I think you're right to a point. During the period Uber and Lyft pulled out of Austin in protest of its background check ordinance, several other companies sprung up immediately and appeared to thrive until the big boys came back.

The barrier to entry is actually incredibly low, assuming you have a base of people willing to drive already as happened in Austin. You don't need to employ drivers or own cars, or anything else in the physical world that eats up capital. It's literally only an app.

> To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders.

That only matters if:

1. You want a larger geographical coverage

2. You want to push out competitors by undercharging.

Local-area Uber clones sprang up like mushrooms in the night when Uber pulled out of certain cities.

> Until you reach critical mass. This is what has lost Uber so much money.

Uber has lost that much money because they were trying to fend off competition and landgrab by charging less. The minute they have to charge what the trip really costs, then the market is suddenly a profitable one and competitors will come in.

My point was that landgrabbing in this market is pointless because you cannot price-gouge later. If Uber decided to raise their rates to become profitable, local-area equivalents will enter the now-profitable market.