Why Your Next Package Will Be Delivered By An Uber

Why Your Next Package Will Be Delivered By An Uber

In this Wednesday, March 18, 2015, file photo, the Uber app displays cars available to make a pickup in downtown Manhattan on a smart phone, in New York. A new report by expense management system provider Certify shows that 47 percent of the ground transportation rides by its users in March were through Uber. (AP Photo/Mary Altaffer, File)
In this Wednesday, March 18, 2015, file photo, the Uber app displays cars available to make a pickup in downtown Manhattan on a smart phone, in New York. A new report by expense management system provider Certify shows that 47 percent of the ground transportation rides by its users in March were through Uber. (AP Photo/Mary Altaffer, File)

(TechCrunch) – Geographic saturation is the key to network effects and profitability in the ridesharing business.

The more drivers Uber or Lyft have in a given region, the faster the pick-up times, the better the customer experience and the more rider demand — which in turn allows drivers to earn more money and attracts more drivers to the network.

David Sacks best illustrated Uber’s positive feedback cycle last year:

If Sacks is right, that the ridesharing provider with the most geographic saturation ends up with the lowest costs and best rider experience, then the strategy is clear: Raise as much money as possible to subsidize both supply and demand in what, to some observers, appears to be a winner-take-all market.

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