Were Uber & Lyft Built on Venture Capital Subsidies?
NY Times article "Farewell, Millennial Lifestyle Subsidy" poses interesting questions. Did investor subsidies deflate prices in unsustainable ways? If so, is that ethical and/or anti-competitive?
“A few years ago, while on a work trip in Los Angeles, I hailed an Uber for a crosstown ride during rush hour. I knew it would be a long trip, and I steeled myself to fork over $60 or $70.
Instead, the app spit out a price that made my jaw drop: $16. - Kevin Roose, NY Times
Most in the NYC for-hire transport industry (aka TLC industry) understand the dynamics that went on between roughly 2014 to 2019. The TLC industry has never experienced that much disruption, outside the Great Depression, then those five years. Uber, Lyft, Via and later Juno armed with billions of dollars in venture capital money were able to both pay drivers competitive wages and give passengers low fares via investor subsidies. In essence, the unit economics of their business model were likely negative, as Kevin Roose of the NY Times points out with a playful analogy of selling a $20 sandwich for $10.
“Imagine a deli that charged $10 for a sandwich whose ingredients cost $19.66, and then imagine how long that deli w…
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