Just wanted to drop in here to laugh out loud at Smapti’s repeated invocation of safety training: I’ve driven Taxi in two places, one of them a majorish city. In one case there was no training. In the other there was a one-day class, mostly focused on the mechanics of the dispatch system and how to fill out your run sheet. Maybe an hour was devoted to a cheesy video telling you not to drive drunk and that people would tip you better if you didn’t speed (hah!).
If your driving record is clean, and you don’t have any recent, nonexpunged rapes or murders on your rap sheet, you’re good to go. They do fire you if you have an accident on the job (say, driving car #402 into a palm tree at 3 am), but I’d bet Uber does, too.
Okay, first, I jumped into this thread because I got tired of people calling Uber a “ridesharing” company (they are a cab company). So, remember that if my responses seem tepid. Basically, where you reacted to Smapti’s fear mongering, I reacted to the willful ignorance about what Uber is. I see your point. Fuck, I agree with your point. But I dislike willful ignorance (which you aren’t exhibiting, by the way).
I have to admit, I’m familiar with cabs in three, maybe four places. SF, where I believe Uber was started, is horrific for cabs. If I lived there, I’d be an Uber cheerleader, too. Seriously, I walked from Snob Hill to Zynga’s office figuring, hey, I can catch a cab. Not so much. Anyway. Toronto is awesome. LA is okay if you call for one, or are outside a bar at closing. I get there is a big difference in how cabs operate.
And, while it’s not a vote-getting issue, at least in cities, it seems to take up a lot of politicians’ time. I’m not sure why. That said, Uber isn’t some mom and pop shop who can’t do anything about the big ol’ mean cab companies.
And maybe there aren’t any. Here’s what I see, though: Buddy reads the law. Buddy obeys the law. Buddy makes some coin; hell, maybe even damn good money (since he put up the cash, and reaps disproportionate rewards for having a medallion) and starts paying off that medallion that cost him $250K or $800K.
Turns out, he didn’t have to do that. Turns out that he could have just gone out and ignored the law.
Is there a victim there? Well…sort of, yeah. And if that victim is a money grubbing cab company, you’re right; I don’t give a shit any more than you do. But, if it is someone who sat on his ass driving for 12 hours a day fighting in Toronto traffic for the privilege of carting a too-drunk-to-TTC me around, then, yeah, maybe we can be a little slow about saying “Oh, turns out laws are negotiable. Some of them can be ignored. Oh, if you had ignored them? That would be different. See, they have lots of money.”
I get the desire for change (again, I’m lucky with the cabs I’ve got access to). And if we decide “fuck it, this is better”, then sure, those are the breaks. But, while “victim” might be farther than I’m willing to go, “people who through no fault of their own other than playing by the rules are who are now getting fucked” isn’t farther than I’m willing to go.
I don’t know if this is directed to me, but yeah, I get it. And I think we can agree they are clearly too scarce, if they go for that much. And the problem should have been fixed decades ago (but entrenched interest etc prevented it).
The problem is how to extricate a bunch of people. To be honest, I’m a pretty cold-hearted bastard. If they can’t make a profit, that sucks, but I’m not in favour of propping up an industry.
That said, let’s do a thought experiment. There are about 13000 medallions in NYC. They used to cost $1million apiece. So, call it 13 billion in outstanding loans (pick any number between 0 and 13 billion you feel is appropriate for loan repayments).
I have trouble understanding, if Uber is allowed complete and utter freedom to simply supply medallion-less drivers, the value of those medallions doesn’t drop to 10% of it’s former value.
In that case, one would be a fool not to auction of the medallion and declare bankruptcy. So, we’re looking at, say, 12 Billion dollars in disappearing money? Say 50% amortization, so 6 billion?
In the scheme of things, that’s not that much money, but it is enough that I’m comfortable telling Uber to slow down.
When I read how much they were going for, I thought NYC should increase the number out there to bring down the value, say, 10% a year. Predictable, brings in money, fixes the problem. Toronto is chronically capital-starved, though, so thinking of ways to bring in big bucks is something urban transit and infrastructure geeks here do.
This is a worthwhile and reasonable concern. But the proper response to that kind challenge is to mitigate their losses and ease the transition, not to stifle innovation.
It’s not as if every cab in America has a million-dollar medallion. I’d bet nationwide there are way more company-owned medallions than driver-owned; AFAICT you mostly only see that in a handful of very big cities.
I’m wondering where the “innovation” is here. I know the tech sector loves to fellate itself over how “revolutionary” and “disruptive” everything they do is, but mundane shit doesn’t suddenly become “innovative,” “disruptive,” or “revolutionary” just because it can be done through a fucking smartphone app. Fuck, we now have assholes trying to charge $500 for a goddamn panini press because they have an “app for that.”
Certainly in Australia fewer and fewer licences (medallions) are owned by drivers themselves.
In London there are black cabs that can be hailed and work off a meter, and “mini-cabs” which charge fixed prices and must be booked by phone.
The obvious way to give traditional cabs a “soft landing” is to use a system like this, so that the traditional cab licences (medallions) retain a niche, while allowing app based companies to service a need.
That’s pretty much my entire point. This might slow innovation (well, the implementation and adaptation of innovation) but I’m not suggesting it should be stifled. I’m saying it isn’t the unmitigated, no-consequence good that some Uber defenders are claiming it to be.
And, hey, it might be that “screw the cab companies” is fine (there is a huge range in how they treat their employees, and some of them, I’m fine with it). It also might be that, once freed of the need to purchase that medallion (like Uber drivers are) they could have better cabs and charge less. I mean, how much of Uber’s competitive advantage is from not following those regulations? That question is sincere: I don’t know the answer to it.
Is surge pricing a better model than flat fee, from our perspective? In a flat-fee model, does the money made in busy times subsidize the slow times? If so, will cabs be unavailable except for during surge pricing times? Should government have the ability to regulate taxi fees? Where in the “common good” to “let the market completely decide the price” spectrum does this fall?
Look, there’s a lot of good to on-demand-indepentent contract cab drivers. There are a few questions that I’d be a little happier having economists look at first. And, hey, that I trust my elected representative more than I do Uber execs might be a Canadian thing.
The answer would vary from place to place but around here the cabs are quite standard and the bar to becoming a driver is very low. The cab itself has to be below a certain age. The killer cost is undoubtedly the massive value of the licence itself. There is also the fact there is a monopoly on the use of credit cards in cabs (by a company called Cabcharge) which takes 10% off the top.
As I understand it Uber also requires vehicles to be below a certain age so no difference there. I think it’s competitive advantage would be not having to pay the inflated price of scarce licences, and not having to pay 10% to Cabcharge.
We’ve been talking about the whole issues with the artificial scarcity created by certain government regulations, and partly what Uber is doing is just evading those which I agree isn’t especially innovative.
The Uber model is more than that though. The persistent problem with the cab industry (and part of why they had to come up with all the medallion silliness in the first place) is the whole peak demand issue. The costs to actually keep a cab and driver on the road are relatively flat, but demand is highly variable. The cab companies have to decide what level of demand they’re going to hire enough cabs for to maximize their profits. That by necessity means during peak periods they’re leaving a certain number of people SOL.
The solution is obvious in that there’s millions of qualified drivers and cars who could give occasional rides, but before there was no way to coordinate the logistics in a way that worked efficiently and which both parties were comfortable with. The dispatch system and the driver and rider review system built into the Uber app are absolutely a major innovation. You can argue the merits of implementing that innovation, but just sneering at those dumb hipsters and their dumb apps is moronic.
Agreed. It’s not that it is innovative in the “inventing the wheel” sense. Uber isn’t something that couldn’t be done using landlines and bits of paper, I guess.
But nonetheless, sometimes just using IT in a fairly obvious way can be easily sufficient to tip the scales between “a business model that is too awkward and inefficient to bother” and “a business model that is simple enough to be usable and profitable”.
And that makes it disruptive, no matter how low the level of technological innovation involved.
I’m in one of NYC’s outer boroughs, which is not representative of anyplace else, but let’s look at the innovation:
Before Uber:
Yellow cabs - available only at a few select cab stands scattered about; didn’t accept credit cards until recently. There used to be a lot of friction with broken machines (I highlight broken because drivers didn’t like given up a cut to the credit card companies) and cash-less passengers expecting to pay by card. Haven’t heard much of this lately, though.
Livery cabs - can be called, and may show up only a few minutes late. As others have pointed out, I’ve been in a cab receiving a call who tells dispatch he’ll be somewhere in 10 minutes when he’s still 15 minutes from my destination. Crap shoot on condition of car, no knowledge of the driver. Livery cabs in outer boroughs (licensed by our Taxi & Limousine Commision (TLC)) constantly break the law by picking up street hails. Also, livery cabs are unmetered and the vast majority only accepted cash; make sure you negotiate price before entering (Manhattanites make this mistake often).
After Uber:
Green cabs - basically yellow cabs for those outside Manhattan (and in upper Manhattan). Increased the chances for a metered street hail along main roads (metered rides are usually less than what even the cheapest livery service charges)
Livery cabs - little change (that I’ve seen)
Uber - you know where the car you are booking is located. You know who the driver is. You have reviews on the condition of the vehicle and the driver. You know the fare, and pay through the app
So a company came up with a way to provide a better service for approximately the same price. If that’s not innovation, what is?
Also, to contrast Lyft and Uber here in NY (versus Toronto), from Slate, July 2014:
Uber…such a big, bad, illegal corporation flaunting the laws wherever it goes whilst twirling it’s Lyft-like handlebar mustache. For the record, Lyft finally did cede to NYC’s rules in order to operate here.
To underline what** D_Odds** has said, the app really is inovateive and revolutionary. The driver and I can communcate if necessary to arrange pick up, and I know his or her name and vehicle license number. I can text or call. (“No, I’m on the SW corner, that’s me in the green hat.”) I know how long the wait is even before I his “ask for pickup,” and the estimate is usually dead on. I get an estimated fare before I even get in the car, if you care about such things. I get an email receipt, which I can forward to my office to track expenses. I can rate the driver. I don’t have to have cash or worry about the many many cabs that either don’t take credit cards or really wish you would not use one and let you know their disapproval. And, just for fun, while I’m sitting in the back, enjoying my complimentary bottle of water, I can pull up the app and track my progress through an unfamiliar city.
Of all the apps designed for smart phones, I can’t think of one that has improved my life to the extent Uber has. (although I am also a fan of my bank’s app for mobile banking)
To add to the (correct) innovations noted above, some from a drivers POV:
(I’m not 100% familiar with how Uber, specifically, works, so some of these might be innovations that could be achieved with a competing app)
It eliminates the dispatch system, which is a huge benefit; aside from the cost savings, it reduces miscommunication: you have no idea how many times I was told by a fare “I told the guy on the phone _____ … why didn’t you _____?” Dispatchers are paid $10 an hour and don’t give a shit.
Driver Safety. Taxi driving is one of the most dangerous jobs in America. You’re alone in urban areas at night in an easily-targetable vehicle and everyone thinks (usually correctly) that you have a decent wad of cash on you, and so you get capped for $200. Online dispatch in your own vehicle solves all that.
The safety and other advantages of your own car. Most taxis are not owner-operators, and we treat the company cars like hell. This is more expensive (the shop has a whole maintenance department), but those costs don’t hit you directly, so fuckit. If it’s your car – the same car you drive your wife and kids in – you’re going to drive differently (read: safer). I did stuff in a taxi I’d never do to my car. Add to that the familiarity factor: I don’t have to spend the first hour getting used to a new vehicle.
The other advantage is a little hard to explain, but let me break it down this way:
[ul]
[li]If you are an owner-operator (or a guy who rents a company car for longer than just a shift) and you have another car you use when you’re off-duty, that’s an expense.[/li][li]If you are an owner-operator (or a guy who rents a company car for longer than just a shift) and you DON’T have another car you use when you’re off-duty, every time you want to drive to the store people are flagging you down and giving you the finger for not stopping. Your kids, your kids’ freinds, your neighbors, your dates, and everyone else knows what it is you do for a living. [/li][li]If you rent the car on a shift basis, you have to set your shifts by what the company dictates; usually 12 or 24 hours. None of this “hey, I’ll squeeze a few fares in today;” 12 hours or zero. Certainly no “hey, there’s surge pricing right now, and I have an hour free, so let me go meet some of that demand”[/li][/ul]
It increases transparency and thus honesty on both sides. If a guy flags you and you don’t like the looks of him (insert whatever acceptable/unacceptable reasons you like here), just keep driving. It’s not like he can prove you saw him, and ten to one he won’t catch your car #. Of course, even if dispatch sends you to a location, you can bail, and with an app-dispatched system, you can do that, but – and this goes back to #2 – I’m a lot less likely to do a flyby on a fare that ordered me on a cellphone that can be tracked and traced. Yeah, the phone might be stolen, but at least its something. Also, since the fare is paid via the phone, no worries about jump-and-runs. In turn, I know that the app can (at least in theory) make it a lot easier for the fare to lodge a complaint on me, and for those complaints to be recorded and tracked.
No paperwork. Keeping a run sheet is a pain in the ass.
So, yeah, lots of innovative and valuable improvements to the business model.
The big thing that has to change for long-term viability, IMO, is making it pay better for drivers. The obvious solution to that (or at least the first one to try) is to send every fare a text message afterwards asking if they want to tip the driver. Taxi drivers depend on tips nearly as much as waitstaff.