible as well)
I love the "small team of focused engineers" trope for apps like uber. It's so easy to blow past that number. Website? That's a team. iPhone app? That's a team. Android? Another team. Data collection and A/B testing platform for all the front ends? Another team. Backend? A team. Infrastructure? Another team. AI solutions for problems like delivery time estimation? Another very expensive team. BI for the executives? You guessed it, another team!
Fairly recently I moved from a company of about 8,000 to a company of 54 or so. At first I wondered how the tiny company got anything done, but they've been around for 30 years so I figured they must have some skill. Now I wonder what the hell all those 8,000 people actually did. Each team you just named is 1-2 people at the current gig.
Having gone through some of these scaling issues. Three things pop out:
1. With more customers, you find your code is much buggier than you thought. Most code has a long-tail of weirds bugs that may be a non-issue at current scale but absolutely crippling by just increasing the number of users by 1-2 orders of magnitude.
2. As you increase the number of business functions within the company, cohesion breaks down. People start losing more and more context and you start needing full time jobs just to keep everyone pushing in the same direction without stepping on each others toes. I don't know you in particular, but most engineers seem oblivious to how many business functions a company trying to operate internationally often needs.
3. As engineers, there's often a wall between us and huge amount of effort that goes into sales, marketing, and customer service (even if the last is only provided to enterprises). One way to keep headcount down is keep this to a minimum, but you're usually leaving most of your profits on the table.
Indeed, we're nowhere near the scale of Uber. We have a few thousand users supported by 7 developers, 2 ops people (one is me) and 7 in customer support who provide 24/7 support with an on-call rotation. If we increased our users by an order of magnitude or two, I doubt we'd need to increase headcount by anything near that much. I'm told really effective companies like Netflix are quite skilled at leveraging technology to scale out their platforms with very agile (read small) teams. I don't think we're anywhere near on par with Netflix, but we can read their engineering blog ;)
My previous role in the big company was actually post-sales customer support so I'm actually pretty familiar with those functions and somewhat aware of all the coordination and power politics that come with increasing numbers of people - there's a reason I'm trying something pretty different these days. And so far, I have to say I'm happier with the surroundings.
> I'm told really effective companies like Netflix are quite skilled at leveraging technology to scale out their platforms with very agile (read small) teams
Netflix has over 1000 engineers, maybe close to 1500? Uber has ~3,000.
If we assume these companies are handling similar amount of work, Netflix has only managed to do 2-3x better in terms of headcount to work ratio. (talking to friends at these companies, I think this paints a rosier picture of Netflix than is reasonable).
As another commenter pointed out, there's also a real step change when you go global. The requirements in terms of governmental compliance and engineering effort to outcompete local software shoots up headcount significantly. With a global audience you generally need to be providing an excellent experience in more ways as local values and tastes can vary more significantly than you expect.
It doesn't. Your unit is tiny. A few thousand users doesn't even break the threshold of "death by Hacker News".
Uber's 93 million in 80 countries means that (very roughly) in each country they have three orders of magnitude more users than you: 93 mln/80 countries = 1+ mln in each country = 1000 times more than you = 3 orders of magnitude.
As I said, just dealing with payments in each country is often a full-time job for a dedicated tema even if you process payments through a third party like Adyen.
Are Uber operating at 100% efficiency? Hell no. Will you have several orders of magnitudes fewer people than Uber when you grow to Uber's size? I very highly doubt it.
Of course, there are exceptions like WhatsApp, but WhatsApp in itself is a very simple product (that is very hard to scale), and was (and still is) very slow in rolling out features.
I have seen how it multiplies out in traditional engineering.
One guy/girl was doing stuff, might be quite a bit, so it's decided it is really needing 2.something people, so they send two more, because you can't have part of a person.
Then they need a manager, and a doc controller and maybe an admin. Then the service people need a manager, and you need a manager of the managers, and they needs an assistant and who knows who else, maybe a HR and next thing know what one person was doing is all of a sudden a ten person team.
And instead of going to just talk to someone in another team, it's no "my manager will confirm with your manager" etc etc
I worked in one place where to send a document to the guy in the next office from me for official review had to go through a document control office in a another country. That was not unusual, apart from being unusually frustrating and time wasting.
That really doesn’t say anything. Those teams all do very different thinks depending on the problem space. You’re not really making an argument though you are just stating two situations and hoping people arrive at your conclusion of big company is stupid.
I think anyone who has interacted with a big organization (company, government, religion, etc...) comes to the conclusion that they're disfunctional in some way. I agree that it doesn't say much, but I do wonder, how many engineers built the original Uber app and how many does the company employee today? I'm betting it's more, and I wonder how much additional functionality they've added over the years.
The bigger the organization, the more calories have to be burned to keep the organization from flying apart at the seams, and the core value producing parts from being eaten, confused/mislead, or destroyed.
At big organizations, it’s often 90% or more of all work the entire organization is doing (depending on how you calculate kt).
I work a startup with less than 15 technical employees and have experience at tech companies ranging from 100s to 100s of thousands of employees. Suggesting that one could accomplish or maintain a platform like uber with so few heads is a farce.
A team of 15 probably couldn't. A team of 50-100 probably could maintain something of similar complexity to the core uber app. Copycats exist using many fewer resources.
How many countries would this be offered in? Would you shut down your service outside of US business hours or will your 50-100 person staff not need sleep?
An underappreciated aspect of computer programming is that maintaining a program often requires less work than writing it in the first place. Once you finish writing the iPhone app, you've finished writing the iPhone app, and you can get by with a much smaller team--possibly just one person--to handle bugfixes and maintenance.
Unicorn tech companies generally don't realize this, which is why they all redesign their apps over and over and add poorly-thought-out features all the time. They're still paying for a build-an-entire-iPhone-app-from-scratch-sized team, and all those engineers are desperately looking for stuff to do!
You've never done iPhone development it seems where there's neverending new or deprecated versions of iOS and "kits". I've had clients that try this without a dedicated team, and each time was a nightmare for them(and hence us) where nobody remembered how anything was done
I have done iPhone development, and I can say with confidence that it is less work to take an iOS 17 app and update it to iOS 18 than it is to take nothing and create an iOS 18 app from scratch.
You still need a non-zero number of people who know how the iOS app works, but the number you need is smaller.
As long as you have good product requirements, creation is actually very simple. You have freedom to choose the technology and the tools.
However, The moment that you discover that your AWS bill exceeds your engineering budget, you will have a different view of maintenance. People will now start calling it resilience, scale, optimization, etc. And then one day, the db will need to be partitioned (almost always, if the product is successful) and then the people who created the mess [almost always using a nosql database as it was available ]will run for the exits. You (or the poor unthanked ‘maintenance’ engineer ) will start learning about why distributed systems are hard to maintain.
Oh, they realize it - which is why the managers and execs whose ongoing career trajectories require managing larger and larger orgs spend so much time coming up with more work!
Most line engineers often realize it too pretty quickly, which is why we end up with so many new frameworks every time there is a huge boom cycle.
These aren’t unique apps though. In my deregulated taxi market all taxi companies (dozens) have Uber functionality where you track cars on maps, pay via app, book rides in the app and so on.
And many of the largest ones use the same app. Because they aren’t in that business, they are in the taxi business. If there is a margin to be found in scheduling or pricing, then their app supplier should provide it.
This is perhaps what Uber should be doing: making the white label apps for local companies doing ride services.
Not sure how many taxi markets are that unregulated that they allow it.
> fire every engineer except the 15 or so it takes to maintain the rider and driver apps and a few services, with no new features, port everything over to common cloud companies instead of their DC (shoutout to DCA, the ugly stepbrother of SJC), and just pivot to value extraction and just maintaining it as the simple taxi app it should be.
Uber operates in multiple countries, each of which have very different rules.
There's millions of rides happening in each of those places.
It's difficult to keep everything running with just a few engineers.
Im sorry you think you can maintain the rider and driver app with 15 engineers… I really can’t take anything else you say seriously as your knowledge of uber as a business discredited the rest of your thoughts.
The problem really is that Uber isn't in a markets that are "tech". Neither is Amazon retail for that side... Taxi and food delivery are horribly thin margin businesses and you really can't change that. Just because someone is middle man there doesn't mean they really are in tech, specially when they are the contact point for both sides.
Now if they were selling platform for other people to operate, I could see them being tech...
Just wondering where the credibility to make statement (2) comes from? This is a pretty big thing to say about a company that has generally been tackling some major technical challenges for quite a few years now. Yes, the economics of the whole thing has changed drastically during their journey, and there have certainly been leadership failures along the way, but they have obviously had technical leadership for quite some time now.
The way the app performance has deteriorated I thought they already had sacked most of their engineers - it used to be rock solid, now it glitches all the time for me.
I mean you’re saying it, and they’re clearly starting to offer it in ny and other places, but perhaps there’s a reason that didn’t work? I can see a million logistical and practical reasons why you couldn’t just make a generic “app for both sides” and let other market owners embrace it. Uber succeeded initially by actually doing the “dirty and unethical” ground work beyond software. I really doubt their tech stack had anything to do with their success.
Yea sure ~15 engs can operate the tech stack of a 50B company. If you worked there for 5 years and still hold these opinions, what you really signal is that you don't know what you are talking about regarding your company's business model and likely just oversimplify how sausage was made with your experience in probably only 1-2 orgs.
I always felt that the business was just a branding excercise to be leader of the pack when self driving taxis became a reality.
On May 5, 2020, during the COVID-19 pandemic, Uber announced plans to layoff 3,700 employees, around 14% of its workforce - Ahh I see what you mean, that is a lot of employees
Well Uber is logistics/CS company which a tech approach. I would think that makes it a tech company. Their stack is complicated and there are plenty of logistic giants who could've beaten them if only they were as tech focused.
I agree that a small team of engineers can do big things. But 15 engineers to run Uber ride share in maintenance mode? That's insane. I would love to see a breakdown of each engineer's responsibilities in that scenario.
The problem with the “many markets” idea is that outside of taxis and food delivery, there’s often not enough consistent demand for “on-demand”
Plumbers and masseurs and dog walkers didn’t build up reservation books because it was hard to make real-time bookings (phones enabled that), they did it because it’s the most efficient way to plan working hours so you’re not sitting around your entire life waiting for work.
DoorDash. Uber Eats in Vancouver is hot garbage, and my wife and i have switched from Skip to DD because Skip’s quality has plumetted. DD has really captured reliable service in Vancouver.
Can people please stop making statements true for America as if they are true for the world? In my country we have UberEats, Deliveroo and a few others, but DoorDash doesn’t even exist.
it always makes me happy to see the "tech bros come in here and think that everything we do is simple and easy to replicate" trope every other industry complains about holds true even when applied to the tech industry.
Nowhere did voz_ say or imply that Uber was simple or easy to replicate. In fact he didn't say anything all about replicating them. What he is speculating about is a hypothetical where Uber itself stops development and just maintains their existing systems.
Regulatory compliance is the one I suspect would be the hard one when it comes to switching a company like Uber to maintenance mode with greatly reduced developer staff on their apps and backend code. They would have to deal with regulations changing in areas they are already in, and in area they expanded to might have regulations that aren't just a trivial variation of regulations they have already figured out how to handle elsewhere.
For dealing with growth, there are two kinds of growth to deal with. One is growth within a given metro area that they already serve. The other is growth into new metro areas.
For things like ride scheduling, driver scheduling, routing, and similar they only have to grow their software to handle that in the largest single metro they serve. Multiple metro areas could then be handled by running separate copies of that software in each metro area. That would require an IT staff that would grow as they expanded into different metro areas, but wouldn't increase the number of developers needed to maintain the app and service code.
It would be the things that are shared between multiple metro areas that might need a growing developer staff even in maintenance mode. That would be things like the login system and payment processing. But note that these are things that a bazillion other online companies have to deal with too. It's well known how to do them and there are a ton of libraries and frameworks and services to support that. These are things you get working and then rarely have to touch.
It's the stuff in the first category, dealing with the details of what Uber has to do that isn't something every other online site with a large nationwide user base has to deal with, where the hard problems for such a business lie.
As far as security goes I think the number of developers needed to deal with security goes up much slower than the number of users. It is mostly a function of the amount of code you have, not how many people use it.
So, aside from dealing with regulators, I think a company like Uber could if it wanted go into maintenance mode and greatly cut the number of developers (although not down to the 15 voz_ used in his comment), once they have gotten the parts unique to their kind of business to the point that they can handle the largest single metro area they are in or want to be in, and they have a good enough debugged enough feature set that there isn't room for someone else to come up with a better enough feature set to matter.
This isn't specific to Uber or other taxi-like services. It is that way for nearly any nationwide business where the actual goods or services provided are essentially local.
Uber would have been fine if they operated like a medium sized SAAS company as they're forced to for example in Spain, where they due to regulations sell their software to local companies.
Smaller team, focus just on the ride hailing software, take a cut of the revenue and that would actually be a decent business that doesn't try to make money by either monopolizing markets or atomizing the taxi business and destroying labour rights. Of course if you do that you can't pretend to be a gazillion dollar technology giant.
Modesty is an underappreciated aspect of running a successful company. The endless pursuit of growth is usually a byproduct of ego or at the behest of some intangible idea of "creating shareholder value."
Just fucking create a killer product and work on refining that product to the best of your abilities. If you get bored, start a new company. You don't have to grow every company into the next Apple.
I don’t think we need to jump to “these dummies can’t conceive of a world outside of VC”…
Uber already took a huge amount of VC funding, so mid-size strategies won’t work. Investors would rather risk the whole company on a 1% chance of becoming Google or Home Depot than take a 50% chance of becoming Applebees. Even though Applebees is presumably a nice, profitable business, those kind of numbers are not useful for the portfolio position they have Uber in.
That’s just the reality for the folks running Uber today. If they try to turn it into a mid-sized business, the board will fire them.
If I read the discussion charitably, someone up-thread wanted to shift the conversation to “what should’ve Uber done in 2012?” while their responders think they’re talking about “What can Uber do at this point?”
I don’t think you need to act like we’re incapable of thinking about building businesses smaller than Google.
And more importantly, they lose the ability to liken themselves to Steve Jobs. This is often cited as the final stage of social suicide for many founders.
> The endless pursuit of growth is usually a byproduct of ego or at the behest of some intangible idea of "creating shareholder value."
If you don't want to grow that's fine, but then don't go public and don't seek VC funding. Investors make money when you grow; they generally don't make much when you don't. Ergo, they will always be pushing you to grow.
The problem with Uber Eats is exactly the same as the problem with Uber's rideshare: there's no difficult-to-copy element of it. It's been clear for at least seven years that it's easy to spin up a food delivery service, just the same way it's easy to spin up a rideshare service. The basic technology is something a small team can conjure up out of nowhere in a few months, the two sided marketplace is heavily incented to abandon a given platform if another platform gives a better deal, and all the bells and whistles that a large development team can add to it don't really move the needle in terms of value, enough to make the marketplace sticky.
Could they charge enough delivery fees to actually build a sustainable business?
How much fees would you need to charge? $4/delivery means having to make a delivery in 15 mins to be able to pay the delivery person minimum wage. Plus Uber’s profit, plus the cost of the car and maintenance expenses + tickets, accidents, etc,
It’s hard to see how a monopoly can also make money, without charging so much that people would rather pick up and restaurants would rather offer their own delivery.
I think that if there was just one delivery service, they could absolutely make a good business.
Now, I mean, would it be a good business that was used by 80% of the population multiple times per week? No. As you point out, it's intractably expensive. But there's nothing wrong with a business that sells a relatively expensive luxury, and it's not sooo expensive to have a meal delivered that only a tiny fraction of the population would ever use it.
The question is why restaurants would sign up to a niche boutique service. They are super unhappy about the cut UberEats and friends charge, and the only real impetus to get them on was a pandemic that shut down restaurants totally.
Nowadays, I see restaurants charging easily $5-10 above their in-person list price on delivery apps, and some have left entirely now that normalcy has returned and they don’t have to put up with it.
Restaurants would do it to increase sales, of course. There simply is demand for delivered food; there always has been, and in a world where more and more families are dual-income and have more money than time, there always will be.
During the pandemic, there was certainly more pressure on the restaurants. After it, the restaurants may get a better deal -- none of that is a particular reason not to comply with the service, it's just one to negotiate more of the costs onto the end user instead of the restaurant.
Right, but every additional sales channel is also work, and so the sales need to be large enough to actually justify doing this.
If they're not, in a world where some mix of users and restaurants get charged the true costs of delivery service, then you're left with a service that gets people to order things for you, which is basically just Postmates, and they're also not doing hot.
I think some of the actual value of delivery apps has been that they have low start-up costs for restaurants. They aggregate demand for that channel and some of the genius here is that it's pretty simple putting a restaurant's menu online.
It seems clear to me that there is plenty of demand to justify the service. Doordash's revenue was about $5B last year (I believe that's revenue and not GTV, which is probably 5x that). Doordash also only has about 50% of the market. Even if you believe that some of that demand is illusory, brought about by subsidized prices, that still seems like there's a pretty straightforward business there if you can charge a sort of "ordinary business profit."
And, again, there's been delivery food businesses since time immemorial, it would be weird if we thought that there was no kind of business here. Pizza companies used to be more or less the only ones because pizza delivered so well that pizza restaurants could absorb the fixed cost of entire delivery employees, but a food delivery app lets you pay for just part of a delivery-person.
It seems pretty straightforwardly the case to me that the problem in food delivery apps has never been that the fundamental business makes sense, the problem has been that from the very beginning there have been a large number of companies ferociously competing in the space, with nothing to differentiate them, which has squeezed margins to nothing.
The problem is inherent in paying for part of a delivery person.
Pizza delivery works because there is only one place you need to go to pick up the food that needs to be delivered, and there is a very high volume of food to be delivered. There's no additional traveling cost to flit between restaurants, most of which don't churn out food at high production rates like a pizzeria.
App delivery drivers spend a lot of their time not traveling directly to customers, or waiting around for food to be ready for them to deliver.
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> Even if you believe that some of that demand is illusory, brought about by subsidized prices, that still seems like there's a pretty straightforward business there if you can charge a sort of "ordinary business profit."
This remains to be seen. MoviePass was never able to successfully both retain customers and raise prices, streaming services are starting to see the same issues. The premium over pickup is often $10-20 already, if it increases anymore that probably starts having a negative exponential effect on market size. (How many people are willing to pay $30? $50? over pickup?)
People definitely order appetizers and drinks, though. And lets not forget that while some of these take less effort to cook, they take a bit more effort in other ways. Cost in cleanup and wait staff that you don't have with takeout, for example.
Also, bigger margin doesn't always mean less effort to cook. It might depending on labor costs and the cost of goods (gravy mix is more expensive than the ingredients, but takes a bit more time to prepare) and you might also wind up needing consistency: Waffle House (a chain restaurant) probably wants its gravy to taste the same in two different cities, and it doesn't matter so much if it takes away a bit of margin.
The only successful version of this business I can imagine is, maybe, the ghost kitchen model that is basically App equivalent of a mall food court. So it's basically a handful of giant kitchens to serve an area that offers several styles of cuisine. You order and their delivery drivers go to the one place and bring it to you.
At that point, though, you're not gigging out delivery people. You're just hiring short-term couriers to move stuff to people from the central kitchens. This is, basically, the model that big city Chinese restaurants and pizza places had anyway before the apps muscled in by swamping them with superior SEO.
There's also a lot of cuisines that simply don't travel well and these Doordash/uber eats business are indifferent. Pizzas travel well, Chinese travels well. Sushi kind of does too assuming you can be quick. But ramen? French fries? Lots of stuff just isn't meant for it.
We had an operator here which was essentially marketplace. Mostly pizza and kebab. But basically what they did was offer a marketplace for online food ordering. And the delivery was done by restaurants. To me that looks like most reasonable model, hiring people for delivery on low margin items while marketplace charges massive fees just isn't sustainable.
And it only takes a few times going through checkout to ask, wait, I got a $10 burger and $4 fries, how is my order $30? Nah, I ain't _that_ hungry for a luke-warm burger and soggy fries.
Amazon won online retail, and changed online retail behavior, by getting rid of shipping fees. The price you see on the product is the price you pay (sans sales tax, but at least in the USA no one is used to seeing tax included).
>Though they also get a 30% cut of the food price, so that considerably changes the economics.
IIUC, 30% is the top end, with rates ranging from 10-30%.
That said, many (most?) restaurants that aren't high-end (which won't be preparing orders for delivery anyway) have gross margins of at most 10-15%.
The cut that DoorDash, GrubHub, etc. take has driven many lower cost restaurants (a number of which had provided their own delivery and been in business for decades) where I live (NYC) out of business over the past 10 years.
The only choice for these folks is to raise prices enough to cover the extra costs, often killing their business (note that GrubHub requires restaurants to charge the same on their site as on their in-house menu, not sure about other services).
The result is fewer independent low-mid priced restaurants. And that's a loss to any community.
It's typical "bait and switch" and that's why it simply doesn't work out in the long run...
A company starts a web site and sets pricing on their service at a very low rate, while subsidizing it's financial loss with investment money at a loss. The company gradually increases costs and pricing over time for suppliers, employees, and on users until it finds a sweet spot in hopes that no one will notice, while also protecting itself carefully with PR and legal moves and careful management of overhead costs for operations... Most often the company manages minimal customer support, insurance, lawyers, a web site, marketing teams, and an office of public affairs, and that's the primary focus.
Often times, ownership frequently funnels profit out through selling shares, and though executive pay, until eventually the company succeeds or fails miserably.
These are not commendable business ventures like the press would have you believe, they're time sharing schemes that victimize almost everyone who invests in them, and they undermine vital services that would normally be regulated like the taxi cab industry, which was doing quite well before Uber came in and scorched it to ashes.
Many cities gave ride share companies huge subsidies and concessions to operate, few of which benefits they've passed on to drivers and riders, and surge pricing is about as scandalous and opportunistic as monopolizing a river then selling the water to the villages it used to lead to. I wouldn't be surprised if these companies are also pushing campaigns and lobbies against individual car ownership as well through employees, and brigading in places like reddit, because that only furthers their death grip on monopoly status.
The corporate world is wildly toxic these days, I'm skeptical of everything companies tell me because everyone is opportunistically dictating prices and terms, and they've abandoned customer service and all of the principles the present at orientation behind the scenes.
- they have never made a profit
- they’re unlikely to ever make a profit unlikely to ever reduce costs enough - they need to reduce expensive headcount rather than squeeze drivers and restaurants
- the early money sole out at a profit while passing their losses onto new punters via IPO
Food delivery also isn’t very practical in developed country markets without a huge increase in productivity vs labor costs. It’s just too expensive compared to a country like China where it is cheap enough to be ubiquitous.
Automation could be disruptive here…someday in the form of food delivery land and/or air drones. It really is the same with ride share: it just isn’t economical considering how much human labor is worth, self driving vehicles are more than likely required to make it economical enough to be ubiquitous.
Food delivery is practical, mainstream and has been for 40+ years in the West.
It works great "inhouse". They tend to know all their regular customers and area and know exactly how to get there, where to park, which bell to press etc. They will also know if there is bad traffic or an accident closing a major road and adjust wait times and order frequency accordingly.
The person that runs the delivery joint can also wait until he knows his/her driver will be making his way back, and only start cooking then, so the next order doesn't get cold waiting for a pickup.
It all goes to shit when you put a tech platform which has absolutely no real interaction with the kitchen and outsource the riders entirely, with virtually no quality control and no local knowledge. Plus they also want to take 30-50% commission for the privilege.
Ubers margins are comically bad. Uber Eats did $13bn of revenue and they made $30m of EBITDA - 0.2%. The credit card networks are probably making 10x the money that Uber on each order. And that EBITDA will be with them pulling out all the stops now they have realised they need to get profitable fast.
>They tend to know all their regular customers and area and know exactly how to get there
>They will also know if there is bad traffic or an accident closing a major road and adjust wait times and order frequency accordingly.
irrelevant in the age of GPS navigation with live traffic (ie. google maps)
>where to park, which bell to press etc.
while I don't doubt delivery drivers accrue such knowledge over time, I doubt that the turnover is low enough for this to actually make a difference. It's certainly not enough to make such a service unviable.
>The person that runs the delivery joint can also wait until he knows his/her driver will be making his way back, and only start cooking then, so the next order doesn't get cold waiting for a pickup.
This doesn't seem very hard to do. Restaurants can let the delivery platform know how long each dish to prepare, and the delivery platform can tell them ahead of time when to prepare the food (after factoring in driver availability and distance).
In urban areas (where most of the demand comes from), Google Maps does not provide the detail required to get this right. If you are delivering to an apartment block you often can't just park on the street outside, you'll get ticketed straight away. This can make an enormous amount of difference, I've had uber eats take 10-15 minutes to find the (quite easy) building I live in, vs seconds from local takeaways who know the area.
This is one of the reasons uber eats often delivers horrendously cold food (with no refund option these days). If you got cold food from a local joint with inhouse delivery they'd usually refund or redeliver for free, because they know it was their fault. They can't offer that through these platforms as it is rarely their fault and even if it was they don't get an option to interface with the customer like that.
On the final point - firstly, it's not as simple as that as not 100% of orders are coming through uber eats, so they don't really know exactly how busy the kitchen is. Secondly, uber was so desperate to grow market share they would push kitchens to take orders regardless of capacity to serve them. The only option AFIAK was to shut off Uber orders entirely, there was no "take 4 orders per 30 minutes max" option (maybe they have added that now).
> irrelevant in the age of GPS navigation with live traffic (ie. google maps)
The confused phone calls I get from delivery drivers just about every time I order begs to differ.
And that's assuming they bother to call rather than just leaving my order with the basement apartment or one of my neighbors or in the same address only on Northeast [name] street 8 blocks away rather than Northwest [name] street.
These drivers churn so much they never learn their way out of routine dumb mistakes like that.
Or worse, they don't see the negative feedback - meaning even if they stick around long enough to handle your second order, they still won't know any better.
This is the actual problem with the app model. No one is on the line for your order being late, cold or wrong. The delivery guy doesn't care - he's the most transient and precarious labor possible and he only needs to get a certain percentage right to keep working. The restaurant, traditionally, tried very hard to keep their customers happy, and would send the (in-house) driver back with forgotten items or free stuff if something went wrong. Now they are plugged into a third-party system they don't have any confidence in or understanding of. They do their best but they can't predict demand, be sure when the driver will turn up, or be sure that complaints are legitimate. Meanwhile the app operator doesn't care that much about your order either. Getting every single order right would massively increase their costs while hardly adding much revenue through brand loyalty. Signing up new restaurants or rolling out to new cities is always going to be a more promising strategy.
Meanwhile, you are hungry and tired and you just spent $50 on $30 worth of takeout. You really really want someone to care about your dinner as much as you do. But next week when you're hungry and tired again, won't you roll the dice again and hope they get it right this time?
To make it worse, I have gate code to enter my complex - I have succinct, exact instructions including the gate code and how to navigate to my building. 90% of the time they never even read the instructions, call to ask for a gate code and then take 10 min to find my place.
I can see that happening pretty easy. Are they looking at their phone, reading instructions as they arrive? No, they're driving. They get to the gate, need a code, hit 'call'. I would do that.
If I lived in a Chinese Puzzle Box I would have to get used to people wanting help to open it. Because they don't actually give a damn about the puzzle box. They just want to drive straight there.
In places like Atlanta, gated complexes are common enough that it makes sense to read the directions, maybe while at the restaurant grabbing the food. Even better, one of the 3000 developers could make the app prominently display the gate instructions when they approach.
Only a few high volume high margin restaurants are able to do in house delivery economically. Typically pizza joints where delivery is already baked in to the price as that is their primary sales funnel.
>Only a few high volume high margin restaurants are able to do in house delivery economically. Typically pizza joints where delivery is already baked in to the price as that is their primary sales funnel.
That's not true where I live (obviously, YMMV). Granted, I live in a very urban area (NYC) and most deliveries are done on bicycle, as the distances are shorter and it's much faster for the delivery folks.
Most restaurants near me have had delivery services for decades. Depending on the restaurant, they might have dedicated delivery folks, but others would just send a busboy as needed.
In fact, the big problem used to be all the restaurants leaving their delivery menus in building lobbies or even slipping them under the doors of non-customers.
Now the problem is that many of these restaurants are going out of business because the fees on the "delivery" apps eat up their entire gross profit margins.
NYC is on a whole other scale than just about any other city in North America. The density of NYC changes the economics of just about anything drastically.
>NYC is on a whole other scale than just about any other city in North America. The density of NYC changes the economics of just about anything drastically.
Absolutely. Which is why I qualified my statement with "YMMV."
That said, I think one aspect is broadly applicable: Most low to mid-price restaurants (not chain restaurants) operate on pretty thin margins. And the 12-30% (just for "listing" on their website) can often eat all the profits from the business.
And that doesn't include the "service" fees and delivery charges either. Making the whole enterprise a bad deal for everyone except the UberEats/DoorDash/GrubHub/etc.
I'm unconvinced. Restaurants are not "forced" to eat those service fees, they can up their prices on delivery apps to compensate.
Does that make it a bad deal for the consumer? Maybe, but lots of people seem to be willing to pay the premium for the experience and convenience of ordering through the app.
Locally I've seen plenty of restaurants have different prices on UberEats than online.
>I'm unconvinced. Restaurants are not "forced" to eat those service fees, they can up their prices on delivery apps to compensate.
I'm talking about service fees to the customer, not the restaurant. The restaurant is already paying 12-30% on every single order. That includes phone orders via the fake websites these services set up with a VOIP number (not the restaurants' own numbers) that forwards to the restaurant.
As for upping the menu prices, IIUC, these services (GrubHub definitely, the others I'm sure do the same) require restaurants to charge the same prices as their eat-in menu.
You're welcome to disagree as to whether or not it's a good or bad deal for anyone, but I've seen (and had it confirmed by several former restaurant owners) restaurants go out of business because they, can't make a profit via the delivery services. Even ones that had been doing just fine for decades.
>Locally I've seen plenty of restaurants have different prices on UberEats than online.
Fair enough. I wouldn't use UberAnything even if it was free, so I wouldn't know. But I am certain about GrubHub/Seamless.
I expect you're still "unconvinced." Which is no skin off my nose. I'm loathe to tell anyone what to think, do or say, as it's neither my business nor my concern.
I live in suburbia and gave up on food delivery years ago. The drivers would regularly get lost. I would provide directions on how to find my apartment building and unit number. They would arrive at the complex, and still get lost, having not read the instructions. Some drivers would call, say "I'm in the parking lot", and expect me to find them (there's 8 different buildings.)
It's cheaper and more convenient to pick the food up myself.
In the '90s when you wanted to order delivery, you'd open a phone book and pick a restaurant. Some would pay extra for a big, extra-visible listing in that phone book.
Uber, Doordash, etc get away with charging such premiums not because delivery is so costly but because they've made themselves into a new phone book. Hungry customers open the app to look for a restaurant, and the restaurant wants to be listed there.
However that's not really a win for the restaurant. It might not increase their business, just stop them from losing it. If the app didn't exist at all, those customers would find them another, less convenient way. But because the app exists, the customers stopped using those ways.
That's a good point. Once DoorDash hits critical mass, I agree it's as much a shopping app as delivery service. I also think that early in a market they benefit from making delivery possible for restaurants that otherwise wouldn't have it.
“All of your competitors pay us 30% so they can order food from their iPhone, pay us the same amount so they won’t take your customers away”
Doordash would offer a restaurant before partnering with them by calling in the orders so they could have sales numbers to pitch to the restaurant owner when they want to take the 30%.
It doesn't work great in house. It works great with economies of scale. I don't know the history of pizza delivery, so this is speculation, but I imagine that pizzas travel well, and people became accustomed to ordering them for delivery. So a driver can load up on pizzas, make a whole bunch of deliveries (and people are generally satisfied with the quality), rinse, and repeat. That's economical. Delivering a handful of orders at a time (maybe even 1) is obviously a terrible value proposition. But if it's incremental revenue, and covers your cost of goods sold, you may as well let Uber lose money to do it.
Well, McDonalds was a crazy amount of UberEats business. I heard as much as 50% of it. McDonalds is now in the UK offering their own inhouse delivery service. Clearly they've let Uber do all the hard work proving it works and now want that commission back.
At least in my area, McDelivery is provided by Uber Eats.
All this seems to mean in practice is I get a crappy Uber Eats delivery but have to order it through the McDonalds app, which is somehow even worse than Uber Eats.
I've just looked at the McDonalds app, and it says my local McDonalds is 24/7 and lets me order to collect from there. I know for a fact that it's shut right now, and the official store locator also says it's shut.
I stick to Deliveroo and Just Eat where possible because their apps and service tend to be pretty decent.
>Food delivery also isn’t very practical in developed country markets without a huge increase in productivity vs labor costs.
But pizza and chinese delivery was a thing in the US long before delivery apps were a thing. Clearly it was practical at some small scale in the US. I don't see any reason why it can't be expanded to other restaurants (eg. by sharing delivery drivers so a restaurant doesn't have to have an entire FTE on payroll).
It wasn't bad before the gig-economy middlemen stepped in, in highschool i delievered pizzas and pocketed something like $2 + tips for each delivery (this was 20 something years ago )
it scaled pretty well, I would just take 3-4 orders per-ride depending on distance ended up with a decent chunk of change just from the weekends, and there was a decent amount of downtime and socializing waiting for pizzas to be cooked
with the gig stuff drivers are shuttleing between multiple resturants non-stop in ill-defined areas to random customers and probably walking away with less cash it's a stupid system
Ya it was a thing before when labor costs were cheaper. Will
It remain a thing now? We still get delivery, some Chinese places don’t even bother with a dining room, but the costs keep increasing such that I don’t see it lasting for much longer.
> Food delivery also isn’t very practical in developed country markets without a huge increase in productivity vs labor costs
What on earth are you talking about. Pizza and Chinese restaurants have been profitably delivering food for decades.
The UberEats model in particular may be unprofitable, but there are absolutely profitable models that have existed for far longer than I’ve been alive.
It seems you’re right because all the major companies in the space are running at huge losses and not just due to an intentional choice to scale rapidly. But it also seems very surprising this is true.
Uber gets away with charging one side of the market 30% of food prices and charging the other side of the market a delivery fee, a service fee and a tip. This typically comes out to 50% of food costs if you use an average tip.
Of course it is easy now that they have been around for over a decade, the problem with the whole space is not technology, but economics. Once you have competitors in the space, it becomes a race to the bottom in regards to cost. Eventually this creates a rift between the service providers and the company, and everything just kind of slowly disintegrates.
Why aren't there a ton of uber competitors around here then? It's been Uber and Lyft and taxi companies and that's been it... Am I missing something with your argument?
Maybe Because Uber is a loss making business, that seems little prospect of making a profit?
Other options do exist - things like Gett in the U.K. for example, not sure how profitable they are either though and some large taxi companies have their own apps too
"Economies of scale" isn't a magical spell. There has to be a function by which a large companies turns its scale into an economy. Walmart and Costco both negotiate much more attractive deals with their suppliers than their competitors can, because they can place larger orders with those suppliers, due to their scale. Because Uber connects one rider with one driver (or one meal-eater with one driver for Eats), its ability to create a useful economy of scale is sharply limited.
Uber has some mild advantages against an up-and-coming rival in terms of constancy of demand, but since drivers will happily turn on multiple gig services at a time, that's not a very big deal for it. Things like Uber Pool are an attempt to turn its scale into an economy, but (predictably) not enough people actually want a ride service that puts them in close proximity with strangers and also takes a vastly unknown amount of time to finish the ride to make Uber Pool a major differentiator. Things like Uber's car loans problem comes face to face with the fact that there it's competing against other, larger entities that have better scale (like, you know, actual banks).
Ironically, Uber Pool is the only reason I kept using Uber, but their scale wasn't big enough for it to work properly. In peak hour to or from the central business district it was great. Anywhere else it was hit and miss.
I noticed that in the past, you'd get the pool discount even if you travelled by yourself. They've changed the terms to "up to 30% discount if someone rides with you".
As a customer, the benefit of using Uber was that they would absorb the risks, spreading it out across millions of customers. Now, I have to individually wear the risk of a pool trip not having multiple customers, while simultaneously being enormously disadvantaged in my ability to estimate the chances of other people joining. Uber has billions of times more information at hand for their estimates than me as an individual.
When I saw this change, I realised that it's a sign of the beginning of the end...
Taxi companies don’t like owning their cars either; they have the same abusive system of making the drivers be contractors who own the cars. Except Uber doesn’t let the drivers rip you off so is safer to use.
Engineer here. Despite your condescension it doesn't appear you understand economies of scale. Economies of scale means the cost goes down when volume goes up.
An Uber driver can only drive one passenger at a time (put aside pool, which requires a price discount to get people to use it). So the number of drivers required to serve N passengers simultaneously is N. Costs scale linearly with rides per hour.
UPS has economies of scale because one driver puts 500 packages in a single truck, so the driver's wage is fixed and the revenue increases with the number of packages in the truck.
> That would be inane. You are basically arguing, "Get rid of your competitive advantage." Uber does ridesharing... badly. They have bad management.
What? Uber Pool was never big, and I believe is now completed retired. Are you sure you know how Uber works?
> An Uber (or Lyft) driver who is able to make an average five deliveries (whether it be people, food, or parcels is immaterial to this discussion) in 30 minutes versus an ordinary taxi cab driver who is able to make an average three deliveries in 30 minutes would be correctly said to enjoy economies of scale.
This is not economies of scale. This is just more volume. It would be economies of scale if Uber paid their drivers hourly wages, so their cost per ride went down because they did more rides per hour. But they do not, they pay them a cut of the ride.
> See, I made it simple enough so that even an engineer like you could understand it!
People care a lot more about timeliness for their hot food and their own person than they do for a box that UPS delivers. Uber has been trying to make that particular economy work for nearly a decade now, and it turns out it's niche.
I disagree. Even Lyft has noticeably worse service than Uber. Compare the prices and time it takes to get a ride on both platforms. They are not comparable.
Anecdata of course: I've been a frequent and global user of Uber for far too long, but in the last six months I've unintentionally stopped using the app completely both locally and while traveling. At least in Europe, the Uber experience, for drivers and riders, has become egregious and competition from aggregators of local taxi infrastructure can finally offer a well-designed app at an almost identical price point with much faster pickup/better service -- and, of course, better comply with local employment regulations. Compound that with orders of magnitude smaller/cheaper engineering teams and I suspect we might be at a tipping point away from ride-sharing towards (aggregated) taxis; I will be watching FreeNow closely in the EU and would love to see their growth/financials.
Taxi companies has the benefit of scale in a way that Uber drivers' don't. I don't think not maintaining the vehicle fleet "at scale" will work out in the long run for Uber's drivers and thus Uber when they run out of lusers running at a loss.
I was on work travel last week. No Uber from the airport - three cancelations then I caught a Lyft. It was over $500 for a 50 mi ride to a neighboring city which I was mostly looking at out of curiosity. My friend was recently held up (well, attempted) by an Uber driver in Nashville who had canceled last second so he could not even find who the driver was to file a complaint.
It seems like the former gap in user experience between Uber and taxis has largely vanished. This may partly be reflective of the great resignation as well: a lot of people who are working have still just given up.
I just came back from a family vacation. I looked at getting an Uber or Lyft from airport home. They were all like a twenty minutes wait and 50 bucks. We took a cab that was already there and it came in at about 40 bucks.
Me too. Took a cab from JFK to NJ for $85. $120 for Lyft $140 for Uber. Prices eventually came down to $105 and $115 by the time I took the cab, but still.
Uber has raised their rates significantly I've noticed in the last year or so to where it's no longer feasible to take as alternative or daily transport.
I just got rejected for a short ride from a cab at the airport in nyc. Dude was very angry I was only going a few miles. Hopped out, ordered a Lyft, got a great ride from a dude with a wife and kids.
It's illegal for a taxi at NYC to reject a fare to any part of NYC. He might huff and puff if you're going out of his way, but he has to take you. You shouldn't have gotten out.
Sounds like a great idea to force someone who doesn't want to take you somewhere to take you somewhere. I'm not letting someone make me an asshole. I'd rather use the app.
If you want to dispute the cancellation fee Uber occasionally hits you with when the driver cancels, it helps to know the driver's name, which you can't find in the app after he cancels.
Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon. So this isn't too surprising, and also the status quo for most startups to burn investor cash ad-infinitum until they reach the theoretical gold at the end of the rainbow.
Well they are not the mafia. If Uber has a monopoly, and wants to charge me $50 instead of $10 to get to the city centre, I won't go, or find another (non-ride-sharing) way to get there. I might go 1 in 100 times of course because of urgency. But then regular cabs are still a thing too.
This is the problem with being the middleman in a low margin world. I don't want to pay a fortune to get somewhere, and the driver has other jobs they can do if Uber effectively pays below minimum wage.
Uber just needs to survive until the self-driving car thing is fully online, which means they are the Stripe of self-driving car micro-rentals. Then they will do very well and be very profitable, IMO.
Yeah, this was somewhat obscured in Uber's early days when the US unemployment rate was 7-9%, and it was easier to get drivers. But even then, it really only worked because drivers were paid more than passengers paid, with VCs picking up the difference.
In today's low-unemployment-rate world, there's pressure to pay drivers more and VCs aren't going to pick up the costs, so... it's expensive.
How does Uber come out top in that? Surely that self driving software/car makers take the rewards. Uber is just a booking platform on top. Why would Google (with Waymo) allow Uber to book their cars, or Tesla to book their cars? They'd surely set up their own competing service to Uber and force them out of the market within months (as the prices would be so much lower).
I'd imagine the software licensing of self driving cars would be so that when you bought a self driving GM/Ford/whatever that is only for personal use and using it for taxi rides would be against the ToS. Which they could quickly catch people out on, and maybe a "taxi" version of the car costs $xxx/month more.
Unless you are suggesting that Uber actually wins the race to self driving, which I really can't see happening. Do they even have a program anymore?
I guess it depends on who is 'they' in 'their cars'?
Maybe Tesla sell the cars to individuals / businesses, and now the individual wants to find a way to get some extra money from it so they rent it out via a platform.
Uber already has the mindshare and the tech.
Maybe Tesla just wants to sell / rent the cars and not get into the market place.
Tesla could try to compete on that, but they could try right now and compete with Uber, right? It is the same thing.
All that financial risk is now pushed down to individual 'franchisers'.
> How does Uber come out top in that? Surely that self driving software/car makers take the rewards.
There's a lot of variables but the car-makers are probably better positioned espcially when it comes to moving around fleets of self-driving cars and servicing them at a nationwide scale
I'm guessing they may be better at dealing with the legal and regulartory issues that could emerge
I think at this point it's pretty well-established that general availability of self-driving cars is not going to happen any time soon. Do you think Uber can hemorrhage money for another ~20 years? I think that's probably a reasonable guess at the relevant timeline.
I never understood hailing self-driving as some money printing greatness. Unless there is just single company selling them.
Otherwise it is race to bottom. Maybe if they are lucky generating 2-10% profit on the vehicle. With certain operators having massive fleets and very high capital investments.
What if not going costs you more money than Uber? For example, it costs you your job, or visitation with your child? Then you will go.
> or find another (non-ride-sharing) way to get there.
Oh, you'd just do the other thing that is available to do. Why doesn't everyone think of that?
> But then regular cabs are still a thing too.
That would mean that Uber didn't have a monopoly. The goal was for Uber to dump deeply discounted service into the market until the cab companies died. They were pretty successful, because I can't hail a cab on the street anymore. They weren't as successful as they needed to be, because people who drive cabs can do Uber and Lyft at the same time.
> the driver has other jobs they can do if Uber effectively pays below minimum wage.
But if Uber has driven the industry wage down, the other job they do will not be driving you around. They will get a different job, and you will still be paying more.
This isn't the case. Uber repeatedly, and likely fraudulently, claimed that they were profitable ex-growth markets (iirc, they made this claim shortly before their IPO, I remember it being leaked to compliant journalists). They have never attempted to obtain a global monopoly either (they bought stakes in companies outside the US, which clearly wouldn't have given Uber itself scale economies). The only place that you saw people make the claim about driverless cars was on Reddit, management never made that claim...because it makes no sense.
The underlying business can, obviously, be profitable. There is a guy near me who runs a taxi app, town has a population of ~5k people (no city with an Uber taxi service for miles around), and he is profitable. The problem is that most tech companies are run by morons who have a big stack of other people's money to burn (it really is that simple, all of these companies thought this day would never come...it has come, it is today).
> The only place that you saw people make the claim about driverless cars was on Reddit, management never made that claim...because it makes no sense.
No need to insult me, you can read my response to another comment in this thread where I direct them where exactly in Uber's prospectus they make these claims.
Whether they actually do what they said would make them profitable is another matter.
Assuming I got my information from Reddit posts and not actual credible sources felt insulting to me, but if you didn't mean it that way then I have no qualms.
> Uber's IPO prospectus pretty much says they'd only be profitable if they can achieve a global monopoly to charge their own prices, and/or hope that driverless cars become ubiquitous soon.
What do you mean by “pretty much”? Where in the prospectus do they say this?
It's a 248 page document, but I know on page 161 in the "Increasing scale, creating category leadership and a margin advantage" you can read how they're hoping that other ride-share companies popular in various regions will pivot to seek profitability and reduce incentives, thus allowing Uber to overtake their market as they keep their own incentives (ie, low prices).
You can ctrl-f "self-driving" to find their strategy in that venture.
Terrible article. It’s basically a negative yelp review masqueraded as some sort of financial analysis. He’s essentially a pissed off ex-customer that on one hand complains that they don’t pay the drivers enough, but also complains that the service is now too expensive. The article is utter garbage.
If you look at Uber’s drop in valuation, it’s commensurate with the drop in all tech companies. In fact, the article is seemingly singing the praises of DoorDash but Uber is down roughly 50% since Nov 2022 but DoorDash is down 75%.
And there’s nothing new that this article brings. Same old “Uber shouldn’t exist” meanwhile it’s set to become profitable.
They don't pay very well, so there aren't many drivers. The drivers that are around will accept a ride, then fuck around for a while, driving further away, doing whatever (no, there are no scheduled drop-offs, they deliberately waste time). Then you cancel, then when you try to re-book to get a different driver ... oh look, surge pricing, it's an extra $20 for that journey now.
This is the point at which I pull out the (crappy) app for the local taxi service, that uber nearly drove out of business, who now offer a more reliable and usually cheaper ride. In fact increasingly I don't look at the uber app first any more.
It was never a good idea to allow a VC funded loss-maker to compete in pretty much every market worldwide, using this subsidy to undercut the local firms while somehow dreaming of extracting 20% on every ride.
It was always going to have to raise prices to succeed, and the only way it was going to be able to do that was by using its stacks of cash to run at a loss for long enough to destroy the competition completely. I'm just glad it failed to finish the job.
All of these companies should have been prosecuted for dumping let's say after 1st month on the market. If what you charge isn't more than you pay out for service you provide you should not be allowed to operate.
On other hand, I wouldn't include RnD and management to that.
> This writer, previously an avid Uber Eats user, now avoids it in almost all cases and instead, orders directly from restaurants, which have mostly built an online ordering systems. Going direct means your food isn’t ruined
I don't know if this is confirmation bias, or just a lie to add weight to the thesis, but it's obviously absurd, as anyone who has ever worked for, or even ordered directly from a local restaurant knows.
Your local pizzeria does not have the driver go back to the restaurant for every order and deliver it directly to you. They certainly don't have a fleet of people ready to pickup your order. They pickup every order that's available, it's completely unoptimized in every way, and you get your order on the luck of the draw. Maybe the driver had no other orders, and is a block away from you. Or maybe your fifth in line.
The key difference is they don't have an app that records every step in the process, the precise times involved, and show you the delivery driver's location on a map.
> Your local pizzeria does not have the driver go back to the restaurant for every order and deliver it directly to you. They certainly don't have a fleet of people ready to pickup your order. They pickup every order that's available, it's completely unoptimized in every way, and you get your order on the luck of the draw.
So, I worked as a delivery driver, and when it wasn't particularly busy, most deliveries were one at a time, and when it was busy, there was both am assigned limit on deliveries taken at once and incentive to optimize by proximity, because not being time inefficient was money out of the driver's pocket (since the bulk of pay was tips + fixed per delivery payment).
(And these days, more of the pizzerias with in-house delivery do have apps with location & status information on deliveries.)
The key difference for me, is actual pizzeria drivers usually have hot bags..
Whereas, 75% of the time 'app' drivers dont.
Doesn't matter if I'm first or last in line, if the food is cold either way. Its gotten so bad, we're actually surprised when we order straight from say..dominos, and get hot food, instead of cold.
I actually agree completely with this part of the post, and even came here to quote that part.
I've gone completely off Uber since about a year ago due to their ridiculous price increases (per item fee + delivery fee + service fee), and I order direct from my half dozen favourite local places now, who absolutely do deliver personally and directly and usually for free if it's over a certain order size. They usually rock up on an e-bike or e-scooter just with my order. It's faster, way cheaper, and always fresher.
I'm not sure if it's just certain parts of Australia that I and the OP have in common, or what the reason is for the different experiences, but our happiness with the experience of ordering food has gone higher than it's been in many years. I won't miss Uber at all.
My information is 25 years out of date, but when I did food deliveries for a restaurant the job was entirely focused on optimization. The resource were the residents and workers within the delivery area, and the goal was to make sure that they got their food quickly, at an ideal temperature, well-packed, without mistakes, and with the right condiments/sauces.
This in very small restaurants or when things were slow was handled by the actual drivers/bikers/walkers for their own deliveries, and in large restaurants or during rush was handled by a person who didn't leave the restaurant.
The metrics were repeat business and tips. First orders were given priority, business meeting lunch orders were given priority, drivers would give big tippers priority. The methods were timing when orders were given to the kitchen, keeping on top of orders that were not coming out of the kitchen fast enough, and grouping orders that could go out with the same person. Orders that had problems leaving the restaurant would result in calls to the customer. Things stayed on the line too long without being delivered and got "trashed" (which probably meant somebody took them home after shift.)
Everything needed to be flawless, because mistakes got expensive quickly. The cheapest mistake would be to forget a condiment/sauce, where you might be able to satisfy the customer by offering them a discount, or you might be able to give the sauce to somebody going out immediately. This cheapest mistake probably obliterated all of the profit from an order. If you have to replace an entree due to a mistake? That's better to consider a new delivery order that you're not getting paid for, in addition to not charging for part of the one you already sent out, and if it was a really stupid mistake you had better send some free desert along with it, and if you fuck up again you're going to lose the customer. Worst case, you get everything wrong, you have to remake and redeliver it again, they get it all for free, and you offer them a credit to beg them to come back. Instead of 1 sale, you've had -4 sales.
The process was actually so choreographed and practiced that I'm realizing that it's a lot to remember. I think the assumption that people would do something for 6-12 hours a day and not optimize for least effort and maximum income is weird. You get that by not doing everything randomly, by not getting complaints, and by getting your big tippers to love you. It's not like a tech business where you can just pivot to a different customer - you are locked in a geographic area, and your available customers are your available customers.
The key difference? Now restaurants can just blame the delivery app/driver.
edit: the big takeaway I would put out there is that delivery orders got a lot more attention and processing than inside orders.
It is never intended to make a profit. EXCEPT for the guys in management, who are soaking the fool investors and non-businessmen drivers alike, while they laugh all the way to the bank. It's a business-model straight out of the dot.com bubble of the late 1990s.
If the investors wised up, and the drivers wised up. Uber would evaporate away like the morning mist. And the Uber management guys might actually have to go out and get a REAL job.
Is the ride over for Uber? Uber never ever had a real ride to start with.
The dirty little secret is that drivers depreciated the value of their car more than the money they get for it. They are taking money out of the value of their car and calling it income. Uber knows this and doesn't mention it.
I was talking to an Uber driver this morning. I asked him if he was paid while waiting for a job. "No" he said. That means that Uber is getting free hours from all the drivers who are 'on duty' but not actually driving. Uber also takes 27.5% of the fare. That other 72.5% has to pay for all wages, taxes, insurances and car expenses first before there is any 'profit' at all.
As I said above, Uber relies on their drivers not having any 'business smarts'. If the drivers went through all the arithmetic involved in costs, wages, taxes, non-business hour loadings, return on investment figures, etc, etc, etc they would find they are subsidising the Uber management, rather than being paid properly.
Food delivery is, in my opinion, an expensive, almost always disappointing and ultimately unhealthy habit.
I can see why it might seem to be an attractive business, food addiction is legal, socially accepted and the harmful side is slow enough that most people don’t notice.
But this is not a “service”, it does not add value for the customer, same category as cigarettes.
I don’t think that businesses riding on addictive behaviours should be regulated, but the public should be made more aware of the bad deals they get…
I've seen people 'get addicted' to takeout to the tune of thousands of dollars of month in food costs. The fees are absolutely egregious for the cold mediocre food you get. Every once in awhile I'll get something I know travels well but wherever possible I'd rather order direct and local and pickup than use the apps.
There is nothing wrong with food delivery when used in moderation. I use DoorDash once a week to get a lunch delivered on a day where I have meetings running through lunchtime. It saves me time and hassle, and is a fun change of pace. It also came in very handy when a family member of mine was very ill and I wasn’t in the same city. I could order food and have it delivered to them. The service is nothing like cigarettes, where the only point of the product is to get you addicted enough to keep buying more, and eventually give you cancer.
That’s not to say that DoorDash et al. aren’t enabling people with food addiction problems, just to point out that there are very many real good uses for the service.
> There is nothing wrong with food delivery when used in moderation.
This can be said about any addiction. The problem is addiction. If your not an addictive person that’s great, for you, but others are susceptible to addiction.
The OP said the service adds no value to the customer and I was specifically refuting that claim. Everyone knows that most addictive things are ok in moderation (I say most because I would argue things like cigarettes and certain other drugs have no benefits to society or the individuals who use them).
I'm split on this. Personally I never use food delivery for these reasons, among others. On the other hand, I have friends with disabilities who have had a real improvement to their quality of life by making food more accessible.
Uber started out well as your "personal chauffeur" with premium cars and polite, professional drivers. Then they started chasing numbers and valuation, and it was all downhill from there.
If by 'downhill' you mean 'their business expanded massively and they became a global phenom', then yes.
They were never necessarily professional drivers, and the drivers today are just as 'polite'.
The market for NYC 1% high end cars is very small compared to the value of unlocking the big marginal market inefficiency brought about by medallions.
All of that said - a bit of technology and flexibility by the world's cities and taxi fleets would have made them a lot more money and made Uber pointless.
I very occasionally used the premium options but other than a nicer vehicle there really wasn't a premium service, mostly regular ubers were clear and drivers decent (on average much better than my taxi experience pre-uber). If it was a busy area its still hard to find the car/driver. Never really felt like I was getting my money worth and I just go with the basic service, it still gets me from A to B.
Chasing? I'm pretty sure they only had regular people in regular cars give you a ride when lyft came around. They had to match the service or lose customers
I think the market is ripe for a real Uber Black. A super premium service that guarantees a cab no matter where you are within a minute. No cancellations. Your own personal on demand limousine. People are so tired of cancellations and not finding rides, I bet some will pay a premium just for the predictability that you can go anywhere whenever you desire.
There are those who pay for business and first class though. It’s a matter of figuring out the price per km and commission dynamics. With the appropriate incentives and commissions supply should ease out. Obviously am trivialising this approach. It will be great to understand why Uber Black couldn’t scale.
Why would Uber not offer this if the business is there? They have the infrastructure and if the Uber branding is sullied, just add a new name with a diamond next to it.
I think the market of people willing to pay $40 for a $10 ride with first-class experience must be too small.
I donno. I keep thinking about this all the time. I might also be blinded by the intricacies of where I live, Bangalore. Cancellations by Uber drivers are rampant here and it's very hard to find the black equivalent. The UberXL service which counts as the black equivalent has absolutely zero predictability. My guess is that there are at least 10,000 - 20,000 people in Bangalore, a city of 10M willing to pay a 2 - 3x premium for predictability and good QoS. There simply is no such option for non airport rides.
Where I live the surge is so frequent and severe, and the wait so long with 2,3,4 cancellations byb drivers half way approaching you, that taxis start looking attractive again.
This is even though they have raised prices, $10.50 flagfall before leaving the curb Saturday night.
It seems all uber has done is handed out a few cheap rides for a while, sucked a heap of money out of the taxi industry, then going to leave us with the taxis, only paying higher prices.
Disruption indeed, but of no to the benefit of the customer, least not in any long term way.
Say what you will about how Uber is being executed but as a user of their products and their competition I am very happy with them. Not only is the quality if their UI great and customer service top-notch (rarely have issues, when I do I get instant refunds, can't say that for doordash/grubhub ans certainly not Taxis's). Taxi drivers and restaurants go out of their way to make sure only people with specific appearance, background and conformity to stereotypes received good service (if any at all), Uber basically killed that bullshit! To me it is similar to how walmart killed mom&pop shops, right... the very nice and welcoming mom&pop? Not a chance! Even before walmart Sears allowing ordering things from their catalog was revolutionary in that minorities and immigrants could just... you know buy shit like toasters like everyone else! What a marvelous idea? Haha. I can say the same about Airbnb and hotels as well.
Let me give you an example: I took a taxii from the airport to my home, the guy took the route I knew was very long and with only 20% of the trip I was being charged like $100 and asked him to immediately stop at the next parking lot he sees. Took my luggage out and called Uber that completed the rest of the trip for $50. Not my first time dealing with scammy taxi drivers either. It was a nightmare calling a taxi before uber, it will take them at leasr 45min to get a guy and good luck getting them to wait on you and coordinate your pickup.
My point is, it may be operated badly but it provides a ton of value and has the advantage od being first to market. I have always wanted to try Lyft for example but I never had to, never been in a situation where I needed them (except for scooter rentals in santa monica once -- didn't work at all). I avoided Uber eats on purpose but the rest were so crappy I switched, much more costly but I have a lot less problems now and they even added grocery delivery now. They are quite possibly one of the most valuable companies at he level of Walmart, whether or not they can realize that value globally and get the timing right I have no idea, but I am rooting for them.
60m operating loss on 6 billion revenue = 1%. So raise prices by 10% and your making 540m. The market can bear that increase, but they still rather be a solo player and destroy Lyft first. All this doom and gloom is hubris.
Are you raising prices 10% and take it all to your bottom line? That's impressive. Have credit cards stopped charging for their services? Do your drivers not want more of the money when you raise prices? And of course you're assuming that you don't lose volume when you raise prices, because apparently we're in fantasy land right now.
$60M loss is small enough that Uber can almost certainly get to breakeven or a tiny profit -- but a tiny profit isn't enough to justify their current valuation. They have always needed a business that is solidly profitable on great revenue to justify the valuations they've had since the mid-teens, and they'd rather try to convince people that those profits are coming someday than to try to make it as an extremely low-margin company (which is the correct thing for them to do in service to their shareholders, who would presumably be very sad if Uber contracted to like a $10B valuation company).
I wish Uber transitioned into being something more like Sabre or the MLS and could be whitelabeled to multiple companies, and created an open marketplace for rides - traditional yellowcabs or independents in their own car or whatever is coming in the future. I get that they kind of already are, it'd be nice if there was just one "network" that everyone used.
(Where we really need a Sabre is for takeout ordering. If you go to any restaurant these days there are like 5 iPads at each of them, one for each delivery service. This is bonkers!)
They were probably counting on AI driving to be fully capable by now for it to be profitable. Obviously that hasn't panned out so their time may be up.
My least favorite thing about Uber is the cars with interiors that are absolutely coated with cleaners, conditioners, disinfectants, and perfumes.
As a driver with experience cleaning a car after someone threw up in it, I can sympathize with their plight, but I hate stinking like a urinal cake after spending $50-100 for a ride.
Uber is pretty much useless in the UK, it's be neutered to the point it's nearly as bad as taxis, because the drivers get to see where you're going before they accept your ride.
At heathrow a couple of weeks ago and tried 5 times to get a taxi to take me 30 minutes down the motorway, each time it was a minute wait showing nearby cars and eventually saying "not possible to find you a ride", had a similar experience in Newcastle a few weeks ago. If I can't rely on it then it's useless to me - may as well run the gauntlet of black cabs and "oh no I'm not going there this time of night mate"
The recent reviews in the app store are full of 1* reports with the same problems.
Nope. They just need to hang on until self-driving tech gets legalised, even if that takes a decade. Then they'll have a ton of habituated riders and can cut the driver costs, keeping the difference, and lowering prices beyond which rivals can compete at.
They have the brand recognition, the first mover advantage and a sizeable market. Since they're developing self-driving tech themselves that'll also help lock out other companies for several years giving them a massive competitive advantage.
I definitely notice the slow down with Uber/Lyft here in SF. None of my friends take it anymore except during extreme situations. I see way fewer cars around on the roads even now.
A much smaller company that has never turned a profit, where the sharedholder's equity will soon become negative. They can't afford to lose money forever, and they've never demonstrated they can make money.
I quit the bike share because the prices are way too high now. It bothers me that Lyft is going to fail and take down dozens of bike share networks across the country.
Before Uber, the Taxi market was self-organizing. Like some ill-thought out communist central planning from the 1950s, Uber thought they could create top-down controlled market place. The rider part of their business will go to zero except for premium rides. Delivery services, where there is a premium people will pay, will remain.
It feels like the right call, around 2017, was to either:
(A) double down and build a platform for every kind of physical multisided marketplace (matching as a service, maps+routing+locations+geofences as a service, physical product ops as a service, etc) Where Amazon went from books->everything->AWS, Uber could have gone rides->platform-for-all-the-multi-sided-marketplaces.
OR (B) fire every engineer except the 15 or so it takes to maintain the rider and driver apps and a few services, with no new features, port everything over to common cloud companies instead of their DC (shoutout to DCA, the ugly stepbrother of SJC), and just pivot to value extraction and just maintaining it as the simple taxi app it should be.
Instead, they did neither, muddling around building random tech as if they had ads/search/social media margins while losing sight of the customers needs. There's a reason DD crushed them in food.
Edit: Since the primary response seems to be "You don't understand!" I was there 5 year, saw how the sausage was way over-made.