1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business
2. Individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab
3. Expenses other than drivers, vehicles, and fuel account for 15 percent of traditional taxi costs but Uber charges drivers 25-30 percent without coming close to covering their actual costs
4. Uber’s surge pricing does not improve efficiency, it simply prices those night shift workers out of the market
5. And as Uber has demonstrated, unlimited taxi market entry can lead to ruinous overcapacity and can allow part-timers to cherry-pick the peak revenue that full-time drivers depend on to cover their costs
6. Uber’s investors knew that it needed raw political power to accelerate growth, and to maintain its hoped-for dominance
7. Uber’s major strategic breakthrough was to treat business development as an entirely political process, using techniques that had proven successful in partisan political settings
8. All of Uber’s early popularity and rapid revenue and valuation growth are explained by the billions in predatory investor subsidies needed to drive those more efficient (but poorly capitalized) incumbents into bankruptcy
9. That [early popularity] allowed [Uber] to pursue more stratospheric valuations by exploiting anticompetitive market power and rent-extraction and buying out any potential competitive threats
I don't disagree with your points but let me give you some counterpoints:
1. Taxi services are balkanized;
2. Many tax services don't allow you to order a taxi ahead of time. You have to flag one down (eg NYC). For ordering a car, you need to otherwise deal with an (expensive) car service;
3. Uber made the payment process seamless and I cannot overstate how important this is as a user. I hate dealing with NYC yellow cabs, card readers that don't work (or actually have skimmers) and a stupid touch screen where your minimum tip option is 20%, etc;
4. The ability to rate both drivers and passengers may have its issues but IME it tends to keep passengers on better behaviour and cars in better condition;
5. Taxis have weird edge cases. In NYC, for example, getting a cab at 3-4pm was nigh-on impossible because of the shift change. It also means that drivers near the end of their shift may not take you places too out of the way;
6. Whatever the costs of owning and maintaining a car are, the traditional taxi system has huge taxes in the form of medallion costs and quotas. These costs are directly passed on to consumers;
7. Uber may well have a lot of value in value-added services. They're trying this with Uber Eats, for example. I can't say if these will be successful or not. I've certainly seen cities where I've tried to use Uber Eats only to be told "There are no drivers available". Obviously the drivers haven't signed up because there are plenty on Doordash and Seamless/Grubhub.
8. I see the flexibility for drivers as a huge plus rather than the rigid shift system of being a taxi driver.
9. The barrier to entry as a driver tends to be low because for many people they have a car anyway.
Taxis died because it's a horrible user experience that was propped up by a government-enforced monopoly. Good riddance. I mean I feel bad for NYC taxi drivers who were lured into paying a fortune to buy a medallion before the market crashed, many of whom had limitd English proficiency and were the victims of predatory practices that should be illegal.
> Taxis died because it's a horrible user experience that was propped up by a government-enforced monopoly.
This cannot be understated. Also, as an introvert, negotiating with drivers, especially those that don't drive by the meter was always stressful, I mostly ended up overpaying.
Nowadays I have Uber drivers sit around the corner refusing to show up and calling me to tell me I should cancel so that I have to pay the $5 fine. Sure I can contact support to get that $5 back but it has happened to me so many times there really should be a button for it. It’s hard for me to believe Uber is not aware of this behavior.
That's very common in Prague. Uber in Prague is a disaster. About 5% of my rides are probably ending up with having to pay a cancellation fee for a driver who never showed up. Contacting support to resolve this is pain indeed. Most of the Uber rides in Prague are owned by limited liability companies (s r.o.). I guess there's some kind of an alliance between Uber and those local companies.
Another 5-10% or so of my Uber orders in Prague involve driver coming my way then cancelling after 5-10 minutes in the middle, then another driver picking up, and so on. You could be on a 3rd or 4th driver sometimes. Initially I thought this had something to do with traffic jams, but I am now beginning to doubt this, as it happened in mild traffic and off-peak hours as well. It is impossible to trust if Uber will arrive in 10 minutes, 20 minutes or not at all. An Uber ride to the airport is a lottery sometimes.
Finally, arrival times are usually understated. It can be 7 minutes on display but 15 minutes in reality. And this is mostly in Kosire area, about 15 minutes from the center. Whoever is reading this in Uber should really look into their Prague situation.
That being said, I am using Uber extensively in London as well and never have these issues. I also used it in California and never had issues. Uber in Prague is something else, my friends.
Unfortunately it seems to be getting more like this in London, the cancellations are much more frequent and the fares have skyrocketed in recent years. I guess one positive regardless is that it has forced traditional taxis to modernise, previously their card machines were always “out of order” etc. and many can now be booked via similar apps.
The drivers have definitely learned how to game the system in some cases. I was once at LAX airport and the local drivers had somehow figured out how to create a surge fare that only kicked in after you matched with a driver. The app would offer you the higher price and if you turned it down you’d find that there were no cars available. If you canceled and tried again the lower fare would once again show.
This is now common here in Perth, Western Australia. The drivers appear to have figured out that cancelling repeatedly, if they all do it, can create a 'surge' where there was none before.
Try Uber in Stambul. The driver will send a message asking where are you going and ask for double the Uber fare or will cancel the order. They don't care about their ratings.
Uber in California and Russia (it's actually Yandex.Taxi for quite some time here) works great.
There is some hidden benefit for Uber drivers in creating barriers for the passengers. Also, the platform does not allow downvotes until you get on the car.
I don't know about US but in India the process to review cancellation fee doesn't require interacting with support but rather a two click process to state the reason for cancellation. Works quite well and the only time they don't refund is when you do it too often in a short span of time.
Which goes t to show the mass amount of this happening in India. Ilived there in 2017, drivers didn't understand what Pool was and let everyone out at the first stop.
Then again, the solution to this is not necessarily Uber, but a regulation forcing taxi drivers to provide credit card payment. As far as I remember, these systems allow a default "do you want to tip" option (but I see what you mean, people probably tend to tip more with cash than with credit cards).
Or when they "accidentally" make a wrong turn, or purposefully take a "shortcut" just to take you a longer/slower route to drive up the meter, almost making you late.
> Taxis died because it's a horrible user experience
And in small cities/towns, getting a taxi was nearly impossible a lot of the times. And if you did get one, you had to have cash. In my 20s I had the personal phone numbers of a couple who ran a car service. I would only ride with them after another taxi home (probably unlicensed) where the driver was drinking smh.
I wonder how many DUIs have been avoided since Uber came about.
People always point out big cities, but forget how abysmal taxis were in small towns.
> People always point out big cities, but forget how abysmal taxis were in small towns.
Not just that, but people forget how bad they were in cities prior to the pressure Uber created. The article asks "Why Is a Company That Lost $20 Billion Claimed to Be Successful?" but the answer is obvious. It transformed the industry. It made a big impact on my life. I no longer had to stress about getting a cab home from pretty much anywhere. When traveling, I know I won't get my face ripped off or have an issue with mistranslation. If it were around earlier, I would have likely driven and made some extra cash when I was home from college. No one would hire me for a few weeks or extremely variable schedule so this would have been a great option.
Today's cabs are better behaved but only because people have alternatives.
How small are we talking? My parents live in a town of ~2-3k, you aren't getting a taxi from there without arranging in advice, app or not.
Or my hometown of ~60k, I can't say availability of app based taxis is better or worse than availability at a taxi rank, though obviously there is the benefit of not having to get to a taxi rank.
The city I live in now of 1 million, app based taxis are a clear win, mainly because most taxi ranks fit ~5-6 taxis max and so at busy times there would be a queue simply because of that fact. That said, you're going to be waiting as long for a pickup at closing time via an app as for someone to show up a rank.
(Extending to app based services in general as actual Uber is a niche player in my country, basically only used by tourists so hard to get rides that aren't going to or from the airport or a couple of tourist hot spots)
> And in small cities/towns, getting a taxi was nearly impossible a lot of the times.
Not just small cities. I lived in Las Vegas for many years. Try getting a taxi to take you from the airport to the suburbs at 2am. I got hung up on by two taxi services. When I finally got someone to pick me up, I had to wait 30 mins for them to drop off other fares to the Strip before they would take me.
Was in a small town recently with a few Uber/ lyft drivers. During peak times there was never a driver available when i tried to get one through the app. I talked to one driver and she said to give her a call next time -- during peak times she turns off the Uber app and drives for whoever calls her.
> And in small cities/towns, getting a taxi was nearly impossible a lot of the times
And in some towns and cities it's now becoming difficult to get an uber, as there are fewer drivers around than there were. And they conveniently drove the local cab firms out of business so you're just generally SoL
>And in small cities/towns, getting a taxi was nearly impossible a lot of the times.
My experience has been the opposite. In small towns you cannot get use rideshare apps, but you can dial a taxi service. This has been the case in every town of less than 1,000 I've needed a ride in.
in europe there are many taxi companies that have started to do uber app features and prepayment and all the jazz that make uber so great.
the main issues i have with uber are that it's now almost more expensive than taxis, there's almost no regulation, the drivers are taken advantage of / not making profit and also not getting proper benefits. just because taxis suck doesn't mean uber should replace them.
government should invest in better public transit, more livable and walkable cities, and less car ownership instead of propping up either taxis or uber.
> in europe there are many taxi companies that have started to do uber app features and prepayment and all the jazz that make uber so great
For me this is the real evolution, and what was needed all along. I've used the apps you're talking about in Europe and Asia, and they're great.
> just because taxis suck doesn't mean uber should replace them.
Hear, hear. I don't miss the old taxi model, and Uber/Lyft came in with simple, strong improvements in usability and payments, as users outlined above. But after 12 years, Uber has shown itself to be what it is: an expensive, shitty vampire.
I actually don't get what the differentiating factor is for Lyft, but based on the ads they ran on a podcast I was listening to, it seems to be "Uber, but at least somewhat trying to be socially responsible." If that's a viable niche, tells you something about Uber I guess.
> in europe there are many taxi companies that have started to do uber app features and prepayment and all the jazz that make uber so great.
Yeah, Uber never got a foothold in Germany, but they brought us apps and card payment. Before that, it was cash only.
That said, cabs (both, actual taxis and rentable cars with drivers [0]) also seem to be far better here. The cab companies own the cars, not drivers, they are modern and clean and usually premium brands. Just from what I’m reading about the situation in the USA, it seems to be a clusterfuck, and I know from experience that in South Africa, cabs get you crappy overpriced cars that are almost falling apart while Uber gives you a clean private vehicle.
[0]: I’m not sure if this is a distinction in other countries, taxis are allowed to pick up people, and have some limited public transport rights, e.g. certain streets might be bus and taxi only, while rentable cars (German: Funkmietwagen, Personenmietwagen, or Minicar) can only be ordered in advance and have to follow all rules like a private vehicle. Taxis pay more taxes.
> Yeah, Uber never got a foothold in Germany, but they brought us apps and card payment.
Germany also worked hard to cripple Uber. Even its per-existing rules are hostile towards much of the innovation Uber brought to market.
One particularly egregious example is forcing each Uber to "return to garage" between each trip, even if another customer is on its path and requesting a ride. This makes the service considerably more expensive, increases wait times and needlessly burns gas to send cars with no passengers back to their "garage".
To my point of view, it's insane protectionism. In recent weeks, the policy can even be seen as indirectly subsidizing an invasion.
> drivers are taken advantage of / not making profit and also not getting proper benefits.
I hear people say this all the time. None of those people are Uber drivers.
I can't speak to Europe but that's been my experience in California.
This kind of "we know what's good for you" elitism is that turns people off from the left and why I don't want to be associated with the democratic party despite my voting history.
I spoke to Uber drivers last time I was in Miami and they are being squeezed there: ride fees went up as with pretty much anywhere, but they also lowered their share %. So Uber making more money and everyone else is screwed. I can definitely attest to the ride cost hike: what used to be a $10-15 ride from the Airport to the Beach is now $40.
I was getting half-convinced that gig workers were getting shafted, until I talked with a doordash/ubereats driver for twenty minutes. She said she was making significantly more money than she had as a waitress, and was finally getting ahead. At the same time it was more pleasant work and she didn't have to fight about what shifts she could work.
Most people are bad at calculating financial implications of decisions before them. There are lots of reasons for this (limited finance/math knowledge, impenetrable language in which conditions are layed out...) or actually don't have better options so they can literally be taken advantage of. Some may be even stupid, but there's no need or reason to reach for that as an explanation.
> Most people are bad at calculating financial implications of decisions before them.
This is such a horrible take and reeks of nanny state oversight. Millions of small business owners make these decisions all the time. Markets have a way of quickly rooting out those who aren’t making good decisions. Government has proven itself to be far less financially competent.
(1) Most business owners ("millions of small business owners"), especially those that are independent LLC owners, do not fully understand the cost implications of their business's financial health. By their very nature, they do not have dedicated financial expertise, typically lack strong accounting principles, etc. My sister, a personal trainer, is a great example of this. I had to explain to her what "writing off" expenses actually meant.
Millions of small business owners, me including, make these kind (and other) mistakes all the time for various reasons. We are all very much fallible and don't go out of business because most of the time our mistakes don't have huge consequences and everyone else makes their own mistakes too.
This may be true in some cases- lots of drivers -many of who are new immigrants-see this as the quickest way to get a job and don’t realize they have no worker protections like paid sick leave, worker’s compensation, that employees get or the tax implications of being a contractor vs employee
This might apply the first year, but many drivers have driven for many years. Uber isn’t new any more.
Drivers that aren’t able to calculate net depreciation (actually pretty easy and expected if you can afford to buy a car) would not be able to stick around and drive for 5 years.
I worked for the owner driver regulator of my country. People would take these jobs that they were making a loss on and not realise and be bankrupt in 6 months
The thing with Uber is that in some places it's the best thing ever and in others it's just a complete disaster. Both view points are correct and I have experienced both myself. For example, when travelling, particularly in notoriously dangerous countries where taxis are extremely untrustworthy and often outright dangerous (driver works with gangs who mug or kidnap you - yes that almost happened to me and it happened to a female friend of mine) Uber has been a real superstar. Uber knows about my whereabouts, knows who picks me up, where the driver is driving, who the driver is and so forth. For a criminal that is too much intrusion and therefore Uber drivers are safer than regular cabs. You can verify that the person who drives the car matches the photo of your cabbie, you can check the reg number, you can follow on your phone if they drive the route calculated by Uber and so forth. If anything appears dodgy you never get in or you're out at the next red light.
On the other hand in first world countries and extremely well connected and overpopulated cities like London Uber is more of a disaster. They clog up the streets and create so much more unnecessary traffic. Uber drivers are extremely picky and don't accept rides which are not going from one prime location to another prime location. They are more expensive than black cabs and offer a worse service. In London black cabs are soooo much better, they can drive in bus lanes which Ubers can't do and therefore beat traffic whereas with an Uber you pay more and then it takes you still twice as long to get anywhere. Also black cabs have more space, they have card readers in the back and you can easily hail them down. It's so frustrating with Uber, especially at night when you want to get home from a party or something which is 10-15 mins away from a busy area and then you try to get an Uber and stare for about 20 minutes on your phone where the app makes you believe that you get a driver confirmed in 2 minutes but it keeps changing and nobody accepts. Literally happened to me so often, looking at my phone and it keeps lying to me that a driver is 3 mins away, then 2 mins, then 4 mins, nobody confirming but it also doesn't allow me to cancel after like 10-15 mins which means I'm then stuck waiting. Uber is so shit it pisses me off. If I don't get an Uber in like 2-3 min then I don't want it and just walk down the road and hail down the next cabbie. So much easier in London sometimes. Anyhow... it's very different in different places.
I hear you on the London thing - having had quite a few experiences like yours with Uber recently, I’m going to try going back to black cabs. As I mentioned in another post though I think Uber has forced black cabs to up their game and e.g. they all have working card machines now…
I didn’t think the article debated the ‘goodness’ of Uber. I thought they were debating the inflated market cap (valuation) compared to the business model. It’s an old argument- should you value it like a tech company where costs are minute portion of revenue and price/earnings multiples are high 30-100 or as a staffing company where you’ll always only make a small cut of the driver fees- where valuation multiples
Are usually 3-5 times earnings
Most of that is specific to the US. Taxis work in other countries without it being difficult to get one in the middle of the night. And the medallion system is unique to the US I think.
> . Uber made the payment process seamless
I've been paying taxi fares with a credit card in an in car payment terminal for twenty years in Scandinavia. If I had a business trip to anywhere in the Nordic countries I never needed to get any cash because everything worked with a card.
I have been living in Istanbul for the last month, and it's worse. With any app (Uber or local) actually ordering a cab takes several attempts. Taxi drivers are constantly rude and unhelpful, cancel rides after taking them, and refuse to take you all the way and just drop you off far from your destination if it's uncomfortable to them. And they often try to get you to pay in cash instead of using Uber's payment, and just plainly scam you, when your bill in Uber is 30% higher than what you saw on taxometer when you got out of the car.
All of that — you guessed it, because of medallion-like system. There's a limited amount of taxis for 25 million city, they cannot meet demand, so they don't have to compete for orders and therefore don't care about their rating (and therefore customer service) in the slightest.
I've seen other regional taxi markets disrupted by Uber and similar local apps — and it always made taxi experience so much better and smoother.
Many tax services don't allow you to order a taxi ahead of time. You have to flag one down (eg NYC). For ordering a car, you need to otherwise deal with an (expensive) car service
First this is just inherently wrong. You’ve been able to call and schedule a cab, even in the burbs, since before the internet was a thing.
Second there’s now services like Curb (in NYC) or Flywheel which allow you to use an Uber/Lyft style experience with cabs.
> First this is just inherently wrong. You’ve been able to call and schedule a cab, even in the burbs, since before the internet was a thing.
And maybe the driver would show up on time, or maybe they'd see a street hail en route to picking you up and decide to make you wait an extra 40 minutes. Uber drivers cancel, too, of course, but "automatically fall back to a different driver after a cancellation" is a meaningfully different experience.
Or never show up. Twice with uber (I'm not a frequent user, so this is a high percentage) the driver never showed up. The app didn't let me request someone else until a very long timeout (don't remember how long). Good thing I wasn't going to a flight or other time-sensitive trip on those times, but waiting around in the dark in an industrial park, not so fun.
Pre-uber I'd reserve cab rides to a relative remote area and not once was there a delay or missed pickup.
> Pre-uber I'd reserve cab rides to a relative remote area and not once was there a delay or missed pickup.
I wish I had your experience. Pre-Uber, I had a 75% cancellation rate with car services to the airport. I live in a suburb about 45 minutes away from the airport. Car services would frequently just not show up. I would call, they’d say to wait and I would get the runaround.
I think it was due to manual scheduling.
Uber is much better in that I don’t think I’ve ever had a cancel when going to the airport. But I’ve had many cancels when using it around town. It’s very frustrating and I wish Uber would do something about it. Lyft seems the same to me.
Recently happened to me twice in a short span. After I was assigned the driver, the car was just sitting there for ten minutes. Then it suddenly started approaching and it arrived in 5 minutes, there was no traffic.
I believe they were waiting for me to cancel and have me take the penalty, but I was purposefully not giving up this time. Or they just wan to pick and choose their orders and have no way to cancel an unwanted trip.
Another time the driver came and passed me and went to a different location without stopping or answering messages. I was just watching the car get further and further away.
And maybe the driver would show up on time, or maybe they'd see a street hail en route to picking you up and decide to make you wait an extra 40 minutes.
That’s not how it worked, or works (see Curb). You didn’t schedule a particular cab you call the cab service and the dispatcher sends a cab to you and makes sure they got there. If they didn’t show up you call dispatch back and they call the guy and find out what the hell happened and/or dispatch someone else.
That's definitely how it **ing worked, man. I came so close to missing so many damn flights before Uber came around, because I'd book a car the day before and it would just ghost me. I had to aim to get to the airport 4 hours early because half the time I had to reorder a fresh cab and hope for the best.
Cabs had a 45+ minute lead time in the evenings and at night too, when I could order them by phone at all. It was a joke. This was in Seattle/Bellevue, Washington, USA, FWIW
It was a big thing for competing cab companies to call each other and schedule bogus pick ups. So much of the time they just disregarded calls until the 3rd or 4th time you call back, then they finally send someone.
I wonder if some new player shouldn't enter the market and start making fake pings with Uber and Lyft. Just entirely fill their system during peak times thus preventing them from operating. Can't be too complicated. And this is just exact type of play their customers love about these companies.
You’ve clearly never called a cab pre-Uber, or you worked as a dispatcher.
Worse of all not only does the cab company often decide to not show up, if you cancel (such as calling another cab company that does show up or take a bus instead) you get yelled at and cursed to hell for letting them know you are canceling.
Everyone in the system is just an average joe, probably being paid less than they deserve. But the system was terrible and broken.
Yes agreed. Some countries and cities had better taxi service than others. But one of beauties of early day Uber was that I was able to use the same app globally (in the US, Taiwan, and even Chiba) and it used my prexisting saved credit cards even! No fumbling for the local currency, registering a local payment method, or worrying if I am going to be scammed by the driver—just a consistent note global taxi hailing experience.
It's precisely how it worked everywhere I've lived. What you describe sounds like a low density suburb or smaller town. Yeah, social pressure in those situations still works.
The only time I've seen things work as you describe were small/vacation towns when I was visiting for a wedding or whatnot. The type of places where there are a dozen total cabs for the entire county.
Any major (call it NFL tier) city scheduling a pickup was a laughable joke. You quickly learn when you move to such places the first time you schedule a cab how totally unreliable it is.
Even the overly chatty cabbies would be happy to tell you how much of a scam it was, and go on to describe how every driver but them does X, Y, and Z to avoid taking such calls. This is the sole reason Uber got its foothold in my household.
> It's precisely how it worked everywhere I've lived.
Have you lived in NYC? It's not how it worked here prior to Uber. You could call one of the car services and schedule a pickup ahead of time and they'd show up. Of course it wasn't totally necessary, because you could call Northside or Arecibo at 4am and they'd come pick you up at your house within 5 minutes.
Outside of NYC, yeah it was a mess. I remember being at datacenters in New Jersey in the middle of the night to fix some server that went down when I was at the beginning of my career and you'd have to call a bunch of car services to find anyone working at 4am.
ROFLcopter! Yes, you are correct, you've always been able to call and schedule a cab before the Internet was a thing. What you're leaving out is that it was always a roll of the dice whether that cab would ever show up, with a much higher no-show rate than Uber.
You know what's a meaningfully different experience? A cab company scheduling a car for you at a specific time, rather that an app starting to look for a car for you a few minutes ahead of time, and coming up with something late or inadequate, something I repeatedly experienced with Uber.
In San Francisco (due to what I hope was a uniquely bad system), calling and scheduling a cab was theoretically possible, but in practice unreliable and frustrating. Dispatchers had no way to locate an available cab in any reasonable time, and even cabs that agreed to pick up a call would often not arrive because (I was told) they would pick up hailed rides on the way to a pick-up. I missed many appointments when dispatchers took thirty minutes to tell me that there were no cabs available, or when an agreed cab never turned up.
I don't think this problem is true of every city, but Uber was clearly an improvement on the existing taxi system in San Francisco. (In fact for many years the main topic of conversation between me and cab-drivers was speculating on how the SF cab system could be improved, and we'd often end up inventing something like Uber, or now Curb. I'm pretty sure SF would not have got to a reasonable system without pressure from Uber and Lyft -- it took them many years to get to what we have now.)
This is not my experience living near Palo Alto. I have had to drive my wife to the airport multiple times because her cab never arrived. Uber/Lyft aren't perfect, but they are 90/10 as opposed to 30/70 for cabs.
In some places, e.g. SF, scheduled cabs mostly didn't show (at least pre-uber). They'd send a driver, but the driver would just pick up the first person they found on the street-- A fare in the seat is better than a fare on the street.
I didn't have that experience in the DC area or NYC, so I know it wasn't universal... but in some places uber really was a massive upgrade in terms of transport reliability even though uber drivers do cancel at a disappointingly high rate too.
[DC had it's own issues-- I never had many problems with them beyond them being thoroughly ignorant about the local roads an geography, but my partner frequently got sexist insults from the driver, refusals to take her directions, etc.]
A lot of the issues you list with nyc cabs could’ve been resolved if yellow cabbies didn’t push livery cabs out of lower Manhattan, or even allowed them in at during shift change hours for instance
5. I don’t think you address issue with cherry picking the price with part timers. Which is I know is the real one, because I realized I did it myself and it’s not very fair. Your answer is more like “what about taxi services, they also have edge cases”
2. But there are also taxi services that allow you too book ahead of time. Many cities in Europe had phone booking of the taxi for specific times at least 20 years ago(not sure about before). The question is why NYC didn’t have it?
But good points! Even if many are specific to New York
I'm not ignoring the cherry-picking issue. I, as a passenger, do not care. Straight up. I consider this supply and demand and market pricing doing what it's supposed to.
The tax medallion system was invented to solve such an oversupply problem. It led to times when it's impossible to get a taxi.
Practically speaking, this just isn't a problem you can solve because you're trying to limit supply. If Uber starts giving preferential treatment to full-time or more "senior" drivers, the part-timers will simply go somewhere else and use another ride-sharing app. If you get Lyft and the other little apps to go along with this scheme, well then it's collusion. The only legal alternative is government regulation and legislation and that's not likely to make anybody happy. You will probably find those that operate a fleet through Uber (and are thus de facto taxi companies) will likely support such measures because it will allow them to exercise greater control and have more predictability over their drivers.
The problem is surge pricing isn't solving the underlying problem (i.e, undersupply of drivers). Uber recently moved to a model where the driver bonuses are disconnected from the actual surge amount: https://www.washingtonpost.com/technology/2021/06/09/uber-ly...
Presumably if surge was focused on maximizing completed trips, then the goal is to find a price that matches riders to drivers.
In reality, riders are more interested in riding than drivers are in driving (this is how we got into this situation in the first place). You can easily charge 2x surge without killing demand, but supply won't rise by the corresponding amount.
Uber found a way to take advantage of this - fixed bonuses to attract the same amount of supply as before, but now surge is an independent variable that they can fine-tune to demand.
Your ride quality isn't improving with surge pricing, it's just getting more expensive.
The idea is that Uber (and Lyft) which has issues pushed out another system, which had a different set of issues, more unpleasant to the passenger in the case NYC (I live here and I agree).
The surge pricing model sounds like a great incentive but it's also very easily exploited. Drivers that would otherwise have chosen to work full time might choose to only work during surges, ultimately reducing the total capacity of the system and increasing prices.
There are also reports of groups of drivers working together to manipulate the surge price in order to increase earnings[0].
I have absolutely no vested interest in defending Uber, but every time one of these threads pops up I feel compelled to throw cold water on it because this website is so damn obsessed with predicting Uber's doom. I have comments that are 6 years old saying "no, uber is not dying", with a thread full of angry pitchforks sure I am wrong.
Nobody cares if Uber as a whole is more "efficient" as measured by some global measure of dollars invested into the service. They care whether -their- individual lived experience is preferable. The obvious takeaway is that urban residents are happy to pay more money overall on car services, so long as those services provide a higher quality experience. People do not like feeling like the end of a cab ride might result in a game of "pretend the card reader doesn't work", people don't like to feel like their destination is an imposition on the driver who will now sit up front fuming about where you've taken him. People don't like having their sense of decency pitted against each other to win a cab in a reasonable amount of time without rudely upstreaming someone. People don't like waiting outside in the cold. People don't like being surprised by how high the meter is when they get out. People don't like having no recourse when they accidentally leave their phone behind besides calling a rude dispatcher. People like cars with nicely maintained interiors that don't smell weird.
How hard is this to understand? The average ride experience you get in an Uber is better. Uber pioneered that improved customer experience by figuring out a solution (some social, some technical) to the biggest friction points. Uber and Lyft are the 700lb gorillas in the rideshare company space, which absolutely DOES have network effects, despite the facile claim otherwise in the article. This is the basis for thinking these companies have a promising future. It's that simple. The size of the circlejerk predicting that it's all going to fall over tomorrow is so embarrassingly, transparently motivated by _hoping_ that it's going to fall over tomorrow.
The experience is much better as you've mentioned; the question in the article is whether a company needs to exist around making the experience better.
Now that the ideal experience is available, the question is whether people are willing to pay for it.
Right now - it's being paid for (all salaries, etc.) by shareholders as the company runs a massive operating loss.
The question these articles lay out is that - at least in theory - this can't last forever. No one's hoping Uber fails - they're just saying that a company eventually needs to make money, and they don't see a path forward for Uber to do that.
A bank wouldn't keep lending to a borrower that could never pay them back; at some point - without a fundamental change in economics - this situation will happen to Uber.
Yeah, this is a more nuanced critique that could definitely have teeth.
That said, I'm kind of skeptical that it's really true that shareholders are keeping the whole enterprise afloat? Here I admit I haven't delved deep into their financials, but isn't a big part of their operating loss related to huge R&D spend for self-driving plays, outsized engineering dev teams that might eventually be reduced as the app stabilizes, etc.? It seems like riders have been willing to shell out a lot more money for the experience, which I would imagine leaves plenty of margin. They are essentially a global taxi company with good market position and value added. It seems hard to believe there is no way to operate that company profitably, even if they're not currently achieving it. It's not like they're being strongly pressured to reach profitability either, though, so this isn't a particularly fair litmus test as to whether they're capable.
Anyway, you raise a good point that it -could- be true the Uber model is fundamentally unsustainable. I was reacting some of the hotter revisionist takes you see, where Uber was never a good idea, offers no value over a normal Taxi, is a big brogrammer pyramid scheme, etc.
Excellent commentary on all the other reasons Uber succeeded. One other comment I'd have is that taxi services are spectacular in some places. Get a black cab in London or Tokyo and you're overwhelmingly likely to experience a better ride than Uber can offer. But the list of similar cities is extremely short; it just happens that a lot of these doomsayers live in them.
One also doubts that the guy writing this article ever needed to take a cab anywhere.
I've just outlined for you a long list of ways in which getting an Uber is superior to hailing a cab. Some of those differences are realized by simply having an app that goes along with the service. Some of them are realized by having a ride-share business model rather than a medallion system with a fleet. Taken collectively, it's a cohesive solution to the problem of "I want to get a ride to Baker St. that doesn't suck". Here are some examples:
- Waiting out in the cold --> Reserve your drive from inside, monitor your driver's position, only step out when they're arriving.
- Driver resents your trip destination --> You declare this ahead of time, and it is accepted by the driver ahead of time. Also, driver rating system discourages people from being rude / guilting you for having a place to go
- Fare was surprisingly high --> You get a quote ahead of time.
- "Credit card machine isn't working" --> Your credit card is already entered in the app, so you don't even have to worry about it. It's charged automatically.
- Car is kind of gross / smells weird --> People use their own, more modern, nicely appointed cars. Drivers have good incentives to take care of the car. Rating system encourages good behavior on both sides (throwing up in an Uber hurts your rating a lot).
On the other side of the coin, Uber's system is solving problems for somebody who wants to earn some cash on the side:
- Reputation system allows you to stand out from the crowd with good service
- No obligations to be on shift - work for as long as you want to. Compatible with having other jobs.
- No need to invest your life savings on a medallion whose only value is to make you one of a sea of undifferentiated, unaccountable yellow cabs
- Don't need to patrol to "find" the riders, so lower downtime
It is a better system. Declaring that it's "NOT" without any backup will not change that. And if you come back saying "so what, local cab services have an app that does all the same stuff now" (now that Uber forced them to to be competitive, that is), then may God have mercy on your soul.
You might be a little low there. In my direct experience as a driver pre-covid, it was close to 50%, and many drivers in the relevant subreddits have reported it frequently being more than that since. Imagine hearing a passenger complain about their $15 fare when you only see $6 of it (out of which you still have to cover your gas usage). 25-30 percent seems reasonable in comparison.
I just ordered a Lyft the other day and was talking to the driver on the way to the airport, he said a common route he drives is from Bozeman (MT) to Big Sky (for the ski tourists), the price is over 150$ on Lyft/Uber, and he ends up getting about 60-70$ from it max.
This type of cut, plus the massive false advertising that Uber/Lyft does via their apps in smaller towns, like telling you that your ride will be booked soon when there are literally no drivers available, have led to me just using prebooked car services when I can now. It costs a bit more, but they are 100% reliable in my experiences, more money is going directly to the drivers, and it supports the local economy.
> like telling you that your ride will be booked soon when there are literally no drivers available
I got burned on this using Lyft to get the airport early in the morning. Scheduled the night before to pick up at 5am the next morning. No one was actually scheduled, and it was just searching endlessly for a driver in the area but there were none! No car services open, I had to call my mother and ask her to take us! I couldn't believe it and I'll never use one again. Only car services for me now, at least for anything that matters.
Same. The language they use for that feature (on both apps) is extremely misleading, if not just straight up false. They clearly want you to believe that you are guaranteed a ride when you schedule ahead.
That's no longer the case. It was the situation at the beginning, but multiple cab folks have told me that incentives have really reduced in the last four years.
Well, shared rides were pretty popular pre-pandemic. Cabs never really did shared rides (at least not legitimately). I pretty much always opted for the shared option whenever I Uber’d or Lyfted.
So how did these work? How did the driver tell where they were coming from and where they were going? And was it worth their time? I can't think sharing your own ride is easy to solve. And no if you add more people when you are professionally driving it is still not ride sharing, it's just bus service at that time.
Yes Lyft Line and Uber Pool. I know Uber pool achieved break even just before the pandemic. It was remarkably cheap and popular in high use areas like major cities. Even if it wasn’t a super profitable product it was a great service that reduced car dependency in America.
I refuse to use Uber but I’ll take Lyft since it is impossible to get an actual taxi anymore.
My last ride I was talking to the driver about someone canceling a $50 fare and her getting it instead which lead to the discovery of her getting $22 of the $48 (minus tip) I was charged.
I agree that Uber is using VC cash to outcompete more effective businesses. It's not sustainable, but in many cases those businesses were predatory either to their employees or the public. This isn't the case everywhere.
I talked with some ex-cabbie Uber drivers. With cabs, they had to pay back the owner each shift for use of the vehicle and license. About half of the shift would be worked free. If they were new and got weekday graveyard, it was particularly bad. They seemed much happier with Uber. I'm a bit concerned about hard to quantify costs like vehicle wear ultimately making it worse, though.
In some countries, taxis are so often criminal that tourists are warned to avoid them. In some less extreme places, drivers simply never use the meter and the passengers must negotiate every ride. Uber and its competitors have been wonderful for hailing rides in these places.
I remember areas of Bali where local cabs would threaten and drive away cabs from outside the area, including private-hire ones ordered via app. Their argument was local drivers should be supported, but the cab prices were really high for short rides as a result (because the clientele was foreign tourists, many from Australia and Europe).
Apparently in Mexico it used to be the case 5years ago but nowadays you can't rely on Uber either anymore if you are a woman and you don't want to just be a dead raped corpse the next morning.
Source: mexican gf and her family still living there.
Not sure if the issue comes from Uber not giving out drivers info, drivers blaming someone borrowed their car but not disclosing identity of supposed borrower or police not even asking but it seems to be the true reality.
Also a quick google search shows there are occurences of this in the USA as well. The fact the driver may be charged and found guilty after that sadly do not prevent the crime from happening in the first place.
"In Mexico" is really too broad to say what to expect. Cancun, Tijuana, CDMX, and Queretaro, as examples, are going to be vastly different experiences.
Well Cancun is not mx anymore. GF is from Queretaro, which is somewhat considered a safe place. She would not take an Uber alone anymore as she used to do.
And why shouldn't Uber be forced to be a platform where the drivers can negotiate price with riders? Seems rather bad that Uber is one dictating the pricing and their cut...
I don't want to put myself at the mercy of some asshole who is trying to dicker with me over the price of a ride. I do not want to argue about the price at all; I certainly do not want to argue about it with the person who is shortly going to drive me around. Better for them to direct whatever feelings of greed or disappointment they may have toward the operator of the service than toward me.
With this many billion dollars on the line, one can never be too cynical.
One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less.
I will say that services like Uber have been very beneficial for areas that were previously underserved by traditional taxi companies. But that alone probably doesn't justify this multibillion-dollar wealth transfer operation.
> One has to wonder if this has been the endgame all along: driving taxi services out of business, replacing them with a monopoly where consumers pay the same price (or higher) and where drivers are paid less.
Only works if you manage to get a govt monopoly and exclusive access tot he drivers. If you don't have those two things there's no point in trying to landgrab under cost and price-gouge later.
For something like Uber, I figure a good team might push out a working solution in a month. The barrier to entry is so small, and travellers have literally no brand loyalty, that the minute the price goes too high there'll be someone else trying to get a cut of the (now profitable) business.
I think they were hoping for network lock-in. Drivers might carry 2 phones but probably not 3. Riders will check 2-3 apps at most. Incumbents end up in a prisoner's dilemma where raising prices in concert usually pays off and defection is actually costly.
To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders. Until you reach critical mass. This is what has lost Uber so much money.
I think you're right to a point. During the period Uber and Lyft pulled out of Austin in protest of its background check ordinance, several other companies sprung up immediately and appeared to thrive until the big boys came back.
The barrier to entry is actually incredibly low, assuming you have a base of people willing to drive already as happened in Austin. You don't need to employ drivers or own cars, or anything else in the physical world that eats up capital. It's literally only an app.
> To offer low wait times you need drivers idling ready to pick up customers. Meaning you need to pay drivers in excess of what you will earn from riders.
That only matters if:
1. You want a larger geographical coverage
2. You want to push out competitors by undercharging.
Local-area Uber clones sprang up like mushrooms in the night when Uber pulled out of certain cities.
> Until you reach critical mass. This is what has lost Uber so much money.
Uber has lost that much money because they were trying to fend off competition and landgrab by charging less. The minute they have to charge what the trip really costs, then the market is suddenly a profitable one and competitors will come in.
My point was that landgrabbing in this market is pointless because you cannot price-gouge later. If Uber decided to raise their rates to become profitable, local-area equivalents will enter the now-profitable market.
No you should always be cynical and assume the simplest dumbest reason. They didn’t think it through this far. They thought driverless would work. They just did what they thought was best along the way.
(Not to suggest that thinking things through this far out from the beginning is a feasible task)
That's the opposite of what I mean by "cynical". That is the charitable view that gives tremendous benefit of the doubt to people who do not deserve it.
These are all interesting points. However, I recently used Uber Premier twice in Miami, after not using any car service for two years, and the experience was excellent. It was fast, friendly, the car was nice, and I was happy with the price. For my use case, I am happy to pay more to get a better service, but it didn’t really seem that expensive. Both drivers had been doing Uber for a long time, which would be surprising if they were getting ripped off. So, as much as these points are interesting, I’m not sure they fully capture the situation.
Both drivers had been doing Uber for a long time, which would be surprising if they were getting ripped off.
If you need to buy food and put a roof over your child's head, you will put up with a lot of things. Being "ripped off" isn't really part of the equation: You can know you are being ripped off while still realizing this is the best way to provide for your child. Folks aren't working fast food for 20 years because they are getting treated well. Same with Uber drivers.
The best Uber I ever got picked up in was a high end Mercedes driven by a bored retiree wanting something to do on weekends.
Clearly that ride was subsidized by a number of things and wasn’t sustainable.
But I don’t expect limo service at taxi rates - and I’ve started noticing that some Ubers have been literal taxis with an Uber and Lyft sticker on them.
Lately I’ve been using shuttle service or just car service.
Amazing for whom? Certainly not for the gig workers who don’t get employee benefits and are now sometimes making sub-minimum wage after accounting for gas and deprecation
> Uber charges drivers 25-30 percent without coming close to covering their actual costs
I mean this is it, right? This is the big one. All these "tech" companies that are not actually selling software taking huge cuts off the top line, this can't be sustainable.
You can own the market for a while, but sooner or later someone is going to come along and disrupt you.
> 1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business
This doesn't seem to be true, given that in some countries you have taxi companies providing services through Uber, as well as their own ride hailing platforms.
> 2. Individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab
I'm not sure this belief holds any truth as well. I mean, isn't the biggest cost associated with Yellow Cab the taxi medallion, which represents a +$80k additional charge over the vehicle?
> It's a one time charge and also can be resold if needed.
It's a hefty one-time charge that is not required to operate a Uber and thus can baloon the initial investment between 2x and 3x, and at best is capex that you have to tie down. Therefore, how is that an advantage?
Good points, but I would add that what Uber is doing now is just carving out a chunk of the market for what is coming in the next few years. Most of your points revolve around human drivers and the gasoline-powered vehicles they own.
The future of Uber is probably a majority of driverless vehicles that are corporately-owned. That is a vastly different model.
Nice summary. A thought on point #2: (from a total costs perspective) is this still true considering yellow cab drivers still need to acquire, maintain, and insure their personal use vehicle?
My takeaway is that there is a big reason that the "robotaxi" is still on the leaderboard of VC investment plays.
I'm surprised that Uber/Lyft never tried lowtech self driving: basically have drone operators guide the cars when they are not in use, and then just monitor/track the drivers when they use them.
Then a "sweeper crew" can handle the outliers/stranded cars.
> 1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business
How is its cost/efficiency in the areas where there ARE no taxis? I have nothing but "gut" to back this up but I live in one of the areas where aren't (m)any, and uber/lyft is infinitely more efficient here.
1. Uber is actually a higher cost/less efficient producer of urban car services than the taxi companies it has driven out of business
2. Individual Uber drivers with limited capital cannot acquire, finance, maintain and insure vehicles more economically than Yellow Cab
3. Expenses other than drivers, vehicles, and fuel account for 15 percent of traditional taxi costs but Uber charges drivers 25-30 percent without coming close to covering their actual costs
4. Uber’s surge pricing does not improve efficiency, it simply prices those night shift workers out of the market
5. And as Uber has demonstrated, unlimited taxi market entry can lead to ruinous overcapacity and can allow part-timers to cherry-pick the peak revenue that full-time drivers depend on to cover their costs
6. Uber’s investors knew that it needed raw political power to accelerate growth, and to maintain its hoped-for dominance
7. Uber’s major strategic breakthrough was to treat business development as an entirely political process, using techniques that had proven successful in partisan political settings
8. All of Uber’s early popularity and rapid revenue and valuation growth are explained by the billions in predatory investor subsidies needed to drive those more efficient (but poorly capitalized) incumbents into bankruptcy
9. That [early popularity] allowed [Uber] to pursue more stratospheric valuations by exploiting anticompetitive market power and rent-extraction and buying out any potential competitive threats