Friday 29 September 2017

We Need To Talk About Uber

... don't we?  But somehow, we haven't ...

Open thread!

Actually, the best commentary is Paul Sinha's, here.  

Start 3:00 minutes in, if you've only got a minute.



Anonymous said...

On mobile, so not watching video! Much as I like using Uber, it's only a viable business if they do one or more of three things:

Put other taxi firms out of business and raise prices as a monopoly

Get subsidised by the state

Have fully automated cars

Given they subsidise each journey by 30-50%, their investors are either stupid or expecting to rinse someone rotten at some future point.

It's also a pretty toxic business to deal with, who've ended up trying to bully the wrong target with TfL.

It's going to be interesting watching the battle.

Electro-Kevin said...

Ha ha ha ha !

He makes a great comedian. Good timing and likeable.

He got away with it because he's a BEM and a sexual minority too. Was it racist of me and the audience to laugh ?

Jim Davidson used to crack exactly the same sort of jokes.

Uber wishes to monopolise, avoids our tax system and wishes to use our state funded welfare and open borders system to do it. No contribution towards anti terrorism, that open borders incurs.

Has the Uber decision by TFL anything to do with the Boeing decision afterwards ? Tit for tat ?

estwdjhn said...

"Given they subsidise each journey by 30-50%"

How much? I'd be interested in seeing where this number is sourced from (and quoting some twit in Groan who hasn't showing his working either won't count).

Unless their overheads are bigger than I think they are, I'd assume an Uber driver would get 75-85% of the fare, and the rest would be Uber's overheads and profit margin. For them to be subsidizing a journey by 30-50%, either their overheads are wildly out of control (given that they have almost no psychical assets, just a register of drivers and a fairly clever app), or they are paying the driver more than the fare received, which sounds a dubious business plan at best.

Anonymous said...

@estwdjhn - Naked Capitalism, amongst others, have gone through Ubers own investor reports.

That puts it around the 41% mark. They aggressively undercharge to undercut viable businesses.

People forget Uber isn't just an app, they also need minicab companies in order to operate. And most of the costs are fixed, few economies of scale to be made.

Timbo614 said...

I commented this on a The Times Uber article the other day (based on the NC articles too):

"Uber doesn't actually make a profit. In fact it has lost billions in the last few years. They are buying the customers partly at the expense of the drivers hoping to establish a monopoly and then raise prices (maybe via self-driving cars but I'm not convinced of that).

From what I have read many drivers do not do their long term sums properly, there are many hidden costs to being a full time Uber driver and they can end up earning very much less than the minimum wage. Running a car as an individual for 5-10,000 miles per year is one thing. Running a taxi at 100,000 miles plus a year is quite another.

I get the convenience but it is being partially provided by exploitation of many who do not have the skills to do a long term business/profit analysis."

@ND You are propbably going to get a near consnsus that if they carry on as they are... it will all end in tears.

Dick the Prick said...

I used to work at both Taxi Licensing and the Inland Revenue doing tax credits (and mum wanted me to be a pop star - pah, the life i've lived!) but I have found myself wonderfully unmoved by the whole affair. It was dispiriting working at HMRC when every taxi driver in the whole of the UK seemingly did 30+ hours a week and yet only ever earned £5,000 which curiously was the threshold for getting loads of lovely free cash - the humanity!

Graeme said...

The NC posts are long on rumour, innuendo and aggressive dislike of Uber, for whatever reasons, but remarkably short of hard facts.

Bill Quango MP said...

That was the funniest 3 mins I've seen on that show in years.

Kev..When did Jim Davidson EVER say he was a gay Asian?
Old Jim used to drink in my local. Big crony crowd around him. Very racist, I thought. Quite openly so.
And I'm no PC liberal. I think the joke comes first and worry about the offence second.

Anyway - Uber. I must be one of the few to have never used them. CU with his all day long London Borough hopping must be in and out of them all day long.

CityUnslicker said...

Never been in an uber, don't care what happens to them.

dustybloke said...

Well, banning Uber is obviously racist, but it was done by Lefties who by definition cannot be racist, so it's obviously something Maggie has done. She's not dead obviously, that was just alt-right bullshit.

Electro-Kevin said...

I was never much of a fan of JD. I liked Dave Allen, Not the Nine O'Clock News and saw an episode of The Goodies being made.

(WTF has this to do with Uber ????)

Nick Drew said...

Hey, that's 3-out-of-3 C@W who've never used Uber!

(does that tell you something ..?)

Electro-Kevin said...

Let me guess, Nick.

You don't go to the pub much ???

None of you are on Tinder ??? (Grinder as the case may be)

estwdjhn said...

So, according to that linked article, Uber do indeed give the driver about 83% of the fare, and pocket the rest, however they apparently (if one believes said article) lose enough money that their actual costs are 30% of fares.

I have my doubts that it's actually possible to spend that much on real overheads for a business with so few obvious costs. The drivers pay all the costs of the actual taxiing part of the business, so all Uber have to do is maintain a list of drivers (that's probably fairly resource heavy to be fair, but presumably once a driver is registered, they will then carry a lot of fares before Uber has to interact again), handle the "cash" (not that expensive when you're an outfit of their size), maintain the computer system and app (it's not that elaborate), and do any marketing they feel is required.

My instinct is that either they are still in full on bootstrapping mode as they keep adding locations they cover (and thus keep spending the profits and then some on expansion), or they are actually making a lot less of a loss than its being suggested, and the journalists don't actually understand it's balanced sheets (especially as Uber doesn't give annual accounts).

Anyway, what's the problem is Uber do driver all the taxi firms out of business by aggressive underpriceing? Consumers win because foolish venture capitalists are paying their taxi fares for them, and as soon as the price gouging phase arrives, it will be profitable to start rival apps or taxi firms (it's hardly a market with big barriers to entry - it's not like trade dumping to drive a steelworks out of business - you don't even need more cab drivers, you just poach Uber's with offers of high 'wages'.

Anonymous said...

@estwdjhn - I'm out and about so just a couple points to respond.

If Uber has few overheads, how come it loses billions? Q1 this year they 'only' lost slightly north of 700 million. Just in Q1.

Take a look at their structure. Clue, it's not just an app. London Uber is its own company, a minicab company, whose costs are subsidised in a way designed to destroy competition.

And your claim consumers win with underpricing is wrong. There's a short term gain until the rent seeking starts. It's not even basic economics, it's preliminary.

And the poaching comment... You compete on price to the consumer, not salary to worker, if you shrink others market share, they haven't the market to expand capacity. Unless you think there are billionaires queuing up to subsidise local minicab firms? If there are, by all means, go middleman them!