Contents:

3 min read

    3 min read

    If you follow our weekly round ups, you’ve probably noticed a few articles about Uber’s profitability – or lack thereof. Today, I interview Professor Len Sherman of the Columbia Business School about an article he wrote titled “Why Can’t Uber Make Money?” We discuss Uber’s profitability, its business model, and its long term prospects in this episode.

    I interview Professor Len Sherman of the Columbia Business School about an article he wrote titled "Why Can't Uber Make Money?" We discuss Uber's profitability, its business model, and its long term prospects in this episode.

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    If you’d like to read a transcript of this podcast, please click here.

    Intro

    • Uber has been growing at an exponential pace over the past few years
    • While they’re growing, they’re also losing more money than ever
    • Can Uber turn it around?
    • Today, I’m chatting with Len Sherman about Uber’s profitability
    • You can always hedge your bets with rideshare driving by driving delivery! Sign up today with DoorDash and Postmates

    Interview with Len Sherman

    • Len Sherman is an executive in residence and adjunct professor at Columbia Business School, a Forbes contributor and author
    • Len wrote an insightful piece on Uber’s profitability (or lack thereof) titled “Why Can’t Uber Make Money?
    • Got started with Uber and Lyft as a customer first
    • Uber’s size and losses first attracted Len’s attention

    Why is Uber Losing Money?

    • Needed to look into Uber’s business plan first
    • What do they do that allows them to sustainably take in more revenues than they have costs?
    • Uber’s business plan seems great at first: they’re getting investors, there are some driver costs, but customer acquisition costs seem low – great, right?
    • Not exactly – why are they still losing billions?
    • Len’s article explains the issue more in depth, but one issue is that the taxi industry itself is not a high-profit market

    Is Profitability in Uber’s Future?

    • Back when the taxi industry was unregulated, it wasn’t profitable
    • Regulation helped to restrict supply and led to higher profits for regulated taxi drivers
    • If they stay on their current course, Uber may remain unprofitable – or worse

    How Could Uber Turn it Around?

    • Need to re-trench – may need to shrink in order to grow
    • Uber and Lyft may need to work it out more together – no race to the bottom
    • Look at the airline industry: sure, we’re crammed into more seats with less room, but airlines are surviving and profiting
    • Uber needs to focus on its drivers, too – it’s a service-industry and having disgruntled drivers does not help their service focus

    Final Thoughts on Uber

    • Uber is going to have to get profitable before they go public
    • Right now, the financials don’t make sense to go public and succeed
    • To learn more about Len Sherman and read his books/articles, please visit his website here

    Outro

    • Big thank you to Len Sherman for coming on and sharing his thoughts on Uber’s profitability with us
    • His article was one of the most astute analyses I’ve seen of Uber’s profitability from someone with the credibility of a Columbia Business School professor
    • Len gives us a lot to think about regarding Uber’s profitability and even viability in the future, but these tough questions need to be asked so they can be addressed
    • If you want to give delivery a shot, check out DoorDash and Postmates
    • Follow me on FacebookTwitter and YouTube and you can always contact me if you have questions – I like to hear from you all!

    Show Notes

    If you’d like to read a transcript of this podcast, please click here.

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    -Harry @ RSG

    Harry Campbell

    Harry Campbell

    I'm Harry, the owner and founder of The Rideshare Guy Blog and Podcast. I used to be a full-time engineer but now I'm a rideshare blogger! I write about my experience driving for Uber, Lyft, and other services and my goal is to help drivers earn more money by working smarter, not harder.

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