Hubert Horan Discusses Uber on Harry Shearer’s Le Show

I am kicking myself for not having let readers know in advance that Hubert Horan was appearing on Harry Shearer’s Le Show on Sunday. But you can listen now, via this link.

Harry excels at asking simple-seeming but sophisticated questions (and making his interviewees look good too). Here he  focuses on the key elements of Hubert’s analysis of Uber’s questionable economic claims, particularly that there are no scale economies in the local transportation business. It’s also gratifying to hear Hubert unpack his argument in a more colorful and colloquial manner than he did in his extended series on Naked Capitalism, since then it was essential to show considerable supporting evidence. Hubert here adds new important tidbits, like the income distribution of taxi users and how Uber is destructive to low-income, night shift workers who make up half of total taxi demand.

This is a great overview for friends and colleagues who may be reluctant to hear that the fact that they like using Uber has nothing to do with whether it makes any sense as a business. Harry has his usual lively set up, but if you want to go straight to Hubert’s Uber segment, skip to 10:13.  Enjoy!

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  1. Joe Well

    I recenty talked with an ordinary person who didn’t believe Uber could be unprofitable since they get 30% of every ride. I explained that through driver incentives they get less than 30% and then we went through all of Uber’s legal expenses to operate in this city where it is not really legal, plus marketing expenses.

    But it is a narrative that is difficult to challenge: 30% of every ride with no overhead except an app = guaranteed profitability. And the fact that there are competing companies supports the idea that there is a business there. Within this narrative, any losses can be dismissed as growing pains.

    1. lyman alpha blob

      How old was the person you talked to?

      Buddy of mine in Seattle drove for Lyft for a short period of time before quickly recognizing it for the scam it was. He was taking young hipsters to their jobs at Amazon or Adobe for a $3.50 fare door to door, or about what it costs to take the bus, and these younger people don’t tip either. He got sick of that real fast. I never took a cab in my life for $3 – it costs that much just to get in the door and it did a generation ago too.

      Anyone who ever took a real cab as an adult must realize they aren’t paying the real cost of a ride when they take an illegal Uber ride for that cheap.

      Not profitable for Uber as a company, not profitable for its employees, but extremely profitable for those executives who managed to unload their essentially worthless shares at the IPO for $70+/share and no longer care as those caught holding the bag watch the share price plummet.

      Some regulatory agency should have shut the whole scam down before it went IPO – I fail to see how Uber is anything but a massive fraud.

      1. Joe Well

        He was in his 60s. At least in this city, Uber is only slightly cheaper than a taxi.

        Anyway, the issue is how could Uber, the corporation, be unprofitable, not how it could be bad for the drivers (obviously, if Uber is taking 30% of a fare that is lower than a taxi fare, something is up).

        1. lyman alpha blob

          Yes I did get a little sidetracked regarding the drivers – Uber really gets my hackles up!

          What I was trying to get at is 30% of not much is well, not much. And besides the expenses you mentioned, they do have a decent amount of overhead. I see small storefronts trying to recruit drivers in a lot of areas and for a company that’s dependent on an app, they do have a lot of actual employees besides the drivers (who they pretend are not). They just pulled one person from our company who then came back to us to promote Uber Business, whatever that is. But since it seems every ride they give puts them one step closer to going under, I was happy to see my company sign up, especially as it doesn’t affect me and I still won’t have to take one.

          Just finished listening to the interview which was really good – thanks Yves.

  2. Bill Smith

    I thought the interview was mixed.

    The level of taxi service has sucked in the places I’ve lived. But there was no incentive for the regulators or the taxi companies to do anything about it. Uber, etc. has forced the taxi business to adopt some long overdue technology to make it easier to use. The taxi business still has some way to go.

    1. lyman alpha blob

      In cities I’ve been in, I’ve still had no problem lifting an arm to hail a cab. When I lived in a major city, I learned where the cabstands were so if there wasn’t one cruising down the street I knew where to find them. I do understand that hailing a cab is more difficult if you aren’t downtown, but most cities have other public transportation.

      While I do agree that taxi dispatch could improve somewhat, I have also checked the Bill of Rights recently and still don’t see the part where it says USians shouldn’t have to wait more than 10 minutes for anything ever.

      This gig economy business is training everyone to believe that there will always be a low paid servant on hand to do whatever they need and it’s no longer necessary to plan ahead for anything or know how to do things for themselves. The world isn’t Downton Abby.

  3. Arizona Slim

    I had the pleasure of meeting Hubert Horan in October. Glad to hear this interview. It means that the truth is getting out there — finally.

    1. Arizona Slim

      And, in a nod to Harry Shearer’s conclusion, I’d like to say that I’ll also buy Hubert’s book. If and when he writes one.

  4. Scott

    You need to get your head around the idea Ubers customers are it’s drivers and not the passengers.
    Uber lives and dies by the experience they are selling it’s drivers. Uber spends about 500 dollars creating each driver and loses most of them within a month. I understand the actual churn rate for drivers is currently in excess of 100% per annum? Be interesting to have Uber confirm the exact figure? It’s simply that drivers wake up fairly quickly they are operating at a loss and subsidizing Uber by doing so and quit. Thus forcing Uber to spend another 500 dollars on advertising management and incentives to create another driver.

    It’s ironic that regulation such as AB5 will actually turn Uber into an OK job and reduce driver turnover but instead of the drivers being Ubers customers the passengers who are currently sending the drivers broke will become Ubers customers and be sending Uber broke instead. Of course Uber will have to increase prices substantially to cover costs due to drivers no longer subsidizing rides and I’m guessing those increased costs could make Uber more expensive than traditional cabs? It will also expose Ubers claims of innovation and better efficiencies as nothing more than baseless propaganda.

    It does leave the question of how does Uber survive? Personally I live in a smaller city of about 1 million people. Our cabs are fairly competitive in price with Uber maybe 10% difference and Uber just struggles. I would imagine in spite of propaganda suggesting otherwise as soon as prices are competitive again that will be the experience elsewhere?

    1. California Bob

      Don’t know if it’s significant, but in my medium-sized California Central Valley town there always seem to be as many as 5 times as many Lyft cars available as Ubers. Most of the cars have both Lyft and Uber stickers, so I assume they ‘self-identify’ when they sign on. I’m guessing Lyft’s terms are better for drivers.

  5. redleg

    I still can’t wrap my head around Shearer, he of Spinal Tap and The Simpsons, being so good at interviewing people.
    Which one is the day job?

    1. Anon

      Shearer’s day job is radio, “Le Show”. He used to be based in LA and broadcast from the studios at KCRW. He has also done some DJ-type work presenting new music to listeners. I believe he’s a Jazz aficionado. That’s why he now lives and broadcasts from New Orleans. He’s a brilliant commentator on current events.
      Love him.

  6. Conrad

    A really good interview which hopefully gets widely heard. At this point Uber is basically WeWork on wheels.

    1. KiWeTO

      At all points, wework is Uber on wheels? All smoke?

      Except Uber “invested” in driverless cars as their magic solution to expensive drivers, while wework convinced investors “borrow long, lend short” was a great real estate strategy.

      Wework would be better compared to as the Northern Rock of Office Space.

  7. KFritz

    Happily, I heard the interview broadcast by KFCF, Fresno, Sunday 5 pm.

    Most interesting and amusing to me was Horan’s explanation of why MSM pundits and commentators still won’t call Uber out for the scam that it is: they were fooled by its presentation as a ‘tech’ company and are now too vain to admit their mistake by identifying it as a scam.

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