While Uber, Lyft and their ride-hailing competitors produce software to connect drivers to people who need rides, they don’t own any assets, and they are branching out into numerous business models.
Investors have the power to rein things in. Uber and Lyft do not have the advantage of being given the benefit of the doubt by investors.
Uber compared itself to Amazon during its investor roadshow. “Cars are to us what books were to Amazon,” Uber CEO Dara Khosrowshahi once said. Amazon generated its first quarterly profit in 2001 and first annual profit in 2003, six years after the company’s IPO. Today, the company’s massive Amazon Web Services business fills its coffers and supplements reinvestments and radical attempts at innovation.
Regulatory and wage pressure in these cities will be an ongoing, expensive battle among Uber (and its peers), local government officials and grassroots activist groups not only in the U.S. but across the globe. London once banned Uber from operating, and drivers staged a one-day strike May 8 across the U.S. These new business models are confronting challenges for monetization on all fronts.
Amazon has the war chest to invest in innovative new business areas because of its Web Services business. Tesla is lucky to have a CEO with a passionate fan base. But Uber, Lyft and their competitors are not being afforded the same leeway.
Perhaps this is the tipping point where ride-hailing companies evolve. They successfully disrupted transportation, but now they have to show a profit.