Thread by @asymmetricinfo

Oh, hey, is that a stormcloud on the horizon?

Why yes, it's a tweet storm coming!

Today: Uber and Lyft, and why we're going to have to pay more for rides.

washingtonpost.com/opinions/uber-…

I'll start by repeating something that I noted months ago in *another* column tweet storm:

https://twitter.com/asymmetricinfo/status/989609519465553920?lang=en

"RIght now, *huge* portions of your tech consumption are being financed by burning VC money. Uber. Spotify. Many of those new media sites .l."

Uber and Left are Exhibit A. Some services can maybe justify the subsidy by arguing "We'll own the market, and then we'll all get RICH!!!"

Uber and Left are not in those businesses.

Compare ride hailing to streaming: it costs a lot to make a movie, almost nothing for incremental streams. So if you can get many subscribers, your profits just keep going up.

On the other hand, it costs quite a bit to drive someone from Point A to Point B.

Uber and Lyft have been subsidizing rides in order to gain market share and recruit drivers. But even if they capture the whole market for ride hailing, their average cost doesn't start plummeting the way it does for streaming services.

They can't even get Amazon-like economies of scale from aggregation. You've still got to put a driver in a car on the road, and most people don't want to buy a minibus so that they can occasionally drive for Uber, while also using it to run errands and take their date to Chili's

So while I get the economic math of the folks who say they're selling the car and just taking Ubers everywhere ... all I'm saying is, I wouldn't let your driver's license, expire, y'know? And you might want to keep an eye out for a good used car, because those prices are going up

Most of the responses to this column were non-sequiturs. Many people who told me that they LOVE Uber, because it's so convenient!

I mean, yes, I also love getting stuff for below cost. But I don't count on those deals lasting ...

Also people who accused me of hating the environment. Uber is at best marginally better for the environment than driving yourself, and arguably worse, because your driver has to get back from wherever they took you ...

I will note that I'm not predicting Uber and Lyft go away. I think there's a real business model there. I just think the demand is probably a lot lower than it looks at artificially low prices, driven by corporate subsidies and newbie drivers who don't grok accounting.

Finally: what about autonomous vehicles? Wouldn't that be a game changer?

I mean, sort of. Throw in AVs, and Uber and Lyft are basically ... short term car rental companies.

A few things to note about that: if AVs materialize, Uber and Lyft will suddenly have to get into the business of owning vehicles and servicing them, which is a completely different business model from their current form.

Fleet management takes quite a bit of expertise. It is very capital intensive, and doesn't offer the gross profit margins of a tech company.

That's the investor side. On the consumer side, you will note that car rentals are not known for being a cheap alternative to ownership.

The past ten years have given us the illusion in a lot of businesses that digital has lowered costs much more than it actually has. Journalism. Car sharing. Arguably streaming.

That money is running out. Uber and Lyft pretty much have to IPO this year because they've burned so much cash.

The IPO may give them cash to burn for a little while longer, but sooner or later--and I think sooner--the party's gonna end. As it is in journalism.

Which brings us to the end of the tweet storm. Please read the column, which, as always, has content that DOES NOT APPEAR in this tweet storm:

washingtonpost.com/opinions/uber-…