One-quarter of Uber's business happens in just five cities

https://slate.com/business/2019/04/uber-ipo-nyc-london-risks.html

by smacktoward • 7 years ago

40 41 7 years ago

slate.com

bifrost• 7 years ago

Why is this a surprise? Its part of the reason it was even invented in the first place...

voldacar• 7 years ago

How is this a vulnerability? Shouldn't one expect something like a Pareto distribution to emerge here anyways?

payne92• 7 years ago

If any one of those 5 cities decides to regulate more aggressively, it could be an immediate, material negative hit to Uber.

Pareto distributions are common in two-sided markets with geographic factors. BUT, when there's a reasonable possibility of extra regulation imposed at the regional level... that's a big risk.

Shivetya• 7 years ago

Well then, the real need is to determine if Uber's competitors suffer a similar issue or not.

blakesterz• 7 years ago

The last line in the article answers that pretty well:

"One thing the filing makes clear: It wouldn’t take a global movement to stress the company’s business model. A couple big-city mayors could do that all on their own. "

kevin_thibedeau• 7 years ago

Their business model is unconstrained growth to funnel money into side projects. That can't persist forever. If they just stuck to their core business they could easily be profitable as taxi 2.0.

empath75• 7 years ago

it doesn't cost that much to pay off a mayor.

qmanjamz• 7 years ago

It's not a vulnerability. It actually shows their revenue is pretty geographically diverse.

You can't trust financial news from propaganda outlets like Slate because they only care about their agenda.

brianzelip• 7 years ago

1. New York

2. Los Angeles

3. San Francisco

4. London

5. São Paulo

ariwilson• 7 years ago

How did you get that ordering? LA is listed first in the S1.

crsv• 7 years ago

Physical distance from commenter? :)

dalfonso• 7 years ago

Not OP, but that’s the order presented in the article.

scarmig3• 7 years ago

2017 GDP Figures (Trillions USD)

  USA: 19.39
  NYC: 1.72
  LAX: 1.04
  CHI: 0.68
  DFW: 0.54
  DCA: 0.53

OMG, almost a quarter of the US's GDP (23%) comes from just five metropolitan areas!

hackcasual• 7 years ago

Sure, and if any of those cities all the sudden decided to no longer produce domestic product, that would be a big risk to the US.

imgabe• 7 years ago

The GDP is a measure of all economic activity. I'd say there's a far greater risk that NYC might outlaw ride-sharing specifically, rather than, you know, suddenly decide to stop engaging in commerce altogether.

thanatropism• 7 years ago

He's saying: this is why Uber city-ridership as a Zipf law with alpha = X: the economy has a Zipf law with alpha = X.

You're saying: this value of alpha presents a concentration of risk for Uber. Yes, you're both saying things that aren't false.

ggm2• 7 years ago

DCA is surely about something other than real productive activity? (I guess people in DC might be making money, I thought they were spending it)

scarmig3• 7 years ago

Perhaps, but if you want, you can replace it with SFO, which is roughly the same.

lancewiggs• 7 years ago

There is a surprisingly large real economy about the area.

mandevil2• 7 years ago

The Washington DC MSA is, by population, the 6th largest MSA in the United States[1]. It also the 2nd most highly educated MSA in the US, by some measures[2]. The top three- and four of the top 6- richest counties in the country are part of the Washington DC MSA[3].

Given (2) and (3), the fact that it produces more than the fifth largest MSA by population in the country (Houston) should not surprise. The top four MSA's by population and by GDP are the same, in the same order- the one that is truly punching above its weight is the Bay Area, which is the 6th largest by GDP but the 12th by population.[4]

[1] https://en.wikipedia.org/wiki/List_of_metropolitan_statistic... [2]: https://www.cnbc.com/2018/07/26/the-10-most-and-least-educat... [3]: https://en.wikipedia.org/wiki/List_of_highest-income_countie... [4]: https://en.wikipedia.org/wiki/List_of_U.S._metropolitan_area...

freehunter• 7 years ago

What I'm interested in out of this information (but not interested enough to look it up myself): These five cities account for 1/4 of their business, but how does the population of these five cities compare to all of the cities they do business in? Is this just a straight-line distribution?

Basically, do these five cities account for 1/4 of the total population of the cities they do business in?

sk5t• 7 years ago

I don't know the answer to your question, but some factors that might skew the distribution could be how annoying and expensive it is to keep a car or park in each city, prevalence of recreational activity that encourages or discourages a car or truck, and the like.

mandevil2• 7 years ago

According to https://en.wikipedia.org/wiki/List_of_urban_areas_by_populat... Tokyo and Seoul (not on the top five Uber list but have Uber presence) are both larger than any city on Uber's top 5 list. Sao Paulo (on Ubers list) is just barely larger than Mexico City (not on the list). Los Angeles (18th largest urban area by population) and London (35th largest urban area by population) are significantly smaller, and the Bay Area is all the way down at 61st, right behind Dallas-Fort Worth (not on Uber's list).

So no, those five cities do not make up a disproportionate amount of the total urban population that Uber covers, just a disproportionate amount of the riders.

freyir• 7 years ago

These 5 cities are not directly related to Uber. Read again.

olliej• 7 years ago

Alternatively: one quarter of Uber's annual losses come from those cities :D

More seriously: if they increased the cost or reduce pay rate in just those cities they could have a significant profit impact while not impacting market acquisition in the rest of the world.

anateus• 7 years ago

Looking at that list, the biggest threat to Uber is good (and not overcrowded) public transportation.

kaycebasques• 7 years ago

Why are these 5 cities Uber’s top markets? Particularly Sao Paolo.

forkLding• 7 years ago

Looking at this another way, this one-quarter revenue coming from users in five cities probably is showing these users as the power users of the app so these are probably the least likely to suddenly give up Uber because they already have a habit and Uber is already such a big part of their life.

mc322• 7 years ago

NYC has definitely always had a taxi "habit" despite their transit. I think London is similar. On the other hand Tokyo (which has one of the best transit systems) has lots if taxis as well, but I guess Über hasn't had much traction compared to local taxis (they've always been clean and offered good service).

samsonradu• 7 years ago

About 3 years ago I've had issues multiple times in Tokyo with taxi drivers not speaking english at all, thus not being able to communicate the destination. I assume Uber would smooth over that aspect as there is literally no need for communication.

tyingq• 7 years ago

"I think London is similar."

Taxi culture gets boosted a bit when the city charges you £11.50/day to drive your own car.

One-quarter of Uber's business happens in just five cities

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