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"Cheap, convenient and almost gone: Uber, DoorDash and similar apps"

Afrikan

Afrikan

Member
Oct 28, 2017
16,990
I haven't followed much of this, but I've heard for a while about Uber and WeWork's struggles.

Is this other stuff true? O_o


I've decided to do this now because I know all of these goodies will be disappearing very soon — from my phone, from your phone and from the overall economy.

The reason is simple. Remember all of those IPOs that were supposed to bring a tsunami of tech wealth to wipe out what's left of the Bay Area's housing, lifestyle and culture this year?

Yeah, that's not how it went.

Uber was supposed to have the biggest IPO of the year. Instead its stock has dropped 30% since that IPO, it's laying off hundreds of employees, reporting billions of dollars' worth of losses, and fighting the state of California to avoid paying benefits to its drivers. Analysts are saying that Uber and its closest competitor, Lyft, have "no path to profitability."

WeWork — another company that was supposed to lead to massive "liquidity events" — was the latest to stumble into this crucible. For years, co-founder Adam Neumann put on a song-and-dance show so good, WeWork had a $47 billion valuation. Then regular investors got a look at the company's laughable prospectus and dreadful financials. Now Neumann is out of a job and WeWork is out of the IPO race altogether.
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Suspending the need to schedule basic daily tasks, like cooking your own meals, because you can just get another coupon from a meal delivery app?

Need I remind you how suddenly Munchery closed its on-demand meal service earlier this year?

The party can't last forever, and this isn't a tragedy. Some form of honesty — or, failing that, profitability — should remain a basic business tenet for companies looking to survive.

But at some point, the venture capital subsidies are going to run out, and we'll all be left to pay the true cost of conveniences that were, historically, luxuries.
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I don't usually make article threads like these.. so if I pasted too much from the article, let me know.....and I'll edit it. But there is more in there.


Edit-

panecasio said:
Just finished reading this one and it's more informative than the article in the OP, IMO.

www.theatlantic.com

The Millennial Urban Lifestyle Is About to Get More Expensive

As WeWork crashes and Uber bleeds cash, the consumer-tech gold rush may be coming to an end.
www.theatlantic.com www.theatlantic.com
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baggage

baggage

Member
Oct 25, 2017
517
I'm still afraid of using those apps because they're largely unlicensed, libertarian wet dream programs that don't really give benefits to their 'employees'
 

Deleted member 1476

User requested account closure
Banned
Oct 25, 2017
10,449
Uber the company might go away, the concept of ride sharing won't. You can't put that genie back in the bottle.
 
saenima

saenima

Banned
Oct 25, 2017
11,892
Tonky said:
Could someone ELI5 why these companies aren't doing well
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Because they rely on wholly exploitative and unsustainable business models and sleight of hand, and exist mostly as a race to the cash out moment. They are not meant to grow and last, but to maintain enough of a successful appearance until the dupes drop the money.
 
Josh5890

Josh5890

I'm Your Favorite Poster's Favorite Poster
The Fallen
Oct 25, 2017
23,229
SugarNoodles said:
I mean Uber and Lyft still havent figured out how to turn a profit, right? They're just living off of investor money from what I understand.
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I think I read something similar. My understanding is that if they don't get a hold of the self-driving cars market, Uber and Lyft will eventually run out of money and fold.
 
GalvoAg

GalvoAg

Member
Oct 30, 2017
2,385
Dallas
Waitr is the one around me and all points show that it's belly up. Had a lot of stock in them. Luckily I cashed out when it was over $13 in March, a couple months later it's sub $1.

They're just not profitable.
 
Sully

Sully

Member
Oct 25, 2017
1,388
These companies tried to upend and outskirt the basic fundamentals of what makes a business last.
 
Chasex

Chasex

Member
Oct 29, 2017
1,696
I don't understand the economics of these businesses at all, but in the completely opposite way.

How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good. It should be easily profitable. Same logic applies to the rest of these delivery apps. I get that it costs money to update and maintain the app etc but c'mon... What am I missing here?
 
Kingpin Rogers

Kingpin Rogers

HILF
Banned
Oct 27, 2017
7,459
I'm still unsure as to what these things actually are. Uber is basically just a taxi service right and the food stuff is you pay someone to collect your takeaway for you if the place you're ordering from doesn't deliver? I've never been in a situation where any of that sounds useful, no wonder they're failing.
 
Miletius

Miletius

The Fallen
Oct 25, 2017
1,257
Berkeley, CA
I listened to a WSJ podcast a couple of weeks ago, and one of the big issues is that these companies are prioritizing growth over sustainability. The true value of a ride from point A to point B, for example, is partially being subsidized by Uber and Lyft in order to entice people to sign up. So either prices will eventually go up, and investors know that when they do they'll be far fewer people taking those rides. The same goes for all of the delivery apps and WeWork.
 

Deleted member 1476

User requested account closure
Banned
Oct 25, 2017
10,449
Kingpin Rogers said:
I'm still unsure as to what these things actually are. Uber is basically just a taxi service right and the food stuff is you pay someone to collect your takeaway for you if the place you're ordering from doesn't deliver? I've never been in a situation where any of that sounds useful, no wonder they're failing.
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"I don't use it so it's not useful."

Infallible thought process.
 
MinusTydus

MinusTydus

The Fallen
Jul 28, 2018
8,198
Thrilled at the prospect of trading:

"I can see exactly where my driver is on GPS" to "Your taxicab will be there in 45 minutes... or not, 'cause the driver might just flake out and leave you, and there's no way to track him."

Dammit.
 

Mr.Awesome

Banned
Nov 4, 2017
3,077
Uber keeps getting fucked by the government at every turn, albeit in a lot of cases its deserved, but even on underserved stuff.
 
natjjohn

natjjohn

Member
Oct 25, 2017
3,538
Chasex said:
I don't understand the economics of these businesses at all, but in the completely opposite way.

How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good. It should be easily profitable. Same logic applies to the rest of these delivery apps. I get that it costs money to update and maintain the app etc but c'mon... What am I missing here?
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You aren't paying what the service is really worth as Uber isn't charging what it's really worth.
 
Jarmel

Jarmel

The Jackrabbit Always Wins
Member
Oct 25, 2017
19,338
New York
You could make a great argument that these are the 2000 era version of the classic pyramid scheme where the sustainability is completely dependent on growth.
 
StopMakingSense

StopMakingSense

Member
Oct 25, 2017
10,730
Chasex said:
How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good.
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Hint: the price you see as a rider is not the cost of the ride to Uber. They pay the drivers more than the rate you see otherwise it's not at all sustainable for the drivers and no one would drive for them.

Uber basically loses money on every ride you take.
 
ThisOne

ThisOne

Member
Oct 27, 2017
1,938
I don't understand how a company like Lyft isn't profitable. There's like no overhead; they pay the drivers shit.
 
ShyMel

ShyMel

Moderator
Oct 31, 2017
3,483
Kingpin Rogers said:
I'm still unsure as to what these things actually are. Uber is basically just a taxi service right and the food stuff is you pay someone to collect your takeaway for you if the place you're ordering from doesn't deliver? I've never been in a situation where any of that sounds useful, no wonder they're failing.
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Uber/Lyft is typically cheaper than a taxi. Food delivery apps are really convenient if you are on lunch break but do not want to go to and from a restaurant for your food.
 
Elderly Parrot

Elderly Parrot

Attempted to circumvent ban with alt account
Banned
Aug 13, 2018
3,146
More ads in the app and in the cars lol
Kingpin Rogers said:
I'm still unsure as to what these things actually are. Uber is basically just a taxi service right and the food stuff is you pay someone to collect your takeaway for you if the place you're ordering from doesn't deliver? I've never been in a situation where any of that sounds useful, no wonder they're failing.
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where do you live, what do you do
 
Border

Border

Banned
Oct 25, 2017
14,859
Chasex said:
How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good. It should be easily profitable. Same logic applies to the rest of these delivery apps. I get that it costs money to update and maintain the app etc but c'mon... What am I missing here?
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I think the short version is that they just aren't charging enough money for their services to cover all their costs. They are trying to undercut taxi companies and don't want to shift to a more viable pricing model until they have killed off taxis.
 
Chasex

Chasex

Member
Oct 29, 2017
1,696
StopMakingSense said:
Hint: the price you see as a rider is not the cost of the ride to Uber. They pay the drivers more than the rate you see otherwise it's not at all sustainable for the drivers and no one would drive for them.

Uber basically loses money on every ride you take.
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Hmm I mean the rate is already pretty high... When I uber to the airport like 10 miles away it is usually around $35 or $40. A short trip in town costs like $15 usually. If I were a driver I'd be happy with the rate the rider paid minus a small cut to the company. The cut to Uber wouldn't need to be that much since the volume is so high. Not saying you're wrong here, but it's still working against my intuitions. I Uber a lot for work since I'm usually out of town and obviously don't have a car with me. Maybe the fares are a lot cheaper outside of big cities.
 
SugarNoodles

SugarNoodles

Member
Nov 3, 2017
8,625
Portland, OR
Josh5890 said:
I think I read something similar. My understanding is that if they don't get a hold of the self-driving cars market, Uber and Lyft will eventually run out of money and fold.
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Thank god the government isnt stealing money from rich people and putting it into, I dunno, transportation infrastructure and we instead get a society where rich people throw money at flawed concepts that require solutions that havent been invented yet in order to work.
 
sredgrin

sredgrin

Attempted to circumvent ban with alt account
Banned
Oct 27, 2017
12,276
Kingpin Rogers said:
I'm still unsure as to what these things actually are. Uber is basically just a taxi service right and the food stuff is you pay someone to collect your takeaway for you if the place you're ordering from doesn't deliver? I've never been in a situation where any of that sounds useful, no wonder they're failing.
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Uber is a taxi service that is usually much faster, easier to access, and cheaper than actual taxis (and is in some areas where taxis are rare).

I mean, just because you don't need a taxi yourself, it's kind of baffling why you can't grasp why that's useful.
 
Masoyama

Masoyama

Attempted to circumvent a ban with an alt account
Banned
Oct 27, 2017
5,648
Chasex said:
I don't understand the economics of these businesses at all, but in the completely opposite way.

How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good. It should be easily profitable. Same logic applies to the rest of these delivery apps. I get that it costs money to update and maintain the app etc but c'mon... What am I missing here?
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Buy the entire supply of apples for $1.50 each and then resell them for $1 while living of VC money. That's practically how Uber works.
 
Titik

Titik

Member
Oct 25, 2017
7,490
Chasex said:
Hmm I mean the rate is already pretty high... When I uber to the airport like 10 miles away it is usually around $35 or $40. A short trip in town costs like $15 usually. If I were a driver I'd be happy with the rate the rider paid minus a small cut to the company. The cut to Uber wouldn't need to be that much since the volume is so high. Not saying you're wrong here, but it's still working against my intuitions. I Uber a lot for work since I'm usually out of town and obviously don't have a car with me. Maybe the fares are a lot cheaper outside of big cities.
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Uber basically undercut the tacos here considerably. It went from $55+tip to just $25 to $35.

The prices will likely rise in the future but you can't beat the convenience of calling from an app.
 
NihonTiger

NihonTiger

Member
Oct 25, 2017
10,517
natjjohn said:
You aren't paying what the service is really worth as Uber isn't charging what it's really worth.
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Exactly.

The plan is always to subsidize until you have market control or near market control, where everyone relies on you for a service, and then begin to nudge the prices up. Venture capital is basically an investment to get to this point so they can then reap the rewards of control over an industry.

For Uber and Lyft, the problem isn't just other taxi services. You essentially need to get public transit to collapse in on itself and people to stop driving themselves, or to be cheaper than filling up a tank of gas yourself (which means subsidizing prices).
 
Robochimp

Robochimp

Avenger
Oct 25, 2017
2,677
Chasex said:
I don't understand the economics of these businesses at all, but in the completely opposite way.

How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good. It should be easily profitable. Same logic applies to the rest of these delivery apps. I get that it costs money to update and maintain the app etc but c'mon... What am I missing here?
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The thing you're missing is that the actual costs for Uber are more than what they're charging you.
 
jvalioli

jvalioli

Member
Oct 27, 2017
695
Chasex said:
Hmm I mean the rate is already pretty high... When I uber to the airport like 10 miles away it is usually around $35 or $40. A short trip in town costs like $15 usually. If I were a driver I'd be happy with the rate the rider paid minus a small cut to the company. The cut to Uber wouldn't need to be that much since the volume is so high. Not saying you're wrong here, but it's still working against my intuitions. I Uber a lot for work since I'm usually out of town and obviously don't have a car with me. Maybe the fares are a lot cheaper outside of big cities.
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For individual rides Uber takes a percentage.

But there are costs outside of the actual ride. They have to pay:
-promos for new drivers
-promos for new and existing riders
-server traffic
-employees
-r&d
 
OP
OP
Afrikan

Afrikan

Member
Oct 28, 2017
16,990
I've noticed Uber prices have gone up.

I don't get the discounts I used to get, which makes sense because I use the services more often than I used to. But I've noticed certain routes have gone up. Hell at times the app even warns you before you confirm, that there was a price..lol.

I used to use Lyft exclusively over Uber because it was always cheaper.... but then Uber was always cheaper, and still is. (For me at least)
 
NinjaScooter

NinjaScooter

Member
Oct 25, 2017
54,164
Chasex said:
I don't understand the economics of these businesses at all, but in the completely opposite way.

How can Uber NOT make money? It is an app, and the app works, and it's basically done. Every time I order an Uber I pay the company some money for basically no work on their part. Give the driver a cut, take a cut yourself, call it good. It should be easily profitable. Same logic applies to the rest of these delivery apps. I get that it costs money to update and maintain the app etc but c'mon... What am I missing here?
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Because they are losing money on every ride. Their plan was to come in, drive out taxi companies with cheapness and convenience, and then start raising prices, but their service was replicable and now they can't afford to raise prices. People will just go to Lyft or something else.
 
Chasex

Chasex

Member
Oct 29, 2017
1,696
No I get the part about prioritizing growth by subsidizing via investor money and driving competitors out of business. I work for a startup that is in process of doing this.

What was counterintuitive to me is that they are actually paying the drivers more then they are charging me. Seemed to me the price was already high enough to satisfy both Uber and the drivers but apparently not.
 
Red

Red

Member
Oct 26, 2017
11,697
Food delivery services are pretty bad in general. Hello Fresh in particular has been a nightmare. I signed up once for a free trial and canceled before the trial ended. They've "accidentally" re-signed me up five times. I've been charged each time and have argued until they refunded the charge. I don't know what to do if it happens again. Like is it worth legal action? It feels like harassment.

Shipt, Uber Eats, Uber, Lyft, and Door Dash have all provided decent to good experiences. I am happy with them and would feel the loss if they disappeared. At the same time, it feels like the predictions in this article have been obvious for a long time.
 
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