Uber CEO Stunned When He Heard Cost of 3-Mile Uber Ride(futurism.com)
futurism.com
Uber CEO Stunned When He Heard Cost of 3-Mile Uber Ride
https://futurism.com/the-byte/uber-ceo-ride-cost
92 comments
Also
Uber CEO surprised after Wired reporter pays $51 for a 2.9-mile Uber ride - https://news.ycombinator.com/item?id=36964028 - Aug 2023 (32 comments)
Uber CEO surprised after Wired reporter pays $51 for a 2.9-mile Uber ride - https://news.ycombinator.com/item?id=36964028 - Aug 2023 (32 comments)
I mean what was he going to say? "Nice, eh?"
At most he was surprised at just how well the revenue management team was doing.
The reporter paid it didn't they?
At most he was surprised at just how well the revenue management team was doing.
The reporter paid it didn't they?
Last year, I traveled from DC to NY overnight, and it was 2.5x surge pricing. When i got to my destination, I stuck around in the car to see what the driver app was saying. I paid close to $900, driver took ~$250, the entire surge pricing difference went to Uber. I was thinking, that's an crazy markup over their AWS bill but really it's just a robbery.
Greyhound nyc to dc is like $20 and has a dozen buses a day. Plus you have Amtrak. Why take an Uber?
I live in Japan but was thinking of taking a Greyhound for a 2-hour or so ride during a US trip but a friend strongly advised against, the presumably exaggerated analogy was getting herpes just riding it. Another friend more familiar than me with the recent US generally concurred.
So I assume that's one reason to take an Uber? I was going to look into a charter anyways based on that advice.
Amtrak I'm more familiar with but at least in California it's just incredibly slow.
So I assume that's one reason to take an Uber? I was going to look into a charter anyways based on that advice.
Amtrak I'm more familiar with but at least in California it's just incredibly slow.
Greyhound is cheap, so yeah you are getting more poor people riding it. I would say its generally fine. I've ridden it dozens of times and never had issues, at least in the north east. Its usually the most cost efficient way between two cities that are nearish. The one hiccup in the north east is often that its hub and spoke which might take longer. If you are going from one small city to another small city, you are probably going to go to nyc first.
My flight got diverted due to some issue in EWR and landed in DC around midnight. There were no other flights that night and no amtrak until the morning. I didn't even think to check Greyhound. I just wanted to go home to see my kids before they head to school.
Because with those other services, you have to be around other people. Americans hate that.
Amtrak at night is quiet, generally pretty empty, and very civilized. Nothing at all like an intracity bus or subway. But I think many Americans would never even give it a chance. Maybe that's why it's so nice...
I've tried to give Amtrak a chance. But I don't live in the northeastern part of the USA. So I would have to drive a few hours to get to a train station, then spend 24 hours longer on the train than I could drive in a car. And it would cost me a lot more to ride the train than to drive myself.
I think there is more than one reason that Americans "never give it a chance".
I think there is more than one reason that Americans "never give it a chance".
Well I'm talking in the context of the NE, I'm well aware that the routes are sparse elsewhere. Amtrak is very good for DC to NYC but most Americans wouldn't give it a chance even in this context.
The main issue with Amtrak is the delays. Freight is prioritized over passenger trains on a lot the lines so you can quickly fall behind schedule. This is compounded over the distance so can add up.
If you don't need to be at your destination for a particular time then Amtrak is nice a way to travel if the route works, especially if you get a cabin.
If you don't need to be at your destination for a particular time then Amtrak is nice a way to travel if the route works, especially if you get a cabin.
No? Lots of "Americans" use Amtrak and buses. Not sure why you have to denigrate Americans as being uniquely hating being around people.
Is that really the cost or figurative? Because I would take the bus from NYC into PA and it was like $70 twenty years ago.
About 15 years ago I took a bus from Philly to DC and it cost $5.
[deleted]
Highly depends on when you buy the ticket and which bus line.
$20-30 is the code nyc to dc. Philly to nyc was $11 before the pandemic, might be more more now.$70 sounds more like state college or Pittsburgh. Greyhound is you’re only hitting major cities in the north east is super cheap and fast
No amount of the surge pricing should go to Uber. They're already earning more due to the increased number of rides. It's almost akin to taking the tips.
I don't understand why people think this. Uber isn't a charity. Of course they are going to try to take advantage of demand shortages.
If drivers want to take in the profit from things like this, they should form a co-op, not be contractors.
If drivers want to take in the profit from things like this, they should form a co-op, not be contractors.
The original (stated) point of surge pricing was to encourage more drivers to start work because of higher rates.
It says this on the Uber website:
> In these cases of very high demand, prices may increase to help ensure that those who need a ride can get one. This system is called surge pricing, and it lets the Uber app continue to be a reliable choice.
The fact that only a fraction of the fare increase goes to the driver is misleading at best.
https://www.uber.com/us/en/drive/driver-app/how-surge-works/
> In these cases of very high demand, prices may increase to help ensure that those who need a ride can get one. This system is called surge pricing, and it lets the Uber app continue to be a reliable choice.
The fact that only a fraction of the fare increase goes to the driver is misleading at best.
https://www.uber.com/us/en/drive/driver-app/how-surge-works/
It sounds like they are saying - we increase prices so that less people use the app so we can service all the people who do.
It is only a misleading statement if you put words in uber's mouth beyond what they say. I don't see anything here suggesting they increase prices to increase supply instead of decreasing demand.
It is only a misleading statement if you put words in uber's mouth beyond what they say. I don't see anything here suggesting they increase prices to increase supply instead of decreasing demand.
Your interpretation is far too generous to Uber.
> prices may increase to help ensure that those who need a ride can get one
Why are you using the app if you don't need a ride? I agree that it's purposely vague, which makes it intentionally confusing.
Here's another link: https://www.uber.com/us/en/marketplace/pricing/surge-pricing
> This encourages more drivers to serve the busy area over time and shifts rider demand, to maintain reliability and restore balance.
> Surge pricing is a relief valve for the rideshare marketplace. Without it, when demand for rides exceeds the number of available drivers, riders would wait longer (or might not be able to get a ride at all). Drivers would have less incentive to accept requests in busy areas. Surge pricing helps restore balance to the network. By waiting a bit longer, riders can avoid the surge price.
> prices may increase to help ensure that those who need a ride can get one
Why are you using the app if you don't need a ride? I agree that it's purposely vague, which makes it intentionally confusing.
Here's another link: https://www.uber.com/us/en/marketplace/pricing/surge-pricing
> This encourages more drivers to serve the busy area over time and shifts rider demand, to maintain reliability and restore balance.
> Surge pricing is a relief valve for the rideshare marketplace. Without it, when demand for rides exceeds the number of available drivers, riders would wait longer (or might not be able to get a ride at all). Drivers would have less incentive to accept requests in busy areas. Surge pricing helps restore balance to the network. By waiting a bit longer, riders can avoid the surge price.
They can buy Uber stock
You took an Uber overnight from DC to NY? That's wild.
Indeed, I'm not sure whether it was in an emergency situation (or if they're referring to NYC versus NY state when they talk about NY) but I regularly travel from DC to NYC and vice versa on Amtrak and it costs me around 100 bucks each way, even in the middle of the night which has some pretty good deals.
> With Uber, the vast majority of your fare is going to your driver
Surely the CEO wouldn't lie to us /s
Surely the CEO wouldn't lie to us /s
Isn't (at least part of) the point of surge pricing to bring more drivers out onto the road? Or was that just a lie.
Would you drive someone 4.5 hours from DC to NYC for $250? The drive back would be $0, so $250 / 9, minus gas and mileage. It's very little. Meanwhile Uber got $650. I wouldn't do it.
The driver asked me if his friend could also come because she was on the crew of the same flight and was also going to NJ. She offered to pay for part of it, but I was happy that I made it home and felt bad for the driver taking 1/4 of the money I paid, so I didn't take it.
on the one hand, you're right, and what's worse that if we apply the IRS mileage reimbursement to the whole round trip, that alone is not worth it, plus like 50 bucks for gas.
On the other hand, $250 cash in hand, now, without having to run around or idle for customers could be a lot of money for someone. People who drive these things don't work for fangs...
On the other hand, $250 cash in hand, now, without having to run around or idle for customers could be a lot of money for someone. People who drive these things don't work for fangs...
It’s a complete lie. On a $116 surge price trip, drivers get an extra $5.[0]
THIS is how Uber finally turned a profit. None of that Kalanick bullshit about how only self driving cars can make Uber profitable.[1][2] It’s jacking up prices and pocketing the difference.
Never trust a tech bro. They’re all grifters and liars.
[0] https://www.tiktok.com/t/ZT8LCks4j/
[1] https://www.usatoday.com/story/tech/news/2016/08/19/s-self-d...
[2] https://www.cnbc.com/2020/01/28/ubers-self-driving-cars-are-...
THIS is how Uber finally turned a profit. None of that Kalanick bullshit about how only self driving cars can make Uber profitable.[1][2] It’s jacking up prices and pocketing the difference.
Never trust a tech bro. They’re all grifters and liars.
[0] https://www.tiktok.com/t/ZT8LCks4j/
[1] https://www.usatoday.com/story/tech/news/2016/08/19/s-self-d...
[2] https://www.cnbc.com/2020/01/28/ubers-self-driving-cars-are-...
It’s a complete lie. On a $116 surge price trip, drivers get an extra $5
It would be helpful to have a better source than hearsay on TikTok from some rando whose gig seems to be ranting about tech bros. Even a an Uber driver on TikTok would be good.
It would be helpful to have a better source than hearsay on TikTok from some rando whose gig seems to be ranting about tech bros. Even a an Uber driver on TikTok would be good.
How very brave you to dismiss screenshots and take obviously out of touch and responsible billionaire Dara Khosrowshahi over the drivers who have been saying this very thing for literally years now.
Seriously. What makes Khosrowshahi believable here, and why do you identify with him?
Seriously. What makes Khosrowshahi believable here, and why do you identify with him?
How about some secondhand hearsay? I've heard this same thing from Lyft drivers. Their customers are all pissed, the drivers ask why, it's because a $30 ride is costing them $100. Meanwhile, the driver still just gets the usual rate
> It’s jacking up prices and pocketing the difference.
Obviously the way to make profit is to charge more than you spend.
Literally the definition.
Obviously the way to make profit is to charge more than you spend.
Literally the definition.
Hotter take: Pocketing the excess value of someone else's labor and capital is theft.
Only if you believe in the labor theory of value which has a lot of flaws instead of thinking that value is derived from supply and demand which has more predictive power and can be a better model.
Hottest take: As a worker, only you can free yourself from your chains. It ain't the corporations' job to start the revolution on your behalf.
Don’t wait around for revolution either
who knows? they have a ton of data that we don't have, and can infinitely tweak the pricing and the take-home based on their needs at the moment
I hope he found someone doing the way back, that must have been a horrible time.
With this one comment, and about $50 million in advertising and $50 million in development, you can erase Uber. (the 50MM in advertising is the budget to make ads that convince Uber drivers to get paid the $900 instead of the $250) And the $50 is the app dev budget.
Yeah, it is a crazy markup and it's why they were able to increase their ARR by 58% this last year. I think the more frustrating thing is lack of serious competition in the space to keep them from jacking up the prices down so much. Lyft should be drastically undercutting Uber in order to force them to lower prices or out of the market but they aren't, instead they are on average charging more. Need better startups in the space
Wouldn't that effectively be asking Lyft to jump on a grenade for the greater good?
Drastically undercutting the competition means you leave money on the table. Let's just assume a 5% discount isn't enough to win riders but 15% is, should the cut fares but anything over 15% just to screw Uber? And does this risk setting a low enough market cap on Lyft that they could be compelled to take an acquisition offer simply because they so drastically under cut their potential revenue?
Startups' job isn't to fix a broken market, it's to either become self sufficientquickly or to 10x investor capital depending on the funding model. The only business model that can really justify cutting fares drastically would be a non-profit, maybe some kind of collective run by the drivers themselves.
Drastically undercutting the competition means you leave money on the table. Let's just assume a 5% discount isn't enough to win riders but 15% is, should the cut fares but anything over 15% just to screw Uber? And does this risk setting a low enough market cap on Lyft that they could be compelled to take an acquisition offer simply because they so drastically under cut their potential revenue?
Startups' job isn't to fix a broken market, it's to either become self sufficientquickly or to 10x investor capital depending on the funding model. The only business model that can really justify cutting fares drastically would be a non-profit, maybe some kind of collective run by the drivers themselves.
> Startups' job isn't to fix a broken market
An aside...why are we still referring to Uber and Lyft as startups? They are 14 and 11 year old, extremely well established, multinational companies. They are no longer the little guys disrupting an entrenched market.
When do they stop getting the excuse of being startups?
An aside...why are we still referring to Uber and Lyft as startups? They are 14 and 11 year old, extremely well established, multinational companies. They are no longer the little guys disrupting an entrenched market.
When do they stop getting the excuse of being startups?
Totally fair, I tossed startup in there pretty loosely as I was thinking about their goals when they originally opened. I definitely don't consider them startups today.
Big Insurance/Banking companies is around a hundred years old.
Uber is still a new business trying to prove it works.
I’m sure it’s the software development cost that’s eating Lyft’s profit margins. Would love for someone on the inside to share insights on that.
Receipt: https://imgur.com/nZ9cjQP
But this was always the plan, wasn't it?
Uber has been losing money since it started, subsiding our travel with VC money, I thought clearly always with the plan of "once we get market dominance we can jack up the prices and make all that money back". I don't think they were ever shy about this plan.
So now we're at that point. Either we put up with the new prices, or move on to another app, or find another transport solution. I don't think whining at Uber about how expensive they are now is a workable response.
Uber has been losing money since it started, subsiding our travel with VC money, I thought clearly always with the plan of "once we get market dominance we can jack up the prices and make all that money back". I don't think they were ever shy about this plan.
So now we're at that point. Either we put up with the new prices, or move on to another app, or find another transport solution. I don't think whining at Uber about how expensive they are now is a workable response.
That part is understandable. What doesn’t make sense is the ratio.
Driver pays for the car, gas and their time. And Uber pockets 50% of the fare? I’ve heard this from at least a few vocal drivers.
Apple App Store’s 30% cut as a software service provider seems like a bargain.
Driver pays for the car, gas and their time. And Uber pockets 50% of the fare? I’ve heard this from at least a few vocal drivers.
Apple App Store’s 30% cut as a software service provider seems like a bargain.
Uber has never considered its drivers to be employees. I think it sees itself as a marketplace - selling driver time to riders. So it makes sense that the plan was always to take more of the pie for itself once it got enough power to do that. Like Amazon with Audible - if you're the only game in town then you can charge whatever you like, so they do.
> if you're the only game in town then you can charge whatever you like
Did I miss Lyft going out of business or something? Or is this more of a duopoly type situation?
Did I miss Lyft going out of business or something? Or is this more of a duopoly type situation?
Android is around too (with the Apple app store example). So, yeah, I guess?
> Driver pays for the car, gas and their time. And Uber pockets 50% of the fare? I’ve heard this from at least a few vocal drivers.
It is in Uber's interest to keep exactly as much of the fare as they can to the extent they still have riders and drivers. This was always the endgame.
It is in Uber's interest to keep exactly as much of the fare as they can to the extent they still have riders and drivers. This was always the endgame.
but what are they supposed to do? there is no more evil tech-bro to blame even, they are now under public pressure to make money and if the current CEO fails to maximize the profits, he will get booted and replaced by the one who will.
Society doesn’t need to accept their profit motive
Then Uber wouldn't exist. It was an exorbitantly expensive and risky plan to disrupt an entrenched taxi industry all funded by investors.
You lack imagination if the only way people can achieve something is through the one specific economic system
ZIRP man… I’m looking forward to more articles like this about companies with models that just might not make sense.
They were betting on self-driving cars originally, but it became too long of a waiting game for that.
Nah, they weren't. Their own leaked study (many years ago, I'll try and dig up a link) I recall showed at most a 5% improvement in their margins over time. This makes sense, as soon as one company has self-driving so will others. Any period where they are the exclusive self-driving ride hailing is fleeting at best. In time, it reverts to exactly the same as it's always been.
I get that people don't like it when the price of things go up.
But surely people can see that the Uber pricing was unsustainable? The VC money was subsidising our transport (yay) but clearly that couldn't last.
So, as prictable to everyone , prices go up, drivers get less, and Uber are hoping riders will have grown so used to the convenience so as not to care.
Expect a flood of stories along these lines in the coming year.
But surely people can see that the Uber pricing was unsustainable? The VC money was subsidising our transport (yay) but clearly that couldn't last.
So, as prictable to everyone , prices go up, drivers get less, and Uber are hoping riders will have grown so used to the convenience so as not to care.
Expect a flood of stories along these lines in the coming year.
Yeah, that’s exactly what the reporter was trying to get him to admit. He says so basically, but Dara refuses to admit it.
Prices go up; drivers should get more.
Of course they -should- get more. But the economics of uber aren't working for either uber or the drivers.
Uber is super convenient. And also (used to be) super cheap. Cheaper than taxis, because a) they used VC money to cover costs and b) because they moved vehicle costs to the driver.
Driving is fundamentally underpaid (it's basically unskilled labor) but if you ignore vehicle costs (which most drivers do) it looks OK. Factor In vehicle costs and it gets bad. Remove all job security and work-place benefits and it's, well, not good.
So uber loses money, the drivers lose money, (or, more charitably, are just badly paid) - the real winners were riders.
But the free money is over. So the prices are jacked - the first time to make Uber profitable, and likely the second time to keep drivers from abandoning the system.
Customers will bleat, but the -economics- don't lie. It costs a lot for the convenience of anywhere-to-anywhere-anytime-by-yourself transport. If it's not costing the rider a lot then someone us getting screwed.
Sure, removing labor will change thd equation (self driving cars), but I fear even then the ancillary effects of "riders with no adult supervision" will add a lot of overhead.
Uber is super convenient. And also (used to be) super cheap. Cheaper than taxis, because a) they used VC money to cover costs and b) because they moved vehicle costs to the driver.
Driving is fundamentally underpaid (it's basically unskilled labor) but if you ignore vehicle costs (which most drivers do) it looks OK. Factor In vehicle costs and it gets bad. Remove all job security and work-place benefits and it's, well, not good.
So uber loses money, the drivers lose money, (or, more charitably, are just badly paid) - the real winners were riders.
But the free money is over. So the prices are jacked - the first time to make Uber profitable, and likely the second time to keep drivers from abandoning the system.
Customers will bleat, but the -economics- don't lie. It costs a lot for the convenience of anywhere-to-anywhere-anytime-by-yourself transport. If it's not costing the rider a lot then someone us getting screwed.
Sure, removing labor will change thd equation (self driving cars), but I fear even then the ancillary effects of "riders with no adult supervision" will add a lot of overhead.
If they want to be profitable long-term, they'll have to give up that short-term thinking. I could see a 50/50 split being reasonable.
How the fuck was uber's pricing unsustainable? They aren't manufacturing anything physical. The core business doesn't need tons of employees. They're aren't paying extra for drivers' gas or mileage. The app is conceptually simple. Where is all the money going?
Why is it WhatsApp can serve most of the fucking world with something like 100 people but Uber needs a huge staff?
Why is it WhatsApp can serve most of the fucking world with something like 100 people but Uber needs a huge staff?
It's a good question. There are enough local clones to suggest it's not the software that eats all the money.
Bandwidth plays a role. Updating driver positions constantly, at scale, chews bandwidth. As does broad-casting trips, acceptances, and so on.
I'm guessing Lawyers take a huge chunk. Uber is forever being sued especially in years past and they must have a pretty terrible legal bill. It was always part of the model to operate outside the law, so legal issues were inevitable.
Plus lobbying - at every level. Changing the model (which they have done) takes a lot of lobbying. More lawyers, at lawyer rates.
Marketing of course takes a chunk. That's to be expected, especially as competitors enter the market (riding on the back of their legal coat-tails).
By comparison WhatsApp has no legal bill, no marketing bill, no lobbying bill, and so on.
Bandwidth plays a role. Updating driver positions constantly, at scale, chews bandwidth. As does broad-casting trips, acceptances, and so on.
I'm guessing Lawyers take a huge chunk. Uber is forever being sued especially in years past and they must have a pretty terrible legal bill. It was always part of the model to operate outside the law, so legal issues were inevitable.
Plus lobbying - at every level. Changing the model (which they have done) takes a lot of lobbying. More lawyers, at lawyer rates.
Marketing of course takes a chunk. That's to be expected, especially as competitors enter the market (riding on the back of their legal coat-tails).
By comparison WhatsApp has no legal bill, no marketing bill, no lobbying bill, and so on.
> Bandwidth plays a role. Updating driver positions constantly, at scale, chews bandwidth. As does broad-casting trips, acceptances, and so on.
How could this chew bandwidth? It's just some bytes for the positioning, over some socket (probably a websocket), it really doesn't sound like it'd chew bandwidth to send an ID + coordinates every second or so if your connection is already established. Maybe a few more bytes for a signature to avoid tampering/spoofing when updating the position.
How could this chew bandwidth? It's just some bytes for the positioning, over some socket (probably a websocket), it really doesn't sound like it'd chew bandwidth to send an ID + coordinates every second or so if your connection is already established. Maybe a few more bytes for a signature to avoid tampering/spoofing when updating the position.
well when they started, the whole concept of ridesharing was unproven. They didn't just set out to replace taxis, the idea was to offer a service initially so cheap that people who otherwise wouldn't even think about getting a car, would start doing it on a regular basis (same with Eats). So yes, i'm pretty sure they have been subsidizing rides, and in certain markets probably still are. So now the question is: can this market - where some people even grew accustomed to commuting to work on Uber - sustain itself, or is it too expensive and people will just revert to the old mode where (outside of NY) getting a cab was a rare event.
tldr - i don't think it's the staff that's the expensive part. Also, they do a bunch of non-trivial things with maps, etc, so not quite a simple crud app.
tldr - i don't think it's the staff that's the expensive part. Also, they do a bunch of non-trivial things with maps, etc, so not quite a simple crud app.
Of course... the specifics of routing so many rides at scale is certainly non-trivial. But in 2019 they had 26k employees, 32k in 2022 according to https://www.macrotrends.net/stocks/charts/UBER/uber-technolo...
dunno... that's probably a lot, but unlike say twitter, they do a lot more stuff. With Eats, you have to coordinate with restaurants locally, etc etc. So while it sounds a bit bloated, i think there are worse examples elsewhere in tech.
But I don't think it matters very much at all. If people are the problem, they can be quickly cut. But if their market fundamentally shrinks or is unable to pay for itself, you can't really fix that.
But I don't think it matters very much at all. If people are the problem, they can be quickly cut. But if their market fundamentally shrinks or is unable to pay for itself, you can't really fix that.
It was, in retrospect, a weird time. Because absolutely yes, everyone knew it was unsustainable and could not logically last forever, yet I think it lasted long enough that we forgot that part, and got used to it, and here we are. Very similar (intimately connected in fact) to the low interest rate world we also started to think was normal.
The share to the driver is so small I can’t believe they get away with it (Lyft too). In SF I often see drivers accepting their next fare while I’m in the backseat. A ride that will cost me $15 might get them $6.
I know Uber’s part here is not trivial (it’s good software and they do support, etc) but surely the driver should be getting more like 80% or even 90% given that it’s their time, their equipment, etc. Most other marketplaces take smaller cuts.
I know Uber’s part here is not trivial (it’s good software and they do support, etc) but surely the driver should be getting more like 80% or even 90% given that it’s their time, their equipment, etc. Most other marketplaces take smaller cuts.
This depends extremely heavily on the market. In my city a 4.5 mile ride is nearly always around $15 if it's not raining.
Could someone be the CEO of McDonalds thinking a Big Mac meal in the US costs $3?
Big “It’s one banana, Michael, how much could it cost? $10?” Vibes.
https://youtu.be/Nl_Qyk9DSUw
Big “It’s one banana, Michael, how much could it cost? $10?” Vibes.
https://youtu.be/Nl_Qyk9DSUw
There’s been times when the surge is so ridiculous me and the driver just work something out in cash and cut uber out of the deal entirely.
Probably was $20 last time he actually took an Uber. He's likely had a driver for a long time.
is someone forcing the reporter to ride an Uber? It's not a public good.
Thought this was going to be about how little Uber drivers were paid
Uber CEO stunned by $52 fare for 3-mile ride - https://news.ycombinator.com/item?id=37000811 (101 comments)