I've been trying to figure this out for the last few months..
Uber isn't THAT complicated on the technical side. The driver/rider matchmaking is simpler than algorithmic trading code I've worked on, and I'm happy to take 1% on a trade in that space, yet Uber and Lyft are helping themselves to 30% or more.
I was personally thinking it'd be great to offer an Uber competitor that aims for complete transparency with no frills, like the Craigslist to Uber's Amazon/Ebay. Maybe charge $5 + 5% for matchmaking the rider with the driver if they use the app for payment, or free if the passenger pays with cash. I've heard a lot of horror stories about Lyft charging riders surge prices while paying normal prices to drivers, various apps stealing tips, etc.
I haven't tossed my MacBook into my carpet bag and run back to my hometown just yet, though, since I assumed there must be some good reason this hasn't already been done. Maybe it costs Uber $500 to background check and onboard a driver, or they eat 10% in credit card chargebacks, or something else I don't understand since I'm just a code monkey
The complexity is not the depth of the problem, but rather the scope. Matchmaking — while complicated — is a very small subset of the domain. Pricing, demand forecasting, routing, payments, etc. are all equally important on the pax side. Similarly, there are many teams needed to support the overall ecosystem for things like driver onboarding, compliance, and support.
Also comparing a 1% return to a 30% charge isn’t exactly fair. Fixed costs like background checks aside, chargebacks, fraud, insurance, support claims, incentives among others warrant the markup
I could be completely clueless here, but it looks to me like a lot of the Lyft/Uber/etc cut is going to:
1) Overpaid, wasteful software engineering (no offense to us). Like someone here said, there are a lot of cheap software solutions out there to handle this stuff
2) R&D into crazy moonshot ideas
3) Advertising
4) Making a completely opaque techno-dystopian game out of people's livelihoods in order to manipulate drivers into working harder for less money and riders into paying less up front and as much as possible in the long run
If I'm right, I'd ideally like to completely destroy this market for good. Fragment it into a separate crappy home-made app for each city that you find out about via a poster on the wall in the airport when you land. I'm hoping that with enough transparency and flexibility, riders and drivers would keep each other in check and come to a happy and sustainable middle ground without making any VCs rich
(Or maybe Uber/Lyft are operating on a level of efficiency that would make my half-baked idea look like a joke. Ain't nobody disrupting Amazon or Apple from their basement any time soon)
Self-driving cars is not such a moonshot at this point, and indeed may be the only way they reach profitability (still a while off, though, and Lidars need to come down in price)
The one thing that might make it harder to figure out the scale is that literally every market (city, state, country) has different regulations and that is not simple to manage.
Uber isn't THAT complicated on the technical side. The driver/rider matchmaking is simpler than algorithmic trading code I've worked on, and I'm happy to take 1% on a trade in that space, yet Uber and Lyft are helping themselves to 30% or more.
I was personally thinking it'd be great to offer an Uber competitor that aims for complete transparency with no frills, like the Craigslist to Uber's Amazon/Ebay. Maybe charge $5 + 5% for matchmaking the rider with the driver if they use the app for payment, or free if the passenger pays with cash. I've heard a lot of horror stories about Lyft charging riders surge prices while paying normal prices to drivers, various apps stealing tips, etc.
I haven't tossed my MacBook into my carpet bag and run back to my hometown just yet, though, since I assumed there must be some good reason this hasn't already been done. Maybe it costs Uber $500 to background check and onboard a driver, or they eat 10% in credit card chargebacks, or something else I don't understand since I'm just a code monkey