A thread 👇
Most simplistically, Uber is comprised of riders and drivers. Uber’s role is to match them, ensuring liquidity on a block by block basis. The marketplace is asymmetrical, with 1 driver servicing XX riders (Drivers naturally cost more to acquire)
Uber acquires new riders and drivers for free (organic) or through paid channels (ex: FB/Twitter). Naturally, some of those existing riders and drivers churn (leave) which means they need to be replaced to ensure adequate network liquidity.
In the initial stages of the downturn, new rider acquisition slows and existing riders cut back on trips as Uber may still be regarded as a premium service. However, more drivers are slowly added as some lose their full-time jobs and need to replace lost income
This leads to a temporary imbalance in the initial stages of the downturn, but riders quickly adjust. As more drivers are added, the average cost per ride decreases, which thereby financially incentivizes riders to take Uber again.
As the financial downturn accelerates, many riders lose their jobs as well. They may not be able to afford their car payments so resort to a hybrid of Uber + public transportation. The marketplace b/t riders/drivers perfectly adjusts to reflect lower average income
Once the economy recovers years later, user behavior and spending have permanently shifted. Unlike most other large tech companies that depend on ad revenue, Uber may prove to be countercyclical and grow during a financial downturn.