# Lyft and Uber still operate at a loss



## Tim In Cleveland (Jul 28, 2014)

http://www.bloomberg.com/news/artic...-show-the-struggles-of-being-no-2-behind-uber

Ride-sharing pioneer Lyft is heading back to the fundraising till, but its numbers may not look that rosy to investors. The company lost $127 million in the first half of 2015 on $46.7 million in revenue, according to private fundraising documents obtained by Bloomberg.

Lyft, the second-biggest U.S. ride-hailing service, is raising roughly $500 million as the company burns through tens of millions of dollars a month, according to a fundraising presentation compiled by Credit Suisse. It highlights tepid financial performance at Lyft and reveals that the company has repeatedly underperformed its own expectations.

In the first half of the year, Lyft generated less revenue, lost more money, and added fewer customers than projected in February. The numbers suggest Lyft has had to burn through cash as it chases growth in a competitive industry. The willingness to spend big on growth is a costly strategy that's becoming increasingly common in Silicon Valley. Public market investors have expressed concern about the high valuations of private technology companies recently. Fidelity Investments, BlackRock, and others wrote downtheir stakes in some startups this year.

In the first half of 2015, Lyft spent $96.1 million on marketing. That's more than twice Lyft's net revenue during the same period. In one document, Lyft promotes its ability to attract new drivers and riders, even as it does so at a sizable loss. Customer discounts represent a big portion of Lyft's marketing costs. This year, Lyft has also purchased billboards in New York's Times Square and on Market Street in San Francisco, in addition to paying drivers big bonuses.

Lyft declined to comment on the numbers contained in the fundraising presentation. As a closely held company, Lyft isn't required to report its financials publicly. The documents said the numbers weren't audited and may not conform to Generally Accepted Accounting Principles. In the past, Lyft has reported revenue to investors as a combination of net from one part of its business and gross from another. It's unclear how Credit Suisse calculated the numbers using Lyft's financial data. Credit Suisse declined to comment.

John Zimmer, Lyft's co-founder and president, said in an interview earlier this week that the company has reached a "run rate" of $1 billion and achieved 40 percent market share in San Francisco, the hometown of both Lyft and its biggest competitor, Uber Technologies. Zimmer said Lyft chose to highlight run rate, which takes one month of gross revenue and multiplies it by 12, because it reflects the impact the company is having on the transportation industry as a whole. Most of that money goes to the drivers.

Zimmer said Lyft has managed to meet and even exceed some performance projections. "I think in certain markets, we're beyond; we're really proud of the share gains we've had," he said. Zimmer, along with bankers from Credit Suisse, met with investors in Hong Kong and Beijing about the funding round recently, said a person briefed on the meeting who requested not to be named. The New York Times reported on Tuesday that Lyft is raising a round of financing with the hopes of achieving a $4 billion valuation.

Andreessen Horowitz is currently Lyft's largest shareholder, according to one of the documents obtained by Bloomberg. The venture capital firm holds 12 percent of shares. Bloomberg LP is an investor in Andreessen Horowitz. Japanese e-commerce company Rakuten owns 10 percent of Lyft shares, and the Mayfield Fund owns 6.6 percent.

Uber's business last year was far bigger than Lyft's is today. Uber had $415 million in net revenue with a loss of $470 million in 2014, according to people familiar with the company's financials. Uber's last private financing round valued the company at $50 billion, and it's currently raising more money, which could increase its valuation to $60 billion to $70 billion, according to people familiar with the matter who asked not to be identified because the talks are private.

The documents show Lyft is still learning how to estimate the pace of its growth. For instance, the company predicted in February that it would facilitate 7.4 million rides in July, bring in net revenue of $25 million, and lose $14 million. It reported about half as many rides as expected, missed revenue projections by a third, and lost almost two and half times more than forecast.

Lyft's $1 billion run rate was based on gross revenue of $83 million in October. Net revenue, which is the amount Lyft takes from rides, would be about a quarter of gross revenue, according to the company. The documents show Lyft expects to generate $26.3 million in net revenue and lose $124 million during the third quarter of 2015. Part of those losses can be attributed to subsidies for its Lyft Line carpooling service, because it often pays drivers more than it costs customers to use. "The company has a history of losses and is not projected to be profitable in the foreseeable future," reads a disclosure in the documents.


----------



## Tim In Cleveland (Jul 28, 2014)

I wonder how much of the losses are due to excessive pay at the top? Wasn't it revealed one top Uber exec was in a legal fight with his landlord and that he paid $18,000 A MONTH IN RENT?


----------



## observer (Dec 11, 2014)

Seems like both TNCs are having trouble attracting US investors and are looking for offshore money.


----------



## observer (Dec 11, 2014)

Tim In Cleveland said:


> I wonder how much of the losses are due to excessive pay at the top? Wasn't it revealed one top Uber exec was in a legal fight with his landlord and that he paid $18,000 A MONTH IN RENT?


18, 000 a month is a small two bedroom house in SF. 

I looked at moving to the bay area in 2001. A 1 bedroom apartment in Milpitas was 2,400 a month.

It was actually cheaper for me to fly back and forth from LAX to SF, three days a week.

Did that for eight years.


----------



## ORT (Nov 14, 2015)

As you all can see, these corporations don't care about the drivers, how more clearer a picture does anyone in here need to see, crystal clear as HD. It's all about world domination, their stake holders "investors" and themselves, you are all interchangeable pawns in this battle, I am sure you all have played the game of chess.


----------



## NachonCheeze (Sep 8, 2015)

I don't buy it.


----------



## haji (Jul 17, 2014)

very easy to fix the problem change the commission ( 80% uber 20% driver )


----------



## ORT (Nov 14, 2015)

haji said:


> very easy to fix the problem change the commission ( 80% uber 20% driver )


Soon enough.


----------



## HiFareLoRate (Sep 14, 2015)

ORT said:


> As you all can see, these corporations don't care about the drivers, how more clearer a picture does anyone in here need to see, crystal clear as HD. It's all about world domination, their stake holders "investors" and themselves, you are all interchangeable pawns in this battle, I am sure you all have played the game of chess.


It has to be 4K resolution for me as doing nights have deterred my vision.
Sooner or later Uber will change. It's in the matter of the drivers to commit.


----------



## ORT (Nov 14, 2015)

HiFareLoRate said:


> It has to be 4K resolution for me as doing nights have deterred my vision.
> Sooner or later Uber will change. It's in the matter of the drivers to commit.


Uber and change, now that was funny .


----------



## UberComic (Apr 17, 2014)

They can't keep this up forever. At some point the bubble will burst.


----------



## Drive777 (Jan 23, 2015)

UberComic said:


> They can't keep this up forever. At some point the bubble will burst.


I agree. This whole state of affairs is ridiculous. These companies took what was a brilliant idea and destroyed it in the name of sheer greed. They could have built a sustainable model from the beginning, still been better than the taxi companies and made a ton of profit... everyone would have been happy, riders and drivers.

Instead we end up with overgrown kids (investors, CEO's) in a big sandbox fighting over turf with action figures (the drivers) and everyone is losing including the companies themselves. And for what good reason?

Pitiful really. Oh what could have been.


----------



## riChElwAy (Jan 13, 2015)

<<The documents show Lyft expects to generate $26.3 million in net revenue and lose $124million during the third quarter of 2015.>>

<<Part of those losses can be attributed to subsidies for its Lyft Line carpooling service, because it often pays drivers more than it costs customers to use.>>

<<The company lost $127 million in the first half of 2015 on $46.7 million in revenue, according to private fundraising documents obtained by Bloomberg.>>

watching this Titanic sink with its scrambling billionaire investors aboard is going to be some great stuff


----------



## Taxi Driver in Arizona (Mar 18, 2015)

Yeah, the losses when Uber and Lyft go belly up will be epic. The only positive is that the only ones losing money will be the VCs, not average investors because neither of these money-losing companies will make it to an IPO.


----------



## Buckiemohawk (Jun 23, 2015)

The damage that they will do before they make it to the IPO will be catastrophic. Lyft won't make it but if Uber does somehow manage to squeeze it's butt to an IPO all those cheap people who loved it will be cursing when they raise the rates. What, once cost 35 dollars in a taxi and 14 dollars in Uber will be 55 dollars in Uber. They will have to raise the rate.


----------



## Sydney Uber (Apr 15, 2014)

Snap Quiz! Do you reckon only those that are older than 40 years old know that businesses which have such terrible repeated profit margins ultimately fail? 

Won't it be an education to the starry-eyed 20 somethings see a "50-60 billion dollar" company finally go under? 

It's pretty basic, no individual, family, club, city, state or country can keep burning more money than they produce, the party ultimately ends.


----------



## melxjr (Sep 10, 2015)

Right now Lyft and Uber are in a Market Share war. They're trying to gain as many clients as possible to convert that in their company value, as well as, drivers to meet that demand. Have you ever done the math on their referral bonuses, and then all the promos they constantly run. It obviously brings them negative. Uber and Lyft are here to stay, but as investors want to soon see returns, something will be done, as any huge corporate to achieve an ROI. Less promos for clients, Maybe they will make an incentive program for riders to earn free credits. They might even raise the rates as well, all to increase their ROI. Nobody goes into a business to go negative. Expect a change, also remember all the pending lawsuits, those are all game changers for the way they operate as well, why would they invest time and fix their pay structure now, when they may not have to later. Uber especially is a multi-national company now, 1 Change is a BIG change.


----------



## moop (Feb 1, 2015)

Sydney Uber said:


> Snap Quiz! Do you reckon only those that are older than 40 years old know that businesses which have such terrible repeated profit margins ultimately fail?
> 
> Won't it be an education to the starry-eyed 20 somethings see a "50-60 billion dollar" company finally go under?
> 
> It's pretty basic, no individual, family, club, city, state or country can keep burning more money than they produce, the party ultimately ends.


i'm just now hitting my 30s and i've seen uber and this bubble for what they are for a long time

imagine what we could do with the money uber et al. are pissing away on useless shit... manned trip to mars, more funding for quantum and/or chemical computer research...

it's maddening that so much money is being frivolously wasted while the poorer among us in america are still struggling to make ends meet


----------



## riChElwAy (Jan 13, 2015)

my take...

the biggest pipe dream of all is Uber/Lyft drivers hoping for better pay, it'll never happen, period

here's how i come to this conclusion...

Uber/Lyft are operating at enormous losses right now, investors will obviously start demanding a profitable business model for themselves, as the drivers are currently the only entity making a profit

marketing for and recruiting new drivers is a never-ending cost, which may get even costlier, as word of mouth really spreads like wildfire how bad a deal it is to drive for these companies, The Churn machine will always need $feeding$

so, in order for the Uber/Lyft corporations to become a profit-making machine, they're obviously going to be forced to hike the price up (we just saw the first reality of this as Uber just gave themselves a huge revenue boost with the latest SRF increase, 100% going to Uber, 0% to driver)

but the future price hikes can't be too extreme, because their most precious cargo are their paying riding passengers, and they cannot upset them

so the rate has to start increasing here, but not too much pissing off their riders

these entire increases will 100% go to Uber it'll all be going to Lyft 0% to drivers, margins are too tight

the iPhone fees to drivers will incrementally keep rising

and that beloved SRF .. yeah that is heading in only one direction (up)

two years plus I've been a day-by-day onlooker and it is crystal clear to me, and many others, that Uber & Lyft are still around only because of the VC $$ and I've been trying to figure this whole thing out

so, my view is, 100% of all incoming increases will be going 100% to Uber 100% to Lyft .. the drivers will continue to shout, keep demands going, but these cries for help will have zero organizational force

i believe this biz model is way too far deep into the red for drivers to ever dream of better pay from doing this


----------



## stuber (Jun 30, 2014)

Drive777 said:


> I agree. This whole state of affairs is ridiculous. These companies took what was a brilliant idea and destroyed it in the name of sheer greed. They could have built a sustainable model from the beginning, still been better than the taxi companies and made a ton of profit... everyone would have been happy, riders and drivers.
> 
> Instead we end up with overgrown kids (investors, CEO's) in a big sandbox fighting over turf with action figures (the drivers) and everyone is losing including the companies themselves. And for what good reason?
> 
> Pitiful really. Oh what could have been.





Drive777 said:


> I agree. This whole state of affairs is ridiculous. These companies took what was a brilliant idea and destroyed it in the name of sheer greed. They could have built a sustainable model from the beginning, still been better than the taxi companies and made a ton of profit... everyone would have been happy, riders and drivers.
> 
> Instead we end up with overgrown kids (investors, CEO's) in a big sandbox fighting over turf with action figures (the drivers) and everyone is losing including the companies themselves. And for what good reason?
> 
> Pitiful really. Oh what could have been.


Exactly. UBER would work perfectly and be profitable if they would simply switch back to using only commercial cars with normal taxi and car service rates. They'd be worth 1-2 billion.


----------



## melxjr (Sep 10, 2015)

riChElwAy said:


> my take...
> 
> the biggest pipe dream of all is Uber/Lyft drivers hoping for better pay, it'll never happen, period
> 
> ...


I hear you on everything, There's only so much they can raise the SRF to be justifiable. With them ending huge bonus signups, the company will save huge amounts of money, along with ending rider promotions as well. There are tons of microeconomic tweaks these two companies can make, to increase their profits and also sustain a level of happiness. Think about what would happen when drivers see that the SRF fee is higher than their minimum ride fare? Nobody would drive uber lol. Consider how people value them now, it can't get better unless they wanna turn over a new relief. Uber could easily eliminate surge pricing, that makes a ton of Uber clients happy, and uber makes the base rates at a consistent slightly higher amount. Polls have already shown people are willing to pay more, to eliminate the ridiculous surge pricing. This biggest thing for these two companies, is cut costs from current bonus programs, revamp to earn incentive programs (spend to earn), increase commission rates towards new onboarding drivers, increase rates gradually on the client, also as you stated increase rates of phone leases and items of such.


----------



## riChElwAy (Jan 13, 2015)

melxjr said:


> I hear you on everything, There's only so much they can raise the SRF to be justifiable. With them ending huge bonus signups, the company will save huge amounts of money, along with ending rider promotions as well. There are tons of microeconomic tweaks these two companies can make, to increase their profits and also sustain a level of happiness. Think about what would happen when drivers see that the SRF fee is higher than their minimum ride fare? Nobody would drive uber lol. Consider how people value them now, it can't get better unless they wanna turn over a new relief. Uber could easily eliminate surge pricing, that makes a ton of Uber clients happy, and uber makes the base rates at a consistent slightly higher amount. Polls have already shown people are willing to pay more, to eliminate the ridiculous surge pricing. This biggest thing for these two companies, is cut costs from current bonus programs, revamp to earn incentive programs (spend to earn), increase commission rates towards new onboarding drivers, increase rates gradually on the client, also as you stated increase rates of phone leases and items of such.


<<Think about what would happen when drivers see that the SRF fee is higher than their minimum ride fare>>

right now in SoCal the SRF is $1.95, raised up from $1 .. the min ride is $4.95 .. on a short min trip UberX driver grosses 4.95 - 1.95 = 3 x .80 = $2.40 .. and this is pre-gas .. you have to figure min $0.45 spent in gas to-during-from the trip .. that evens the driver's post-gas gross $1.95 and SRF $1.95 .. chances are total gas x is more than 45 cents, so yes, in a lot of cases, the SRF is now more than a driver's post-gas gross

the incredible thing at this stage is that the driver is the only one profiting and Uber / Lyft are operating at enormous losses when it seems like it would be the other way around

would be interesting to see some ideas for different models on how to make all three entities happy (Uber, driver, pax) right now the only happy entity is the pax


----------



## melxjr (Sep 10, 2015)

riChElwAy said:


> <<Think about what would happen when drivers see that the SRF fee is higher than their minimum ride fare>>
> 
> right now in SoCal the SRF is $1.95, raised up from $1 .. the min ride is $4.95 .. on a short min trip UberX driver grosses 4.95 - 1.95 = 3 x .80 = $2.40 .. and this is pre-gas .. you have to figure min $0.45 spent in gas to-during-from the trip .. that evens the driver's post-gas gross $1.95 and SRF $1.95 .. chances are total gas x is more than 45 cents, so yes, in a lot of cases, the SRF is now more than a driver's post-gas gross
> 
> ...


Yes, but the psychology is people don't think about the expenses that come along with it. The SRF fee actually showing up as a higher total than the fare would make all the baboons realize. You've already understood it, because you're not dumb.


----------



## riChElwAy (Jan 13, 2015)

melxjr said:


> Yes, but the psychology is people don't think about the expenses that come along with it. The SRF fee actually showing up as a higher total than the fare would make all the baboons realize. You've already understood it, because you're not dumb.


i think Uber's driver screening program scans each driver applicant's history for... Math F Algebra F Arithmetic F


----------



## BaitNSwitch (May 12, 2015)

Leslie is losing 3 dollars on every cookie she sells. Uma is losing 2.5 dollars on every cookie she sells. How many sales do each girl scouts have to make before they are profitable?

It's like one of those math word problems.


----------



## riChElwAy (Jan 13, 2015)

LOL


----------



## stuber (Jun 30, 2014)

melxjr said:


> I hear you on everything, There's only so much they can raise the SRF to be justifiable. With them ending huge bonus signups, the company will save huge amounts of money, along with ending rider promotions as well. There are tons of microeconomic tweaks these two companies can make, to increase their profits and also sustain a level of happiness. Think about what would happen when drivers see that the SRF fee is higher than their minimum ride fare? Nobody would drive uber lol. Consider how people value them now, it can't get better unless they wanna turn over a new relief. Uber could easily eliminate surge pricing, that makes a ton of Uber clients happy, and uber makes the base rates at a consistent slightly higher amount. Polls have already shown people are willing to pay more, to eliminate the ridiculous surge pricing. This biggest thing for these two companies, is cut costs from current bonus programs, revamp to earn incentive programs (spend to earn), increase commission rates towards new onboarding drivers, increase rates gradually on the client, also as you stated increase rates of phone leases and items of such.


It all makes sense. But we're not talking about people who want a sensible, sustainable business.


----------



## RobGM84 (Oct 26, 2015)

I love how so many here are trying to comment on economics and business based on this report. 

Uber and Lyft are growth companies. Like any other growth company they are investing every dollar they receive into expansion. Uber is opening more and more markets every month. The goal here is to become pervasive as possible worldwide and they are doing a damn good job at it. Meanwhile they are keeping prices as low as possible even to the point of operating at a loss. This is to get as many riders as possible and steal them from other services, taxis, and public transit. 

The important point is that everywhere they operate Uber passengers always consider it an incredible deal over almost any other form of transportation. This means the pax market has upward price movement available. Uber is going to employ penetration pricing until they are satisfied and then raise rates to sustainable levels


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> I love how so many here are trying to comment on economics and business based on this report.
> 
> Uber and Lyft are growth companies. Like any other growth company they are investing every dollar they receive into expansion. Uber is opening more and more markets every month. The goal here is to become pervasive as possible worldwide and they are doing a damn good job at it. Meanwhile they are keeping prices as low as possible even to the point of operating at a loss. This is to get as many riders as possible and steal them from other services, taxis, and public transit.
> 
> The important point is that everywhere they operate Uber passengers always consider it an incredible deal over almost any other form of transportation. This means the pax market has upward price movement available. Uber is going to employ penetration pricing until they are satisfied and then raise rates to sustainable levels


Uber does not use extraordinarily low prices to establish themselves in a market. They virtually always enter a market with rates equal to the lowest priced taxi company. Once they establish a driver/client base, they then allow the rates to surge from the price of the lowest priced taxi company to 3x then 5x or whatever they can manage. that is done to attract drivers.

Prices are then dropped to below competitive prices as the market reaches full maturity. The low low rates are not reflective of an effort to expand business. That is already accomplished by the time they drop rates into the basement.

Rates are dropped as markets become fully loaded with drivers.

"This is to get as many riders as possible and steal them from other services, taxis, and public transit." 
This kind of stealing is still considered illegal. the word for it is antitrust. Drivers themselves are being forced to accept losses despite the burden of car ownership. What makes Uber of interest is the ethics behind the losses.

Uber does not need to keep rock bottom rates in order to out compete other forms of transit. Their ability to divorce themselves from the cost of ownership of the actual cars allows them to put a massive fleet of cars on the road. It has also, until recently allowed them to only pair pax with idle cars. That does provide exceptional convenience at the expense of the driver, not Uber.

Prices drop to rock bottom as the attempt at expansion has been proven successful in a given market. The rock bottom rates are aimed with the future in mind. The idea is to bolster themselves against disruption from some other form of start up.

Rates are competitive and surge from there during the actual expansion process. That is easy to observe.


----------



## RobGM84 (Oct 26, 2015)

You are oversimplifying things here. There are two markets. One for drivers and one for riders. Uber understands that winning the driver market must come before they can win the passenger market. Initial entry into a market comes with prices that strongly attract drivers. Once enough drivers and interest is established they proceed to win the passenger market. To do this they lower prices to the lowest point at which supply and demand become relatively equal (where they are maintaining enough drivers on the road to meet requests). This hits it's most effective point when surge pricing begins to disappear because there are always just enough drivers to meet demand. 

Uber has the brand recognition by passengers to be able to charge a premium for their service over rivals but they choose (for now) to undercut them slightly because they favor greater reach over higher revenues. 

No market has yet reached the point at which uber will turn prices back up. They have room to do this again because most passengers prefer them over rivals. Think about it: if Uber, Lyft, Taxi, and Bus were the same price...which one would pax pick (Uber). If Uber were only slightly higher would most pax still pick it (generally, yes). This is all part of business 101. 

And no, it's not antitrust. I assure you. Uber does not enjoy a monopoly on the market and they are not importing anything into the US.


----------



## melxjr (Sep 10, 2015)

RobGM84 said:


> You are oversimplifying things here. There are two markets. One for drivers and one for riders. Uber understands that winning the driver market must come before they can win the passenger market. Initial entry into a market comes with prices that strongly attract drivers. Once enough drivers and interest is established they proceed to win the passenger market. To do this they lower prices to the lowest point at which supply and demand become relatively equal (where they are maintaining enough drivers on the road to meet requests). This hits it's most effective point when surge pricing begins to disappear because there are always just enough drivers to meet demand.
> 
> Uber has the brand recognition by passengers to be able to charge a premium for their service over rivals but they choose (for now) to undercut them slightly because they favor greater reach over higher revenues.
> 
> ...


Also remember Uber has niched their market a ton. They have many ways to increase costs amongst all their services.


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> There are two markets. One for drivers and one for riders. Uber understands that winning the driver market must come before they can win the passenger market. Initial entry into a market comes with prices that strongly attract drivers.


This initial process takes on average, as a guess, a little over a year to a year and a half. I would think that would encompass the period said to be focussed on expansion into a new market.

As for:


RobGM84 said:


> Once enough drivers and interest is established they proceed to win the passenger market. To do this they lower prices to the lowest point at which supply and demand become relatively equal (where they are maintaining enough drivers on the road to meet requests).


That is dubious. They are only able to do that because they are forcing the drivers, supposed independent contractors to work at losing rates despite their fixed costs.



RobGM84 said:


> they choose (for now) to undercut them slightly because they favor greater reach over higher revenues.


Not higher revenues: it is at a loss. Uber's loss is mitigated quite heavily due to the fact that the drivers bear much of the brunt of the rate cuts, they after all own the cars.



RobGM84 said:


> And no, it's not antitrust. I assure you. Uber does not enjoy a monopoly on the market and they are not importing anything into the US.


That is in contradiction to your previous post:


RobGM84 said:


> . This is to get as many riders as possible and steal them from other services, taxis, and public transit.


----------



## stuber (Jun 30, 2014)

RobGM84 said:


> You are oversimplifying things here. There are two markets. One for drivers and one for riders. Uber understands that winning the driver market must come before they can win the passenger market. Initial entry into a market comes with prices that strongly attract drivers. Once enough drivers and interest is established they proceed to win the passenger market. To do this they lower prices to the lowest point at which supply and demand become relatively equal (where they are maintaining enough drivers on the road to meet requests). This hits it's most effective point when surge pricing begins to disappear because there are always just enough drivers to meet demand.
> 
> Uber has the brand recognition by passengers to be able to charge a premium for their service over rivals but they choose (for now) to undercut them slightly because they favor greater reach over higher revenues.
> 
> ...


"Undercutting slightly"? I wouldn't describe UBER that way. In my market they're running UBER X at 60% lower rates than commercial taxis. Granted, these are non-permitted cars without commercial liability insurance, but still.

It's a scam which depends on a constant resupply of drivers. I'll pass.


----------



## RobGM84 (Oct 26, 2015)

1) they are not forcing drivers to do anything. The market for labor and vehicles is wide and has many other options for drivers to do. Uber sets what they pay at a lower rate and drivers continue to sign up in droves. I would estimate for every driver who goes inactive 2 more join (even at current rates). This implies the market is at equilibrium or that rates could be set even lower.

2) my statements are not a contradiction. Setting prices lower than competitors is not a crime. Antitrust applies to monopolies and import of physical goods. There are tons of alternatives in the transportation market and uber is dealing in services, not manufacturing.


----------



## RobGM84 (Oct 26, 2015)

stuber said:


> "Undercutting slightly"? I wouldn't describe UBER that way. In my market they're running UBER X at 60% lower rates than commercial taxis. Granted, these are non-permitted cars without commercial liability insurance, but still.
> 
> It's a scam which depends on a constant resupply of drivers. I'll pass.


Except that when drivers do stop joining rates go back up. It has already happened in several markets. Face it. They are exactly pricing at the intersection of supply and demand.


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> uber is dealing in services, not manufacturing.


Uber itself makes claims of antitrust against the taxi industry. The State of Maryland and the city of St. Louis come to mind.

The taxi industry too is not involved in manufacturing.



RobGM84 said:


> ) they are not forcing drivers to do anything. The market for labor and vehicles is wide and has many other options for drivers to do.


That too is questionable. What Uber is doing is an effort to destroy the playing field, reduce the viable choices to zero. Also, look at many of Uber's practices, they make quite an effort to tie a driver up and prevent them from driving for Lyft for example. The structure of the guarantees, the manipulative rating system is a great example. Many drivers are manipulated into driving more and exclusively for Uber just in order to improve their driver rating. Uber's subprime loan partnerships serve as another great example. You sign an insane financing agreement, start to work with zero security and watch your market's rates slashed. Those people very much find themselves forced to drive more than they might have otherwise. Remember claims of being able to make $90,000 a year driving Uber? Those claims enticed people into making unwise decisions.

By your own admission, Uber is aiming to reduce market choice. the word you used was "steal" I assume that was a kind of Freudian slip, but perhaps your most honest and accurate contribution to this thread.


----------



## stuber (Jun 30, 2014)

I don't like them, and I don't wish to associate myself with them. That's the short answer. It's a bunch of scoundrels.


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> Except that when drivers do stop joining rates go back up. It has already happened in several markets. Face it. They are exactly pricing at the intersection of supply and demand.


Hardly. NYC by Uber's own numbers had around 21,000 drivers signed up as active drivers. By their own account, they only average about 3,800 drivers on the road during peak traffic hours. The highest number of Uber drivers on the road according to Uber's numbers, was Saturday evening between 10 at that time, 2/3 of their available fleet was available.

http://www.nydailynews.com/opinion/editorial-bill-phony-uber-stats-article-1.2299587

"They are exactly pricing at the intersection of supply and demand."

That is a ludicrous assumption. It fails to take into consideration the high number of drivers who simply refuse to drive at base rates for example. If rates were set in relation to cost to operate the vehicles, more drivers would be willing to drive. It is all fabricated. Also, Uber does not own or maintain the cars. If they did own the cars, there is zero chance they could afford to squander such great assets by allowing them to sit idle. It is the drivers who absorb the costs of that burden.


----------



## RobGM84 (Oct 26, 2015)

It's not illegal to be one of many competitors aiming to become the only competitor. It is only illegal when you are the only player and you are conspiring or using that advantage to keep others out. Clearly you know little/nothing about antitrust law. The case against the taxicabs was a legally valid one because they were in large part the only player and using the medallion system to create an artificial barrier to entry in the market.

The reason I bring up that this is not manufacturing is because you seemed to be going after the predatory pricing argument which is only valid when a foreign competitor exports goods to the US at prices below cost in an attempt to displace domestic competition. This is not a valid legal case in the service industry or between two domestic competitors.


----------



## stuber (Jun 30, 2014)

RobGM84 said:


> Except that when drivers do stop joining rates go back up. It has already happened in several markets. Face it. They are exactly pricing at the intersection of supply and demand.


Why is UBER pricing anything? It's not up to them. EBay doesn't price. Craigslist isn't setting prices.

It's an app. Not a transportation company. It's only real function is to facilitate communication and transactions between buyers and sellers.

UBER has no value beyond that. Customers and drivers will eventually figure this out.


----------



## RobGM84 (Oct 26, 2015)

stuber said:


> Why is UBER pricing anything? It's not up to them. EBay doesn't price. Craigslist isn't setting prices.
> 
> It's an app. Not a transportation company. It's only real function is to facilitate communication and transactions between buyers and sellers.
> 
> UBER has no value beyond that. Customers and drivers will eventually figure this out.


Once again...UBER IS NOT THE MARKETPLACE..it is a bidder in the marketplace. The marketplace is available labor and available cars. McDonald's, Lyft, postmates, the bus company, the taxi company, etc are all bidders in this market. Uber is bidding a price for your car and service and you are accepting or rejecting.

Likewise they are bidding in the passenger marketplace agains limo companies, taxis, Lyft, and bus companies. They are again submitting a bid to riders and they are accepting.

And yes, maybe you are right and people will figure it out and leave (I doubt it, again, supply of drivers seems to indicate equilibrium in the market at this price). They will raise rates $.50/mi and they will all come back. why do you think the market is so flooded? Because it's damn easy work and even for crappy pay for many that beats working a 9-5. You either have unlimited flexibility or crappy pay. You don't generally get both (if you did, everyone would do it, just as they did when rates were high)


----------



## Huberis (Mar 15, 2015)

stuber said:


> Why is UBER pricing anything? It's not up to them. EBay doesn't price. Craigslist isn't setting prices.
> 
> It's an app. Not a transportation company. It's only real function is to facilitate communication and transactions between buyers and sellers.
> 
> UBER has no value beyond that. Customers and drivers will eventually figure this out.


Couldn't agree more. Does Uber even recognize drivers incur a cost to operate?


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> Once again...UBER IS NOT THE MARKETPLACE..it is a bidder in the marketplace. The marketplace is available labor and available cars. McDonald's, Lyft, postmates, the bus company, the taxi company, etc are all bidders in this market. Uber is bidding a price for your car and service and you are accepting or rejecting.


This is false. Uber sets the rates at whim. The surge seems often to be fabricated. Taxi companies often need to petition their rates with their state's PUC. Any rate increase needs to be approved by the state of PA PUC for example. The rate must meet certain criteria. One is that the rate must be fare in relation to meeting the goals of a common carrier. Uber fights being defined a common carrier. Also, rates are not allowed to be set at on competitive levels in order to undercut reasonable competition.

You have stated over and over elsewhere that Uber's intent is to "steal" competition. By definition, that seems to exclude the notion of some sort of fair competition or bidding process.

stuber is 100% correct, it should be individual Uber drivers who set their rates.


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> It is only illegal when you are the only player and you are conspiring or using that advantage to keep others out.


That is why rates drop as low as they do once the market matures. You can claim all you want about there being to markets, the market for drivers and a second market for pax. You can keep making that argument until you are blue in the face. The fact is, they are attempting to use that pricing model to keep others out. That should be evident simply by looking at the general complaints of drivers working in mature markets. They can not afford to work at base rates. It isn't a matter of choice but necessity. Uber drivers aren't even able to compete against Uber's own tactics.

The people they are trying to keep out by non competitive rates are future VC startups such as themselves. Kalanick himself will attest to the threat. He will go so far as to suggest that at some point, the driver himself may need to be left by the wayside in order to avoid disruption. Whether or not it is actually possible, it is apparently on the table. All in the name of avoiding disruption which is another way of saying they which to suppress competition.


----------



## stuber (Jun 30, 2014)

RobGM84 said:


> Once again...UBER IS NOT THE MARKETPLACE..it is a bidder in the marketplace. The marketplace is available labor and available cars. McDonald's, Lyft, postmates, the bus company, the taxi company, etc are all bidders in this market. Uber is bidding a price for your car and service and you are accepting or rejecting.
> 
> Likewise they are bidding in the passenger marketplace agains limo companies, taxis, Lyft, and bus companies. They are again submitting a bid to riders and they are accepting.
> 
> And yes, maybe you are right and people will figure it out and leave (I doubt it, again, supply of drivers seems to indicate equilibrium in the market at this price). They will raise rates $.50/mi and they will all come back. why do you think the market is so flooded? Because it's damn easy work and even for crappy pay for many that beats working a 9-5. You either have unlimited flexibility or crappy pay. You don't generally get both (if you did, everyone would do it, just as they did when rates were high)


OK. It's not a marketplace. They are a player in the market.

Just like bootleg DVDs are a player in the marketplace. Or streaming services selling pirated movies.

UBER competes with commercial operators, yet it does so by utilizing non commercial cars. What's next? Airlines that don't comply with the FAA? Or buslines operating outside DOT rules?

UBER's scam only functions because of the fragmented rules and regulations governing transportation all over the world.


----------



## Huberis (Mar 15, 2015)

stuber said:


> Or streaming services selling pirated movies.


Kalanick was a prominent player in the world of illegal file sharing/ music piracy industry. He takes great pride in telling audiences how much he was sued for in those days and his efforts at creating a revenge business designed to profit off those who sued him.


----------



## stuber (Jun 30, 2014)

Huberis said:


> Kalanick was a prominent player in the world of illegal file sharing/ music piracy industry. He takes great pride in telling audiences how much he was sued for in those days and his efforts at creating a revenge business designed to profit off those who sued him.


...and yet there's no shortage of people anxious to cheer him on. "See what a smart business idea he had, " they croak.

Let's see UBER take over the world AND operate by the existing regulations. Then I'll be impressed. Then they'll have shown themselves to be a great company, and not just pirates.


----------



## Huberis (Mar 15, 2015)

Agreed.


----------



## RobGM84 (Oct 26, 2015)

stuber said:


> ...and yet there's no shortage of people anxious to cheer him on. "See what a smart business idea he had, " they croak.
> 
> Let's see UBER take over the world AND operate by the existing regulations. Then I'll be impressed. Then they'll have shown themselves to be a great company, and not just pirates.


There was a time when copying a CD or DVD to your hard drive for personal use was spun as a crime...do you believe we never should have developed DVD/CD ripping software?

There has never (as far as I know) been a case of Uber/Lyft overtly operating in direct conflict with the law. I am only aware of them ever operating under laws which have not yet been defined or that have not been proven to apply. Remember that in our legal system a law on the books generally means nothing until a precedent is set by a court ruling.


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> I am only aware of them ever operating under laws which have not yet been defined or that have not been proven to apply.


That is Uber speak.


----------



## Huberis (Mar 15, 2015)

RobGM84 said:


> I am only aware of them ever operating under laws which have not yet been defined or that have not been proven to apply. Remember that in our legal system a law on the books generally means nothing until a precedent is set by a court ruling.


Do you buy into Uber's reasoning that they are a technology company and not a transportation company or common carrier and thus exempt from otherwise generally excepted regulations?

That ability to define themselves as outside conventional rules is going to come under fire as time moves forward. Uber's relationship with drivers designated as independent contractors will be challenged.

I assume that Philly, St. Louis, Pittsburgh up until last February would be examples of "operating under laws which have not yet been defined or that have not been proven to apply" by way of your understanding. Is that fair of me to assume?

I am going to go out on a limb and suggest that is erroneous, the PUC has been given the green light to fine Uber up to $50 million dollars in Pittsburgh and serves as suitable evidence that it has now been proven they were operating without authority. The law caught up. The judge has had its say. Will Uber try to fight it, talk them down, surely.

I do not know if a PUC fine is subject to appeal however, so that should be interesting once the 30 days has passed, Uber has its say and the fine is levied. The PUC originally sough to fine Uber 19 million.

"Remember that in our legal system a law on the books generally means nothing until a precedent is set by a court ruling." Time is just as likely to work against Uber regarding such concerns.


----------

