6 ms·

You are missing something important. Uber is like a bit like Walmart or Costco. They all enjoy economies of scale; Uber simply has bad management.

aetherson 4y ago
I'm really not. "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).
- jiggawatts 4y ago
  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...
RL_Quine 4y ago
What economies of scale? Their primary expenses, workers, are fixed cost.
- Jistern 4y ago
  - aetherson 4y ago
    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.
  - wwalexander 4y ago
    If that makes you weary, you should try explaining engineering to business people!
    - Jistern 4y ago
  - kareemsabri 4y ago
    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.
    - Jistern 4y ago
michaelt 4y ago
I'm not sure I agree. I mean, it's not like Uber is buying cars in bulk at a discount smaller operators can't match, or anything like that. And it's not like they're running a lean technology operation, with just 50 engineers globally, to get economies of scale on tech expenses. The only economies of scale Uber has on their side is marketing.
- hotpotamus 4y ago
  There's also maintenance on that fleet of cars to consider and ride-share gets no economies of scale there. You know who does? Taxi companies.
  - astrange 4y ago
    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.

aetherson 4y ago

I'm really not. "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).

jiggawatts 4y ago
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...

RL_Quine 4y ago

What economies of scale? Their primary expenses, workers, are fixed cost.

Jistern 4y ago
- aetherson 4y ago
  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.
- wwalexander 4y ago
  If that makes you weary, you should try explaining engineering to business people!
  - Jistern 4y ago
- kareemsabri 4y ago
  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.
  - Jistern 4y ago

michaelt 4y ago

I'm not sure I agree. I mean, it's not like Uber is buying cars in bulk at a discount smaller operators can't match, or anything like that. And it's not like they're running a lean technology operation, with just 50 engineers globally, to get economies of scale on tech expenses. The only economies of scale Uber has on their side is marketing.

hotpotamus 4y ago
There's also maintenance on that fleet of cars to consider and ride-share gets no economies of scale there. You know who does? Taxi companies.
- astrange 4y ago
  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.