Cory Doctorow tells us all that Uber is nothing but bezzle.
Well, could be. I don;t think it is but then so what? My opinion is that it is in fact profitable in its mature markets – sans covid at least – and loses by investing in more. But that is just my opinion and I’ve done zero research to back it up. Which brings us to Doctorow:
That’s a funny thing to read in a business paper about a company that is losing 38 cents on the dollar. I mean, I love public goods that have no market case – health care, education, transit – as much as the next commie, but these are not “proven in the marketplace.”
They’re public services, and they’re only sustained by public subsidies – private firms cannot perform these functions.
If you’re going to try and use these economic buzzwords it helps to know what they mean and Doctorow doesn’t know shit.
Health care, education and transit are, none of them, public goods. They are all excludable and rivalrous. They are all, also, provided at times by private companies. The American medical system, Yale and Greyhound all come to mind.
As to market proof compare and contrast the performance of the private companies that provide these things against the public sector alternatives.
Hmm, quite.
Someone who gets economics this wrong is just the person to be analysing the profitability, or not, of Uber, right?
My opinion is that it is in fact profitable in its mature markets
Well, either it is or it isn’t. Do you know if it is?
The problem with Uber is that what it does is easily replicated. There’s a load of alternatives in London alone. All good for the consumer, but not so much for the investor. The ride-sharing/glorified taxi business works, but I can’t see much profit in it.
What Doctorow says is really fucking stupid of course. I mean, really stupid. I know he’s Canadian but Jesus.
I actually say that I’ve done no work on whether Uber is profitable or not. Only that that’s my opinion.
As to competition, yes, obviously, But this dos have network effects, scale does matter.
When you were talking about your serendipitous 2nd hand book, I almost asked you whether you’d read – down and out in the magical kingdom. (same guy as this post i think) From what i can gather- starts from a post scarcity, post mortality and they have social credit currency called wuffies. Be interested in a book review of that.
“public goods that have no market case – health care, education, transit”
What?
I suspect that Uber has never been profitable – it’s simply a bet on whether their version of autonomous vehicles actually works (or not). Which is probably the sort of bet that equity investors were used to taking way, way, way back when.
But, that’s not the tale Uber was selling first time around, they were a new form of taxi service, nothing more. So, an exercise in Greater Fool Theory from the off, nothing more.
What Doctorow says is really fucking stupid of course. I mean, really stupid. I know he’s Canadian but Jesus.
And a science fiction writer…
@Dennis, SEiC
He’s an activist and a self claimed science fiction writer.
gunker.
self-claimed is right.
If Carrie Marshall can be a women, then Cory Doctorow can be a science fiction writer.
Not either of them are good at it, mind you.
Dennis
Hadn’t thought of that…
Doctorow must know shit. He’s full of it to overflowing. Tried to read him but I’ve always forgotten what he was writing about 10 minutes after I’ve finished it. At the moment, I can’t recall a single storyline to criticise.
How can Uber *not* be profitable in mature markets? Act as middle-man between buyer (passenger) and seller (driver), take 20% cut, spend a bit on making the app work smoothly, and pocket the rest.
The wrinkle is that everyone else is trying to do the same thing. So your average punter sees half a dozen ads for new minicab apps, and your unique position is lost. Eventually you have to spend all of your 20% cut on advertising just to maintain market share. That’s what happens in other mature markets – witness all the TV ads for fungibles like car insurance or broadband.
Network effects aren’t that important: drivers and passengers can have multiple apps. Uber has a strong first-mover advantage, global availability (I can Uber in New York or London), and it has a verb-name (to Hoover, to Google, to Uber). None of that makes it unassailable though.
@Andrew M – agreed on the limited network effect. I am a pretty good customer of Uber and have used the app all over the world, or at least the bits I (used to) travel to regularly. Three years ago I would be an advert for the network effect.
However, here in HK, there is now a HK taxi app and more of them accept cashless payment, in China, Didi replaced Uber, in Singapore, Grab replaced Uber, in London you use whoever is offering the best discounts.
Most of these ‘new economy’ companies have perfectly sensible business plans, however they are rarely as unique or magical as they claim. And the valuations are bonkers. But then we live in a world where people have become millionaires via a joke dog-themed cryptocurrency….