Re-posted from Tech Crunch: several articles are out that look at the possibility of Uber getting into the package delivery service.
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.
But do Uber’s network effects really scale infinitely, or will they reach a point of decreasing marginal returns? Could…
View original post 657 more words