Uber and other gig jobs are very situational. Walmart and other retail jobs only give you 16 - 25 hours a week to ensure you're part time. You do gig job to supplement that income. If you're doing gig job as primary income, you are going to get hurt
One other thing is with restauraunts, the highest margins are on drinks. Most people don't order drinks on the apps, so that cuts into the margin more, forcing them to raise food prices.
It's more efficient for the restaurant to deliver it. They're already there. Uber has to make two trips for every delivery. It's a special business plan. They are special boys. I'm not a math major but two trips cost twice as much.
@phoneywheeze9959 there isn't the volume. I've worked in two restaurants that have Doordash/Uber. I've never seen a driver pick up more than 1 delivery. When I delivered Chinese food and pizza I could leave with 5 deliveries and be back to the restaurant in less than 30 minutes. They can't do anything close to that. I guarantee it would take them over an hour. If the restaurant had enough delivery orders they would do it themselves like Dominoes. I just don't see people paying twice as much for delivery that takes twice as long. The food gets cold and it's expensive. And it takes a long time.
It is stunning that even with a lax regulatory environment and massive employee exploitation, they still cannot earn money. It's almost as though it's a fundamentally bad idea!
Remember back when you'd just call the pizza place instead of using some dumb app? A guy would show up with the pizza, you paid for the food, gave the guy a tip, and that was that. Somehow that was a sustainable business model.
@@blastermanr6359why does that matter? The customer pays for the food and gives a tip to the delivery guy. What does cost of ingredients have to do with it?
nope, the early investors are getting paid very well through the IPO's. they pump the valuation up, so the idiots are hyped and buy their shares bc they think these are "tech companies".
@@salkryeful”Greater Fool” is when an investor buys something with the only intent to sell it to someone for more. Gig economy is based on dodging regulations. The grand-daddy, Uber, dodges taxi regulations by not owning the cars or employing drivers directly. The other, airBNB, dodges lodgings regulations. In every gig scheme companies are pumping up participation through gimmicks. Uber paid drivers more, charged riders less to attract both to the platform. They hoped to trap drivers and riders and kill taxi companies. But they ran out of cash to burn. Riders and drivers show no loyalty when a better deal presents. Taxi companies quickly scale up and down with demand. Gig workers should abandon these platforms. The value of workers hasn’t been this high in generations now that Boomers are retiring. Workers can easily claim fair conditions and compensation.
We used to mark up all our prices like 20% on those delivery apps to account for the fee. Cost us nothing upfront so we did it. Blew my mind people would pay our price + 20% + the DoorDash fees
Why ? If you make more money per hour working than driving around getting your food its totally valid. If i order takeaway from you for 15 bucks + 20% + 5% fee thats a laughable 18.75 $. If i make 40-50 $ net (after taxes and everything) an hour it saves me time and hassle to buy either groceries, cook and clean + additional cost of maybe gas/tyres to get it, mileage on a leased car, power for the stoves, water for cleaning and so on. Most of the time you can not even buy that small portions of food in stores. So i have to make at least two portions. Who wants to eat the same thing twice or thrice all the time (if single). And now make a total cost list of all the ingredients you buy, the time you need to get them, cook them, clean and all the surrounding costs (water, gas, power). It all adds up. And if you earn enough it makes a LOT of sense to order instead of doing it yourself or even getting it yourself.
It's convenient and lots of consumers are not price sensitive. I order Starbucks almost every morning -- sure with fees and markup, I'm paying ~30% more, but I can also avoid having to leave my home office. I probably get that money back in terms of time saved tbh.
@@hindsightcapital2021 Ok, thats a good reason but your customers would a) have to know they can do that (many restaurants only work with delivery companies or forget to advertise themselves to customers) and b) some may prefer the UI / Tracking-features of the big companies. Just saying.
@@ThirdLife86 Of course that makes sense in your case with $40-50, the median hourly wage in the US is $17.02 according to statista. In that case the calculation is completely different. With minimum wage going up, it will not be sustainable for average people to expect their food to be delivered to their door. People need to get up and get their own food.
I owed one of the first restaurant delivery companies back in ‘02 and ran it for about 16 years. It started in ‘93. I took it and did well but was in a very small area that was very affluent so they could afford the extra fees so I could stay profitable. I can’t believe the companies out there now are still in business. There is no way for it to make sense for big business. It has to be small and run by a few people in a small area.
Yes that is right. There are certain business segments that do not translate well into large companies. Smaller companies are more efficient. And they don't have to pay Bay Area salaries
@@biometal770 Small companies are also far more agile and tailored to where they operate. Many small companies in NYC won't survive outside the city because they're niche, and NYC has a ton of people in general. Likewise, NYC is a hard city to break into
@@biometal770 You are totally right. These guys never learn scaling concepts whilst doing their fancy MBAs. Some things don't scale up, some don't scale down. I think Mr Pareto had something to say about that.
Gig economy feels terrible for society as a whole. Innefficient means of achieving things are made available based on paying workers terrible and investor money. A bus, train or subway transports people far more efficiently. Its bad for the workers and since they wont have a retirement or be able to develop their career society pays through cost for benefits and low tax revenue.
It's still less stressful to drive for uber than to work a normal low entry point job, that's the only reason the company is still afloat. They know that a lot of people will take less money and no benefits if it means not having to work at mcdonalds or equivalent.. i contemplate quitting my job and going back to rideshare driving every day >_
The money is going to operations, IE, salaries. Anyone can take a look at their financial statement and see that their operational cost is pretty close to the cost of the business. With salaries that high starting with Uber's CEO making close to $20 million in 2021 while the company is losing money, you know his priority is not on the investors but himself. The same can be said for the rest of the executive team.
You know the business concept is not feasible when the start-up has eight Executives on the team, each driving a German car, living in a huge house, drawing seven figure payroll.
They operate at a loss BY DESIGN, with venture capital keeping them afloat until they eventually force competition out of the market achieving a monopoly. Which is basically what the video said, but I just wanted a TLDW. We have to fight these corporations at all costs. Or they will trap us.
They will never have a monopoly. Google has a extremely complex algorithm for search. Facebook AD software and user base is pretty hard to replicate. But relatively speaking, Uber is very easy to copy. There are countless competitors in different countries that appeal to the local population better (Rappi & in driver) in latam for example
Cab businesses are still well survived despite years of Uber trying to price them out. They finally gave a white flag and started to raise price for drivers and consumers. Yes they may try to have a monopoly but Uber business will always face competition from local cab and delivery businesses, rental car, other rideshare businesses, going to restaurants, cooking or taking out food by people themselves. You can't have monopoly in rideshare market. Competition is too fierce
Uber is illegal. Taxis have regulation. Uber just ignores the laws. I don't know why they are allowed to get away with it. They are breaking all sorts of laws and regulations.
@@Dragon-Believer yes they operate in legal grey zones. I saw an Uber Taxi, it had a huge patch saying UBER on it, and in very small letters something like "*not actually uber, we just mediate clients to this independant driver". Yes sure, that's not an UBER taxi, it just says UBER in big fat letters on it. Ridiculous. This was in Germany. It's the same with AirBnB, LetsEat or even Amazon. These international corporations are PARASITES in our economies and they are BAD for us.
I think it's a big initial set-up cost and not much per extra user AFTER that big cost. It's like living off solar power. Huge upfront costs and peanuts ongoing costs
Isn't it obvious that they knew these business models were uneconomic from the get go and and made their money through the all the funding rounds and IPO etc. It seems that most startups going through the rounds aren't interested in being profitable at all, ever, because they often just "buy" new revenue with marketing expenditure so that it seems like they are on a rocket ship to the top. This is just an example of sophisticated investors making money from less sophisticated ones.
Rideshare drivers haven't got 75% take in ages..... Yesterday I saw a trip come thru ..... 57 miles to the airport Uber was paying $46 ..... there is a $9 toll added to that $46 I looked on the rider app they were charging the rider $97. These companies rob everyone and still don't make a profit!
Because they're middle men. It's hilarious by the end of the video it's like, oh so everybody loses? Scratch that, I guess the restaurants do well as long as they up the price of their food.
I used to drive for doordash, and postmates, but stopped because of how unpredictable it was. Picture this: you wait 1.5 hours for an order to pop up, you drive 20 min to the restaurant, wait for 10 minutes for the food to be ready, drive 20 minutes to the customer and then drive back another 20 minutes to the designated area you’re receiving orders in. The order with a tip paid 5 dollars, you just made 5 dollars in 70 minutes… while yes it is true that you can make 20 an hour, that’s only during a short period after people get home from work that only last about an hour. If you’re lucky you can do two orders in that hour, and you just made 40 bucks, but the rest of the day you’re making 5-6 an hour. If you drive for 8 hours you’d make 70 bucks, after gas closer to 60, also don’t forget to save money aside for maintenance and taxes. You’re probably making 20-30 dollars a day after Including all the costs for an 8 hour work day. The restaurants don’t make money, the drivers don’t make money, and the app doesn’t make any money. The only ones profiting are the banks who handle the transactions.
My husband drove for Lyft for 3yrs. A few months ago, a guy with a gun ran up to his car, with a passenger in the back, and tried to car jack him. He drove for a few more weeks then said no more. We’re lucky he wasn’t hurt or killed like other drivers. We invest our money but I told out broker No Gig companies.
I still remember a post circulating in Linkedin that goes something like this: facebook is valued certain billions, yet it creates no content; uber is valued certain billions, yet it owns no car; couchsurfing is valued certain billions, yet it owns no hotels. Something big is happening. Now I know the "big thing" is the hole in investors' wallet.
Because everyone learned that having too much asset/inventory heavy business is too risky and ties up too much capital. Economies of scale is a key in these app businesses but if it involves asset heavy business model, it will take up too much capital and will be too risky. Imagine if Uber owned all of its fleets.
I rarely order from these apps. You end up paying so much more in fees and tip, I’d rather just pick up my food and save the 35-50% additional cost, but many people are lazy and would rather pay the fees.
Stores, particularly after COVID, often give free deliveries. And shipping is always an easy skimp. Just like oligarchs fire or keep wages low, as worker compensation is always the easy skimp. So that's why shippers like this are a joke. They don't make money. And most people simply don't really order from them. It's a bloated market that someone can just do it themselves and often do to make money stretch. Because its easy to pick up your own stuff. It's a niche for the very few affluent and rich. And even they often have gofer boys and girls already on their staff. So... even many of the rich don't use them. Ueber maybe. But again, even the super rich often don't use them because they have a staff that does the gofer boy job. And affluent people... sure they spend like drunken sailors and that's their target audience, but few of them exist to the glut in easy capacity, easy entry to market. Moment affluent feel like they've put themselves out of affluence, they do stop spending on that and worsening demand quickly, on a easily supplied gofer market. Why investors came running? Effect of idiot low interest rates. Stampede the easy crap. And I think they were hoping the giggle economy wouldn't make workers not giggle. And perhaps it would spread to other sectors; the fiasco of using a employee makeup that's mostly from temp agencies... hasn't worked because you typically get a circus clown productivity nobody works nothing gets produced and you spend even more on workmen compensation with accidents going to the moon... all while production tanks. Quality... what quality at that point. And many employers have already discovered the giggle economy was just that, a sickly laugh. Doesn't work. Shit in shit out. And it all falls down.
They keep "treating" themselves. And every time they do that, any thoughts about costs go out the window. I'm trying to cut any takeaway food including McDonald's. You can get lazy and waste too much. I still buy but only if it's a chaotic day.
@@jmitterii2 you obviously have ZERO CLUE on how temping agencies work. For A START you the agencies shoulders ALL the workers compensation insurance costs, they DON'T just hire anyone unless they get desperate and I have seen the useless ones get fired in 3 hours, and the temping agency pay is ASTOUNDING compared to a normal job. Temping jobs with big overtime hours has made me wealthy. I was literally doubling my wage with overtime alone and making 3 times what some permanents in the same place were making
When I deliver for uber, I have customers that explicitly state that they are working from home and do not want the driver knocking on the door. That might be a reason why they order: their time working is more valuable than going out to get the food themselves.
Frequently, these companies use complex structures, licencing fees, and other inter-company cross charges to transfer funds across national borders. Diversion of these funds (aka profits by another name) to shell companies registered in places such as Lichtenstein (and/or other tax havens) means these companies make use of the infrastructure and other conveniences provided/paid for by taxpayers in the jurisdictions in which these companies operate, whilst they actually contribute little to the jurisdictions in which they operate...
They also tend to rely on underpayed employees receiving welfare. This MO was so obvious back in 2010 and it even was being discussed here and there, but somehow everybody accepted it in the end.
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My wife handled taxi loans at her bank for a while. Then her bank eliminated that department because the price of a taxi medallion had dropped to a small fraction of its previous value. It used to be that someone could drive a cab, pay off their loan after a few years, and then make a good living and support a family. Now the cab drivers may never be above water. If I'm in the city and I need a ride, I always take a yellow cab. Also, Uber is a terrible company, if half of what I've read is true.
In the Netherlands there is a delivery platform that mandates the restaurants to charge the same price to deliveries as it does to takeout customers. Some restaurants refuse to do it and simply don't do deliveries. Some restaurants that do deliveries try to encourage takeout, by giving free foods.
While ride sharing would probably see eventually a winner that'll lift prices (how in US Uber has mostly achieved it), in food delivery space it is dumb to cut prices to undermine competition. It is too easy to put in place the app, other competition will appear once the prices go up. I live in Eastern Europe and we had 6 food delivery companies in a city with 0.5M population and a culture that is more oriented towards cooking at home instead of going to restaurants. 3 of them left, but prices are probably still unsustainable, in many cases the prices are lower than at the restaurant.
I don’t understand how these companies don’t make money they charge the customers and give only 30-40% of that to the drivers. drivers are responsible for covering their own vehicles, their own gas, insurance, maintenance, everything the authorities should definitely look into how these companies are managing the funds because there’s no way they should be unprofitable when they get to keep more than 60% of the overall income and the drivers themselves also pay their own taxes and cover medical insurance too
All of these companies have a small army of execs that get million or multi-million dollar bonuses. And then there's the lobbying (aka bribing) they do to US officials so they can bypass rules and regulations.
they have very expensive employees. uber doesn't make a profit, but the people who make sure the app is functioning get the same sorts of high salaries they'd get if they were doing something similar for amazon or google.
I think there is an oversight here. What companies like Uber are waiting for is Autonomous vehicles! When that time comes, ALL the money will be theirs. They are all playing the long game. Which is why investors keep ploughing money into these companies despite not being in profitable.
The problem with things like Lyft or uber or dashing is that it’s marketed as a side hustle but when you actually do it you realize that when you account for things like gas and car maintenance (because you’re adding so many extra miles to your car that you previously wouldn’t have) the additional expenses means that in order to make money you have to work essentially full time hours without the benefits of being an employee. Also unless you live in an area with decent population density there’s no real way you’re going to get enough work. I live in the middle of farm country not many people are ordering take out
So it sounds like uber should just be bought out by a credit card company and then that company can switch uber to use only their credit cards. Eliminate the processing fee (since it would go to itself) and maybe even encourage customers to use their cards giving a small cash back incentive.
credit card companies like Visa/Mastercard make insane profit margins with just letting people swipe their cards around the world. "Tool booth" companies like that, why would you overcomplicate your business with the overhead of buying an extremely complicated and unprofitable business?
Onde again, not so simple... Processing fees exist because most of their money come from bank loans. The 'credit card money' doesn't come directly from Visa/Master, the companies actually work just like Uber. They basically manage 'credit loans' between banks and customers. Then, if we go deeper, most of banking money doesn't really exist on the bank vault, it comes from the magic system between regular banks and Central bank... The problem relies on how our current financial system works...
These companies are also a case in point about the negative selection bias in IPOs. These are the companies whose management don't care about losing the bulk of future profits, ergo many of them are simply not profitable.
@OffGridInvestor not really. IPO price is literally negotiated between big bank investors and management, so the IPO price is usually fair price. The price you, the nobody, gets filled at is during the first day pop paying an average premium of over 10%
How does the gig worker fund insurances, fuel, vehicle cost average per kilometre. They dont but still face the risk of being held responsible for an accident as they have no business use vehicle insurance.
10:00 why are people protesting? If you don’t want to offer labor as a contractor then don’t. Why would you accept a deal to work as a contractor then protest to be an employee
I delivered for a few months between jobs to keep money flowing and give me something to do while I studied and applied for jobs. Made a decent amount of money by hustling but it was in the heat of the pandemic. I hope the gig economy stays around in some form as it’s wonderful to have a floor on your income and be able to work some extra as your schedule allows.
Yea I think people don't understand that this shouldn't be someone's full time work but something between jobs or a part time role if you're short on cash
Who do you believe? Do the test yourself, and come back to me and let me know if I'm the only driver making 49% of what the rider pay. Don't want to drive, so order an Uber and ask your driver how much he/she is making on the ride. 51% Uber 49% driver. Richmond, VA
I think a lot of people works these jobs due to the convenience. You can start and stop whenever you want and have total control over your schedule. If you work for Walmart or some other W2, you're schedule is dictated to you from a manager with often little flexibility. Sitting in the car isn't so bad if you have things you can do why you wait to entertain or educate yourself.
It's still not worth the trade off of guaranteed work hours, health insurance, and other benefits. You're trading a lot of money for convenience. But that is the issue, workers think that it's a viable alternative to an actual job. it was meant originally to allow people to sell their commute to others with a similar destination and offer ride share compensation. but it got twisted
@@answerman9933no, it’s because it allows you to mortgage your body in the future for higher wages now. It’s the same as Uber where most drivers make below minimum wage once you factor in depreciation of their vehicles.
@@waffle8364that’s not how it started. Uber was just a luxury car service. The app allowed you to rent a car and driver for the night, Lyft was the first to get into picking up fares. They both catered to luxury markets and expanded into mid markets later.
I will say that I opened a ghost kitchen using Uber Eats back during covid after I left the army. Rented a kitchen/cafe after hours to make "gourmet" burgers that instead of cheese slices, I'd make cheese sauce like the stuff you'd make when making mac and cheese. It turned out to be really popular but I didn't want to work the late nights until 3am so packed it in after 6 months. Having Uber really helped with the start up, even with the stupid rates they charge.
Just like you already said at some point: it's the extremely low interest rates that pushed the 2008 real estate bubble, the 2000 internet bubble and recently, especially in 2021 and the start of 2022, bubbles in real estate market and especially the part of the stock market covering growth stocks was absolutely insane...
No, it was the idiotic belief that housing and property prices can continue to grow infinitely. This makes houses and property seem like an investment. "HoW cAn i pOsSiBlY lOsE" everyone said. The bubble we're seeing today is similar in growth and scale, but not average interest rate, which is much higher this time around. Instead of housing being an "investment" - Gen Xers and boomers are now using it as "retirement plan." One person owning 8 properties and living off the rent income. Combined with the corporate version of this where they own hundreds of lands then sell the returns of rental profits back to investors of the company.... Does this sound familiar to anyone?
Unless I’m trying to get to an airport in a city with no public transportation, I don’t really use these services. Sure there’s the convenience of someone picking up your food but with Uber and other companies charging the restaurants more money for visibility I’d rather call in, place an order and pick it up. Also it bugs me that a lot of these online services have tipping culture which probably means that they’re not paying employees enough and that those tips may not be fully going to the person that deserves it.
I would never order food through one of these apps. And I hesitate to say "ride-hailing" is good, because it's just a taxi by a different name which is obviously a business that exists, yes.
They call it a tip but it’s not a literal tip. We used to not pay the tip in front. Also it is a “bidding” fee to lure ppl to accept your contract not a tip. Doordash and Uber drivers will not accept no-tip orders. They are experienced and can tell. They blacklisted all the McDonald’s Wendy’s etc and most infamously Wingstop.
The problem is, that these companies don't manage to shrink their overhead. They are basically a software provider that needs servers to operate. But they try to be much more, hiring so many office employees. Their margins on sales (food delivery) is extremly high, but they still lose money, since they spend too much
I don't know why food delivery companies aren't making money, but when I worked for food delivery and juggled 2 jobs, it wasn't always pleasent. The money was ok, but I had pay for everything from the bag, e-biike, rain wear, and repair costs. So that was 1500 usd in debt when I started. The business model is a bit broken in my opinion, easy to start but hard to maintain.
@@SHA-3qua well don't want to be rude, but I didn't want to deliver On gas. That's why I used an e-bicycle and drove 2000km with it. I repaired it but I still use it. Besides priuses cost like 20,000 usd, that's too much to start delivery.
I remember that at one point a few years back Uber actually turned a profit, but then management decided to pay out a billion dollars or so worth of bonuses (to themselves), pushing the company deep into the red again for that year. I never invested in it.
Idk why the taxi industry team up like a union app and go against uber with no limit but at a professional profit rate on demand with alot of transparency to win the gig economy
I mean if those companies are not profitable and yet it feels like they steal from me, I am scared to know how much it would cost if they try to be profitable…at least it created lots of jobs (albeit terrible) and sucked wealthy investors and VC dry
I know a few Uber drivers that live in their cars. They sleep in the airport Rideshare parking lot. They take sink baths in the airport bathroom. Once you get into this rideshare industry, you can't get out because it's the only option for you and hope their cars don't break down.
The one thing I think is that we need anti-dumping laws in place that prevent investment funded businesses from lowering the fares for gig work beyond what is actually profitable, so they can't enter a market by destroying the previous systems that were in place. They should only be able to enter the market if there is clearly profitable to introduce their solution based on the merits of the service
Thanks for your videos. One element of the rideshare problem is the vehicle. The driver provides the car and the fuel is NOT the only cost to the driver. An old friend drove his low mileage Toyota for 2 years with Uber. He put 55,000 miles on the car driving for Uber. So your Toyota Rav4 with 75,000 miles on it is worth less than your Toyota Rav4 with 25,000 miles right? A cab driver does not pay for the vehicle upkeep. 90% of Uber drivers quit within 6 months. They figure out the above and work elsewhere.
WOW. I'm not easily impressed - but this was impressive. It was everything I wanted it to be; informative and entertaining. I am definitely subscribing. My only criticism is the soundtrack has sounds that are similar to doorbell sounds and therefore, with headphones on, it made me repeatedly question and check if my doorbell was being rung. See you in the next video...
The reason drivers can't make enough money is Uber can't compress time or space. Uber app or no Uber app, it takes the same amount of time to physically pick up the food and transport it to the customer. This is the REAL inefficiency and it cannot be overcome as long as it requires humans and/or space/time cannot be fundamentally altered.
I studied this bussines models, when it came out 10 to 14 years ago, and I noticed an existencial contradiction in the bussines model, that only way to solve was, to get into more debt or badly abuse from costumer/independet contracter. in other words a bussines model in conflict whit itself its doom to fail,, so I stayedt away from those stocks, little did i knew that, geting into more debt every single year will last as long is it has. For me its easier to spot proftable bussines, but I constantly underestimate the hype from stupid investors.,, it happend to me whit Facebook, Tesla, and bitcoin too. MAD WORLD WE LIVE IN.......... but I blame the FED and its stupid 0% interesrest rate
And Cramer will continue to push this stuff. Cathie Woods and any of these people jumping on "the next big thing" OFTEN get burned. But people buy into the hype and don't do maths on it. I hate this American mentality of constantly jumping on the next big thing because it's nowhere near like this in Australia
@@OffGridInvestor U are so right about that. thumbs up. Do u think we can exchange more ideas ? cuz I have tried to join Discord groups, but at the end of the day they are always selling me some crypto shit. God bless you buddy. ^_^`
Like Amazon and temu selling at a loss. But there's always some other one that pops up to undercut the other. Meanwhile more and more investors money gets pissed away. Helps consumers buy more chinese junk though
I'm from the subburbs, so I rarely use Uber. But when I recently needed an Uber to go to the airport, here's the problem: $95 to ride in a Elantra or Civic, not sure if my luggage would fit... on the other hand, there was the airport limo service, $110 for a Navigator. Guess which one I chose?
One major factor that you left out is the zero interest rate environment, when their loans come due and they have to refinance at 7 or 8% the game is over and all these zombie companies will collapse.
I haven’t used doordash or ubereats in probably 4 years, the fees are just crazy. I hardly order delivery, but when I do it’s only from places that have their own drivers. At least the price of the food is the same, then there’s only the delivery fee & tip.
It’s the 0 switching cost that kills gig economy. I can’t move my company data from AWS, many content creator can’t move their channel from UA-cam willy nilly, or Facebook marketplace. The gig economy will never reach pricing power
When you was talking about how you could get paid more working as an employee for Walmart and fuel cost as a driver you forgot to mention that not only fuel is an expense but vehicle maintenance also goes up, brakes, rotors, oil changes, tires all get more worn out constantly running a vehicle as opposed to driving to a location to work and parking all day.
If only Uber runs ads like YT and every 5 mins during your hour-long ride to the airport your driver says, "let me tell you something about today's sponsor..."
Driving for the other company, I actually lost money. I quit, but my car is not in good shape now. Now that I've quit, they can offer me $20.00 per ride guaranteed (for a specified number of rides). Before, I would only get between $5 - $8 per ride. $20 is more on par, because you need to buy a new car about every 6 months.
Drivers only get about 10% of the fees paid by customers and restaurants. Doordash gives drivers a base pay of just $2 to $2.50 per deliver. Doordash keeps the rest. Gig app companies violate the rights of independent contractors and exploit gig workers. The FTC knows about the illegal practices of the gig companies but refuses to take action.
The root problem for food delivery is that customer DO NOT want to pay the actual cost of the delivery. If all the apps decided that the mimimum delivery charge that would be given to the driver is $10 regardless of distance from resto to house, then i would imagine 25-30% of the customers would never use these services? But to allow the driver to have a living wage not just dependent on the optional generosity of tips, this is actually the correct charge. 🤔🤔🤔
You touched on the fact that only exist because they pay way below minimum wage for a job with no protections. If you hear the term Independent Contractors that is code for exploitation
9:03 Really appreciate the legwork for the videos, been great to catch up while at home sick. Please do correct me if I'm wrong but at 9:06 ff or seems to state that $0.13 profit per ride would equate to $1b profit overall on sales of $7.xb. That would be true if rides were only $1, but ride/total delivered costs are much higher. Just a small point as you've really done homework well 👍
Why such platforms in China or Russia are profitable? As i understand, they have different model of relationships with eployees and kind of monopoly, but prices are not too hight - there is balance between customers and drivers. Moreover some companies offer hourly wages.
Chart at 7:30 is wrong. Wrong bars and labels and the data is just wrong too. Uber takes about half of the ride's cost and only gives half to the driver.
What was not said is that the Uber driver is actually using the equity in their late model automobile to pay themselves. In a couple of years, their late model car will not meet Uber's requirements. In other words , you are wearing out your car on Uber's behalf.
I’ve always thought that the end game for these business was driverless cars. Any thoughts on how this would be structured and if it could change the biz model to a profitable one ??
It’s honestly cheaper to rent a car than it is to get an Uber if you’re traveling. I had my vehicle in the shop so I had to take an Uber to and from work 1 day and I spent 119 dollars lmao. It’s crazy.
As a former Uber driver I can tell you that a lot of times the take rate is way higher then 28% I seen some Uber drivers who get offered high rates on rides but for me it was terrible and I could not support myself on it, I guess it might varry by region
Going to the fact that Uber can’t afford to list their workers as employees it reminds me of the FDR quote “if a company cannot afford to pay its workers a living wage they don’t deserve to exist” its upsetting that the modern equivalent is just having the right to be recognized as an employee
Delivery apps work for new restaurant types that only do delivery and don't have the overhead of customer space, service, etc. That market may keep growing but I doubt it'll ever be huge. Otherwise yeah does not make sense, just order pickup or go to the restaurant: cheaper, more timely, and warmer/better looking food.
I have a friend who has a restaurant in a major city in the NE and she is mystified as to who would move to a city and then order noodles for $25 bucks to be delivered while living 4 blocks away....people in the US have too much money she says.
@@willissudweeks1050 it's your money man, but 6 bucks used to be an hour of labor and I just can't rectify that in my head. Used to be homeless so maybe I just see money differently idk.
Nah, the employes in the management, marketing, it and research also make decent to very good wages. And the companies selling add slots, placard slots etc. Also make a nice revenue on the posted adds. Only investorsanddrivers really loose. Oh, and the goverment/taxpayers. Customers pqy more, but that's by choice for the service, so I'dsay technically they are beneficiaries as well.
Restaurant websites/ordering platforms have also gotten much better; it’s easier to just order directly when they’re set up on BeyondMenu or Toast etc - even if they charge a $2 convenience fee it’s far less than what I’d pay when using UberEats, plus the restaurant keeps more of my money too.
God knows this channel has enough support but for this vid I had to express my utter contempt for these app based companies who literally exploit everybody they touch. They basically add nothing to the economy but misery. Bankruptcy is the least they deserve but you know the founders always find a way to make someone else pay for their evil.
The Gig economy business model is impossible to turn a profit as at its core, it is designed to do one thing: monetize depreciation. That’s it, that’s all. It is a grift based on convincing economically unsophisticated people to pledge their assets in exchange for a marketplace of users looking for the service being offered. Investors convince themselves that it should print money because they only have payroll and server expenses. However, not owning any assets isn’t a feature: it’s a bug. When you don’t own the hotel, your offer price to the marketplace has to simultaneously pay the owner of the accommodation enough money to make it worth their while to go through the hassle of competing with Hilton, while simultaneously pricing the offer competitively against Hilton to make their service appealing to the customer. Thus the actual revenue that flows through to the app is peanuts as the margin is being squeezed on both ends. Third strike against them is that by not owning anything they have zero moat against competitors. So with price being their only lever, and very hard costs/market dynamics working against them, they have no choice but to subsidize user purchases by spending inordinately on advertising and promotions as their platforms have no “stickiness” to foster customer loyalty. So the business: raise a bunch of cash through equity and debt. Spend gobs of money on servers and UX design. Constantly spend obscene amounts of money on marketing and advertising to attract independent contractors to your platform. Also take large losses heavily subsidizing initial contractor compensation to grow your service territory. Simultaneously offer promotional discounts to attract new customers. Generate revenue that barely covers costs and seek new capital infusions to repeat the process. When you strip away all of the inputs and outputs, though,all you’re left with is the cost of depreciation, as it is an accounting construct and not a hard cost. These businesses are confidence trucks that only worked when money was free. Now that money has a price and their respective debt bubbles can no longer be refinanced down the road, their time is coming. Fed fund rate hitting 6.5% will spell the end for most of these zombies.
I have a sustanable income, but still use uber to make extra. If you're doing it full time, idk how you manage. I started it to pay down debt, now I do it to pay for my daily food , and I put half my regular income in the market. But I know I'm not the norm, and more people with my income are too bouji to drive uber for side money. But to each their own.
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.
When people have money, they spend it. And some people spend more money when they have more of it. If you want to improve your financial management, you should consult with a financial advisor.
@@devereauxjnr A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
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Cost of revenue includes Ubers insane salaries???
Uber and other gig jobs are very situational. Walmart and other retail jobs only give you 16 - 25 hours a week to ensure you're part time. You do gig job to supplement that income. If you're doing gig job as primary income, you are going to get hurt
Thank you kind sir
One other thing is with restauraunts, the highest margins are on drinks. Most people don't order drinks on the apps, so that cuts into the margin more, forcing them to raise food prices.
Good insight
Shoot, that’s a good point.
It's more efficient for the restaurant to deliver it. They're already there. Uber has to make two trips for every delivery. It's a special business plan. They are special boys. I'm not a math major but two trips cost twice as much.
@@Dragon-Believercan't they pool orders?
@phoneywheeze9959 there isn't the volume. I've worked in two restaurants that have Doordash/Uber. I've never seen a driver pick up more than 1 delivery.
When I delivered Chinese food and pizza I could leave with 5 deliveries and be back to the restaurant in less than 30 minutes. They can't do anything close to that. I guarantee it would take them over an hour.
If the restaurant had enough delivery orders they would do it themselves like Dominoes. I just don't see people paying twice as much for delivery that takes twice as long. The food gets cold and it's expensive. And it takes a long time.
It is stunning that even with a lax regulatory environment and massive employee exploitation, they still cannot earn money. It's almost as though it's a fundamentally bad idea!
Remember back when you'd just call the pizza place instead of using some dumb app? A guy would show up with the pizza, you paid for the food, gave the guy a tip, and that was that. Somehow that was a sustainable business model.
That's because pizzas are laughably cheap to make.
@@williamyt6174bro what
@AndreasVal he is right your avg Domino's Pizza has a very low ingredient cost compared to your avg food service
@@blastermanr6359why does that matter? The customer pays for the food and gives a tip to the delivery guy. What does cost of ingredients have to do with it?
@@blastermanr6359that isn’t everything, the pizza delivering model has been streamlined to perfection even the boxes come from a special manufacturer
It's almost like a lot of valuations are total BS. Investors who keep feeding this sinkhole deserve to lose.
Greater fool theory at work.
nope, the early investors are getting paid very well through the IPO's. they pump the valuation up, so the idiots are hyped and buy their shares bc they think these are "tech companies".
@@salkryeful”Greater Fool” is when an investor buys something with the only intent to sell it to someone for more.
Gig economy is based on dodging regulations. The grand-daddy, Uber, dodges taxi regulations by not owning the cars or employing drivers directly. The other, airBNB, dodges lodgings regulations.
In every gig scheme companies are pumping up participation through gimmicks. Uber paid drivers more, charged riders less to attract both to the platform. They hoped to trap drivers and riders and kill taxi companies. But they ran out of cash to burn. Riders and drivers show no loyalty when a better deal presents. Taxi companies quickly scale up and down with demand.
Gig workers should abandon these platforms. The value of workers hasn’t been this high in generations now that Boomers are retiring. Workers can easily claim fair conditions and compensation.
they ARE total BS
Those investors will have cashed out long before anything bad happens to them.
We used to mark up all our prices like 20% on those delivery apps to account for the fee. Cost us nothing upfront so we did it. Blew my mind people would pay our price + 20% + the DoorDash fees
Why ? If you make more money per hour working than driving around getting your food its totally valid. If i order takeaway from you for 15 bucks + 20% + 5% fee thats a laughable 18.75 $. If i make 40-50 $ net (after taxes and everything) an hour it saves me time and hassle to buy either groceries, cook and clean + additional cost of maybe gas/tyres to get it, mileage on a leased car, power for the stoves, water for cleaning and so on.
Most of the time you can not even buy that small portions of food in stores. So i have to make at least two portions. Who wants to eat the same thing twice or thrice all the time (if single).
And now make a total cost list of all the ingredients you buy, the time you need to get them, cook them, clean and all the surrounding costs (water, gas, power). It all adds up. And if you earn enough it makes a LOT of sense to order instead of doing it yourself or even getting it yourself.
@@ThirdLife86 I'm talking about the restaurant side. I'm saying customers could've called us and it would have been instantly less expensive
It's convenient and lots of consumers are not price sensitive. I order Starbucks almost every morning -- sure with fees and markup, I'm paying ~30% more, but I can also avoid having to leave my home office. I probably get that money back in terms of time saved tbh.
@@hindsightcapital2021 Ok, thats a good reason but your customers would a) have to know they can do that (many restaurants only work with delivery companies or forget to advertise themselves to customers) and b) some may prefer the UI / Tracking-features of the big companies.
Just saying.
@@ThirdLife86 Of course that makes sense in your case with $40-50, the median hourly wage in the US is $17.02 according to statista. In that case the calculation is completely different. With minimum wage going up, it will not be sustainable for average people to expect their food to be delivered to their door. People need to get up and get their own food.
I owed one of the first restaurant delivery companies back in ‘02 and ran it for about 16 years. It started in ‘93. I took it and did well but was in a very small area that was very affluent so they could afford the extra fees so I could stay profitable. I can’t believe the companies out there now are still in business. There is no way for it to make sense for big business. It has to be small and run by a few people in a small area.
Yes that is right. There are certain business segments that do not translate well into large companies. Smaller companies are more efficient. And they don't have to pay Bay Area salaries
@@biometal770
Small companies are also far more agile and tailored to where they operate. Many small companies in NYC won't survive outside the city because they're niche, and NYC has a ton of people in general. Likewise, NYC is a hard city to break into
Also, being local meant that you can have closer relationships with restaurants and customers. That’s a big help in this kind of business.
@@biometal770 You are totally right. These guys never learn scaling concepts whilst doing their fancy MBAs. Some things don't scale up, some don't scale down. I think Mr Pareto had something to say about that.
@@Demopans5990 but there are others that do survive and even thrive so it does tend to balance itself out.
Gig economy feels terrible for society as a whole. Innefficient means of achieving things are made available based on paying workers terrible and investor money. A bus, train or subway transports people far more efficiently. Its bad for the workers and since they wont have a retirement or be able to develop their career society pays through cost for benefits and low tax revenue.
It's not a career but a temporary job. People like yourself think being a waitress is also a career probably.
France realized this a few years ago so much so thag Uberization is used enough to be lexicon. It's terrible and encompasses everything you mentioned!
It's still less stressful to drive for uber than to work a normal low entry point job, that's the only reason the company is still afloat. They know that a lot of people will take less money and no benefits if it means not having to work at mcdonalds or equivalent.. i contemplate quitting my job and going back to rideshare driving every day >_
The money is going to operations, IE, salaries. Anyone can take a look at their financial statement and see that their operational cost is pretty close to the cost of the business. With salaries that high starting with Uber's CEO making close to $20 million in 2021 while the company is losing money, you know his priority is not on the investors but himself. The same can be said for the rest of the executive team.
You know the business concept is not feasible when the start-up has eight Executives on the team, each driving a German car, living in a huge house, drawing seven figure payroll.
@@ralphemerson497 The business model was.....courting investor cash. That's probably where the bulk of cashflow came from.
Uber gave their CEO a raise.... It's 25 million now. Because they are doing such a good job posting loses, i guess.
1 single salary of $20,000,000 per year makes no difference to their bottom line.
Delivery apps’ business model: Create a convincing “business model” to sell stock to investors
That's about it 🤣🤣
Gamblers. Not investors. Investors buy Coca Cola and Walmart.
And apple
They operate at a loss BY DESIGN, with venture capital keeping them afloat until they eventually force competition out of the market achieving a monopoly. Which is basically what the video said, but I just wanted a TLDW. We have to fight these corporations at all costs. Or they will trap us.
They will never have a monopoly. Google has a extremely complex algorithm for search. Facebook AD software and user base is pretty hard to replicate. But relatively speaking, Uber is very easy to copy. There are countless competitors in different countries that appeal to the local population better (Rappi & in driver) in latam for example
Cab businesses are still well survived despite years of Uber trying to price them out. They finally gave a white flag and started to raise price for drivers and consumers.
Yes they may try to have a monopoly but Uber business will always face competition from local cab and delivery businesses, rental car, other rideshare businesses, going to restaurants, cooking or taking out food by people themselves.
You can't have monopoly in rideshare market. Competition is too fierce
Uber is illegal. Taxis have regulation. Uber just ignores the laws. I don't know why they are allowed to get away with it. They are breaking all sorts of laws and regulations.
@@Dragon-Believer yes they operate in legal grey zones. I saw an Uber Taxi, it had a huge patch saying UBER on it, and in very small letters something like "*not actually uber, we just mediate clients to this independant driver". Yes sure, that's not an UBER taxi, it just says UBER in big fat letters on it. Ridiculous. This was in Germany. It's the same with AirBnB, LetsEat or even Amazon. These international corporations are PARASITES in our economies and they are BAD for us.
Lol. Too late. I love these apps and the convenience they provides me. I for one welcome our corporate overlords.
3:05: "Platforms cost basically nothing to operate." 7:10: "Platform apps are prohibitively expensive to operate."
I think he means cost relative to other operations
They still need customer service staff. The software engineering team also requires high compensation.
I think it's a big initial set-up cost and not much per extra user AFTER that big cost. It's like living off solar power. Huge upfront costs and peanuts ongoing costs
@@OffGridInvestorbut it wouldn't cost much to start these apps. I think it's the other way around
@@incremental_failureHalf of SEs are waaay overpaid. At least senior developers are worth it.
Isn't it obvious that they knew these business models were uneconomic from the get go and and made their money through the all the funding rounds and IPO etc. It seems that most startups going through the rounds aren't interested in being profitable at all, ever, because they often just "buy" new revenue with marketing expenditure so that it seems like they are on a rocket ship to the top. This is just an example of sophisticated investors making money from less sophisticated ones.
"serial entrepreneurs"
Rideshare drivers haven't got 75% take in ages..... Yesterday I saw a trip come thru ..... 57 miles to the airport Uber was paying $46 ..... there is a $9 toll added to that $46 I looked on the rider app they were charging the rider $97. These companies rob everyone and still don't make a profit!
Because they're middle men. It's hilarious by the end of the video it's like, oh so everybody loses? Scratch that, I guess the restaurants do well as long as they up the price of their food.
I used to drive for doordash, and postmates, but stopped because of how unpredictable it was. Picture this: you wait 1.5 hours for an order to pop up, you drive 20 min to the restaurant, wait for 10 minutes for the food to be ready, drive 20 minutes to the customer and then drive back another 20 minutes to the designated area you’re receiving orders in. The order with a tip paid 5 dollars, you just made 5 dollars in 70 minutes… while yes it is true that you can make 20 an hour, that’s only during a short period after people get home from work that only last about an hour. If you’re lucky you can do two orders in that hour, and you just made 40 bucks, but the rest of the day you’re making 5-6 an hour. If you drive for 8 hours you’d make 70 bucks, after gas closer to 60, also don’t forget to save money aside for maintenance and taxes. You’re probably making 20-30 dollars a day after Including all the costs for an 8 hour work day. The restaurants don’t make money, the drivers don’t make money, and the app doesn’t make any money. The only ones profiting are the banks who handle the transactions.
My husband drove for Lyft for 3yrs. A few months ago, a guy with a gun ran up to his car, with a passenger in the back, and tried to car jack him. He drove for a few more weeks then said no more. We’re lucky he wasn’t hurt or killed like other drivers. We invest our money but I told out broker No Gig companies.
This is the Rat Race business model. Running and running without going nowhere.
I still remember a post circulating in Linkedin that goes something like this:
facebook is valued certain billions, yet it creates no content;
uber is valued certain billions, yet it owns no car;
couchsurfing is valued certain billions, yet it owns no hotels.
Something big is happening.
Now I know the "big thing" is the hole in investors' wallet.
Because everyone learned that having too much asset/inventory heavy business is too risky and ties up too much capital. Economies of scale is a key in these app businesses but if it involves asset heavy business model, it will take up too much capital and will be too risky. Imagine if Uber owned all of its fleets.
I rarely order from these apps. You end up paying so much more in fees and tip, I’d rather just pick up my food and save the 35-50% additional cost, but many people are lazy and would rather pay the fees.
Stores, particularly after COVID, often give free deliveries. And shipping is always an easy skimp. Just like oligarchs fire or keep wages low, as worker compensation is always the easy skimp.
So that's why shippers like this are a joke. They don't make money. And most people simply don't really order from them. It's a bloated market that someone can just do it themselves and often do to make money stretch. Because its easy to pick up your own stuff. It's a niche for the very few affluent and rich. And even they often have gofer boys and girls already on their staff. So... even many of the rich don't use them. Ueber maybe. But again, even the super rich often don't use them because they have a staff that does the gofer boy job.
And affluent people... sure they spend like drunken sailors and that's their target audience, but few of them exist to the glut in easy capacity, easy entry to market.
Moment affluent feel like they've put themselves out of affluence, they do stop spending on that and worsening demand quickly, on a easily supplied gofer market.
Why investors came running?
Effect of idiot low interest rates. Stampede the easy crap. And I think they were hoping the giggle economy wouldn't make workers not giggle. And perhaps it would spread to other sectors; the fiasco of using a employee makeup that's mostly from temp agencies... hasn't worked because you typically get a circus clown productivity nobody works nothing gets produced and you spend even more on workmen compensation with accidents going to the moon... all while production tanks. Quality... what quality at that point.
And many employers have already discovered the giggle economy was just that, a sickly laugh. Doesn't work.
Shit in shit out. And it all falls down.
@@jmitterii2ok boomer
They keep "treating" themselves. And every time they do that, any thoughts about costs go out the window. I'm trying to cut any takeaway food including McDonald's. You can get lazy and waste too much. I still buy but only if it's a chaotic day.
@@jmitterii2 you obviously have ZERO CLUE on how temping agencies work. For A START you the agencies shoulders ALL the workers compensation insurance costs, they DON'T just hire anyone unless they get desperate and I have seen the useless ones get fired in 3 hours, and the temping agency pay is ASTOUNDING compared to a normal job. Temping jobs with big overtime hours has made me wealthy. I was literally doubling my wage with overtime alone and making 3 times what some permanents in the same place were making
When I deliver for uber, I have customers that explicitly state that they are working from home and do not want the driver knocking on the door. That might be a reason why they order: their time working is more valuable than going out to get the food themselves.
Frequently, these companies use complex structures, licencing fees, and other inter-company cross charges to transfer funds across national borders. Diversion of these funds (aka profits by another name) to shell companies registered in places such as Lichtenstein (and/or other tax havens) means these companies make use of the infrastructure and other conveniences provided/paid for by taxpayers in the jurisdictions in which these companies operate, whilst they actually contribute little to the jurisdictions in which they operate...
They also tend to rely on underpayed employees receiving welfare. This MO was so obvious back in 2010 and it even was being discussed here and there, but somehow everybody accepted it in the end.
“Negative profit” should be simply “loss”
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@@SHA-3qua same
Funny, I made a mint trusting randos I found in UA-cam comments. Rich pickings. Can't believe people just give tips like these away.
My wife handled taxi loans at her bank for a while. Then her bank eliminated that department because the price of a taxi medallion had dropped to a small fraction of its previous value. It used to be that someone could drive a cab, pay off their loan after a few years, and then make a good living and support a family. Now the cab drivers may never be above water. If I'm in the city and I need a ride, I always take a yellow cab.
Also, Uber is a terrible company, if half of what I've read is true.
In the Netherlands there is a delivery platform that mandates the restaurants to charge the same price to deliveries as it does to takeout customers. Some restaurants refuse to do it and simply don't do deliveries. Some restaurants that do deliveries try to encourage takeout, by giving free foods.
While ride sharing would probably see eventually a winner that'll lift prices (how in US Uber has mostly achieved it), in food delivery space it is dumb to cut prices to undermine competition.
It is too easy to put in place the app, other competition will appear once the prices go up.
I live in Eastern Europe and we had 6 food delivery companies in a city with 0.5M population and a culture that is more oriented towards cooking at home instead of going to restaurants.
3 of them left, but prices are probably still unsustainable, in many cases the prices are lower than at the restaurant.
I don’t understand how these companies don’t make money they charge the customers and give only 30-40% of that to the drivers. drivers are responsible for covering their own vehicles, their own gas, insurance, maintenance, everything
the authorities should definitely look into how these companies are managing the funds because there’s no way they should be unprofitable when they get to keep more than 60% of the overall income and the drivers themselves also pay their own taxes and cover medical insurance too
All of these companies have a small army of execs that get million or multi-million dollar bonuses. And then there's the lobbying (aka bribing) they do to US officials so they can bypass rules and regulations.
they have very expensive employees. uber doesn't make a profit, but the people who make sure the app is functioning get the same sorts of high salaries they'd get if they were doing something similar for amazon or google.
CEOs made their billions... mission accomplished
Ubers cut is nowhere near that high. They would if they could, but drivers always switch to whichever one is paying more.
I think there is an oversight here. What companies like Uber are waiting for is Autonomous vehicles! When that time comes, ALL the money will be theirs. They are all playing the long game. Which is why investors keep ploughing money into these companies despite not being in profitable.
The problem with things like Lyft or uber or dashing is that it’s marketed as a side hustle but when you actually do it you realize that when you account for things like gas and car maintenance (because you’re adding so many extra miles to your car that you previously wouldn’t have) the additional expenses means that in order to make money you have to work essentially full time hours without the benefits of being an employee. Also unless you live in an area with decent population density there’s no real way you’re going to get enough work. I live in the middle of farm country not many people are ordering take out
So it sounds like uber should just be bought out by a credit card company and then that company can switch uber to use only their credit cards. Eliminate the processing fee (since it would go to itself) and maybe even encourage customers to use their cards giving a small cash back incentive.
Nice idea
credit card companies like Visa/Mastercard make insane profit margins with just letting people swipe their cards around the world. "Tool booth" companies like that, why would you overcomplicate your business with the overhead of buying an extremely complicated and unprofitable business?
Onde again, not so simple... Processing fees exist because most of their money come from bank loans. The 'credit card money' doesn't come directly from Visa/Master, the companies actually work just like Uber. They basically manage 'credit loans' between banks and customers. Then, if we go deeper, most of banking money doesn't really exist on the bank vault, it comes from the magic system between regular banks and Central bank... The problem relies on how our current financial system works...
Or a Taxi company gets an app (omg the horror)
Banks have FAR FAR mote profitable options than that giant entanglement you just said to make a tiny amount
These companies are also a case in point about the negative selection bias in IPOs. These are the companies whose management don't care about losing the bulk of future profits, ergo many of them are simply not profitable.
"negative selection bias"?
All I could take away from this comment is : IPO bad
And I don't disagree, most are bad, and overvalued
IPO = it's probably overpriced
@OffGridInvestor not really. IPO price is literally negotiated between big bank investors and management, so the IPO price is usually fair price. The price you, the nobody, gets filled at is during the first day pop paying an average premium of over 10%
How does the gig worker fund insurances, fuel, vehicle cost average per kilometre. They dont but still face the risk of being held responsible for an accident as they have no business use vehicle insurance.
10:00 why are people protesting? If you don’t want to offer labor as a contractor then don’t. Why would you accept a deal to work as a contractor then protest to be an employee
I delivered for a few months between jobs to keep money flowing and give me something to do while I studied and applied for jobs. Made a decent amount of money by hustling but it was in the heat of the pandemic. I hope the gig economy stays around in some form as it’s wonderful to have a floor on your income and be able to work some extra as your schedule allows.
Yea I think people don't understand that this shouldn't be someone's full time work but something between jobs or a part time role if you're short on cash
Uber drivers: Uber, you are taking almost all the money, pay us more!!! 😡
Uber: No, you are the ones taking all the money!
Who do you believe? Do the test yourself, and come back to me and let me know if I'm the only driver making 49% of what the rider pay. Don't want to drive, so order an Uber and ask your driver how much he/she is making on the ride. 51% Uber 49% driver. Richmond, VA
🤣🤣🤣 dayum that sent me...
Thanks for the laugh Nicolas😂
I think a lot of people works these jobs due to the convenience. You can start and stop whenever you want and have total control over your schedule. If you work for Walmart or some other W2, you're schedule is dictated to you from a manager with often little flexibility. Sitting in the car isn't so bad if you have things you can do why you wait to entertain or educate yourself.
On a somewhat similar note, I feel many people go into construction so they can work outside and smoke while working.
It's still not worth the trade off of guaranteed work hours, health insurance, and other benefits. You're trading a lot of money for convenience. But that is the issue, workers think that it's a viable alternative to an actual job. it was meant originally to allow people to sell their commute to others with a similar destination and offer ride share compensation. but it got twisted
@@answerman9933no, it’s because it allows you to mortgage your body in the future for higher wages now. It’s the same as Uber where most drivers make below minimum wage once you factor in depreciation of their vehicles.
@@waffle8364that’s not how it started. Uber was just a luxury car service. The app allowed you to rent a car and driver for the night, Lyft was the first to get into picking up fares. They both catered to luxury markets and expanded into mid markets later.
yeah, the drivers are for sure educating themselves while waiting in the car :D
I will say that I opened a ghost kitchen using Uber Eats back during covid after I left the army.
Rented a kitchen/cafe after hours to make "gourmet" burgers that instead of cheese slices, I'd make cheese sauce like the stuff you'd make when making mac and cheese.
It turned out to be really popular but I didn't want to work the late nights until 3am so packed it in after 6 months.
Having Uber really helped with the start up, even with the stupid rates they charge.
Another banger by Wall Street Millenial, great vid!
Just like you already said at some point: it's the extremely low interest rates that pushed the 2008 real estate bubble, the 2000 internet bubble and recently, especially in 2021 and the start of 2022, bubbles in real estate market and especially the part of the stock market covering growth stocks was absolutely insane...
No, it was the idiotic belief that housing and property prices can continue to grow infinitely. This makes houses and property seem like an investment. "HoW cAn i pOsSiBlY lOsE" everyone said. The bubble we're seeing today is similar in growth and scale, but not average interest rate, which is much higher this time around. Instead of housing being an "investment" - Gen Xers and boomers are now using it as "retirement plan." One person owning 8 properties and living off the rent income. Combined with the corporate version of this where they own hundreds of lands then sell the returns of rental profits back to investors of the company.... Does this sound familiar to anyone?
Unless I’m trying to get to an airport in a city with no public transportation, I don’t really use these services. Sure there’s the convenience of someone picking up your food but with Uber and other companies charging the restaurants more money for visibility I’d rather call in, place an order and pick it up.
Also it bugs me that a lot of these online services have tipping culture which probably means that they’re not paying employees enough and that those tips may not be fully going to the person that deserves it.
Same, it's out of necessity rather than convenience that I use these apps
That’s fine, but the only reason most people avoid/stop using them is price.
I would never order food through one of these apps. And I hesitate to say "ride-hailing" is good, because it's just a taxi by a different name which is obviously a business that exists, yes.
They call it a tip but it’s not a literal tip. We used to not pay the tip in front. Also it is a “bidding” fee to lure ppl to accept your contract not a tip. Doordash and Uber drivers will not accept no-tip orders. They are experienced and can tell. They blacklisted all the McDonald’s Wendy’s etc and most infamously Wingstop.
The problem is, that these companies don't manage to shrink their overhead. They are basically a software provider that needs servers to operate. But they try to be much more, hiring so many office employees. Their margins on sales (food delivery) is extremly high, but they still lose money, since they spend too much
I don't know why food delivery companies aren't making money, but when I worked for food delivery and juggled 2 jobs, it wasn't always pleasent. The money was ok, but I had pay for everything from the bag, e-biike, rain wear, and repair costs. So that was 1500 usd in debt when I started. The business model is a bit broken in my opinion, easy to start but hard to maintain.
You’d understand if you delivered with a car that runs on gas.
I talk to delivery people driving Priuses and they are living a different life
@@SHA-3qua well don't want to be rude, but I didn't want to deliver On gas. That's why I used an e-bicycle and drove 2000km with it. I repaired it but I still use it. Besides priuses cost like 20,000 usd, that's too much to start delivery.
no one who lives within a budget should be ordering from any of these food delivery services
it’s an absolute rip off
I remember that at one point a few years back Uber actually turned a profit, but then management decided to pay out a billion dollars or so worth of bonuses (to themselves), pushing the company deep into the red again for that year. I never invested in it.
Essentialy every one of these platforms tried to use dumping practices on eachother
Idk why the taxi industry team up like a union app and go against uber with no limit but at a professional profit rate on demand with alot of transparency to win the gig economy
I mean if those companies are not profitable and yet it feels like they steal from me, I am scared to know how much it would cost if they try to be profitable…at least it created lots of jobs (albeit terrible) and sucked wealthy investors and VC dry
I know a few Uber drivers that live in their cars. They sleep in the airport Rideshare parking lot. They take sink baths in the airport bathroom. Once you get into this rideshare industry, you can't get out because it's the only option for you and hope their cars don't break down.
Wow, that’s nuts. Hopefully it’s temporary for them.
In other words, it's a job for DESPERATE PEOPLE that KEEPS them poor.
The one thing I think is that we need anti-dumping laws in place that prevent investment funded businesses from lowering the fares for gig work beyond what is actually profitable, so they can't enter a market by destroying the previous systems that were in place. They should only be able to enter the market if there is clearly profitable to introduce their solution based on the merits of the service
Thanks for your videos. One element of the rideshare problem is the vehicle. The driver provides the car and the fuel is NOT the only cost to the driver. An old friend drove his low mileage Toyota for 2 years with Uber. He put 55,000 miles on the car driving for Uber. So your Toyota Rav4 with 75,000 miles on it is worth less than your Toyota Rav4 with 25,000 miles right? A cab driver does not pay for the vehicle upkeep. 90% of Uber drivers quit within 6 months. They figure out the above and work elsewhere.
WOW. I'm not easily impressed - but this was impressive. It was everything I wanted it to be; informative and entertaining. I am definitely subscribing. My only criticism is the soundtrack has sounds that are similar to doorbell sounds and therefore, with headphones on, it made me repeatedly question and check if my doorbell was being rung. See you in the next video...
The reason drivers can't make enough money is Uber can't compress time or space. Uber app or no Uber app, it takes the same amount of time to physically pick up the food and transport it to the customer. This is the REAL inefficiency and it cannot be overcome as long as it requires humans and/or space/time cannot be fundamentally altered.
With automated delivery services, this cost will dramatically fall. And time will become largely irrelevant.
@@incremental_failure robo taxis are probably a decade or more out from being accessible to most people, getting a Big Mac is even further.
@@brianbelgard5988 Robo taxis are further off. Getting a big mac is already here, you can order a Big Mac to be delivered by a Starship drone.
I studied this bussines models, when it came out 10 to 14 years ago, and I noticed an existencial contradiction in the bussines model, that only way to solve was, to get into more debt or badly abuse from costumer/independet contracter. in other words
a bussines model in conflict whit itself its doom to fail,, so I stayedt away from those stocks,
little did i knew that, geting into more debt every single year will last as long is it has.
For me its easier to spot proftable bussines, but I constantly underestimate the hype from stupid investors.,, it happend to me whit Facebook, Tesla, and bitcoin too.
MAD WORLD WE LIVE IN.......... but I blame the FED and its stupid 0% interesrest rate
And Cramer will continue to push this stuff. Cathie Woods and any of these people jumping on "the next big thing" OFTEN get burned. But people buy into the hype and don't do maths on it. I hate this American mentality of constantly jumping on the next big thing because it's nowhere near like this in Australia
@@OffGridInvestor U are so right about that. thumbs up.
Do u think we can exchange more ideas ?
cuz I have tried to join Discord groups, but at the end of the day they are always selling me some crypto shit.
God bless you buddy. ^_^`
That was very informative, excellent!
Every operator believes that they will be the 'last man standing' in this gig economy. They won't be. Hence the cash burn will continue.
Like Amazon and temu selling at a loss. But there's always some other one that pops up to undercut the other. Meanwhile more and more investors money gets pissed away. Helps consumers buy more chinese junk though
I'm from the subburbs, so I rarely use Uber. But when I recently needed an Uber to go to the airport, here's the problem: $95 to ride in a Elantra or Civic, not sure if my luggage would fit... on the other hand, there was the airport limo service, $110 for a Navigator. Guess which one I chose?
One major factor that you left out is the zero interest rate environment, when their loans come due and they have to refinance at 7 or 8% the game is over and all these zombie companies will collapse.
I haven’t used doordash or ubereats in probably 4 years, the fees are just crazy.
I hardly order delivery, but when I do it’s only from places that have their own drivers. At least the price of the food is the same, then there’s only the delivery fee & tip.
if doordash cant make a profit peak 2020-2022 when everyone was locked at home, they will never make a profit
It’s the 0 switching cost that kills gig economy. I can’t move my company data from AWS, many content creator can’t move their channel from UA-cam willy nilly, or Facebook marketplace. The gig economy will never reach pricing power
My gig app, Buber, delivers an existentialist philosopher to your door in under 20 minutes.
They are not profitable because of the competition. Once a few go bankrupt, the competition will die down and the survivors will become profitable.
When you was talking about how you could get paid more working as an employee for Walmart and fuel cost as a driver you forgot to mention that not only fuel is an expense but vehicle maintenance also goes up, brakes, rotors, oil changes, tires all get more worn out constantly running a vehicle as opposed to driving to a location to work and parking all day.
If only Uber runs ads like YT and every 5 mins during your hour-long ride to the airport your driver says, "let me tell you something about today's sponsor..."
Driving for the other company, I actually lost money. I quit, but my car is not in good shape now. Now that I've quit, they can offer me $20.00 per ride guaranteed (for a specified number of rides). Before, I would only get between $5 - $8 per ride. $20 is more on par, because you need to buy a new car about every 6 months.
I just call restaurants and order from them directly. That way they get all the money and they use their own delivery crews.
Drivers only get about 10% of the fees paid by customers and restaurants. Doordash gives drivers a base pay of just $2 to $2.50 per deliver. Doordash keeps the rest. Gig app companies violate the rights of independent contractors and exploit gig workers. The FTC knows about the illegal practices of the gig companies but refuses to take action.
Another awesome video. Thx!
The root problem for food delivery is that customer DO NOT want to pay the actual cost of the delivery. If all the apps decided that the mimimum delivery charge that would be given to the driver is $10 regardless of distance from resto to house, then i would imagine 25-30% of the customers would never use these services? But to allow the driver to have a living wage not just dependent on the optional generosity of tips, this is actually the correct charge.
🤔🤔🤔
Yeah 2.50 pay for a trip that takes 30 minutes...... You just worked below costs.
You touched on the fact that only exist because they pay way below minimum wage for a job with no protections. If you hear the term Independent Contractors that is code for exploitation
9:03
Really appreciate the legwork for the videos, been great to catch up while at home sick.
Please do correct me if I'm wrong but at 9:06 ff or seems to state that $0.13 profit per ride would equate to $1b profit overall on sales of $7.xb. That would be true if rides were only $1, but ride/total delivered costs are much higher.
Just a small point as you've really done homework well 👍
Why such platforms in China or Russia are profitable? As i understand, they have different model of relationships with eployees and kind of monopoly, but prices are not too hight - there is balance between customers and drivers. Moreover some companies offer hourly wages.
There is a cost to keep up with competition. No competitors means less cost and more margin. It's covered in the video.
Guess most businesses can't grow their way to profitability after all.
wonderful video! congrats!
Chart at 7:30 is wrong. Wrong bars and labels and the data is just wrong too. Uber takes about half of the ride's cost and only gives half to the driver.
What was not said is that the Uber driver is actually using the equity in their late model automobile to pay themselves. In a couple of years, their late model car will not meet Uber's requirements. In other words , you are wearing out your car on Uber's behalf.
In my country the concept of Uber ride share is illegal that's why they did not work.
0.13 cents in profit is absolutely nuts 😂
I’ve always thought that the end game for these business was driverless cars. Any thoughts on how this would be structured and if it could change the biz model to a profitable one ??
"We lose money on every unit sold, but we're making up for it in scale."
-- Warren Buffet
It’s honestly cheaper to rent a car than it is to get an Uber if you’re traveling. I had my vehicle in the shop so I had to take an Uber to and from work 1 day and I spent 119 dollars lmao. It’s crazy.
As a former Uber driver I can tell you that a lot of times the take rate is way higher then 28% I seen some Uber drivers who get offered high rates on rides but for me it was terrible and I could not support myself on it, I guess it might varry by region
I just don't get it. When I get take out, I drive 5-10 minutes to pick it up, even before Uber Eats and Doordash.
Uber posted a profit of ~$2 billion for 2023. Still, a valuation of 160 billion for a food delivery and taxi app is ridiculous.
Going to the fact that Uber can’t afford to list their workers as employees it reminds me of the FDR quote “if a company cannot afford to pay its workers a living wage they don’t deserve to exist” its upsetting that the modern equivalent is just having the right to be recognized as an employee
If you combine social media and youtube with your delivery shifts you can add value and make more . Its about creating opportunity and adding value .
Driver-less delivery is the solution. I personally would not pay all that markup for casual food delivery.
Delivery apps work for new restaurant types that only do delivery and don't have the overhead of customer space, service, etc. That market may keep growing but I doubt it'll ever be huge. Otherwise yeah does not make sense, just order pickup or go to the restaurant: cheaper, more timely, and warmer/better looking food.
I have a friend who has a restaurant in a major city in the NE and she is mystified as to who would move to a city and then order noodles for $25 bucks to be delivered while living 4 blocks away....people in the US have too much money she says.
Or too little brains.
For me I usually only pay like 6 bucks more than I would if I went there. It’s well worth it for me to not have to leave the house.
@@willissudweeks1050 it's your money man, but 6 bucks used to be an hour of labor and I just can't rectify that in my head. Used to be homeless so maybe I just see money differently idk.
Based on what you've presented here, I can't see how there's a future for this type of Gig work. I'm curious how companies like Fiverr are doing.
How about autonomous food delivery will that change the unit economics?
no one notices the millions of dollars that go to the C-suite to be failures. That money comes from somewhere.......
Other than the cost of running servers and the various fees they have to pay I don't understand what their expenses are. They have zero employees.
So the only beneficiaries are credit card companies?
Nah, the employes in the management, marketing, it and research also make decent to very good wages. And the companies selling add slots, placard slots etc. Also make a nice revenue on the posted adds. Only investorsanddrivers really loose.
Oh, and the goverment/taxpayers.
Customers pqy more, but that's by choice for the service, so I'dsay technically they are beneficiaries as well.
They cooking books too don't let them fool you. Who verifies these percentages? No one they steal from merchant and driver any chance they get.
Restaurant websites/ordering platforms have also gotten much better; it’s easier to just order directly when they’re set up on BeyondMenu or Toast etc - even if they charge a $2 convenience fee it’s far less than what I’d pay when using UberEats, plus the restaurant keeps more of my money too.
They don’t care if the company is profitable they care about how much the stock is worth that’s how the ppl who invested in it get they millions
but why would stock worth something if the underlying company is losing money?
The people who invested GET BURNED. It's the FOUNDERS who "get their millions"
@@pennygeno5629 robinhood a good example they make the most bread off the ipo
avoid using credit card processing, and your fees would come down significantly
God knows this channel has enough support but for this vid I had to express my utter contempt for these app based companies who literally exploit everybody they touch. They basically add nothing to the economy but misery. Bankruptcy is the least they deserve but you know the founders always find a way to make someone else pay for their evil.
The Gig economy business model is impossible to turn a profit as at its core, it is designed to do one thing: monetize depreciation.
That’s it, that’s all.
It is a grift based on convincing economically unsophisticated people to pledge their assets in exchange for a marketplace of users looking for the service being offered. Investors convince themselves that it should print money because they only have payroll and server expenses. However, not owning any assets isn’t a feature: it’s a bug.
When you don’t own the hotel, your offer price to the marketplace has to simultaneously pay the owner of the accommodation enough money to make it worth their while to go through the hassle of competing with Hilton, while simultaneously pricing the offer competitively against Hilton to make their service appealing to the customer. Thus the actual revenue that flows through to the app is peanuts as the margin is being squeezed on both ends.
Third strike against them is that by not owning anything they have zero moat against competitors. So with price being their only lever, and very hard costs/market dynamics working against them, they have no choice but to subsidize user purchases by spending inordinately on advertising and promotions as their platforms have no “stickiness” to foster customer loyalty.
So the business: raise a bunch of cash through equity and debt. Spend gobs of money on servers and UX design. Constantly spend obscene amounts of money on marketing and advertising to attract independent contractors to your platform. Also take large losses heavily subsidizing initial contractor compensation to grow your service territory. Simultaneously offer promotional discounts to attract new customers. Generate revenue that barely covers costs and seek new capital infusions to repeat the process.
When you strip away all of the inputs and outputs, though,all you’re left with is the cost of depreciation, as it is an accounting construct and not a hard cost.
These businesses are confidence trucks that only worked when money was free. Now that money has a price and their respective debt bubbles can no longer be refinanced down the road, their time is coming. Fed fund rate hitting 6.5% will spell the end for most of these zombies.
I have a sustanable income, but still use uber to make extra. If you're doing it full time, idk how you manage. I started it to pay down debt, now I do it to pay for my daily food , and I put half my regular income in the market. But I know I'm not the norm, and more people with my income are too bouji to drive uber for side money. But to each their own.
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.
When people have money, they spend it. And some people spend more money when they have more of it. If you want to improve your financial management, you should consult with a financial advisor.
@@devereauxjnr A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
@@2024Red-j5t Over the following 3 months, I want to increase my reserve from $280,000 to at least $550,000. I would be grateful for any advice you can give on how to accurately predict the market and how to diversify and balance my portfolio in order to accomplish my goal.
@@Petroguest-i4g credits to NICOLE DESIREE SIMON, one of the best portfolio manager;s out there. she;s well known, you should look her up
@@2024Red-j5t I looked up NICOLE online using her fullname and researched her accreditation. She seem very proficient, I wrote her detailing my Financial market current position, goals and scheduled an appointment. Thanks