I am very much being objective here. Uber won despite having an objectively worse economic model, because they cheated via venture capital. It happens all the time in the tech world.
Tech company comes in, "innovates" by providing a product that's 2x as convenient for 10x the cost, and undercuts competitors by cheating.
To be very clear, Uber IS absolutely a better experience than taking a cab, and I've noted this multiple times. I believe, however, it's not convenient ENOUGH to justify the extreme infrastructure costs.
From an economic standpoint, Uber does not make sense. If you wanted to run an Uber service at that scale, it would be beyond expensive. Customers don't want to pay 20 bucks to go a few blocks down. So if that was the case from the beginning, Uber would have been dead in the water.
You're greatly underestimating how cost sensitive consumers are. Most people will willingly take a less convenient and shittier option if it's cheaper.
We are just in opinion territory here, but Uber was originally more expensive generally than NYC taxis, but it took off anyway. If everyone was so cost sensitive, why isn't everyone taking the subway?
Well first off people do take the subway. Lots and lots of people. But if subway doesn't go where you need it to and you're in a time crunch, you take a taxi or uber.
Second off, even if Uber is more expensive that's still not it's true cost. You, or anyone, would be happy to take an uber if it was 1.15x the cost of a taxi. Because that's worth it for you.
But this is the big idea here:
"Tech company moves in a provides a product that's 2x as convenient for 10x the cost"
There's a point where it makes no sense to get an Uber, and we're well past that point. Uber made it only because they could hide the true cost.
Uber IS a better experience. But would you pay, say, twice as much for a better experience? I would say for most people the answer is no. Not for a transportation service.
When you're making a product it doesn't matter how amazing it is if it's too expensive to produce. There's some exceptions for some product categories, but ultimately operating inefficiency will bite you. From an economic standpoint, Uber does not make sense and has never made sense. Point blank, it's a stupid idea. As time goes on and Uber prices go up and up to try to make up their billions of dollars of losses, you will see this first-hand.
Tech company comes in, "innovates" by providing a product that's 2x as convenient for 10x the cost, and undercuts competitors by cheating.
To be very clear, Uber IS absolutely a better experience than taking a cab, and I've noted this multiple times. I believe, however, it's not convenient ENOUGH to justify the extreme infrastructure costs.
From an economic standpoint, Uber does not make sense. If you wanted to run an Uber service at that scale, it would be beyond expensive. Customers don't want to pay 20 bucks to go a few blocks down. So if that was the case from the beginning, Uber would have been dead in the water.
You're greatly underestimating how cost sensitive consumers are. Most people will willingly take a less convenient and shittier option if it's cheaper.