
Death of the taxi medallion: SF cab company ponders major change - smalter
http://www.sfexaminer.com/sanfrancisco/death-of-the-taxi-medallion-sf-cab-company-ponders-major-change/Content?oid=2856068
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refurb
You gotta give Hansu Kim credit, he's doing something different. A lot of
companies would complain about Uber and die a slow death, but this guy is like
"if they don't have to follow the rules, neither do I."

It shows dash.

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jonknee
> "Uber isn't putting me out of business," Kim said, speaking hypothetically.
> "What Uber is making me do is retool -- and given the same rules, I'll beat
> them all day long."

I appreciate his spirit, but I don't think he's fully estimating what it would
involve to beat Uber at its game. He'll have to hire more drivers, have lower
prices and still be up against a huge network effect wall. He seems jazzed
with Flywheel, but they could stop sending him business tomorrow.

One of my favorite parts about Uber is that it's in so many cities and has
consistency (easy to see pricing, if there's a problem I know who to contact,
etc). I'm never going to seek out DeSoto Cab Co on purpose.

Basically, if the rules tilt towards the Uber model there is no reason for Kim
to exist. He's a middle man in a business that is going the opposite
direction.

~~~
chrismsnz
What do you mean by "Network effect"?

I don't really see how it applies in this situation. (e.g. you can use uber
today and a taxi tomorrow and suffer no loss of value).

~~~
ghshephard
Uber has some drivers in a city, and some passengers - not very valuable. But,
Uber does something special, like drop prices, and all of a sudden, there a
lot of people who hear about the low cost of UberX, and so they put the App on
their iPhone/Android, and start calling vehicles. Drivers, hear about the
incredible demand for UberX drivers, and start adding that network to their
vehicle. Passengers discover there is _always_ a Uber vehicle close by and so
they start using it more often, which creates more demand.

Eventually, you get a network of users/drivers - each new driver is available
to _many_ customers, and each customer will make themselves available to many
drivers.

It's not a perfect N(N-1)/2 mesh, but then neither were fax machines (not
everyone wanted to fax everyone else) - but the same concept of network value
exists.

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philip1209
I had a friend visit SF from NYC a couple weeks ago, and it blew my mind that
he continued to use taxis instead of Ubers. Here, the decision seems clear-
cut: calling a car with a phone is cheaper, faster, and more convenient.
However, in NYC the streets are so saturated with taxis that waiting 5 to 10
minutes for an Uber instead of hailing a cab immediately seems absurd in most
day-to-day situations.

~~~
nvarsj
It's pretty much the same in Chicago. You can hail a taxi almost immediately,
but uber will take you 5-10 minutes. Can be useful though if you're in the
outskirts of downtown.

~~~
jgroszko
Yep, I usually wind up using Uber to get from my apartment to the bars, and
then there's enough cabs in the street outside the bars that it's faster to
just hail one to get home.

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SilasX
Summary: given the current regulatory conditions, you don't need a medallion
if you just take bookings and do not get hailed from the street. "Taking a
booking" is interpreted more broadly each day, so it includes summoning via
apps. The owner, Kim, estimates that giving up the hailed fares in return for
not paying for medallion rentals, would let him make more money and outcompete
Uber.

My comment: How long until someone converts a street hail into a booked ride
by generating a record to make it look booked?

~~~
simcop2387
I'm wondering if a "kiosk" in key locations on the street to grab a cab would
be considered a booking or a street hail?

~~~
mnutt
What if Uber just gave bar bouncers an app for hailing Ubers and shared a
small cut with the bar? They'd just need a Square-like credit card swiper so
that customers could pay for the rides individually.

~~~
wastedhours
This is kind of what we had here outside some nightclubs in the UK. There'd be
a private hire company (bookable only), with a guy with a notepad and phone
standing outside, he'd make the booking on the paper, ring the driver who was
in the car next to him, bingo.

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marvin
Has the market value of taxi medallions fallen after the advent of Uber and
Lyft? I think there is a big risk that this way of organizing things is about
to go away, which will leave taxi medallion owners with a huge loss.

~~~
LanceJones
[http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/20/t...](http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/20/taxi-
medallions-have-been-the-best-investment-in-america-for-years-now-uber-may-be-
changing-that/)

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xsmasher
I don't get it - he's giving up the ability to pick up riders at the cub, so
where will his riders come from?

Or does this loophole mean he CAN still pick up at the curb? I did not
understand the whole TCP vs TNC business.

~~~
jmckib
Not sure if this is full answer, but from the article:

> Kim said he would do just fine because he has built a loyal customer base
> over the company's 80-year history and now receives an additional 2,000
> hails daily through the hailing app Flywheel, which he hopes would adapt
> with him.

~~~
xsmasher
Thanks, my skimming was poor.

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cpwright
What I think might be more interesting for Mr. Kim is a hybrid model. He could
start shedding medallions, and only use them for the airports or potentially a
downtown core.

The rest of his dispatched traffic could be in vehicles without a medallion.
If most of the rides don't require the medallion, he could shed a significant
cost. It sounds like with 204 of 2000 medallions, his decisions could
personally have a fairly large effect on the marginal cost of the medallion
(so he is paying less per medallion and for fewer medallions overall).

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omarrr
Interesting that DeSoto fails to mention _why_ people seek out Uber. Kim seems
to be focused on the medallions pricing structure completely ignoring user
advantages such as ease of access through the app, reliable service, quality,
etc, etc.

If cab companies don't realize that new services beat them to the punch in
many areas besides pricing they won't survive.

~~~
Karunamon
That is, unless, they have a government-granted monopoly that is tremendously
unfriendly to disruption (i.e. regulatory capture)

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clairity
has anyone tried [http://www.ztrip.com/](http://www.ztrip.com/) ? it's a car
hailing app developed by the company that owns a bunch of yellow cab
companies. curious what people's thoughts/impressions of it are...

~~~
blhack
Interesting name. Ztrip is also an incredibly popular remix artist/DJ.

[http://en.wikipedia.org/wiki/DJ_Z-Trip](http://en.wikipedia.org/wiki/DJ_Z-
Trip)

~~~
clairity
nice! love old school hip hop dj'ing.

still wondering if anyone has any opinions on the ride summoning app... maybe
that's the answer, that no one uses it or has an opinion?

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midas
I wonder if we'll see city medallion prices fall as drivers like this choose
to not buy/rent medallions. Once that happens, the math might change such that
it makes sense for him to keep the medallion.

Sucks to be an investor who bet who bet against technology, ouch!

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dwd
This won't work everywhere that has a medallion/license system. In Australia
taxi licenses are regulated by each department of transport at the state level
rather than city/municipal councils.

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trhway
interesting that right before (a year or two) Uber/Lyft/etc...'s time the
prices of medallions hit something like $200K/$600K in SF/NY and there were
stories about that in the news. Speaking about dialectics - top blossom of
anything carries its undoing with/inside it.

~~~
jonknee
They have cost a fortune for a long time, Uber was born more out of the
frustration of the ability to actually get a ride than whatever expenses were
involved (though to be fair the reason it's hard to catch a cab in SF is
because there are so few medallions which is why they're so pricey).

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kelukelugames
Taxis are going the way of video rental stores. I wonder what is going next.

~~~
InclinedPlane
The big one is going to be schools. They won't die out, but they will be
substantially altered and not as dominant as they are today, and that process
will take much longer than the uber vs. taxi dynamic will take to play out. So
much of modern education is just read, regurgitate, test, even much of a
typical undergraduate education falls in that bucket. That sort of education
is prime for disruption via interactive educational apps, but the genre hasn't
hit it's inflection point moment yet. Nevertheless, sometime in the next 10 to
20 years or so there will be a breakthrough in educational software. Someone
will put the pieces together and start making stuff that is universally
considered to be excellent, and they will start making a crap ton of money
which will fuel a gold rush into making apps using the same ideas. The rest
will be history.

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dang
Url changed from [http://pando.com/2014/08/04/san-francisco-cab-company-
admits...](http://pando.com/2014/08/04/san-francisco-cab-company-admits-
ridesharing-defeat-threatens-to-convert-to-limo-service/), which points to
this.

