
Suburban Ride-Sharing Is Mathematically Unlikely - brudgers
http://www.citylab.com/commute/2015/11/suburban-ride-sharing-is-mathematically-impossible/415494/
======
brudgers
It seems that the conclusion is drawn from specific premises:

\+ The measure of a ride sharing app's value is cash on cash returns to Silcon
Valley style investors.

\+ A ride sharing app's primary market will be in the US.

\+ The suburbs served will be affluent, and hence the ride sharing app's user
base will tend to have economic flexibility in regards to transportation.

\+ The served markets will have poor public transportation infrastructure.

On the one hand these are all reasonable assumptions for the conclusion
regarding a ride sharing app's commercial prospects. This is important because
ride sharing apps (particularly in a political context like Silicon Valley)
are a free lunch: $200,000 spent on software development won't even buy the
land for a ten parking space lot in a place where it would be useful.

On the other hand, the numbers in the article suggest that a ride sharing app
could readily produce a ten parking space reduction in demand for a city like
Palo Alto. And because the marginal costs of adding additional cities to such
an application are negligible, reduction in demand for parking spaces across a
region like Silicon Valley could be several times that.

In other words even if a ride sharing app is not going to pencil out into a
possible unicorn, it still may be good public policy. And perhaps a better
alternative to a public policy decision to raise the cash price of parking
since it could induce willing social change via better communication
infrastructure rather than forcing changes in behavior by pricing out those
least able to afford changes in parking policy.

Parking policy is a great area for consultants to consult municipalities. Back
in 2002 I was a junior urban planner in St. Pete, the city was "debating"
removal of exiting parking meters installed for baseball in 1998. In the
department library one day, I saw a study from 1962 that concluded that the
parking meters installed in 1957 should be removed. The arguments are always
the same: 1. Not enough spaces so install meters, 2. Meters are a hassle for
local businesses' customers so take them out.

~~~
HappyTypist
The numbers in this article are misleading as they're drawn from ridiculously
underestimated assumptions. 25 - 33% is a more accurate number.

Pooled ridesharing is cheaper and better than owning a car in many cases
(including mine), and the benefits will only increase with the network effect.
(Imagine if 50% of the cars on the road are Ubers, and the average ETA to
pickup is 30 seconds).

The positive externalities are more than just parking:

\+ Less traffic congestion, shorter commutes for everyone

\+ Less pollution and emissions, less lung cancer

\+ More experienced drivers, less traffic accidents

\+ And of course, less parking space.

~~~
brudgers
If a person calls for an Uber and rides alone, there's no less congestion
because there is no reduction in commuter-vehicle trips. Just an increase in
raw vehicle occupancy. In addition, unless the Uber is already in the
commuter's driveway _and_ waits at the curb until the commuter is ready to
leave _and_ parks in the commuter's driveway overnight, the use of an Uber
increases traffic overall.

~~~
nimblegorilla
The previous person was talking about pooled ridesharing. In my case car
pooling was only convenient when going to work. It was much harder to
coordinate the afternoon/evening trip home. Services like Uber make it a lot
easier for 3-4 people to carpool one way and then use different methods to get
home.

~~~
ghaff
Possibly. That effectively assumes that it's far enough (or parking costs are
high enough, etc.) for it to be worthwhile to coordinate a carpool in the
morning yet it's still viable to take an Uber/cab/etc. home in the evening.
That seems like a pretty specific scenario.

>In my case car pooling was only convenient when going to work.

I suspect this is why, anecdotally, I don't hear much about carpooling in my
circles any longer. Not that it's ever been all that common. Hours at the end
of the day are probably more variable for a lot of people than they used to
be.

------
IshKebab
This is probably about as accurate as the Drake equation.

At the company I work at in the UK, probably 80% of people lift-share.
Admittedly that is unusual but still. The article makes several mistakes
anyway:

* "8 out of 31000" is one source to one destination - so it is very misleading

* They don't realise that people might be willing to work different hours in order to find a lift share

* 10 percent seems unoptimistic

~~~
jcfrei
I was wondering why he would pick Redwood and Palo Alto as an example. To me
that doesn't seem like a typical commute in the US. The distance is only
12.5km, you could almost travel by bike. Anyway I think VLM's first comment is
a much more intuitive explanation why ride-sharing is not attractive.

~~~
rconti
In fact, from where I live in Redwood City, it's more like 4 miles by bicycle.

It's not really a typical commute, but I think the point is more than fair --
if the author picked 2 far-flung locations, the probability of a match is
typically going to be even lower.

That said, yes, there are common commute routes -- for example, more distance
suburbs, which will have a number of commuters going to the same urban
core(s).

But statistically speaking, the longer the journey, the less likely the
commute match, given a general tendency to live closer to work rather than,
say, 5 states away. Even in the US!

------
VLM
The article has two insights, which are kinda related in an surprising way.

One is tangentially mentioning that car poolers almost always know each other
and will not go with random strangers; I thought to myself, yes, I am not
young and I cannot remember ever hearing or seeing first hand a "hitchhiker"
style car pool although coworkers helping each other out (critically, without
a dedicated app/service middleman) is almost normal. The insightful part is
the successful ride sharing services actual business model is psychologically
tricking users into pretending to be taxi drivers and taxi customers rather
than some random dude picking up anonymous hitchhikers which is what they
really are.

The second semi-related insight is when the free market numbers won't work,
just demand the government socially engineer a private profit. Specifically
the part of the article where the government should artificially manipulate
parking prices to make him the billionaire he is entitled to be because he is
so much more deserving of a billion than everyone else. As the article
implies, the concept of suburban ride sharing IS mathematically impossible as
defined and the only hope for that sector is winning some kind of "dictator
for a day" lotto to basically oppress and dominate the inhuman locals.

What ties them together is the concept of LARPing, live action role play. In
the first insight from the article, you can successfully run a middleman
transport business, basically an online semi-illegal unlicensed gypsy cab
dispatcher service, by convincing both participants to LARP that they're taxi
drivers and passengers. In the second insight from the article, aside from all
this complicated mathy stuff which is none the less true, you can tell a
business sector is dead when the only serious business plan first involves
LARPing like becoming dictator for life or mass social engineering or whatever
other wish fulfillment.

The esoteric message of the article, as opposed to the mathy exoteric message,
is the sector is dead because the only participants are the business hustler
equivalent of joining the SCA and mistakenly thinking that means you're
actually the municipal government, rather than the reality of getting drunk
with friends in costume. Which is fun, but don't confuse it with actual
political rule.

~~~
alistairSH
Hitchhiker-style carpooling is alive and well in DC. [http://www.slug-
lines.com/](http://www.slug-lines.com/)

All the major arteries into DC from Virginia have HOV lanes. At many major
interchanges, there are parking lots. If you want a ride that doesn't take 2+
hours, you park at the interchange and hop in a stranger's car.

~~~
VLM
Yes, but its a context switch. You can't build unicorn for a billion people if
the maximum possible market size is actually 10K people, or to be extremely
generous, we'll say a couple million absolute tops.

That is an interesting sized market for a lifestyle business or maybe a
government sponsored non-profit to target. Startup with VC money? Not really.

~~~
brudgers
I agree there's a context switch. But the original article makes one as well.
It goes from the conclusion that a ride sharing app can't become a unicorn to
suggesting a public policy that raises the costs of parking.

So the context of public policy is in the article and I suspect that the
conclusion to raise parking prices "in Palo Alto" intends to make all four of
its audiences - capital investors, parking consultants, municipal managers,
and believers in the new urbanism - happy.

------
cpursley
Enough with the fancy vans and apps. Russia has already solved this problem:
[http://www.st-petersburg-essentialguide.com/marshrutka.html](http://www.st-
petersburg-essentialguide.com/marshrutka.html)

They're private, cheap and ubiquitous and make getting around anywhere in
Russian cities easy. Without these, buses from the burbs can't work.

~~~
ghaff
And car-pooling has a long history although my sense is that it's perhaps less
common than it used to be--probably because work hours tend to be more
variable than in the past. While apps and so forth _can_ reduce transaction
friction enough to create markets where they didn't previously exist, I
reserve the right to be suspicious of claims that an app suddenly makes a
service viable that wasn't before.

~~~
argo12
There is also a huge cultural element to this. The element of trust is a huge
problem in most countries and in my opinion this will make it hard for
carpooling to scale as a business idea.

------
HappyTypist
This 'paper' relies on some very flawed assumptions and hence have no basis in
reality.

Ridesharing services like Uber aim to be cheaper than car ownership, while
being as reliable as running water. Many people are finding that once they add
up all their vehicle costs (maintenance, depreciation, parking, registration,
fuel), uberPOOL or even uberX is cheaper than owning a car. Plus, you get to
work or relax on the ride instead of focusing on the road. How much is your
time worth?

Assuming that only 10% is willing to pay less for a superior experience is
absurd. Once you change it to a more realistic figure of a third to a quarter,
the conclusions fall apart.

~~~
brudgers
I think the author is using "ride sharing" more in the sense of car pooling
for commuting rather than as a substitute for taxi cab and similar services
where the rider hires the driver.

~~~
HappyTypist
'Ridesharing apps' _is_ a commute option.

I use Uber + public transport for commuting and getting around everywhere. I
don't have a car, and I know many people in the same boat.

~~~
brudgers
The reason that I think the author is not using "ride sharing app" in your
sense is that the author concludes that such apps will not pencil out to cash
on cash returns attractive to Valley Venture Capital. If we assume that the
author has at least half a clue, then the author could not reasonably be
assumed to include Uber or Lyft type apps in their definition of "ride sharing
app".

If the author is without a clue, then probably the article should be flagged.

------
cameldrv
Besides all the great points others have made, the origin and destination of
the shared riders don't need to be the same, they just have to share some
common segment. Furthermore, although there is time lost waiting for the other
rider to be picked up or dropped off, there is also time gained by not having
to find parking and then walk from the car to your destination, since the
shared car can drop you off right out front.

------
dbg31415
Hush. You're ruining my discount with math the companies should have done
already. (=

I'm getting discounts on all my rides from home by using the carpool feature.
In the last 3 months, I have had 0 people opt to share a ride with me from my
house to downtown Austin. I'm 8 miles away from the city center.

~~~
natrius
Consider the MoPac toll lane that's supposed to open in a year or so. It's
priced based on demand to keep the lane free-flowing at all times (barring an
accident in the lane itself). You'll be able to shave significant time off
your commute by paying extra, or you can pay less by sharing a ride with other
people.

Demand pricing will make shared rides take off even in low density cities.

------
JohnHammersley
I used to work with Steve, he's a great guy and it's good to see he's still
working on this stuff.

There's a nice archive of papers plus some simulation models we put together
at [http://www.ultraglobalprt.com/about-
us/library/](http://www.ultraglobalprt.com/about-us/library/)

------
Stasis5001
Wait, what? The article actually derives the conclusion that 8 people live in
the same zip code, are going to the same destination, in the 10% technophile
bracket, and leaving in the same 20 minute window -- and this makes it
impossible? Doesn't that show the exact opposite, that even with really
pessimistic assumptions, matches are still likely?

------
facepalm
Where I live, commuter trains are packed, though (Europe). How can that be?
The same logic should apply to commuter trains as to cars?

~~~
xyzzyz
In Europe, the number of people willing to use public transit is much greater
than 10%, for one thing. Another thing is that you don't really need to get
matched with someone going the same direction as you: people generally value
living close to public transit (which is completely opposite to people living
in California, who try to avoid it), and public transit generally gets you
where you want to be, possibly with one or rarely two transfers.

~~~
akgerber
The prices in the Mission or downtown Palo Alto, for example, don't really
reflect your contention that people in California don't want to live near
public transit. The real issue is that California isn't building much new
transit, and it's essentially impossible to build much new housing or
corporate headquarters nearby— so it's mathematically impossible for many
people to live near public transit.

~~~
ghaff
In general, rail projects are considered to increase property values. In fact,
I've read the argument that light rail isn't really cost effective vs.
dedicated bus lanes but the commitment associated with a rail line makes often
makes it preferable for planning purposes. (In that buses, in addition to
having a lower-class image, can always have their routes altered so--the
argument goes--people won't make property decisions based on bus lines.)

------
allcentury
Only one comment in here about slugline... shocked.

------
VLM
Here's a super depressing mathematical proof of why the services fail in the
burbs:

First the assumption is a car is necessary for living in general. I am very
happy for the 0.1% of the population who live in an urban hugbox where they
don't need a car, but this is a general argument for 99% of the population or
a unicorn sized middleman app.

My garage costs perhaps $50K lifetime, including land, maint, all added
together. An online mortgage calculator spat out $290/mo for my garage. I
suppose as a fraction of the cost of the house its not ridiculous. Or at 20
working days per month, simply having the possibility to drive my own car
costs $20 to park it at home. Use it or not, I'm out $20 per day.

I bought the cheapest toyota out there for my commute. Many people will insist
on the largest SUV they can afford, but whatever. Many people will replace
their car every two years to show off conspicuous consumption whereas I drive
my cars into the ground because I'm super arrogant and rebellious about not
impressing other people. Anyway simple straight line capex depreciation of
$20K vs 250 commutes per year vs maybe a decade life of the car means each
working day the car drops in value $8 no matter if I drive it to work or not.

Being a commuter car instead of a SUV I am kinda cheating on gas expense when
I actually drive to work. Figure 40 miles round trip at 80 MPH (I don't live
in CA LOL, and flex time a lot) and 40 / 30 mpg = 1.3 gallons burned per
commute and we'll pessimistically call the average price of gas over a decade
$3 (LOL) so it costs me $4 to actually drive instead of car pool.

Now there are two ways the math argument kills suburban car pooling. The first
is I'm out $28/day to commute no matter if I actually commute, car pool, or
call in sick. The variable cost is a menial minimal $4 to actually do it. So I
do NOT save 100% of the cost of my commute, I only save about 10% of my
commute cost by not commuting. Why bother? If I wanted to save 10% I'd be
infinitely more likely to get an even smaller car or live in a cheaper area
than to give up the convenience of my car for a mere 10% savings. This
argument is like people who pay $4000 mortgage and then shiver in the dark
because they can't afford the heating bill, its not that turning down the
thermostat is a great idea, but its that they obviously demonstrate incredibly
bad economic management to end up in a scenario like that.

The other killer is car pooling takes a lot of time, and regardless of how
high or low an employer values his feudal servant's time, outside work people
seem pretty happy to drop $20+/hr to get drunk or watch theater movies or
whatever. So I feel $20/hr is a reasonable valuation of time for the general
public. Now lets say car pooling costs 15 minutes extra wasted time at each of
four endpoints, for a total of an hour. If you insist on matching up strangers
online, they probably don't live or work nearby each other. Now an hour of
free time is worth $20, and car pooling will cost me an hour, but save me
$4... So car pooling puts me $16 in the lifestyle hole.

So mathematically I don't save much money by occasionally car pooling, and the
standard of living is dramatically lower.

I tried to calculate a math model for reliability and dropped it... its hard
to compare a nearly 100% reliable toyota vs a very hypothetical service that
may or may not match you up after hours and may or may not match you up with
weirdo axe murderers or maybe not. Basically you have one system that although
expensive is nearly perfectly reliable and nearly perfectly safe, vs a pile of
question marks that might ... might ... turn out as good. Maybe. But you can't
build a math model off that so I gave up.

~~~
dannypgh
0.1% really?

I live in Pittsburgh, Pennsylvania. 25% of households here have no car, and we
don't have the world's best transit system.

Per [http://blogs.wsj.com/economics/2014/01/21/vital-signs-
more-h...](http://blogs.wsj.com/economics/2014/01/21/vital-signs-more-
households-dont-own-a-car/) it's over 9% of households that don't have a car-
and of course the average size of a household is above 1, so your fake
statistic is two orders of magnitude off from reality.

You're welcome to be hyperbolic, but especially among engineers making up
probabilities that have no bearing on reality feels more like intellectual
dishonesty than hyperbole.

I think a lot of the HN demographic is completely out of touch with the fact
that a lot of people simply can't afford a car.

~~~
jellicle
Isn't this article about suburban ride-sharing? Car ownership in the suburbs
is 100%.

I don't think anyone disputes that a lot of people live in cities and don't
own cars.

~~~
VLM
More specifically the article is proposing that an uber-for-suburbs is a
mathematical non-starter and the comments against that conclusion are
primarily non sequiturs along the lines of "I live in an urban area and uber
and mass transit work great for me". Cool. Rock on. But that has nothing at
all to do with the article's business plan, or the research in the article or
my own mathematical model that came to the same conclusion as the author via a
different path.

This is also a live example of survivorship bias. Nobody who tries to live in
a mass-transit-less uber-less suburb in the current year will last very long.
Nobody who can't afford a car can afford a house in the burbs either.
Therefore there is a natural self selection such that roughly 0% of potential
uber-for-the-burbs startup can physically live at this time in the burbs. If
uber-for-the-burbs already existed such that potential customers could be
found in the burbs, then a startup could in fact sell to them, although
starting up into entrenched competition isn't as much fun as a wide open
field. But the geography has self selected such that all potential customers
cannot currently live there. It is possibly one of the least possibly fertile
areas to sell a service idea. It is like the proverbial trying to sell ice to
eskimos. The burbs are multiply mathematically provably possibly the worst
place on the entire planet to try an uber-for- startup.

Perhaps the business model for uber-for-the-burbs should bootstrap off little
kids and suburban nursing home residents (I mean, who else is left there, to
sell to, who isn't already a car owner?). Although little kids have safety
issues and nursing homes have privately owned bus routes and taxis are already
pretty entrenched in the market. And the little kids and old people might not
be the wealthiest residents of suburbia (demand doesn't matter without the
cash revenue to back it up). I would guess the best bootstrap would be
physically disabled / handicapped but then you run into wheelchair issues and
drivers being medically qualified? And how many little kids / disabled /
retired / nursing home residents are commuting into the big city to desk jobs
anyway?

I edited this post to emphasize that the "startup lesson" of this whole topic
is you can't just look at where to sell, you need to think up who to sell.
Finding a giant underserved geographic area with plenty of money is utterly
useless if by the inherent existence of the area they have no use for it.
Hawaii is dramatically underserved with respect to snowshoes, but I would
strongly recommend against a startup trying to sell snowshoes in the Hawaiian
islands.

~~~
ghaff
I'd just add that Uber being fairly successful in a lot of areas in spite of
the fact that taxis were already a thing has probably led a lot of people to
take away a (somewhat) incorrect lesson--namely that app-ing the taxi
experience fundamentally changes the economics.

In fact, Uber has, for example, had a lot less relative impact in Manhattan
which already has lots of taxis than in other locales. So the more correct
lesson is that taxis were and are pretty broken in a lot of places and that
those markets would actually have supported a more functional taxicab system.

Now, one can assume that low-density suburbs and exurbs are also underserved
markets but I don't see a lot of evidence that's the case.

~~~
marssaxman
Yes! Here in Seattle, so far as I can tell, Uber succeeded mightily not
because people particularly loved Uber, but because everybody hated the
taxicab system.

