3 Ways Uber and Lyft Could Actually Become Profitable
Self-driving cars have to be part of both companies’ endgames
Uber is currently an unprofitable business. Lyft is too. Both have aspirations to become profitable businesses in the next one–two years, but right now, they aren’t even close. How can they achieve profitability, and what impact would that have on your fare to get from the airport to your Airbnb?
There are a few estimates on how much Uber loses per ride. It’s enough that, up until its initial public offering, your Uber ride was substantially subsidized by Uber’s investors. That means if Uber charged you $10 for your ride, Uber might pay the driver $6, earmark $6 for the costs of operating a business, and cover the $2 loss with some of the money they raised from venture capital (VC) funding.
For a while, everyone was okay with this. Uber and Lyft were happy because both sides of their marketplace (rider and driver) were growing, and one side (riders) was pretty happy. Users stayed happy because they kept getting cheap rides. VC firms were happy, too, because the companies’ ridiculous spending begat ridiculous growth. Drivers were not happy, but nobody seemed to care, save for a few cities and states.
