Finance: What are the economics of Uber?

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Transcript

00:23

are two flows of economics to this now enormous company

00:25

One flow is about extra dough coming into their drivers

00:29

on a given trip a driver collects eighteen dollars forty

00:31

cents from the trip Uber gets twenty five per cent

00:33

of that money or four dollars sixty cents in this

00:36

instance anyway and the driver pockets the rest It was

00:39

a nine mile trip It cost the driver about a

00:41

dollar in gasoline and maybe figure another dollar in wear

00:45

and tear and insurance and maintenance and occasional vomit clean

00:48

up and well on that two dollars of expense The

00:50

driver then keeps eleven dollars eighty cents for her time

00:54

in gross profit Not a bad gig Getting three of

00:56

those rides in an hour and it sure beats flipping

00:59

burgers So that's one set of economics It's contractor work

01:03

for the drivers who by the way as contractors can

01:06

tax deduct a meaningful part of the cost of operating

01:09

their car Since it qualifies as a business expense it's

01:12

legit So then what about the four dollars sixty cents

01:15

too Hoover What was uber's expenses Toe Earn that four

01:18

sixty Well uber is basically a giant billing system at

01:22

art They track and bill and clear in calendar drive

01:24

units and make everything look all nice and pretty on

01:27

a spreadsheet So there was a big fixed cost to

01:30

initially build that giant database to track all of the

01:33

driving events But then once the database was built well

01:36

not a lot of expenses continue to Maine Chainat Uber

01:39

also had to recruit tons and tons and tons of

01:42

drivers like in a lot of cities That's their pinch

01:45

point They can't get enough human beings who need or

01:48

want the extra dough to just you know be around

01:50

quickly enough so that uber demand er's get serviced quickly

01:54

enough in that local area such that they don't either

01:57

Goto lift their hated comm editor of Uber for God

02:00

forbid call one of these yellow things Taxi That's what

02:03

it was What recruiting drivers who are a legal be

02:06

non convicted violent felons and see not suffering from extreme

02:11

halitosis or B o is not easy There's a whole

02:14

background checking process and all kinds of loitering and human

02:17

resource ing and other stuff that has to go into

02:20

this human filtration system All right well what other expenses

02:23

Well insurance is a biggie Never know when a driver

02:25

is gonna decide to take a shortcut through the Chicago

02:28

River there Then there's government regulation that keeps hitting him

02:31

or at least the threat thereof Read Mohr Lawyer Bills

02:35

Yeah so yeah a lot of elements to noodle here

02:37

But overall uber is doing just fine for itself In

02:39

fact weed you know have to give them five stars