M06 Recap: the future of Uber

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We had an awesome discussion about Uber, the economics of it and imminent profit problems.

For the recap…


What is Uber?
Uber is a company that has added technology and revolutionized the taxi industry. They also have Uber Eats, a subsidiary.

Important things about Uber:

  • Uber treats its drivers not as "employees" but as independent contractors, saving Uber around $4 billion dollars annually from having to pay for employee benefits like health care. 
  • Uber uses an algorithm that factors in distance, demand, time, traffic etc. into calculating their prices for rides. In general, this algorithm makes Uber cheaper than taxis, but during rush hour for example, taxis may actually win. 
  • 96% of Uber drivers quit after their first year…but this doesn't impact Uber because they don't treat their drivers as employers through interviews, tests for special skills etc. In other words, drivers are just drivers for Uber…they are indispensable. 

Hallmark of a tech company? scalability. In other words, the developmental costs of one user are similar to that of 70,000. 

UBER'S PROBLEM
  • Most ppl agree Uber is a tech company
  • May face trouble expanding bc the model relies on a driver + rider coexistence. No riders = no drivers. No drivers = no riders. This relationship hinders Uber's growth in certain countries where people may not want to drive. 
  • More drivers = more to pay drivers
UBER'S FUTURE
  • MOVE TO AUTONOMOUS CARS
  • Why? Bc it eliminates the money eating machine in their model; human drivers
  • Makes the company scalable theoretically anywhere…as long as there are riders. Riders no longer have to rely on the existence of drivers in the area. 





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