Uber passengers were paying only 41% of the actual cost of their trips; Uber was using these massive subsidies to undercut the fares and provide more capacity than the competitors who had to cover 100% of their costs out of passenger fares.
Izabella suggests that more pivots may be ahead
The first came in the shape of subtly turning its private taxi service into an economised carpool experience and hoping customers wouldn’t notice Uber’s slow and steady transformation into a bus service. Indeed, since this is Uber, customers’ preferences are instead subtly massaged and managed with discount incentives and other behaviour moderating mechanisms.
Which brings me to Juno, a new ridesharing platform in the US. Juno has what can best be described as a fresher model than Ubers. First, their take is only 10%, Uber’s vigorish is 25%. Second, they have placed half of the companies shares into a pool for drivers. If Juno succeeds in creating significant value, then the labour employed (comprising riders and employees) will likely get more than half of that value. Which seems quite remarkable.
If consumers like the Juno experience, seems like it would be might be tough for Uber to compete. But, Uber has tons of money (even with its burn rate), massive brand recognition and vast liquidity….