The economic principles behind Uber’s success

Image: Freepik

Everywhere from Silicon Valley to the southern tips of Africa to the kangaroo corners down under, your ride shall only be a few taps away.

Anything less than a 4.6-star on average can get a driver deactivated from the company’s list of drivers, which is still better than Netflix’s thumbs up or down in my opinion.

Image: Freepik

Despite this, Uber is almost always cheaper and faster, and in most cases easily accessible. It challenged a century-old conventional business, sprinkled a dose of technology into its inefficient framework, and reinvented the wheel for an optimal future.

One medallion, the right to operate a single taxi was once worth over a million dollars!

Sounds familiar?

Image: Freepik

As a result, it’s evident that around 54% of drivers are making less than the median wage. 8% actually end up losing money! But some might say, “Uber is supplementary, it’s a great side hustle between jobs.”

If Uber takes a cut from drivers, their interests should be the same. Regulations slow down its growth, but there’s also another reason.

On paper, Uber has the perfect business model. Its huge network of drivers occupies all corners of the globe, but it need not buy a single car, gallon of fuel, or pay for maintenance. All the perks for minimal works!

So why exactly did Uber lose money early on?



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