Uber?

I always thought Uber's business model was to lose a bunch of money until they put the cab companies out of business so then they can start price gouging.

Quote: ams288

... until they put the cab companies out of business so then they can start price gouging.

once cab companies are effectively out of business a newer 'uber'' will do ride share operation.

Quote: Evenbob

All their overhead is in office workers
and tech. They manufacture nothing,
import nothing, they should be making
nothing but money. They're being
ripped off somewhere by a lot of
people.

EB you were in the cab business. The article says 85% of your revenue goes to drivers and cabs/cab overhead in the cab business. That leaves 15% to pay for everything else. There is nothing in the UBER business model that would significantly change this. You can confirm if 85% is an accurate figure from your experience. They pay their drivers less but they also charge less so their O/H percentage should be similar. In the New York City study I quoted many posts back they found 50% of the UBER cars were driving around empty, this did not include the off shift cars. Would you have had a profitable cab company with a 50% load factor?

Quote: kenarman

EB you were in the cab business. The article says 85% of your revenue goes to drivers and cabs/cab overhead in the cab business. That leaves 15% to pay for everything else. There is nothing in the UBER business model that would significantly change this. You can confirm if 85% is an accurate figure from your experience. They pay their drivers less but they also charge less so their O/H percentage should be similar. In the New York City study I quoted many posts back they found 50% of the UBER cars were driving around empty, this did not include the off shift cars. Would you have had a profitable cab company with a 50% load factor?

Load factor should not matter as much for Uber since they are not paying for the load.

Imagine I contract with LUV to fill seats. Deal is that I get 15% of whatever I sell, otherwise I pay nothing. I do need to sell some level of seats to eat, but I do not care how empty the planes fly.

Quote: kenarman

EB you were in the cab business.

Yup, and the business owned all the
cars and was responsible for the
upkeep, insurance, and licensing.
Plus we bought all the gas. And
we still made money. And we had
to pay the airport to sit our cars
out there, yet another expense.

Uber has none of those expenses.
They buy no insurance, no gas,
they own no cars except a few
self drivers. I have no idea why
they aren't making money.

Quote: Evenbob

Yup, and the business owned all the
cars and was responsible for the
upkeep, insurance, and licensing.
Plus we bought all the gas. And
we still made money. And we had
to pay the airport to sit our cars
out there, yet another expense.

Uber has none of those expenses.
They buy no insurance, no gas,
they own no cars except a few
self drivers. I have no idea why
they aren't making money.

Because they aren't charging the same as the cabs. They discounted more than they reduced the costs of a traditional cab company. They have been adding drivers and customers faster than their revenues increase. They have the expense of huge server farms now to handle the millions of customers and drivers. Something that a traditional cab company doesn't have. Per customer it should be cheaper than a manned dispatch centre but it is far from an inconsequential cost.

Quote: kenarman

Because they aren't charging the same as the cabs.

Still, their expenses are nothing like
a real cab co. We had two full time
6 day a week certified mechanics,
constantly working. They rebuilt engines
and trannies, changed the oil in every
cab once a week. Buying the cars and
keeping them going was 80% of the
expenses. And supplying hundreds of
gallons of gas a day.

This is where they're losing money,
in promotions and all the rest of it.

Called the local Yellow Cab company to get a ride back to a car dealership. They are also using regular cars and drivers like Uber. The driver told me they still have and use the yellow cabs. Must be some sort of hybrid adaption.

Quote: rxwine

Called the local Yellow Cab company to get a ride back to a car dealership. They are also using regular cars and drivers like Uber. The driver told me they still have and use the yellow cabs. Must be some sort of hybrid adaption.

Could be for airport business
Seems airports still give cabs priority access

Quote: terapined

Seems airports still give cabs priority access

And why do you think that is. The
cab co's pay the airport a huge
amount of money every month
for the privilege of sitting there
at the curb.

Most airports ban Uber from picking
up in the passenger area. At my
airport it Uber/Lyft gets caught
it's a big fine and your permanently
banned.