I don't really like Uber's business practices but they do fill an essential niche in New York City.
A couple years ago, the city allowed independent car services to paint their cars green and take street hails. They previously did this, of course, but it wasn't legal. And of course, not every "black car" became a green cab, so this still happens. It's the standard way to get around the outer boroughs of New York.
I watched a very common event unfold the other day in Brooklyn Heights. A woman hailed a green cab. It pulled over and the driver opened the window, asking "where to?" The woman mentioned an address in Manhattan. The driver said, "sorry, green cabs can't go to Manhattan" and drove away.
That is 100% false. Like yellow cabs, green cabs have to take you anywhere in the five boros, but they're reluctant to take you to Manhattan because they aren't allowed to pick up fares there. They have to drive back to Brooklyn empty and not make any money, so they lie to customers to avoid that. The end result is that you still can't get a taxi in most of New York City, at least one that will pick you up near where you live and take you exactly where you want to go.
The "ridesharing services" rectify this problem; I've never had an Uber driver refuse to take me anywhere. If the licensed taxis want to be free from competition, they need to follow their own rules.
Even the yellow cabs within Manhattan would not take me places within Manhattan when hailed. They would stop and ask where to-- when I told them where (touristy areas) they'd just drive off.
The problem happens systematically and the system fails to correct it because it lacks the proper alignment of incentives that keep it from working against the public.
That's pretty much what corruption is.
Would you say the same of third world traffic enforcement because the system is trying to stop the practice of shaking down motorists?
This is the only way you can get to the airport during the "shift change" that's right around PM rush hour. Nobody will take you there if you tell them you want to go there.
That said the new Q70 bus from Jackson Heights (7/E/F/M/R) is quite efficient, and I don't bother with cabs anymore. Not worth paying someone $40 to bitch and moan about going to the airport when the MTA can get you there, from Brooklyn, in less than an hour for $2.50.
I remember I once needed to catch a cab to the airport at this time, and I was lugging a big ass suitcase. Knowing full well that standing on the side of the road with that suitcase, a cabby would never stop, I hit it behind a tree. I hailed the cab, open the passenger door, then said "one sec", ran and grabbed the bag and dragged it into the back seat with me. Oh man, was he pissed.
I personally always take the LIRR to Jamaica when going to JFK. It's a bit nicer than taking the E (from Manhattan), and a bit faster than taking the A (from Brooklyn, get the LIRR at Atlantic Terminal) because the Jamaica AirTrain seems to run more frequently than the Howard Beach AirTrain. The LIRR also runs on an actual schedule, so you will end up at the airport when you expect, which always makes things less stressful.
But don't think you're safe there. If you have the slightest hesitation at all in your tonality, the driver will all of the sudden get a case of "I don't know that location, can you give me directions". I experienced that when I first moved here back to back one night because I didn't understand the "process" of getting a cab in New York.
Point is, cabs are completely shady, and nearly all have horrible service.
Since I've been here in NY, I've been using Uber regularly and every single experience has been nothing short of great. 99% have been spotless vehicles that smell good, with A/C in summer, and drivers with an awesome attitude. I've had a few rides where the driver took a non-optimal route and Uber refunded credits each time.
It's unbelievable to me that people dislike Uber and think they're just some "scam" backed by venture capital.
> It's unbelievable to me that people dislike Uber and think they're just some "scam" backed by venture capital.
There is a flip side to that, as well. Uber has engaged in questionable tactics, and their drivers are from the same pool as Taxi drivers.
I've had uber drivers accept the fare, then immediately cancel when they figured surge pricing will kick in. I've also had drivers not pick me up from my location, one who would not turn down their christian music when asked 3x.
Uber's support staff is good, and any hint of poor performance results in a 1-star review.
When I first used Uber, the drivers were great. Now with more uber drivers on the road, there is more variance in the service you get.
"Uber's support staff is good, and any hint of poor performance results in a 1-star review"
This is roughly how the market "responded" (0) to Uber in Moscow - Yandex ("Russian Google") rolled out its Yandex Taxi service/app which provided Uber-like experience to user and integrated with taxi companies at the backend. Same experience same driver ratings etc - but on a legal platform. The prices are compatible with Uber too.
(0) I put "responded" in quotes here because Uber launched in Moscow a few years after Yandex Taxi.
Agreed. I'm native, born and raised, and learned about "gypsy cabs", "car service" and how to hail a yellow cab back when yellow cabs still had "jump seats". Uber has democratized what affluent people have always known, money can buy anything, including someone to drive you somewhere.
I think you need to reexamine the meaning of the word "monopolized".
Having a single state-sanctioned business (and therefore backed by the threat of violence) is somehow less monopolistic than having a free market where the best service provider is rewarded by becoming the most popular and profitable one?
This is a false equivalence. There isn't one and only one State Taxi Company. There are hundreds if not thousands of successful private taxi companies in each state.
There's one Uber and maybe Lyft if you're lucky. In the grey-area taxi market, they might fit the definition of a monopoly. I wouldn't argue that though because I know nothing about that market and reading that sentence back makes me laugh.
Microsoft operated in a relatively free market and was the arguably the best software provider as they were the most popular and profitable one for quite some time. They were also deemed a monopoly.
In strong agreement with task_queue here. The taxi industry is legislated on the city level. Uber is poised to become an international actor, with larger gross revenues than the GDP of many small countries (projected $10bil in 2015).
> "I don't know that location, can you give me directions"
On the other hand, sometimes I've been pleasantly surprised at how knowledgeable some cabbies are. I've gotten in a cab at LGA, told them my home address in Brooklyn, and they went there with no directions. I never tip less than 20%, but this efficiency earns a much larger than usual tip.
I take cabs daily and my experience does not match yours. Most NYC cabbies are quite friendly. Most are also immigrants with interesting stories.
In Harlem, where I live, cabs will actively honk for any potential fare, especially to the airport. You'll have multiple cabs trying to get you if you have a suitcase. From my conversations with drivers, they prefer airport fares.
I don't doubt that they are friendly but honestly that's irrelevant to most people. The problem is, while they may be friendly, nearly all of them will want to pickup and drop off in the same location because they know it's harder to pickup outside of Manhattan.
This doesn't happen with Uber's model.
Also, I'm paying for a ride somewhere. The top priority for me is not sitting in hot, smelly, filth. I'll stick with Uber.
1. NYC taxi cabs are actually pretty clean. Most have AC. Most are only a few years old. You can pass on the hail if you don't like the vehicle.
2. Today Uber has clean, nice smelling cars because it is new. Let's talk after Uber matures a bit like the cabs. We'll be back to where we started, only under the influence of an international monopoly. That does not bode well for the consumer.
3. Uber cannot really solve the imbalance of demand between Manhattan and the peripheries. Uber forces drivers to have a certain acceptance rate threshold. NYC forces drivers not do discriminate based on destination. In either case, drivers will try to game the system to avoid the less profitable journeys.
4. Look to places like Russia and India for the future of Uber. Drivers have 4+ cell phones, subscribing to different services in parallel with holding a cab license.
In grad school I worked part time for the city's non-emergency 311 help-line and took several calls related to taxi complaints. The process may have changed since then (early 2000's), but it's not a very friendly process for the individual making the complaint.
The person making the complaint is required to show up for a hearing, in person, at a date and time determined by the TLC, to present her complaint to a panel of "judges." The driver is also required to show up and to present their side of the story. My understanding is that they almost always find in favor of the complainee, even when there's no evidence and it's the driver's word vs. the complainee's. After the third judgment the driver loses their license.
So on one hand making a complaint is far more difficult than poorly rating a driver on a phone, a process that takes almost no effort. But on the flip side the complaints that were processed were taken very seriously and had very real repercussions.
> The "ridesharing services" rectify this problem; I've never had an Uber driver refuse to take me anywhere. If the licensed taxis want to be free from competition, they need to follow their own rules.
This is because all hails on Uber are tracked, and enough refusals would be noticed, and the driver would be fired.
It's shitty that green (or yellow) cabs do this; there should be a way to hold them accountable, but for now there is a stop-gap solution: lie.
Get in before telling them your destination. If they don't let you, lie and say you're going to somewhere in Brooklyn, then change your mind. As soon as you hear them begin to complain, snap a photo of their cab number, and start dialing 311.
It's a portal provided by the government (through a contract). It's may be competitive for taxis (that's an empirical question, I think), but it's not competitive in terms of algorithms, ratings systems, predictive taxi distribution, etc.
Also, sometimes you're trying to get somewhere very reasonable in Manhattan, but you can't hail a cab because of your, say, skin color. Uber solved that.
> A couple years ago, the city allowed independent car services to paint their cars green and take street hails.
Does anyone else see the absurdity in that? Compare to: "In 2014, the city allowed people to wear green socks"
If you want to transport people for a fee, what rational, moral justification is there for anyone to intervene in that? -To decide what colour your car should be, or where you can pick up customers?
> And you can. There is absolutely no law stopping your from picking up people in a car and taking them places. On land you own.
Imagine you could only wear blue socks on land you own, but anywhere else you'd need to pay $250k for permission to wear them. Would that be alright?
> When it is communal land, communal rules are made (sadly they far too often benefit a well connected minority, but the concept itself isn't bad).
You're kind of seeing a problem, but not really wanting to.
But for starters, the word "communal" doesn't work when you have a small group of "community leaders" imposing their will on ~330 million "community members" they've never met.
The major part of that was being able to pick up street hails not he color of the car.
Cabbies themselves have been the biggest reason for all the regulation from the city. Picking up tourists and aimlessly driving around for half an hour to run up the meter, refusing to take people where they want to go and not picking up black people are just some of the shenanigans they pull on a regular basis.
> Picking up tourists and aimlessly driving around for half an hour to run up the meter, refusing to take people where they want to go and not picking up black people are just some of the shenanigans they pull on a regular basis
Well, if you need a X-hundred-thousand-dollar taxi "medallion" to be allowed to transport people for a fee, that cuts down on your competition quite nicely, and then you're not really motivated to provide a good service.
Uber has shown that there are plenty of people who wouldn't mind transporting people for a fee, but they haven't been able (or motivated to) get permission to do so, which means the licensing system has been highly effective in keeping competition low and prices high, just the way the state-maintained monopoly/cartel wants it.
Can an Uber driver pull nasty shit on people and keep getting gigs? No, but taxi drivers can, and there's a reason for that. Well there you go.
The road is a limited common resource, and it's difficult to directly charge drivers per their usage of it, so the local government uses other forms of regulation.
As electric cars become more common, we can lower gas taxes to the point that they only cover environmental externalities and switch to a weight x mileage tax for roads.
(Mileage to be measured at vehicle inspection time and incorporated in registration fees.)
Roads could be private too, and payments could be collected for (and only for) using them, even without setting up a state-maintained taxi monopoly/cartel.
So I'm not sure what you think is currently handled well.
Uber drivers can see where you are as part of evaluating your ride request. Consequently, though your ride request might be offered to several drivers before being accepted, you are not likely to be assigned a driver who cancels later because of your location. Furthermore, Uber drivers are not allowed to refuse more than a certain small percentage of rides, so drivers who do this more than rarely will be kicked out.
It's more likely that a driver will be reluctant to go where you want to go. Though this can happen, Uber passengers will rate the driver poorly, and they'll be kicked out.
Uber's star rating system and insistence on keeping drivers only with good ratings is part of why people enjoy using the service. Drivers can't pull shit like that and get away with it.
> Uber's star rating system and insistence on keeping drivers only with good ratings is part of why people enjoy using the service. Drivers can't pull shit like that and get away with it.
The star rating system works well, but given the number of drivers Uber churns through, you're still likely to poor service.
I have had a case of an Uber driver not really wanting to drive me to Marina del Ray from downtown LA. He gave me a low review (this was back when there was the bug that let you see your rating).
The biggest problem I have with Uber is that some of the drivers are so pleasant and professional that I hate not being able to give them an extra tip. Maybe I should figure out how to do that.
That doesn't stop Lyft from accepting tips. I think Uber is just pushing back against tipping culture out of a desire to hypersimplify their user experience. It's a noble goal, but there's still a huge amount of pro-tipping social inertia in places like the US, which ends up making the process more complicated as people just tip in cash instead.
It's less of a problem for uber though because (1) it only applies when there's no good uber driver match, not when the uber driver doesn't want to go where you're going (because then they'd get a bad review, or worse) (2) I'm not sure, but I believe there are penalties for drivers who cancel too much.
Whatever you think about Uber, you have to realize that de Blasio's actions are not about congestion or the public's interest.
Let's not forget his original plan to have the city pre-approve upgrades to ride-hailing apps:
> The mayor’s plan to require Uber Technologies Inc., Lyft Inc. and other ride-hailing services to get city approval for upgrades to the user interface on smartphone apps -- and to pony up $1,000 each time they do -- has rankled a broad swath of companies, with 27 signing a letter protesting his plan.
This is very similar to BitLicense which is also born in new York. It's unfortunate that they are heavily against permissionless innovation which had created $4 and $40 billion markets.
Caught a taxi tonight in Paris. 5 euro but jacked up to a minimum of 7, driver claimed he couldn't give me change. He spent 5 minutes pretending to have no change, then gave me 2 euros in coins plus a 10 in exchange for a 20. Great.
Taxi services have practically begged for Uber etc to destroy them.
When you have French taxi drivers willing to injure, threaten, assault just for working for a competitor, it's no surprise that some of them resort to shenanigans like this.
Are taxis in Paris not supposed to be able to accept credit cards?
In New York, if a cab's card reader is broken (hey, it happens) they're supposed to inform you of this before beginning the ride. If they don't, you get a free ride.
There was un-coördinated public outreach, too. It may be unmerited graciousness, but a council member and a senior City administrator each told me, on separate occasions, that I swung their position on the bill.
New Yorkers have shit to do and places to go. I'm fine with paying for a congestion charge. But it needs to be fairly applied across traffic. Engaging regulators and - in a balanced and sensible way - poking them in their flabby spots, when warranted, is a well-tread feature of democracy. If you care about something, reach out to your local representatives.
Disclaimer: I don't work, nor ever have worked, for Uber. Neither do I hold a position in their stock, et cetera. I am a frequent rider. I've had many severely upsetting experiences with yellow cabs.
The thing about Uber I don’t understand is how they are going to defend their monopoly once they acquire it. Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business then how are they going to stop anyone else from entering their market?
Each transport market is effectively isolated (you don’t hail a driver from SF to get around NYC). This means any new entrant can achieve critical mass in a market at a relatively low cost (especially if they start with small towns/cities). If Uber do manage to get to the point where they can start extracting monopoly profits they have no means of defending these markets other than competing on unit price. Consumers are going to win big time out of Uber, but I can’t see how their investors will (at least their long term investors). Someone far smarter than me must have answered this?
I think you're significantly downplaying the network effects inherent in Uber's model. Yes, those network effects might be localized (each city is its own network), but they're still incredibly strong. Drivers want to be where the riders are and riders want to be where the drivers and other riders are. (As a rider, I want there to be a healthy rider pool so I can do sharing.)
Additionally, Uber doesn't have to jack up prices (with "monopoly pricing") to earn a healthy profit. In its mature markets, it's already quite profitable.
Given that, where do you think there is an opening? If it's so easy to compete with Uber on a local level, why isn't Lyft beating it in any single market (despite $1b raised)?
>Given that, where do you think there is an opening? If it's so easy to compete with Uber on a micro level, why isn't Lyft beating it in any single market (despite $1b raised)?
The market is going through a lot of innovation right now and what the end result will be is not known. I just can’t see how even if Uber wins that they have a way of preventing competition eroding their margins. All the regulation in the taxi industry was driven by the players wanting to control the cut-throat competition that existed before regulation. Competition is great for consumers, but not so good for the owners of taxis.
> All the regulation in the taxi industry was driven by the players wanting to control the cut-throat competition that existed before regulation.
The difference is that traditional taxis had no monopoly power. They were (and are) undifferentiated commodities—I don't even have any idea who owns a cab I'm in.
Uber's network is a substantial moat which protects it from undifferentiated price competition.
Again, how do you propose that a competitor would build a viably competitive network in an Uber city?
>Again, how do you propose that a competitor would build a viably competitive network in an Uber city?
I would pick mid-size markets and optimise for unit costs. I would settle on a single fuel efficient car model (or two) and then work on making my capital and servicing costs as low as possible. I would use trained and experienced employees and implement tracking technology to ensure that the drivers are polite, prompt, efficiently located, and don’t drive the vehicles like taxi drivers do (helping keep wear costs down). I would then bombard the local media market to achieve name recognition and app take up and then run a price war to gain market domination. Since I had optimised for unit cost I should be able to defend this domination against new entrants as long as I kept my pricing at just above my costs. I would make little profit, but my market would be defendable. Rinse and repeat in each new markets.
I don’t think such a business is worth the effort, but all it take is one person who does.
I don't think that's a viable strategy. If it were, Lyft would be successfully deploying it.
Namely, I see 3 primary flaws:
1. A marginally lower price is not by itself enough to achieve market penetration. If it takes 5-10 minutes longer to get a ride on your platform (due to fewer drivers), I'm not going to use it—even if you are 20% cheaper (wiping out Uber's entire margin).
2. You're ignoring the pooling savings which come from being able to easily coordinate shared rides due to a huge installed rider base.
3. Uber can spend you into the ground. They have a massive war chest and continued huge revenue from their mature markets—enough to undercut you until you run out of oxygen.
The biggest flaw of these 3 is that I just don't think price alone is sufficient to overcome network effects. If it were, the $100+ vouchers which I see also-ran competitors giving out would have made a dent in Uber's market share.
Competing against Uber in even a single city would require hundreds of millions in capital to basically buy your entire network overnight, and once you succeed in that market you'll enjoy less profitability than Uber does today.
There's a reason that crappy marketplaces like Ebay and Craigslist are incredibly sticky—networks are overwhelming.
A monopolist doesn't have to make its moat unbreachable, it just needs to be insufficiently profitable to overcome.
The only possible risk I see to Uber is from corrupt politicians.
I can see a competitor using the fast food model to effectively compete with Uber.
By having a large enough number of clean, reliable and uniform cars a competitor would provide a more consistent and predictable ride than Uber, which relies on its drivers subsidizing the cost of a variety of different vehicles.
Sure, you would be getting a McTaxi instead of an a la carte experience, but at least you would know what you order is what you get.
You raise a very good point. When it comes to a service like Uber most people just want a McTaxi experience; they want to get to where they want to go efficiently in a safe and friendly manner. They are not looking for more than this.
The reason McDonalds is successful is not because they produce great food, but because they meet a minimum standard in consistent way. The way Uber currently works make this hard to deliver.
Namely, I see 3 primary flaws:
1. A marginally lower price is not by itself enough to achieve market penetration. If it takes 5-10 minutes longer to get a ride on your platform (due to fewer drivers), I'm not going to use it—even if you are 20% cheaper (wiping out Uber's entire margin).
I think you have assumed that I would not have as many drivers on the road as Uber. I would have as many or more - hence the need to go after mid-size markets to begin with. The time for the driver to turn up with my service would be the same or better than Uber.
2. You're ignoring the pooling savings which come from being able to easily coordinate shared rides due to a huge installed rider base.
I am not ignoring it. If there is demand for this service and I have as many cars on the road as Uber then I can offer the same pool service. I will still have the same unit cost advantage.
3. Uber can spend you into the ground. They have a massive war chest and continued huge revenue from their mature markets—enough to undercut you until you run out of oxygen.
The biggest flaw of these 3 is that I just don't think price alone is sufficient to overcome network effects. If it were, the $100+ vouchers which I see also-ran competitors giving out would have made a dent in Uber's market share.
If you limit the size of the markets you go after then there is a limit to what even Uber can spend trying to kill you. You just need to be able sustain any loss over the length of time that you think Uber can fight you for. The key to success here is have enough resources to survive the level of damage anyone can throw at you. Personally I would hold off until Uber just goes public when they can’t afford to waste as much money anymore.
More fundamentally the reason none of Uber’s competitors like Lyft (or even Uber itself) has pursued this model is that you can’t sustain it at the capital cost that VCs demand. It is a model which will only be pursued by businesses with a low cost of capital in much the same way the container shipping industry is run. The problem for Uber long term is once a business enters with this model they will be hard to fight.
I have to say these discussions are lots of fun :)
I think (not an economist) but this is what happens when a market is disrupted, new players enter with a lower cost than incumbents, clean up, this encourages other new players to enter at slightly below, first player then drops to match and eventually you reach a new stable equilibrium, in lots of markets that is by one company winning and buying out the others (commodities like Sugar and Salt seem to go this way, it's hard to differentiate on Salt) while others divide up amongst big players (laptop market).
Uber will be interesting since the initial capital costs aren't that high (compared to a multibillion dollar fab plant or hundreds of 40,000sqft shops) so it could be a blood bath, alternatively one way of differentiating is on brand and Uber has (despite some negative press) got brand recognition.
There maybe a first mover advantage in play here as well, lots of sites clone successful sites (for example) but rarely make a tiny fraction of what the original one did.
Something else occurs, Uber took a lot of VC funding, new players entering the market who didn't do that could offer a better deal on both sides of the market and not have the millstone around their necks either, it would be amusing if a smaller nimbler non-VC company ate their lunch.
Industries like sugar and salt are commodity industries where prices are driven by costs. There are economies of scale that allow one player to dominate a market and prevent new entrants. Uber does not have this advantage since each market is effectively small and isolated (there are thousands of taxi markets in the USA alone) and most of the costs are unit costs, not fixed costs over which they can scale.
Any competitor with lower costs - say a business that used only one fuel-efficient car type that offered lower unit costs should be able to outcompete Uber. The contractor model where each contractor purchases and services the needed physical equipment (i.e. cars) is far from the most efficient way to run a capital intensive business.
A complete sidebar discussion, but although there are many, many laptop manufacturers, one company is estimated to make only 10% of the revenues but more than 35% of the profits, leaving the manufacturers of the other 90% of the laptops to divide 65% of the profits.
So... It is possible that in some markets, a company can drive operational efficiencies to be grossly profitable even if it ends up with a minority market share.
Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business
That's very unlikely to happen and I don't think anyone here at Uber sees the world as a zero-sum game as you portray it. Even in SF, the most mature Uber market, there are still plenty of cabs operating. Cabs offer a different service (street hails, fixed pricing etc) - which is why you can even hail a cab from the Uber app if you want.
Differentiation is key, and that's how Uber does and will compete with both taxis and direct TNC competitors.
I also don’t think it is very likely either, I was just assuming the best case scenario for Uber and I can’t see how they can make money in the long term even if they achieve this. Competition is great for consumers, but not so good for investors.
Edit. Thanks for the updates to your post Ben. Given Uber’s cost of capital and current valuation how do you see Uber earning enough of a return with a differentiation business model? Or is the current business model irrelevant to Uber’s future and you foresee a massive pivot?
I think you under-estimate the power of network effects and also the cost of entry to set up an on-demand transportation company. If it really was as easy and low cost as you assert I would suggest you would have seen many other players enter the market already by now.
Maybe, but if each market is isolated then the network effect is small. To dominate a market you just need enough drivers available to meet the market expectations. If you have two businesses in a market supplying an equal quality service, but where one is 20% cheaper, then the cheaper service will capture the majority of the market.
An alternative hypothesis might be that nobody can think of a way to make money by investing in such a market and so they don’t.
My god I hope this is not Uber’s plan. While this would actually work it is very, very illegal [1]. I can’t see the USA government turning a blind eye to such blatant antitrust activities, but after what they have let the banks get away with maybe it would work.
I think we are talking past each other here. Any competitor with an equal number of drivers can offer the equivalent to Uber pool in a market.
I was referring to a business model where Uber cut prices in a small market when a new competitor enters to kill them before they can get going. This model works really well once you are an established business (the Standard Oil model) hence why it is illegal.
Yes, we probably are. Not much of what you write makes any sense. Cutting prices is obviously not illegal. In extremely rare circumstances if the pricing is clearly below cost, you might have something. But that's even more unlikely in the software or service industries.
Yes I agree. I view the taxi industry as being made up of many separate markets where dominating one geographical market gives a company little competitive advantage in other geographical markets and hence why the taxi industry stayed fragmented when other areas of the transport industry consolidated. If this is wrong then the first business to win the consolidation race will dominate the market long term.
I don’t think Uber is in a commodity market right now (there is far too much innovation going on), I just don’t know how you prevent it becoming one in the future. Your current valuation suggests that a lot of smart money disagrees with me :)
Winning all the legal battles might not be their best case. They are getting good at fighting legal battles, and a permanent state of lawfare might be to their advantage (because they are better at fighting it than competitors).
If this is their business model it is a very interesting one. Create continual legal battles with the local authorities to scare off new entrants to the market.
I wonder if any business has ever used this model successfully before?
In a more general sense, quite a few businesses rely heavily on complicated regulatory environments that virtually ensure than only people who can afford lawyers can compete.
Of course, there's a difference between continual legal battles and just needing a lawyer.
Sure, but their investors are going to want them to start extracting profits at some point in the future. You can’t run an business indefinitely selling below your costs. The question I have is how are they going to be able to start doing this without opening themselves up to competition?
It is rare to see, of not impossible, a real monopoly in a free market.
Uber has to compete to win customers, if they artificially raise their prices to where people will not pay, people will choose a different form of transportation.
The common definition of 'monopoly' is the sole provider of a good or service. I doubt very much that Uber can ever achieve that.
I much prefer 'market share', I think it's the most accurate term.
Aside from that, I do see some parallels with eBay.
Firstly, I have no inside knowledge of their complete model, just assuming.
Travis has said that the early markets are 'profitable', the early markets are also their most competitive. So the 20-30% model they have now should allow profitability in all the 300+ cities they're in. I'm assuming the margins are very tight, and that they have to do a lot of volume to be hugely profitable, which they're fast approaching.
Any new business can establish an equivalent to uberpool once they have critical mass. Since many markets are small the relatively cost of establishing this mass is not excessive.
Yes network effects are real - the question is there much of a network effect with the taxi industry. History suggests there isn’t, but the current valuation of Uber suggests that a lot of smart money thinks there is such an effect.
Actually there is a lot of history for this - go to any third world country and this is how most of the taxis for locals run. It is actually one of the outcomes of a lack of enforced regulation since competition drives unregulated drivers down this path.
How is it a natural monopoly? A natural monopoly is something like the electrical poles and wires. I can't see how Uber could even become a normal monopoly even if everything went their way.
Both buyers and sellers of second-hand goods can use multiple auction websites without much hassle, yet eBay still has a natural monopoly due to network effects. I doubt the network effect for uber is as strong as ebay, but I wouldnt completely dismiss it either.
Exactly. If you know a competitor can provide the equivalent service quality, but at significantly lower price, then users will switch. In a small market it is not too hard to let potential users know you exist and install your app.
What do you consider "monopoly profits?" As of the 2013 leak, Uber was grossing $1bn in revenue [1]. Uber takes a 20% cut from each transaction, and has an extremely lean cost structure - drivers pay for gas, insurance, amortize vehicles, don't get any benefits, etc. Even if we assume costs to be 10% of revenue (which they aren't), Uber still would have earned a gross profit of $100m in 2013. Judging by Uber's current $50bn valuation, their revenues have grown anywhere from 3x-5x over the past 2 years. [2]
So by my rough estimations they're making $300-$500m in yearly profit (hardly loss-leadership), and they still haven't driven Lyft or conventional cabs out of service. This is also without taking geographical expansion into consideration. Uber is sitting on a goldmine of a market that it has barely begun to tap.
So what if Uber does manage to establish itself as a monopoly? Then we look to the price elasticity of demand for Uber's service, which measures change in demand over change in price, aka how bad people actually need the service. Cabs are essential to a large group of people (businessmen, tourists, blind, etc.) and in high demand for almost anyone else that lives in a large city such as NY or SF, where it is uncommon to own a car and often inconvenient to take the metro. Therefore they will have a large bandwidth in which to raise their prices in large cities before users start to disengage with the service, opting instead to walk or take the metro. Smaller towns, where people don't use cabs as much, do not present a large market for Uber, but it costs them next to nothing to get users and drivers to download the app, therefore there are no prohibitive costs of investment stopping them from expanding operations other than a natural lack of demand.
If they jack prices up too high for an extended period of time in the cities, another company will enter the market and pick up the churned customers, much as Uber did in the broken, monopolistic taxi market.
So ultimately they will be able to make a very healthy profit, and will not need to worry too much - unless the government decides to intervene with some serious anti-trust legislation, but it probably won't as long as Uber is paying a cut to the cities that it operates out of.
You are right that there are low barriers to entry in this market - it's why most drivers do both Uber and Lyft. The underlying technology is the same, and the capital (drivers) is not proprietary and can be shared between different companies. However, if Uber were to stipulate that drivers sign an employment contract, and then enforce that they were not working for the competition, this would raise the barriers to entry for competitors. Likewise, there isn't much differentiation in the taxi market. It's nice if a driver comes with water and a nice-smelling car, but ultimately it's not a deal breaker.
Ultimately, the network effect is key. Get the most users on your service, get the most drivers driving for you, beat the competition, then erect barriers to entry around your castle. Just don't piss the peasants off too much, or they might try and revolt :)
>What do you consider "monopoly profits?" As of the 2013 leak, Uber was grossing $1bn in revenue [1]. Uber takes a 20% cut from each transaction, and has an extremely lean cost structure - drivers pay for gas, insurance, amortize vehicles, don't get any benefits, etc. Even if we assume costs to be 10% of revenue (which they aren't), Uber still would have earned a gross profit of $100m in 2013. Judging by Uber's current $50bn valuation, their revenues have grown anywhere from 3x-5x over the past 2 years
Assuming all this is correct (leaks sometimes are not) this does not solve the competition problem. The more money they make in a market the more attractive it comes for someone else to enter that market.
>You are right that there are low barriers to entry in this market - it's why most drivers do both Uber and Lyft. The underlying technology is the same, and the capital (drivers) is not proprietary and can be shared between different companies. However, if Uber were to stipulate that drivers sign an employment contract, and then enforce that they were not working for the competition, this would raise the barriers to entry for competitors. Likewise, there isn't much differentiation in the taxi market. It's nice if a driver comes with water and a nice-smelling car, but ultimately it's not a deal breaker.
The problem is the parts of their business that are unique have low barriers to entry, while the other parts are inherently inefficient (having each driver pay all the capital and running costs is more expensive than centralising). Sure the current taxi industry was ripe for innovation, but once that genie is out of the bottle there is nothing stopping someone else out ubering Uber. How does Uber stop this happening?
I don't think you realize how Uber moves into new territory: tons of free ride codes (maybe 40% of my rides have been unsubsidized); special event codes; subsidised events (free transportation to voting places last election here); cash payouts and bonuses for drivers. It's by no means lean.
They haven't defeated the cap yet. According to the article, there will be no cap while a four-month study proceeds, and a cap may still be imposed, depending on the conclusions of the study:
The city will conduct a four-month study on the effect of Uber and other for-hire vehicle operators on the city’s traffic and environment.
While the study is being conducted, de Blasio won't seek to cap the number of new vehicles Uber or other car services can put on the road. But de Blasio administration officials say a cap is still a possibility in the future.
Okay? And the data access was clearly more important to NYC than the cap. If you really think NYC can't step up at a moment's notice and drop the hammer, you're awfully optimistic. I mean, it's in the press release that the cap is not off the table.
Unfortunately, this world cannot have win-wins, so I've got to find someone to hate in this situation!
In the last few years NYC has closed stretches of Broadway (a significant north-south corridor) to traffic, squeezed vehicle lane widths to add bike lanes and introduced several measures to slow or impede traffic so the city is safer for pedestrians. These are all very good things, but they come with a cost.
Reducing the surface area of roads does not magically remove cars from the roads, it just creates congestion and traffic.
If anything, Uber's model would seem to reduce traffic since their cars are more deliberate vs. taxis' aimlessly wandering.
NYC should try to figure out how to partner with Uber. Taxi's are already expensive enough to be something of a luxury (though filthy), Uber is a far better experience.
> Reducing the surface area of roads does not magically remove cars from the roads, it just creates congestion and traffic.
Most traffic theory maintains that this actually does magically reduce traffic. People who would have driven now decide that there's too much traffic and find another way. Similarly, expanding highways doesn't reduce congestion, the number of cars just increases to the previous levels of congestion.
Reducing the complexity of a large number of intersections (AKA closing & narrowing Broadway) can move traffic through them more quickly:
http://www.nyc.gov/html/dot/html/pedestrians/broadway.shtml
'Travel speeds for northbound trips throughout West Midtown improved 17% from fall 2008-2009, compared with 8% in East Midtown.'
The main issue seems to be that Uber isn't replacing taxis but augmenting them: before there were about 2000 taxis in the core of Manhattan during peak hours, and there are now 2000 taxis and about 1900 Ubers. The trips per taxi seem to be slightly reduced, but overall there's still an increase in the total number of taxi-like vehicles circulating, and the total number of trips made by automobile vs. other modalities (subway, walking, etc.). Thereby making it easier to get a taxi, but making traffic congestion worse.
It's in a neighborhood that has no cabs and driving there not pleasant or convenient. Last night the chef told me if it wasn't for Uber, they probably wouldn't have survived
Why did they put their restaurant in a location that depends on a single, possibly illegal, transportation service to get their customers to them? Was that location easier to get to when they opened?
In theory, they should pay lower rent for a bad location. Uber, in driving up their profits, should in the longer term also drive up their rent. The landlord will eat all the advantage eventually.
First of all, it's perfectly legal in Illinois and Chicago in particular, because Illinois and Uber worked it out. Secondly, obviously because rent is significantly cheaper in that neighborhood.
Does this mean Uber's daily spam robocalls from "Molly" to New York City residents that offer no option to be removed from the list or speak to a live person will stop?
If this is what they were actually doing, and not hyperbole, I suspect you would have a reasonable case to fill out an FCC complaint - see their "Rules and Resources for Dealing with Unwanted Calls and Texts" at https://consumercomplaints.fcc.gov/hc/en-us/articles/2028738...
I've gotten several. I still have one recorded in voicemail. It likely wouldn't matter since Uber would call it a "political" call, thus utilizing one of the loopholes so they can spam the heck out of your phone number. All they accomplished by calling me over and over and over is ensuring that I'll never use their service.
Vonage's auto-translate results for the curious:
"Hi it's Molly with Huber and we need your help. We ended the days when you couldn't get a ride home because cab didn't wanna leave Manhattan now married to blog Theo is trying to bring the bad old days back because his millionaire taxi donors are telling him to why on earth would your council member. Ever consider voting for something like that. They should stand up for you. Not orders from the mayor your council member is sponsoring this bill and we need your voice. Please call your council number and tell them to take their name off of mayor-to-bother-as(?) an title bird(?) because you and all New Yorkers deserve a reliable transportation. Paid for by Huber 212-257-1745." "
Uber continues to amaze me with their incredibly skillful political maneuvering. They seem to have roadblocks thrown in their way at every turn and they manage to just keep trucking. Heads down, eyes on the prize; it's really quite impressive to watch. I have to believe it starts at the top with a tunnel vision approach to revenue growth. It's like that old Al Davis quote "Just win baby!".
Whether you agree with what they're doing or not, it is incredible to watch their execution.
In this case it looks like its lobbying lost but its PR won. Despite that it reluctantly turned over its data, every news outlet portrayed it as a victory.
Yes, a company with an illegal business model stayed under the radar until they got big enough that they could combat the legal challenges to their illegal business model. Always a pleasure to watch.
When their business model is only illegal due to a corrupt, inefficient, entrenched monopoly which is just as hostile to its customers as its employees, yes, it is indeed a pleasure to watch someone take on the machine and win.
Where "winning" is the normalization of precarious labor where the employee assumes all risk and somehow makes even less money than they did in "the machine".
Oh, but you got to the club a little faster. Baller, bro.
I make a point of asking Uber and Lyft drivers how they like it. Lyft drivers universally love it. Uber drivers are less enthusiastic on the whole, but they have generally said it's better than working as a cab driver. I've since stopped using Uber since it's hard to feel comfortable about their business practices, but they're still better than the taxi monopolies and I'm happy to see them pursuing the fight and clearing the way for kindler, gentler services along the same lines.
I am generally inclined to think that people should be free to make their own decisions about their lives. Whatever you may think about the risk/benefit tradeoff, it seems clear to me that drivers in Seattle who have the choice choose to drive for Uber, Lyft, or a private for-hire service rather than put up with the traditional cab dispatcher. I can make guesses at why that might be, overall, but I am certainly not going to tell them that they are making the wrong choice.
To be honest, consider that it may take just one negative review to get fired ("independent contractors", hehe) from Uber (don't know how strict Lyft ratings are). I doubt the drivers that are not satisfied will risk answering you honestly, as you're a person in power to kick them out of their job by a single tap on your smartphone.
That's a reasonable point, and I certainly don't imagine that my informal survey results have any scientific validity. I do have what seems to be a higher-than-average sensitivity to body language, however, and I have never seen the signs of stress or guarding that I would expect if drivers were trying to give me the answers they thought I wanted. Perhaps Lyft's hiring process selects in some way for people who have the kind of social awareness and self-presentation skill necessary to fool me, but it seems simpler to believe that Lyft drivers are, by and large, genuinely happy about their jobs.
The individual choices of Uber drivers aren't what I'm concerned about. I'm concerned about the overall normalization of precarious labor that benefits the owners of capital and hurts the people doing the work. It starts to hurt workers everywhere if everyone gets used to accepting all of the risk of employment, not having access to workers comp or unemployment insurance, etc etc. And given the kind of benefits packages tech companies typically offer their workers, Uber's practices are especially hypocritical.
Oh, bullshit, as if taxi drivers weren't already contractors without any benefits. Hell, they had to pay to work, by renting a medallion from millionaires like Evgeny Freidman, who can actually afford to buy them. Uber only takes a cut if you actually make money.
Yes, once Uber takes the crown they will behave ethically, operate within the confines of the law and re-classify their drivers as employees with full benefits. They also won't even consider dropping them as soon as self-driving car technology matures. /s
> re-classify their drivers as employees with full benefits
In what way is this an ethical concern? Many other businesses work with contractors. Considering that drivers compete with each other, work hours of their choice, and supply their own equipment, what exactly makes them employees?
It depends on the state, but in many places taxi drivers are not employees either; they are independent sole proprietorships who rent the taxi medallion from its owner. Uber is not perfect but is an improvement over the status quo for both drivers and riders. Once it "takes the crown", we can work on the next step in improving transit.
This seems like a non-sequitur. The business model was made illegal by people who were voted into office to make business models like these illegal.
Uber isn't wrong to push the letter of the law, but no one should be surprised that it will take a little bit of time for the law to adapt to this. Uber's vicious and cavalier attitude towards law in general is really disgraceful.
This seems like a classic "ends justify the means" type of scenario, and I'm generally skeptical of these.
Although I am a big proponent of spreading the word about Regulatory capture, it's not quite that simple. A lot of the regulations that exist for taxis really do make sense, given a few contexts:
1) you don't know who is coming to pick you up
2) the ability to contact your former driver in the event of a bad experience is almost nil
3) you have to trust the taximeter
4) taxis have to jockey for a visual hail
5) there is no guarantee that a dispatched taxi will actually arrive.
while there are concerns (e.g. safety, insurance) that do warrant a strong rational basis for regulation that are in common between taxis and lyft/uber, etc - a lot of the regulations that are in place do not carry over and those shouldn't apply to the lyft/uber.
To its credit, the state of california seems to be making an (if slow) rapprochement between the existing regulation set and a reasonable set... Don't know about other places.
One can decry Uber's asshole spirit and questionable business practices while applauding the political change their unpleasant activity is accomplishing.
But people didn't vote people in because of their stance on taxis, apart from small vested interest groups. For most people this wasn't even an agenda they thought about, but because Uber exists, and they see an alternative to the rubbish taxi companies, it's coming to the spotlight.
Yes, right now that seems to be the case. Taxi systems were notoriously bad before regulation, so it's not true to say that Uber is illegal only because of a deeply entrenched monopoly.
Things were seriously rough in NYC (and elsewhere) before the government stepped in. I expect it to take some time to adapt to a things like Uber/Lyft, and Uber's attitude towards that reality is disappointing.
Then again, it is basically the word of Silicon Valley gods to be as blatantly disrespectful of reality as possible.
It's just a hunch at this point, but I suspect the end game for personal transportation a few decades down the road will be government-provided rides.
Cities, counties, whatever municipal entities providing autonomous vehicles at subsidized rates, or maybe even "free". These are the entities paying for the infrastructure, after all, and once voters don't own vehicles, the argument will start to be made that governments should operate what what runs on the infrastructure.
But that's decades away, and there's money to be made now, in the current system. And Uber/Lyft/Google whoever else is in the business may provide the tech to the governments.
Anyway, like I said, it's just a hunch at this point, but it won't surprise me if things slowly move that way.
That's an interesting perspective. Honestly seems like a future I could get excited about, despite bureaucratic inefficiencies and edge cases of govt screwups.
A world where transit is dominated by things like Uber is a world where those who can't (or don't want to) afford $600 phones + $50/month service charges can't navigate a city.
The US is not the only country in the world. Not all countries have a corrupt, entrenched monopoly nor do all countries have the same antagonism towards taxi services.
And yes it's great to see someone siphon billions of dollars away from government/taxpayers and into the hands of a select few. It's also great to see them do this by ignoring any and all laws they see fit to. What a shining example of corporate responsibility and ethics.
Yishan Wong explained it well in a Quora answer about the law being "lazily evaluated" and how the political realities can change by the time the law comes after a business in earnest:
sometimes I wish a brave soul will do the same with the financial industry (w.r.t. institutional regulation) but alas the law there is nowhere close to lazy eval.
Just as it's much easier to get traction behind an idea with a proof of concept, it's much easier to change the law when you've demonstrated an obviously better solution.
A company should never act unethically. That does not make all laws worthy of respect. Just have a very detailed understanding of the consequences.
Fascinating to see HN's best brightest and their view of the rule of law. How is it good for democracy if a well-funded corporation can flout the law by its very existence? People make the excuse that taxi regulations are unjust. But it is still the law, and for Uber it didn't matter whether the law was unjust, only that it was in their way. These guys are not crusaders for justice, they are profit-seekers who decided the law didn't apply to them and went about their business until they amassed enough power that they could not be stopped.
No matter what Uber does, they always please me with stuff like this. It makes the anarch-libertarian blood run warm to see government cronies routinely bested and consumers offered superior services in a market that was ripe for innovation. Now we need this type of disruption in health care and education.
It started in education with Khan Academy and the like, but there's still a lot of work to be done. As for health care... it is one of my fondest wishes for a large company like Google to come up with a medical expert system that can solve even half of the "take two pills and come back in two days" consultation that currently cost me $50.
> it is one of my fondest wishes for a large company like Google to come up with a medical expert system that can solve even half of the "take two pills and come back in two days" consultation that currently cost me $50.
AFAIK, this is not a technical problem; such solutions have existed for quite a while. Drug control laws, laws governing scope of practice of various classes of health care providers, and insurance rules all require that, even if your diagnosis and recommended treatment come out of such a system, its done under the authority of a provider with a particular kind of license with a particular degree of contact.
Absolutely agreed; I was reading about such medical expert systems in the 80s. I know it's a political issue... unfortunately, I don't see anything smaller than an Apple or Google able to take on it.
A possible alternative might be a startup willing to offer such services to third-world countries that have really bad medical systems (which in turn would mean not enough political power to prevent it). Unfortunately, I don't know if there are enough money in such a venture - definitely nowhere near the current "get $1B quickly" trend.
While Uber and AirBnB were able to get VC backing for business models that deliberately disregarded key regulations in their field, neither short-term occupancy laws nor taxi regulations are enforced with the same kind of, well, robust methods by authorities as laws governing the practice of medicine and, particularly, the dispensing of controlled substances.
Disrupting that is likely to take political capital, and application of that political capital at an earlier stage of the process than what AirBnB and Uber have done in their fields, or its going to involve a lot of risk for participants and investors, and not just the kind of limited-downside financial risks that investing in a corporation, startup or otherwise, usually involves.
I drive for Uber in my spare time as of a few weeks ago - they just started serving Cheyenne for Frontier Days (and I'm hoping they keep the service on after that, though I'm not sure the demand is gonna be there)
(That is, for the precisely one ride I've gotten.. Something in the backend appears broken and nobody can request rides even though I'm online, and support hasn't been helpful on this >_<)
Can answer any questions you have, but I doubt there's going to be a lot to answer. Signing up as a driver and doing what you gotta do is a pretty straightforward process.
I have heard several interviews with drivers. It reminds me of every other VC funded technology company that creates a platform. Those drivers do well as early adopters, but I suspect its downhill (for them) in the long term.
I spend every Lyft ride I take talking to the driver about what it's like driving for them. The majority also drive for Uber. They always say positive things although that may be due to self censorship.
I have one question for somebody knowledgeable about this market.
Why companies like YellowCab do not offer something similar to Uber? They developed the app but the app is jut front end to dispatcher: so there is no guarantee that cab will actually come (I tried it).
For example, ability to pre-pay taxi via iPhone so that there is guarantee that cab will actually pick me up. Or maybe hailing taxi via iPhone? Or something like Lyft Line?
Is management of cab companies to blame? Or is it taxi drivers?
Most of my exposure to Uber has been negative articles about them. I've used them a handful of times, but not for a couple of years, until just this week.
I used them to get to and from the airport for a trip this week, and it was pretty interesting to compare with what I've been reading.
First, of course, the experience as a user was great. This is no surprise, but it sure does cement my desire to use them over any other service. I wanted to avoid taxis at all costs. I was ready to drive to the airport twice each way to handle all 8 people who were going, and pay for parking, rather than deal with that. I've done it before and wow, it just sucks. You call and get a surly dispatcher, you have no idea where your car is until it arrives, it might just not show up, credit cards are a joke, you have to figure out what to tip, etc. Uber was great. Hail in the app, see within seconds exactly where your car is and who's driving it, track them all the way, get in, ride, then get out on the other end and go, without even needing to explicitly pay. It just works! Even getting two different cars at 5AM in the suburbs was no problem. No cars were available at first, but within a few minutes they appeared.
I'll note that it's not just taxis who are problematic. I also checked into Super Shuttle, because heck, there's so many of us that we should be able to get a whole van at a good price. Checking on their web site, I thought that's how it would be. They wanted $28 plus $10/person, which worked out to quite a bit cheaper than four Uber rides (two each way). And we'd all go together, cool! Of course, it turns out that this is the price for each way, so the actual price would be double. They are pretty careful not to make this clear until very late in their reservation process. To be fair, all the info is there if you pay very close attention, but they make it extremely easy to assume that the quoted price is the whole thing. Compare with Uber, which is happy to give me a pretty precise quote, and matched it (near the low end!) all four times.
OK, we know all this. It's a great service (unless you get a bad driver who attacks you or something) but it's built on the backs of the poor oppressed drivers. Except both drivers I talked to were ecstatic about Uber and loved doing what they do. One was relatively new on the job, having been an assistant manager at a pizza place until a few months ago. He started out doing Uber part time, then graduated to full time once it became apparent that it was the better choice. The other one has been doing it for about two years. He bought a brand new Toyota just to drive for UberX, and he's put over 60,000 miles on it since then. He loves the flexibility (apparently he's somewhat "on call" to help family members out doing various things, and when he needs to help them he just signs out of Uber, goes off and does whatever tasks this involves, and signs back in) and the money is pretty good. He usually hangs around downtown DC on weekends and makes good money accumulating lots of short trips, but hangs out doing occasional airport runs on other days to earn a bit more.
So they're good with customers, they seem to be great with drivers, and all I have left is a vague sense of unease at how they approach regulations, by basically barging in and ignoring them. Except they're totally on the up-and-up in Virginia now, having reached an accommodation with the relevant authorities to be completely above-board.
After all the stuff I've read about them over the years, I felt a little guilty using Uber for this trip, but practicality won out. The guilty feeling didn't last.
Edit: I forgot to mention, the second guy, with the new Toyota, previously drove a cab. It was awful, and says he tries to convince his cabbie friends to switch to Uber at every opportunity. They charged him $150/day to drive for them no matter what. No fares? Fuck you, pay me. He's extremely happy that Uber came along to give him a much better way to make money.
> They charged him $150/day to drive for them no matter what.
Not that I particularly want to defend taxi companies, but they also own and maintain the cars. Purchasing a newish vehicle and maintaining it isn't free - while not being charged daily, it's still a sizeable invoice you have to pay, no matter what. $150/day does seem extortionate, though.
Of course, but the quantity is outrageous. Financing a taxi-level car is going to be, what, $200/month? Maintenance should be substantially lower than that amount. That daily charge is literally an order of magnitude higher. "No matter what" is fine. $150 could be fine, if you earned a lot. It's the combination that's crazy.
Services like Uber definitely need some regulation. I drove from downtown SF to the Castro this evening, and witnessed 4 separate incidents of Uber drivers being reckless and/or discourteous. Things like: driver stopped in the leftmost lane, at a green light, because he suddenly decided that he wants to turn right instead of left; driver stopped in the right lane to pick up passenger, when he could have just stood in a parking spot a few yards down; driver stopped to pick up a passenger at a corner, blocking the crosswalk.
I'm all for "disrupting" the taxi industry, but please don't disrupt traffic because you're too lazy and/or clueless. Is there a way to report asshole Uber drivers?
What does it have to do with Uber? A lot of drivers are doing that, and don't even get me started on taxi drivers in New York City, they just do whatever they want on a road.
If these are Uber drivers picking up/dropping off passengers, then it's Uber's problem, isn't it? Setting aside the contractor/employee dispute, these drivers are engaged in activity for which they'll get money from Uber, so it definitely is Uber's problem.
> A lot of drivers are doing that
Not in SF. I've lived here 10 years, and never saw this level of ineptitude. These days whenever I see a driver being an asshole, I immediately check to see if it's an uber driver; and 9/10 it is. I sometimes work in a cafe which is on a corner; and I've lost count of the number of times I've seen Uber drivers doing a U-turn at the stop sign, confusing other traffic.
> don't even get me started on taxi drivers in New York City
Driving for Uber (or a rival) hugely increases the likelihood that you'll want to change your destination suddenly eg when you get a job. That makes it more likely you'll do something dangerous to get somewhere more quickly - your review depends on it, and consequently so do your potential future earnings. I'm not sure that's a reason to regulate Uber but it is a problem, just as it's a problem with taxis.
Uber's "we need to meet demand" argument is true, but disingenuous. Uber needs to keep adding more drivers because they have such a high turnover rate.
Many drivers work for a few months, realize that after costs they're making minimum wage, if that, and then quit. Naturally, Uber needs constant access to fresh blood in order to keep the scheme going.
The title would be better if it were "Uber has defeated Bill de Blasio's plan to block them from doing business". I think we really need to fight the notion that Uber promotes "ride sharing", whatever that even means now. Uber has shown that its service is anything but sharing - it is plain old taxi with a spiffy app and no labour protection, and where their "employees" are merely treated as another replaceable contractor. The media also needs to stop quoting meaningless buzzwords like "sharing", but I guess this goes to show the successful PR of Uber.
We've changed the title of this submission to be that of the article. Submitted title was 'Uber has defeated Bill de Blasio’s plan to block ride sharing'.
Submitters: please don't rewrite titles unless they are misleading or linkbait.
And yet people choose to use them and pay them money. But no, we must protect those willing customers from the dangers of doing business freely and having an actuall choice, instead of paying extra to a violent monopoly of taxi drivers who'd rather crash other's cars than compete honestly.
People would pay for taxis too if they were priced competitively and as reliable/convenient as Uber. I don't think treatment of drivers/employees is high on anyone's priority list.
Just because some people are willing to pay for something, doesn't mean it's right. People in general are very happy to pay for things that have huge externalities not directly affecting them.
Maybe I could have phrased it better. I was making a wider point ("people in general...") than Uber here. Uber's externalities are mostly related to insurance, worker abuse and damage to the fabric of society (what example do they give by being able to get away with blatant disregard for law?). Some of that should (and probably eventually will) be handled by union.
But my point is - willingness of some people to pay for something in no way makes something worth existing. People do pay for kidnapping and murder.
Or more day-to-day, mundane examples - why do we have spam, both electronic and the shitton of leaflets that go to trash every day in every city? Because someone paid for it. The Internet as a useful resource of knowledge is in constant battle with people paying for SEO. I could write hundreds of such everyday examples.
The point is, people are optimizing extremely locally when it comes to their decisions. Sometimes because they simply don't care, often because they don't know better. But just because they're willing to pay for something doesn't make it good or validate its existence.
Uninsured Uber driver causes traffic accident. Pedestrian is severely injured. Uber driver cannot pay for the medical expenses and there is no insurance company involved who could.
Either the pedestrian is ruined for life, or society has to pick up the bill.
That's one of the clearest examples of externality you will ever see.
Our free choice evangelists try to frame the whole issue as "one Uber driver, one satified customer who only exercised a choice, and no one else exist in the world".
First of all, if that was true it would be a failure of the healthcare system ("society paying the bill" is just insurance with economies of scale). But that's not true. A lot of people are not aware of recent developments with uber. Uber offers commercial comprehensive insurance on all rides. When there is a passenger in the car, there is full commercial insurance.
When there are no pax, many insurance providers DO cover it under personal insurance. Some (like geico) don't, but I would wager that the majority of Uber are insured every second of the day.
Even if the healthcare system eats the cost (as it would in my country), it's not supposed to. That's akin to entering a health insurance contract and then demanding the insurer pays for the theft of your iPhone.
Road traffic is insured by car insurers. The Uber driver doesn't have any, the car insurer therefore doesn't pay, so someone else pays. It doesn't matter if you rationalize it with "oh, that someone else is also some insurer". It is someone not involved at all. Ergo an externality.
So, I'm from Russia. In Russia, there's a great variety of cheap taxis, great mobile apps with reviews, gps location of taxis and stuff like that. Very good infrastructure. All simply because government doesn't regulate that.
I am yet to meet a single person complaining that this is bad. There is no increase in road accidents. The service is great. The drivers are very polite and are always on time. One must wonder, how can you be so blind to an obvious example of free market at work?
You are intentionally leaving out the part where many of the people in danger don't have a choice, because they have no connection with Uber, other than the inconvenient fact that they were counterparts in a traffic accident.
That's silly. A more accurate analogy would be: We should stop saying there is no ice cream (no ridesharing) being sold at McDonalds (Uber). I think that's a reasonable assertion.
Uber doesn't describe the service as 'ridesharing'. That's a term the media uses or very occasionally we will use if referring to (for example) "Texas Ride Sharing Bill" where that's the official name of the legislation.
Yea, but it's 1000 times easier to organize a ride share with Uber when the app will automatically pair you with someone with similar source and destination locations.
This is where people go wrong! You're not paying to be driven anywhere. You're paying the driver to want to go to the same place where you are, and then he might as well give you a ride there. So it's completely different, and the driver doesn't deserve any of the perks and protections people with real jobs get. Being an Uber driver obviously isn't a job, it's just doing something for money. And there's an app involved, so it's clearly different. It sounds like you're just conversative. Disruption, dude. Have you heard of it?
I'm no fan of Uber and I can't stand its founder or his ridiculous smirk but... they played this well. Uber's got game when it comes to politics. If either political party ever learned demagoguery from Travis, I'd be scared.
It helps them that their opponent isn't sympathetic at all. Non-zero medallion values, by definition, mean that there are too few cabs on the road (and in New York, there are). The Medallion Mafia pisses me off; just a bunch of rent-seekers stealing money from drivers.
I'm actually glad to see the Medallion assholes get "disrupted". I just wish that it were a different company taking the lead in doing it.
My hunch is that if the company was different, it would lose. Like it or not, this is what's required to defeat our noble overlords a.k.a. the holy regulators and the munificent politicians.
As far as I know every Uber driver chooses to be one. Also, to be an Uber driver you have to own a relatively new car... I couldn't even drive for Uber because my car is too cheap. These people are not helpless.
To get a car loan you need employment history and decent credit. While some folks that fit this category are struggling, it's not exactly the profile of an exploited class.
Uber push their own financing program to recruit drivers (or to get drivers to update their cars). They use subprime lenders and claim that even people with poor credit are eligible https://get.uber.com/cl/financing/
I think that's fair, so long as they're presented with all the facts.
If there is any truth to the comments that claim many drivers quit after determining they make at or near minimum wage, it seems like they got into Uber believing that drivers can make $90,000 a year
Well.. It's also fair in situations without perfect information. Assuming that as a requirement would render any ethical judgement on real life scenarios unusable.
What profits? Uber is losing money every day aiming to provide a quality service for people. They lost tens of millions on last years numbers.
Will most likely do the same this year as well.
Kindly control yourselves, whatever your views. This is a place for thoughtful discussion, not venting.