I'm looking for a job currently, and I'm surprised at the number of Series A and B companies still hiring. I wonder when the funding grim reapers will come home to roost.
A lot of these companies might have millions in funding in the bank, no need to show quarterly returns to the public, and a load of experienced tech workers have just hit the market who may be able to be snapped up for less than before. I think it makes sense.
Those companies were doing layoffs a year ago. It sort of started there and has moved its way up. Many A/B companies are starting to pick it back up now and there’s actually a nice pool of talent available.
How in the hell does one not make a profit when literally all they do is skim off the top of unlicensed taxi drivers, using an already fairly functional product?
For the system to function, you've got roughly five variables:
A: Drivers need to get paid enough to want to do it.
B: Riders need the rides to be cheap enough to choose it.
C: The quantity of drivers generally available needs to be consistently high enough that riders can find the rides they need when they want with little wait time.
D: The quantity of riders generally available needs to be consistently high enough that drivers are willing to sign on and wait to accept rides.
E: The overhead of running the business.
Profit comes from the spread between A and B minus E. But A is dependent on D: if there aren't enough riders seeking rides then drivers get fewer of them and need to make more per ride to it to be worth signing on. Likewise B is dependent on C: If they have to wait longer for rides or risk not having a driver available, they won't pay as much or choose to use the service.
The company has knobs they can turn by controlling how much they charge riders and how much they pay drivers. But because of the connections through C and D, they can't turn one without affecting the others.
And it may be that depending on their overhead and the natural density of an area, there may be no valid pricing solution that doesn't lead to the system collapsing from disuse. They have been able to avoid that up until now by infusing the system with "free" investor money, but that doesn't last forever.
By having comically large back-of-house operations.
In a more reasonable scheme the technology portion of a cab company is a small part of their overall expenses, commensurate with the degree of value it brings to the business.
This is true in some white-labeled cab dispatching apps (see: Curb), but not true for ones that chased sky-high valuations with assumptions of pure-software margins (see: Uber, Lyft).
You can afford to pay a huge number of top-dollar engineers and product people when your margins justify it. Being the tech layer on top of cabs turns out to not be in this category of business.
yeah its really odd how so many investors got suckered into thinking that all these "tech" companies that are firmly not tech companies and whose businesses make money in fairly mundane ways based on things happening in the real world are going to make trillions of dollars.
I mean just look at Netflix. They were never a tech company, they were an entertainment company with a tech advantage and thats extremely obvious now. Same thing with something like Carvana. How the hell did they ever manage to convince people they are a tech company and will have tech company margins when they are just selling cars.
Total lack of due diligence and critical thinking, along with the very tech VC mindset where naysayers are poo-pooed for being out of touch luddites. Combined with the very weird incestuousness in tech investment circles where they all have the exact same brain worm.
Remember for the past 10 years where every bit of skepticism about these companies was vigorously attacked as either being a) grossly out of touch idiocy or worse, b) malevolent forces representing a conspiracy of anti-tech incumbents?
You had VCs that were willing to believe literally anything, and naturally an entire cohort of entrepreneurs happy to tell said VCs anything.
The fact that these same VCs haven't been run out of town on a rail suggests the bubble will regrow once things settle down some, and that's disappointing. I for one believe the efficient allocation of capital towards speculative technology is crucial to the advancement of the human race, but the people who've been doing it for the past decade have proven themselves to be credulous rubes who are utterly and congenitally incapable of it.
And often subsidizing the drivers... a marketplace like Lyft or Uber is only lucrative when there's a lot of volume. Otherwise, you're constantly trying to keep a doom loop from happening when there isn't enough supply (drivers) which makes riders upset or not enough riders, which drives drivers (sorry) off the platform.
It's tempting to ask why the subsidies continue given it's not like there are going to be widespread robotaxis anytime soon. Why not let prices settle at the appropriate market level?
But, if one is being charitable, one problem as you say is that there probably really isn't a market for unsubsidized rideshare in a ton of places--even if they are a better service than traditional taxis. I know where I live--50 miles outside of a major city and adjacent to a couple small cities--Lyft and Uber availability is very thin as it is. I couldn't really depend on it for anything.
I always hear this but I'm not sure how they subsidize rides, is it just the 50% off type deals they give out?
When I was a driver nearly a decade ago I would get roughly 70% of the fare and that would be reduced if they used a coupon so it seems more like I was subsidizing the ride. I get that they'd lose a bit of their pie as well.
Recently I see the price I pay on my phone and then see the fare the driver receives on theirs and it's sometimes a good chunk less than 50% of what I pay.
