Thinking specifically for the take rate for Uber, and you can see, from the recent reports from Uber, the ride-hailing business is evolving pretty well and growing quickly. I think they predict that their take rates will be growing. How do you look at that evolution of take rate, as the business scales?

There are a couple of factors. Part of it is the way that P&L is represented and it’s related to accounting, as well. The way that P&L is structured is a net take rate. A net take rate is a combination of three different things. One is, your pure take rate, that you charge the drivers. There are also a couple of contra-revenue items. One is the driver incentives and then the rider-side promotions. While your take rate could still be constant, because of the variation in ride-side promotions and driver incentives, your net take rate could still fluctuate.

The way I think about it is, what will happen in the longer term? Why is the take rate for Uber 25%, in most of the market? The take rate could also vary from market to market and from product to product. Let’s say, the standard product, UberX, has a take rate of 25%, but other products will have different take rates. In the US, the take rate is 25%, but in some other markets, because of the competition or the regulatory issues, the take rate could be different. If the take rate is 25%, in a market like the US, your net take rate is reduced, because you are offering some of the incentives and rider-side promotions. For example, earlier in the evolution, the promotions were around 3% to 5% and incentives were 3% to 5%. So your take rate was reduced from 25%, all the way to 15%.

As your other items are reducing, your take rate is growing closer to 25%. That would be one of the biggest factors to drive the take rate upwards. I believe that it will be very hard to move your real take rate that you are charging to the drivers, up from 25%, to a different level. Ultimately, if it’s a more supply-constrained market, demand is huge but if you have a very difficult source of supply, it will continue to remain a supply-constrained market and you need to keep your take rate where it is right now, rather than moving it up. You can still continue to optimize your promotions and incentives, but the real take rate, it’s very hard to move it upwards from here.

That’s where, again, scale matters. If you own the market, your drivers are stickier, therefore you can reduce the promotions and incentives on that, to increase your net take rate?

Yes; scale definitely matters a lot, from various perspectives. One, to provide the right experience to your riders, so that have the right ETAs, enough supply, etc. On the driver’s side, to ensure that they have options. Once you have a bit more scale, I think it’s pretty evident, throughout the industry, that the more scale you have, the more pricing power you will have. If you have more pricing power, you can then definitely optimize your promotions and incentives, to increase profitability.