Think of it as redistribution
June 2, 2017 9:42 PM Subscribe

Can Uber Ever Deliver? Part One – Understanding Uber’s Bleak Operating Economics , Hubert Horan, Naked Capitalism

Uber is currently the most highly valued private company in the world. Its primarily Silicon Valley-based investors have a achieved a venture capital valuation of $69 billion based on direct investment of over $13 billion. Uber hopes to earn billions in returns for those investors out of an urban car service industry that historically had razor-thin margins producing a commodity product. Although the industry has been competitively fragmented and structurally stable for over a century, Uber has been aggressively pursuing global industry dominance, in the belief that the industry has been radically transformed into a “winner-take-all” market. This is the first of a series of articles addressing the question of whether Uber’s pursuit of global industry dominance would actually improve the efficiency of the urban car service industry and improve overall economic welfare.

posted by the man of twists and turns (72 comments total) 36 users marked this as a favorite

I realized today, that the Psychic Delivery Service as envisioned by Kids In The Hall foretold the world of the gig economy.

(and just like Uber, the system works by convincing desperate people that it would solve their problems).
posted by mrzarquon at 10:36 PM on June 2, 2017 [4 favorites]

I pretty much thought Uber struck me as a machine for inflicting pain on people from, say, day 10 or so.

And, whodathunkit, I was RIGHT!
posted by Samizdata at 11:08 PM on June 2, 2017 [6 favorites]

You'd hope that we would remember the GM-led conspiracy to destroy the streetcar systems in the 1940s, a plot that is literally cartoonishly evil. Yet, here we are, with the Saudis investing their oil money into a company attempting to destroy urban transit. Maybe this time, they'll double the fine to $2.
posted by Homeboy Trouble at 11:27 PM on June 2, 2017 [18 favorites]

Certainly the taxi industry here in Aus is moribund and overdue for a shake up. You can only have so many bookings not show up before you start to hate them. And they are certainly as or more exploitative.

But I think a lot of comments are missing the point of the articles, which is not the virtue of uber but rather its unsustainability.

People talk about the self driving ,but i think that stuff is further away than people think.

Rather, I think uber mistook their business in services with being a commodity business, and I question whether they can triumph in industries that are already disrupted, or not so awful, eg uber eats.

I think the company could well survive, but in what form I do t know.
posted by smoke at 12:52 AM on June 3, 2017 [13 favorites]

I remember having an argument about this with a colleague when Uber first showed up around here. My position was that there's no way Uber can provide the same service in a more efficient manner by just relying on random people driving their personal cars part time. His position was that taxi drivers are bad and smelly and cut you off and drive old cars and overcharge, therefore Uber = good.

Efficient in what way? Scanning the articles, it seems a point being made is that Uber is inefficient because drivers are massively subsidized. By its investors. Which would mean it's really inefficient for its investors. But for users, it's really quite efficient. Because my position is that taxi drivers have far more often been assholes. When they bothered to show up. So, compared to my experiences, yes, Uber = good.

Another point is that inefficiency described above means Uber is doomed. OK, so why is that my concern? Or the concern of anyone who actually hates Uber? If it's the case that Uber's success is fleeting, why not treat Uber as a limited time offer, with unknown expiration date, and enjoy it while it lasts? There's concern that Uber treats drivers awful and people shouldn't be subjected to such shitty jobs. And there's concern, who will think of the poor drivers when Uber relieves them of their shitty jobs with robot cars?

It seems Uber haters not only love wringing their hands over the success of Uber, but often love just as much wringing their hands over the possible collapse of Uber, and easily entertain contradictory narratives of Uber's evil, because sharing economy/disrupting/Uber is evil. And don't forget the Kochs.

Once again as I've stated before, I'll hate Uber when Uber makes things worse. Which may never even come to pass. And it may be that the way Uber, Lyft, etc would surely make things worse, is by ceasing to exist, leaving point to point transportation services back to cartel systems.
posted by 2N2222 at 12:59 AM on June 3, 2017 [14 favorites]

His position was that taxi drivers are bad and smelly and cut you off and drive old cars and overcharge, therefore Uber = good.

His position doesn't take into account that you quickly find taxi drivers you prefer and politely request their business card. Then you can call them directly. Pretty sure this is common with all full time drivers and all regular taxi users. My favorite cabbie is constantly getting called while I'm in their cab. He usually has 1-2 more customers in his queue at all times. This means I have to wait, sometimes, but it's worth it to get the driver I want. I have three drivers I trust and am always looking to add more.

All Uber has done is replace the middle man (outdated phrase?), but I like the middle man. The middle man requires drug testing, background checks, health checkups, all of which make me feel safer and more comfortable using a cab. Without a middle man, these services are glorified hitchhiker apps.
posted by Beholder at 1:07 AM on June 3, 2017 [29 favorites]

Its not really performative pissing rather than acknowledgement that the uber model is unsustainable. They are propped up artificially, falsely cheap- in order to undercut the established and yes, often subpar taxi services. But their goal, like almost all companies in late stage capitalism, is monopoly. And if they do succeed in running the taxi companies out of business- they will turn fully towards making a profit, un-propped up. Which will mean major fare hikes, well above surge pricing, and as they will be the only game in town, especially in places with poor or almost non-existant public transport-- well that will be that. Talk about dystopia.
The reason Uber is getting so much backlash is that we can see the endgame of an un-regulated taxi service. Regular taxi services are regulated so much that true monopoly is impossible, as is true gouging. But with no such restraints on Uber, one can see the endgame being very VERY bad for the general public.
Late capatalism going to late capatalism I suppose.
posted by Homo neanderthalensis at 1:11 AM on June 3, 2017 [25 favorites]

All Uber has done is replace the middle man (outdated phrase?), but I like the middle man. The middle man requires drug testing, background checks, health checkups, all of which make me feel safer and more comfortable using a cab. Without a middle man, these services are glorified hitchhiker apps.

I'm curious about this age when cab drivers were such paragons of virtue, and taxi companies such exemplars of ethical capitalism. Never in my life did they make me feel safer and more comfortable using a cab. It would be cool if Uber/Lyft were glorified hitchhiker apps, because that would mean rides were free. But that's not the case. Instead, without the middleman you describe, catching a ride service is more reliable and convenient than it was before. And there's nothing keeping you from patronizing your favorite drivers either way.

But their goal, like almost all companies in late stage capitalism, is monopoly.

That catch phrase, late stage capitalism, gets thrown around a lot without meaning. Monopoly was a goal of all companies in any stage capitalism. If they can keep it.

The reason Uber is getting so much backlash is that we can see the endgame of an un-regulated taxi service. Regular taxi services are regulated so much that true monopoly is impossible, as is true gouging. But with no such restraints on Uber, one can see the endgame being very VERY bad for the general public.

But regular taxi services are regulated so much that they were practical monopoly, with fixed number of medallions allocated by the government. There was no meaningful competition in that system. The endgame of an unregulated taxi market means it's more difficult to maintain a monopoly. Once competition is driven out, it's difficult to raise prices before new competitors are quickly drawn in.
posted by 2N2222 at 2:16 AM on June 3, 2017 [19 favorites]

I wonder what Uber supporters will think when the fare doesn't double but quintuples or more. If Uber survives, it will gouge customers mercilessly, redline without shame, provide increasingly shitty service, fail to provide even lip-service to anything like having genuine emplyees, and probably kill any number of people with their unvetted drivers and cars.

The people eager for disruption will start boo-hooing, and boom, regulation and back to the cab company again.

Pete Townshend mentioned this cycle in a little ditty for the Lifehouse project.
posted by maxwelton at 2:29 AM on June 3, 2017 [9 favorites]

One deleted. Please feel free to explain your own viewpoint, but if you're just here to throw out insults because people are discussing this, probably better to spend time in a thread where people are not discussing this.
posted by taz (staff) at 2:30 AM on June 3, 2017 [2 favorites]

One way in which I can see Uber being more efficient than traditional cab companies, which I think the article missed, which is also one aspect of how it's worse for society overall:

It's certainly true that cabs a lot more profitable in certain neighborhoods and at certain times of day. While traditional cabs are somewhat forced to cover both profitable and non-profitable routes, with the former subsidizing the latter; this means that they have to charge higher prices on the profitable routes. Because part-time "independent contractors" have more flexibility, Uber could exclusively serve the profitable parts of the business. Since they don't have to use that to subsidize the less profitable parts, they could offer lower prices in a sustainable way.

Of course, this would mean that the traditional cab companies would be profitable at all, meaning that nobody is serving poorer neighborhoods or providing cabs at less lucrative times, and I think that would be worse for society after all.

In fact, this is really the purpose of traditional taxi regulations. Let us, as a thought experiment, imagine that we are a local government, trying to create regulation to ensure that all parts of the city are well served by taxis at all times of day.

Obviously, the first step is to say that you won't get a license unless you solemnly promise that you'll serve everyone equally, at all times. This is certainly a start, but it's hard to enforce. We can do a little better.
At least the "time of day" problem can be addressed by economic incentives. Let's introduce a cost of the license/medallion whatever which is high enough that it's a big cost to leave a taxi idle. People get a license because there is a lot of money to earn driving a profitable times; but once they have invested the large fixed cost they "might as well" drive during the unprofitable times, to gain what they can.
This only works if you also artificially keep the profits from the profitable times high. To do so, you now introduce a limit to how many medallions you grant, to keep the supply low at profitable times.

I'm not saying that all taxi regulation actually works, but there is a definite core idea behind them that is sound, if you believe in taxis service as a form of public good.

So in summary, if you're traveling from an affluent neighborhood to a fancy restaurant hot-spot during the evening, Uber may be able to offer you a better fare than a traditional cab, even without investor subsidies. But in taking the fare, you're likely contributing to less availability for taxis from poorer neighborhoods in the early morning. If you believe that early-morning, poor-neighborhood taxi rides have value to society, beyond what somebody is willing to pay for it, then Uber is doing damage to the public good.
posted by water under the bridge at 2:35 AM on June 3, 2017 [11 favorites]

Now that I've read the pieces, a few thoughts:

1) Horan's research is inconsistent. His claim that the taxi industry has never been monopolised effectively is easily refuted using data from my own Australia - where in fact the cabbie cartel was taken to court for fixing extra charges with cab vouchers and use of credit cards (they lost, charges went down and were capped), but there are lots of more examples, including Little Rock, and Ottowa to name a couple. Unless he means a global monopoly, in which case, sure. But are there many service industries with a global monopoly? By their nature service industries tend to be more localised than commodities.

2) I feel like Horan makes a flaw in comparing Uber's driver model with the taxi driver model. I've only a caught a few Ubers, I grant, but most of the drivers I've had are not driving full time. They are doing it on weekends as a supplemental income, filling time between contracts or jobs, etc. You simply can't do that driving a cab due to plate/medallion cost - you can't afford to. By positing Uber-as-cab against cabs, it's a wash, certainly. But Uber-as-demand-driven-casual-job-using-sunk-cost-of-already-purchased-car vs cab is a different competition. Also, the later model encourages more people to work when it's busy, as opposed to cabs which has a more static labour pool and hence getting a cab on a friday night or during shift changeover is a nightmare here in Sydney.

3) Horan's position that "Every other transport industry depends on highly centralized management using highly sophisticated systems to ensure that capital assets are highly utilized and tightly scheduled" is just not true. It's not true for many taxi companies, and it's not true for couriers, freight companies etc. I mean, I think his point is sound but he's acting like this model is the only model to be successful and it's not the case. For better and for worse contracting has a long history in the transport industry. He even argues himself in other chapters that use of indepedent contractors is not unique - so which is it?

4) I thought part 4, about Uber wanting a monopoly was especially weak - every company wants a monopoly and to eliminate their competition. You can't really ding them for not being socialists.

5) His rebuttals to people pointing the competitive advantage of an app that works well and taxis that show up/are clean/don't rip you off etc is very weak, I thought. I feel like he seriously underrates the reputation of the taxi industry - at least, here.

6) The pieces definitely got worse as they went on. For the unitiated I would stop at part 5. Parts 6, 7 8 basically just repeat his argument again and again with less evidence, whilst traducing Leavitt and some other rando journalist (They deserve it, but it's not a very edifying spectacle. Tech/Business press is myopic and boosterish; news at 11.)

7) The stuff about Koch funded corporate welfare advocacy is interesting - he tries to draw a straight line between it and Uber, which is too much, I think. They are both representative of a broader issue/problem.

That's what I thought was wrong with it. The main thing I guess is I think the whole thing could have been written in about 1500 words and been stronger for it, and Horan gets overextended by his hatred of Uber and what he feels it represents.

What I think it gets right:

1) No clear path to (the kind of) profit (people are expecting; I think it could be moderately profitable)
2) Tech Start-up mentality can often be stupid when it comes to reality-based products/markets and Uber has disregarded lessons from its forebears in services and logistics.
3) The start-up world thrives on wild over-valuations and positively deranged growth projections (which neoliberal govts love as they can move 'wicked problems' off to a subsidised private sector instead of doing policy and having hard conversations with voters)
4) The company's innovation has been overrated (in part because the bar is so low with taxis, in part because tech start up etc)
5) Uber, as it currently exists, can't replace cabs (does it need to, I guess is my question).
6) The company is losing a lot of money in an unsustainable way.

I'm torn. I wish Horan had been more measured and not so assured with his arguments, as some of them are not so strong as he thinks. Also he's assessing the whole thing through his history of commercial aviation, not IT/tech - and it shows. I mean look at Snapchat's value FFS, at least Uber has a service people pay for. You can't put these tech companies up against real companies.

The comments are, mostly, what I imagine the comments here will be like: People arguing about Uber being great, or being bad, not so much focus on the business model.
posted by smoke at 2:43 AM on June 3, 2017 [19 favorites]

I'm curious about this age when cab drivers were such paragons of virtue

Not virtue exactly, but back in the day here in NYC there were well-informed taxi drivers outside of nightclubs that had good information on where the best choice for the next club is, or what new after hours scene had opened, or where other club-goers had gone for an all-night blueberry muffin or pirogi ... just general all-around nightlife consultants.
posted by StickyCarpet at 2:53 AM on June 3, 2017 [3 favorites]

In terms of regulation, I have been informed that my home state of South Australia requires that Uber driver have valid Police-issued Working with Children forms, which do catch a variety of things, and that they have the third party insurance associated with a 12-seater minibus. Both of these mean that the Uber environment in SA is not necessarily the same as found in other places. This doesn't address any of the economic/monopolistic issues raised but I thought it might interest some people who were thinking about regulation and accountability.

Our state government has also raised a $1-per-ride hired transport levy to pay for compensation to the Taxi owners who had purchased medallions/cars prior to the introduction of Uber. It's supposed to cut out in 6 years but it will probably just redirect to Government coffers after that.
posted by nfalkner at 3:13 AM on June 3, 2017 [1 favorite]

I'm curious about this age when cab drivers were such paragons of virtue

And the very first thing I mentioned in my post is that I have favorite drivers that I directly contact, plus the fact I know they are drug tested, have health checkups, and no criminal record. Those last three things are biggies.
posted by Beholder at 3:45 AM on June 3, 2017 [2 favorites]

"Another point is that inefficiency described above means Uber is doomed. OK, so why is that my concern? Or the concern of anyone who actually hates Uber? If it's the case that Uber's success is fleeting, why not treat Uber as a limited time offer, with unknown expiration date, and enjoy it while it lasts? [...] Once again as I've stated before, I'll hate Uber when Uber makes things worse."

Found the libertarian!

The inefficiency alone may not be your concern, but things that have damaging second- and third-order effects *should* be a concern, not just from an ethical perspective but even from the more selfish "what will things be like for me (or others I care about) when that happens" one. You instead seem solely concerned with whether it hurts you, personally, in the here-and-now, and nothing else. It's not a conflicting narrative to say that Uber's model is ultimately doomed and that it can cause immense damage in its wake on its path to that doom.
posted by mystyk at 3:48 AM on June 3, 2017 [22 favorites]

Not once in all those years has a yellow cab driver ever proved to be a resource of any sort about nightlife or anything else other than some good discussions about politics in Yemen or what Bhangra tape they were playing on the stereo.

One thing I like about London is that black cab drivers take The Knowledge, probably one of the hardest exams in the world. It's said that the amount of information they have to learn is equivalent to doing a medical degree. They are suffering with Uber at the moment, but I hope the Knowledge never changes. It should be adopted in other cities in my view.

(Someone blogging taking The Knowledge. Good luck to them).
posted by plep at 4:51 AM on June 3, 2017 [7 favorites]

.... (which is a roundabout way of saying that I too like the middleman and hope he or she doesn't become deskilled because of Uber).
posted by plep at 4:52 AM on June 3, 2017

But in taking the fare, you're likely contributing to less availability for taxis from poorer neighborhoods in the early morning. If you believe that early-morning, poor-neighborhood taxi rides have value to society, beyond what somebody is willing to pay for it, then Uber is doing damage to the public good.

I don't know your city but Yellow cabs here were notorious for not serving black neighborhoods for generations and regulators never did anything to correct that. That why every supermarket in a black neighborhood here has a bunch of unlicensed 'jitney' drivers hanging around the entrance asking "hey, need a ride?" when you walk out. Not that I have any love for Uber but taxis have never been any kind of paragon of equal access.
posted by octothorpe at 5:05 AM on June 3, 2017 [11 favorites]

Uber came to DC, and the taxi service here got markedly better. To the point now that I prefer using taxi cabs over Uber.

My experiences with Uber X here, lately, have been unpleasant. I'm pretty much done with them. The taxi services here mostly fixed their problems in the face of competition, and I, for one, am spending a little more with them because the product is worth it.
posted by Thistledown at 5:09 AM on June 3, 2017 [2 favorites]

Lyft is my go to: better drivers, better service, better cars. I use it at least three times a week, relatively long trips, both ways (work at various places and home again). Where I live a large majority of drivers are retired people, either supplementing an income or doing it to get out of the house. For all intents and purposes, cab service here is through one company, and they are seriously the worst transportation option around, for drivers and passengers alike.

Uber just sucks in comparison to Lyft.
posted by disclaimer at 5:17 AM on June 3, 2017 [2 favorites]

If it's true the Sauds are big investors, I guess that explains why the CEO's sexist attitudes and behavior have never been enough to stop the money train.
posted by saulgoodman at 5:30 AM on June 3, 2017 [1 favorite]

I think this article is kind of missing the point. Uber's business model is basically sound, except for the part where they took $70 billion in investments. Ride sharing apps are a low margin business with no real lock-in effects. In the future I expect there will be 10 different apps, each of which only took a few million in capital to build, and Uber's investors to be $70 billion poorer.

The only way this could possibly turn around is if Uber completely knocks it out of the park with their autonomous vehicles program. In that case the ridesharing is really irrelevant, because the technology would be incredibly valuable on its own. But Uber needs to survive 5-10 years until autonomous vehicles are safe and legal. I actually tried one of the Uber autonomous cars a few weeks ago and while it's impressive, it's also not ready for prime time yet.

One other factor is that the drivers are getting paid way, way too little. Uber reimburses around $0.75 cents/mile, and it's hard to even make minimum wage driving at that rate after paying car expenses. Even without a driver, operating a car with a $25k autonomous computer system at that price is probably unworkable. They're going to have to raise prices quite a lot, and that's going to prompt a huge exodus to the next subsidized bubbly ridesharing platform.
posted by miyabo at 5:45 AM on June 3, 2017 [10 favorites]

His position doesn't take into account that you quickly find taxi drivers you prefer and politely request their business card. Then you can call them directly. Pretty sure this is common with all full time drivers and all regular taxi users.

I have lived in a city where cab usage is very common for almost a decade and I have literally never heard of a single human being ever doing this anywhere.
posted by deathpanels at 5:59 AM on June 3, 2017 [25 favorites]

Interesting note: in Beijing, where Uber is Didi and Didi is Uber, I can summon an actual taxi in the app, right next to the ride hail, ride share, and Uber Black equivalent. Not sure what they worked out, but often with surge pricing actual taxis are cheaper... You just can't get a damn car 'cause they're all busy.
posted by saysthis at 6:20 AM on June 3, 2017

All Uber has done is replace the middle man (outdated phrase?), but I like the middle man. The middle man requires drug testing, background checks, health checkups, all of which make me feel safer and more comfortable using a cab.

The middle man never did anything. I have been taken for a ride by Boston cabbies more than once because I was speaking Finnish with friends, being cursed at getting ride from Logan to East Boston, been at an accident because the driver drove like an ass, refused rides, etc.

Uber is multiple times safer and gives a better user experience than these "licensed" monopolies ever provided. And the argument about gig economy is just as stupid, none of the cab drivers ever had a regular pay check. They rent the medallion for a day whether they make the money or not.
posted by zeikka at 6:24 AM on June 3, 2017 [6 favorites]

Uber haters not only love wringing their hands over the success of Uber

Uber loses the better part of a billion dollars every three months. I don't think it's fair to call it a success yet.
posted by ultraviolet catastrophe at 6:45 AM on June 3, 2017 [12 favorites]

A lot of people I know *love* Uber because it's cheaper than cabs, full-stop, and get annoyed when I try to explain the reasons I don't use it. Yes, the taxi industry in Toronto sucks and desperately needs to be reformed, but at a base level I'm opposed to people getting "disrupted" into doing the same job for less money (and it's not like cabbies are raking it in), and then there's the rating system on top of that which more or less forces Uber drivers to obey the every whim of customers because anything less than a five-star rating is going to decimate their ability to attract business. Also, the people who founded Uber sound like shitheads and I don't want to give them my money.
posted by The Card Cheat at 6:59 AM on June 3, 2017 [16 favorites]

One issue is the corruption that can occur with middle men. Around 1990 I wrote software for an automated taxi dispatching system for Motorola called TaxiPak (some explanation of it here). Passengers would call the taxi company (or in Paris they could request a cab online with Minitel), taxis would have a two-line terminal where requested pickups would be sent by radio and the first driver who chose to take the pickup got it. All of the taxi companies that were customers were in Scandinavia or France. I remember being told that they had trouble selling it to US taxi companies because the dispatchers didn't like it as they couldn't get paid off by drivers to get the best trips, and drivers didn't like it because they couldn't pay off the dispatchers to get the best trips.
posted by ShooBoo at 7:42 AM on June 3, 2017 [10 favorites]

The problem with Uber discussions, and I will cheerfully admit to hating Uber, is that Uber the company, Uber as an app that takes the place of a middleman in ordering a cab, and Uber's specific implementation of such a service, are three distinct things.

For instance, Uber the company is a garbage fire, and their specific implementation is algorithmically cruel (for instance: imagine what the surge pricing will be like if there's a terrorist attack in your city, and whether it's fair Uber profits from that) and lies about their car locations - but an app that connects a driver to a passenger, and shows you where the driver is and whether they're actually coming directly to you, is amazeballs.

In Sydney, I use an app that taxi drivers can opt into. I get a taxi, but it's usually a decent driver, and I can call a driver who's driving away from me, and tell them that I can see they're going the wrong way and ask them what they're doing. That, and not having to pay the taxi cartel because I pay through the app, basically addresses all the problems with the taxi experience.
posted by Merus at 7:55 AM on June 3, 2017 [10 favorites]

Uber's business model is basically sound, except for the part where they took $70 billion in investments. … Uber needs to survive 5-10 years until autonomous vehicles are safe and legal.

They’ve been consistently losing $2-3 billion annually for the past few years, so 5-10 years of survival for Uber might mean $10-30 billion in the hole. Meanwhile, they don’t have an effective moat around their business: designing a ride-hailing app is not prohibitively difficult with today’s various location services, and the murky “independent contractor” relationship Uber have with their drivers means that many drive for multiple companies simultaneously. Users of Uber easily convert to users of its competitors.

Autonomous vehicles are currently a fantasy. Uber recently lost the head of that group in Pittsburgh, and it’s not looking like this bet will pay off in the short time that they need it to. The articles make the point that even when Amazon was losing money they were doing the things that would eventually make them profitable. No similar network effects exist with cars, so Uber’s profitability stories depend on a 5-10 year leap of faith. I’m told they’re currently hiring for their flying car group — ridiculous.
posted by migurski at 7:59 AM on June 3, 2017 [6 favorites]

I really liked Uber when they were a luxury car service. When they tried to put taxis out of business, not so much.
posted by empath at 8:03 AM on June 3, 2017 [2 favorites]

So in summary, if you're traveling from an affluent neighborhood to a fancy restaurant hot-spot during the evening, Uber may be able to offer you a better fare than a traditional cab, even without investor subsidies. But in taking the fare, you're likely contributing to less availability for taxis from poorer neighborhoods in the early morning. If you believe that early-morning, poor-neighborhood taxi rides have value to society, beyond what somebody is willing to pay for it, then Uber is doing damage to the public good.

Funnily enough, my experience is the exact opposite, at least in New York City. It is more-or-less impossible to hail a cab anywhere outside of Manhattan south of 96th street. Even after the city introduced the green cabs. Uber and Lyft tend to work well. If you are in Manhattan south of 96th street, it's usually still easier and more reliable to hail a cab.

(There was a "real New Yorkers ride yellow" ad campaign which I took to mean "real New Yorkers are rich enough to live in the most expensive parts of the city".)

Of course NYC is odd in requiring Uber and Lyft drivers to have hack licenses. It may be that the city has more clout to make things less dystopian than in other places. I think experiences may be extremely different in different cities (New York, where it's basically just full-time drivers, to LA, where it's out-of-work actors with a side hustle, to DC, where it's a mix of people and the subways are very unreliable). This might have something to do with the heated disagreements about these services.
posted by vogon_poet at 8:33 AM on June 3, 2017 [5 favorites]

I have lived in a city where cab usage is very common for almost a decade and I have literally never heard of a single human being ever doing this anywhere.

Allow me to blow your mind, then: I haven't driven in more than 25 years, have lived in half a dozen cities with heavy cab usage, travelled to dozens more for work, and had at least twenty taxi drivers offer me their business cards.
posted by ricochet biscuit at 9:08 AM on June 3, 2017 [7 favorites]

Uber and Lyft are perfect for business travelers in my opinion: no need to learn the quirks of local taxi systems when visiting a new city, cars show up quickly, and scheduling rides in the future (to catch a flight) works well. Their predictability and timeliness beat local taxis, in my experience.

If they ever come on hard times, they should focus on business travelers. There would be room to raise rates for the convenience they bring.
posted by Triplanetary at 9:36 AM on June 3, 2017 [9 favorites]

Not once in all those years has a yellow cab driver ever proved to be a resource of any sort about nightlife or anything else...
posted by spitbull

You're not going back far enough, at just 20 years. You need to go back 35 years to the days of the Mudd Club, The Jefferson, Destroy All Monsters, and the other various pop-up after-hours 'till 10 in the morning venues.

The nightlife cab drivers were ordinary young guys, and they might take a detour to some East Village tenement to help you score a small bag of weed lowered in a bucket from a fourth floor window. Some owned their cab medallions, and the cabs were parked in a driveway during the day. If the passengers had just the right vibe (and included cute single girls), they might even go off meter and drive to the beach to watch the sun rise with the party.

That changed abruptly when medallion prices skyrocketed and the owners had to run the cabs around the clock, under-paying drivers, and outright scamming them, just to pay off the medallion.
posted by StickyCarpet at 10:16 AM on June 3, 2017 [4 favorites]

Most of the cab drivers around here sell drugs and many also act as pimps. I've had drunk or visibly high drivers show up many times. I wish I knew where this mythical land was that cab drivers were upstanding citizens with all the health tests and the drug tests and the not being a creepy weirdo. Periodically they all get arrested leaving us with no cabs for a while until new drivers can be imported. We don't have Uber, I sure wish we did.

And when I lived in LA, Uber transformed getting around. Cabs just weren't feasible there and Uber is. It's probably cut drunk driving in the greater LA area by 85%. I have quite a few friends who drive for it part time or short term and it's OK, you don't make much but it helps.

So I'll be sad when Uber implodes. I hope we get it here for a bit first.
posted by fshgrl at 10:33 AM on June 3, 2017 [4 favorites]

You can say what you like about Uber, and it's probably all true, but as someone with a very limited income, if a few very very rich parasites want to pay for me to get a cheap ride while their money is en route to swirling away down the toilet then I'm down for some redistribution of their wealth.
posted by walrus at 10:40 AM on June 3, 2017 [10 favorites]

lived in LA, Uber transformed getting around

Yeah, I can remember pre & post in just going from LAX to mid-city: $70+tip vs $20-25.

Totally changed nightlife too, it's literally impossible to hail a cab in LA outside of a few blocks on Sunset or within the past 4 years in Downtown. Parking is always an issue and then it even begins to make sense to use Lyft/Uber even during surge pricing because it's $20 to park.

Lyft/Uber also might be why there's now a push in the state legislature to change last call to 4am.
posted by wcfields at 11:50 AM on June 3, 2017 [2 favorites]

I liked Horan's work on the earlier chapters; those were interesting reads. I think I agree that Uber is just not ever going to be profitable. They're making a monopoly - but it's only a monopoly with massive cash input. Once they stop doing that, nothing's stopping anyone else from doing the same thing.

Whether that's an evil thing or not seems to be pretty much a political choice. Is it a good thing that more profitable routes subsidize the less-profitable ones, or should the less-profitable customers have to pay what it really costs to serve them? Are taxicabs an essential service people should have available to them at low cost? I don't know, but Uber is choosing no, and forcing everyone to choose no, probably forever. Changing that will have to come from regulation, just like it always has, and a lot of that 13 billion is going to resisting that regulation, not even counting subsidizing the ride cost.

I think Horan in the later ones veered into "is it evil" instead of sticking to "will it work economically." I agree with him on the second thing, in that I just don't see where the investors get their money back.
posted by ctmf at 12:41 PM on June 3, 2017 [2 favorites]

I feel like Uber is a bizarre and elaborate system of transferring wealth from rich people (their investors) to the middle-class and poor (the riders). It would be nice if the drivers ended up with more of that, but the fact that it's being drained from their wealthy investors is still nice.

Glad someone else was thinking along the same lines as I was. Everybody keeps talking about burn rate and this companies losing this many million and that many million.

No one seems to consider the plus side of the equation. All those millions that would basically sit in one place growing moss are being dumped right back into the economy in various sectors.
posted by Samizdata at 1:00 PM on June 3, 2017 [10 favorites]

Is it a good thing that more profitable routes subsidize the less-profitable ones, or should the less-profitable customers have to pay what it really costs to serve them?

i.e., same old thing. Should poor people be on their own? FYIGM.
posted by ctmf at 1:04 PM on June 3, 2017

But regular taxi services are regulated so much that they were practical monopoly, with fixed number of medallions allocated by the government. There was no meaningful competition in that system.

Even if this were the case, please consider the difference between an effective monopoly with government-regulated pricing and one without.

The endgame of an unregulated taxi market means it's more difficult to maintain a monopoly. Once competition is driven out, it's difficult to raise prices before new competitors are quickly drawn in.

If it was so easy to build an unregulated taxi market, do you think Uber would need to be spending so much to do it? "New competitors will be quickly drawn in" is very often an Econ 101 reflex response which does not hold up when you consider how an industry actually operates. Not to mention: if Uber survives, in 20 years it will be trying to close the regulatory gates behind it.
posted by praemunire at 1:27 PM on June 3, 2017 [1 favorite]

In Sydney, I use an app that taxi drivers opt into.

Hey, Merus, , what's the name of the app and does it work for Melbourne?
posted by Joe in Australia at 1:37 PM on June 3, 2017

It's called GoCatch, Joe (also losing money, I might add).

imagine what the surge pricing will be like if there's a terrorist attack in your city,

Merus, if you live on Sydney you should know this is exactly what happened during the lindt siege, and they dropped surge pricing and refunded anyone who was caught in it.
posted by smoke at 3:45 PM on June 3, 2017 [1 favorite]

The irony being that if you disapprove of Uber, the best way to hit them in the wallet is to actually use their service.
posted by fellorwaspushed at 4:02 PM on June 3, 2017 [9 favorites]

Yet, here we are, with the Saudis investing their oil money into a company attempting to destroy urban transit.

Maybe you can also look at it the other way around: Uber users are subsidizing a Saudi self-driving car skunkworks. I think the Saudi's investment in Uber goes deeper than an interest in selling more oil to the west.

Just as internet platforms are helping oppressive governments consolidate power and shutdown opposition through censorship and surveillance, Uber allows them to monitor and maybe soon control the movements of their citizens and guest workers. It's not a self-driving car but an algorithm-driven car. That algorithm can be used by its host government to restrict free movement or enforce patriarchal religious beliefs. It's easier to suppress public protests when you can declare a driving curfew with the touch of a button or to geofence your wife when the car doesn't have a steering wheel.
posted by peeedro at 4:52 PM on June 3, 2017 [5 favorites]

Once I had a great conversation about Dolky Parton's popularity in Nigeria.

I don't know about anyone else but I googled for Dolky Parton thinking a Nigerian Dolly Parton would be amazing.

It is just a typo. I think. Universe tell me I am wrong!
posted by srboisvert at 5:05 PM on June 3, 2017

It may be that the city has more clout to make things less dystopian than in other places.

Or it could just be that their Mayor's brother is not a major investor [cough cough Chicago cough cough].
posted by srboisvert at 5:14 PM on June 3, 2017

The Saudi geofencing thing is, sadly, very plausible. The Kingdom is probably one of the best places for self-driving cars, because of the huge highways and the money they can spend on infrastructure. Self-driving cats would also let Saudis avoid exposing their wives and daughters to chauffeurs. This is An Issue, both because they're men and also because they're corruptible, and therefore can represent a potential avenue for women who want to exercise some freedom over their daily routine.
posted by Joe in Australia at 5:19 PM on June 3, 2017

Self-driving cats

"Toonces, look out!"
posted by peeedro at 7:34 PM on June 3, 2017 [10 favorites]

u know i've had drivers proposition me for oral sex, make a 10 minute ride 30 minutes to overcharge, etc- even tho uber is a fucking train wreck i prefer them. as sad as it is they r safer.
posted by superior julie at 7:53 PM on June 3, 2017 [1 favorite]

Not once in all those years has a yellow cab driver ever proved to be a resource of any sort about nightlife or anything else...
posted by spitbull

Slightly off-topic, but once upon a time in Singapore, hailed a cab one Saturday morning to go check out the local India-town. Got talking to cabbie, asked him for a recommendation for a good local place for lunch. He pulls over after a while, we get out of the cab, up a creaky metal stairs up the side of a nondescript building and into a very bare bones eating establishment. He orders who knows what and we all sit around a table eating some of the best south Indian food ever.

Best cab ride ever!
posted by cfraenkel at 7:59 PM on June 3, 2017 [1 favorite]

Also, more on topic - a big shout out to nakedcapitalism for promoting reporting like this. Agree or not, it's about the only place around that is consistently questioning our corporate overlords these days.
posted by cfraenkel at 8:07 PM on June 3, 2017 [1 favorite]

UUber and "monopoly" should never be used in the same sentence. Uber has robust competition in any market with the critical mass to support a rideshare service. Any market with only Uber almost certainly is being profoundly subsidized by Uber's VCs -- more a charity than a monopoly. Uber's immunity to regulation is greatly exaggerated. Regulators with backbone force Uber to comply or leave without any problem. And when Uber leaves? Ridesharing services willing to toe the line spring up overnight. I think it took me 3 minutes total to learn Uber had quit Austin in a fit of anti-regulatory pique, figure out Fasten had replaced Uber, download and register with Fasten, and call the first of 4 or 5 cars I would call on Fasten in the next several days -- which in grand total I swear cost less then one Austin taxi ride would have cost from the airport a few years back.
posted by MattD at 8:30 PM on June 3, 2017 [3 favorites]

I just got my new car insurance policy this week and one thing they make very, very clear is they are not covering me, my car, anyone in my car, or anyone I may happen to hit if I am operating as an Uber or Lyft driver. It will be interesting to see what happens when these part time driver have to start buying commercial insurance.
posted by rtimmel at 9:22 PM on June 3, 2017 [3 favorites]

The thing about Uber is that their service is entirely fungible. Most people I know use more than one car service, including yellow cabs. All you really want out of a car service is a ride that's fast, cheap, and safe. If Uber disappeared tomorrow and all their customers had to take Lyft or Via instead, nobody would miss them. They're not like Spotify, where you'd lose all your playlists and social connections if they went out of business. Or Netflix, who makes a ton of original content.

Operating at a ridiculous loss to provide a commoditized service that is fast becoming a race to the bottom, that makes very little sense. I would never invest in that company.
posted by panama joe at 6:51 AM on June 4, 2017 [3 favorites]

The last time I called for a cab in LA it took forty minutes with no regard for customer service. I was basically told "it's coming" then left to stew. This is not dissimilar to every taxi I ever ordered in Perth.

That was the last straw and about the time I switched to Uber (now Lyft).

If the taxis had practiced any sort of customer service or innovation I'd probably still be feverent supporters of their industries. I don't mind paying taxi rates, I just want Uber's service.
posted by Talez at 6:59 AM on June 4, 2017 [4 favorites]

Like I haven't used a taxi to get to the airport in over a decade. A third of the time they would just not show up at 5:30am. When you call the company to complain they tell you that preordered taxis aren't guaranteed. So why even bother doing it?

Then you find out the fare of a TNC is the same price as a taxi anyway and a rideshare TNC service is a third of that. What exactly are the taxi industry even doing here to stay in business?
posted by Talez at 7:05 AM on June 4, 2017 [5 favorites]

The first post in this series laid out the evidence of Uber’s staggering losses. Uber has grown because consumers have been choosing the company that only makes them pay 41% of the cost of their trip; there is no evidence that taxi customers in a competitive market would pay more than twice as much for the service quality advantages Uber investors have been subsidizing. Incumbent operators have been losing share and filing bankruptcy because they cannot compete with Silicon Valley billionaire owners willing to finance years of massive subsidies as they pursue industry dominance.

From the second piece in the series

My stupid-clever brain is spinning its gears trying to connive of a situation where a traditional cab company (i.e. cab-leasing and maintenance company) could take advantage of this massive subsidizing. Maybe switch to using uber for dispatch but still lease cabs the same to their operator clients? I'll be interested to see if the article covers this.
posted by rebent at 11:54 AM on June 4, 2017 [3 favorites]

Regardless of profitability (taxi companies and "ride-sharing" thingies profit by keeping drivers low-paid and in debt), the on-demand transportation industry needs to be reformed. The taxicab model sucks for some of the obvious and not-so-obvious reasons already given. What I would like to see is a marriage of professional drivers and well maintained vehicles to a technology platform like Uber's. I like the convenience of calling for a ride using an app that knows who and where I am and in most cases knows where I'm going and that let's me know when the ride will be arriving and what it will cost ahead of time. Then it shows me a map and tracks my progress, while predicting my arrival time with pretty good accuracy. Finally, it doesn't require me to fumble with cash or credit cards and I can tack on a tip if warranted in the comfort of my seat, whether at an airport gate or my favorite restaurant. I would actually pay more for this service. Ultimately, a traditional taxi company that provides this functionality would win the market in any locale, but I'm not sure who would be willing to put up the capital to reconfigure the traditional model. Uber won't, because they hate the drivers.
posted by Mental Wimp at 1:52 PM on June 4, 2017 [2 favorites]

Ultimately, a traditional taxi company that provides this functionality would win the market in any locale, but I'm not sure who would be willing to put up the capital to reconfigure the traditional model.

The dirty little open secret is that the taxi markets are basically an oligopoly with an ever shrinking vanguard of independent operators who, up until Uber, were retiring and condensing the market even further. Whenever they want to beat up on Uber, in a vain attempt to put the genie back in the bottle, the taxi industry trots out one of the remaining independent operators to generate some sympathy for the much maligned taxi industry. They didn't innovate because taxi plates, up until Uber, were literally a rent seeking thing. Innovation, service, those things cost money.

Those people probably deserve some compensation but it's all a propaganda war where, fortunately for the rent seeking operators, the interests of the rent seekers align with a particularly sympathetic group. At this point I'm ready to say fuck them all. Especially since the taxi companies basically fuck their own drivers for profit, Uber or not.

What I can get behind is approved and licensed people being able to drive for themselves without a middleman taking a giant cut and leaving them with a pittance. Whoever does that will get all my money. Right now it's the owner-operated TNCs for long point to point trips while getting around a place like Manhattan I figure Lyft is about as close as I'm going to get.
posted by Talez at 2:26 PM on June 4, 2017 [2 favorites]

Well if we throw out the expectation that high-performing routes pay for the low-performing/undesirable ones, then it's easy. Let the drivers bid on what they would charge for the ride, and the rider select from the bids. Invisible hand of the market, you know. I'm surprised Uber doesn't do this already (for a fixed % cut). It's not like they care about affordability for the rider.
posted by ctmf at 2:27 PM on June 4, 2017

Ebay for rides. lazyweb make please thanks.
posted by ctmf at 2:41 PM on June 4, 2017

Yeah, I can remember pre & post in just going from LAX to mid-city: $70+tip vs $20-25.

Totally changed nightlife too,

In the 90s if you went out in Hollywood, you'd drive home on the 134 or 101 and there would be cars all over the road. People so drunk they couldn't stay in two lanes, much less one. Every time. So many the cops couldn't get them all. I haven't seen that in years, it's great.
posted by fshgrl at 10:39 PM on June 4, 2017 [1 favorite]

I've read a few stories about car sharing apps. I don't know why none of them seem to have taken off; you would think it would be like Ebay for rides. Weird.
posted by Joe in Australia at 12:06 AM on June 5, 2017

Re: Uber and their move to self-driving cars: not only is it a ten-year pipe-dream, it's also a complete reinvention of their business model. At the moment, they're a capital-light (well, aside from the tens of billions of VC dollars subsidizing rides), infrastructure-light company who makes their money by dodging regulation. And now they're going to make themselves profitable by switching to a capital-heavy, highly-regulated business where they can't pass their own costs on to independent contractors?

Even if this massive, long-term gamble pays off, Uber as it currently exists is still doomed, and as soon as the gravy-train disappears, all their customers are just going to switch to Lyft or any of a dozen other cheap knockoffs. Might as well enjoy the cheap rides subsidized by Saudi capital in the meantime.
posted by Mayor West at 7:28 AM on June 5, 2017

Here's the most direct comparison I've seen between on-demand public transit and on-demand ride share service: Centennial's recent attempt at supplementing existing on-demand service with Lyft.

It did not go well. Some of the reasons for that might be fixed with a broader implementation (larger service area than for this pilot project, better marketing) but some are tougher (it's easier and cheaper to provide ADA-compliant service when you just make sure all the vehicles are accessible to begin with.)

About the existing on-demand service in this area: many of the more suburban light rail stations have a dedicated call-and-ride mini-bus that can drop off and pick up from a short radius around each station at no additional cost. They're not marketed especially well, since most people don't have much idea how they work, but they're very convenient if you can't or don't want to walk from the train station.

Getting to the station usually requires some advance preparation, but leaving the station is just a matter of getting on the mini-bus, showing proof of paid fare, and telling the driver where you want to go. Departure is every 10-15 minutes depending on time of day. Lyft service is the more complicated option in this case!

When you factor in that all our fixed-route buses now have GPS tracking, so that you can check their location and likely arrival time with a variety of different phone apps, a lot of the relative advantages of the ride share services versus public transit are diminished. (Plus there aren't a lot of ride share vehicles that can take my bicycle along with me without advance planning, while any bus or train can.)
posted by asperity at 8:20 AM on June 5, 2017 [4 favorites]

THE TRAVIS TRAP - Venture capitalists want to invest in manic, headstrong sociopaths. Uber’s Travis Kalanick did not disappoint.

We Are All To Blame For Uber

We in the press created this monster by glorifying CEOs for being willing to buck convention, push the envelope, trust their guts and believe in themselves no matter what the doubters say. We put people like that on magazine covers. And then those same qualities land CEOs on magazine covers when the convention-bucking and envelope-pushing shifts from being an asset to a liability.

posted by the man of twists and turns at 3:11 PM on June 15, 2017

I must say when I saw the recommendations from the report I was aghast that a company of such size had such unbelievably shitty governance.

I know start ups are different but the amount of money swooshing around should have engendered some more rigour.

When I saw what they didn't have in place, I felt they were getting off lightly.
posted by smoke at 11:40 PM on June 20, 2017

« Older Where there is mystery it is generally suspected... | Three and a Half Pounds of Bees Newer »

This thread has been archived and is closed to new comments

MetaFilter

Think of it as redistribution
June 2, 2017 9:42 PM Subscribe

Tags

Share

Think of it as redistribution June 2, 2017 9:42 PM Subscribe

Tags

Share

Think of it as redistribution
June 2, 2017 9:42 PM Subscribe