That's an interesting issue. We see the same thing in real estate -- seller's think their homes are worth way more than anyone will pay for them. I think this is one of the reasons For Sale By Owner (skipping realtor fees) hasn't taken off yet in the US. The FSBO seller will price too high, the home will sit on market for a while and people will think there's something wrong with it so they'll stop considering it entirely. As an anecdote, someone approached us the other day wanting to sell their family home for ~$4M that would realistically fetch about half that based on recent comparable sales in the area. At our current scale we can talk him down from that ledge, but we'd really like that listing process to be self-service and online. Traditional agents will say you need a selling agent there to talk the seller down to a reasonable price but my gut says we could solve this with computers.
Also it isn't really true that Uber lowers prices for riders when they lower prices for drivers. Uber practices active price discrimination to discover the highest price a rider will pay. If you get ten people together on the same street corner and everyone calls for an UberX, you'll get ten different prices.
That would be a huge story and would be much more interesting than the typical Uber hit job. If it were true, I have to imagine that it would have been covered by a journalist intent on attacking Uber.
Care to share some actual evidence?
More importantly, there's simply no way that you would have 10 different prices. Ten people on a corner might be enough to flip that area into surge pricing, but each individual would not get their own personal price.
It's not like this is something which is untestable. If people actually think Uber is discriminating on price between different users, that's trivial to test.
Outside of surge everyone pays a published rate.
Absolutely not. This is why price-discrimination always happens jumping through a weird hoop or other. Imagine the typical example of price discrimination, S/M/L coffee for widely spread prices that don't have much to do with the cost for the amount of coffee with prices that wildly change up and down depending how busy it is, customers would be rightly pissed for getting screwed because they're obviously not getting a fair price. Price differentiation needs some sort of trick to obscure this fact.
Otherwise it's like saying "getting away with this is perfectly fine because capitalism", which is motivated purely by greed, not the possible benefits of a free market.
> it's harder to arrange for 10 cars to arrive at a spot than 1.
I think you forgot to divide by ten, there. Try this statement for a fairer comparison:
to arrange for 10 cars to arrive at 1 spot vs 10 cars at 10 spots
Seems to me that the 10 cars at 1 spot should be cheaper.
The only reason they get away with this price differentiation going the other way is because they are able to hide these prices from the customers. Driving up profits from unequal information availability is also known as "screwing people over", so yeah that'd be a scandal (except for all the HNers that will go "I am genuinely curious why this is so *surprising" to anyone" -- because getting screwed should be a surprise, otherwise you should've gotten mad sooner, like when we said there's no proof of getting screwed)
I'm not even sure if it's positive or negative, given that they subsidize markets (running a loss) sometimes.
Wait really? Has this been written about? That would be very interesting!
1) Owning a car
2) Having insurance and good driving/criminal history records.
3) Willingness to do the work.
Even assuming Uber also has minimum age requirement, that's a very large supply of potential drivers, which is going to prevent wages from rising very high, unless there is artifical pressure such as regulation.
As they transition to a more normal company that needs to make money, can they afford those incentives?
This is wrong for two reasons:
1) In general, overheads don't directly affect how much you choose charge for something. By definition, overheads are fixed (i.e. don't change with the output), so don't affect your marginal decision about whether to drive or not.
2) In the specific case of taxis, prices are set via a combination of lobbying and regulation. Taxi tariffs are not set by the market in response to the market value of medallions.
In summary, you have it backwards. Taxis tariffs aren't high due to the cost of medallions. Medallions are worth a lot because taxi tariffs are high.
For a cab it's similar, except you have labor cost and medallion cost as well. With rates fixed by regulation, the only way to increase profit is to drive more.
That's the reason right there. The rates are totally set by regulation. The number of medallions is similarly set. If medallion rental cost were to go up or down by 20% this wouldn't affect whether the marginal ride would be worthwhile for the driver.
Likewise, there are mental and affordability factors that influence passengers. When I was still going out to downtown clubs, I lived in a close suburb of my mid-sized city. Cabs were regulated by the city, but unregulated outside. That meant that predatory cab companies would charge as much as $50 for a 5 mile ride, and something like $10 for a 4.8 mile ride within the city.
In NYC, historically this has meant that many cabs are kept in motion 24x7, and are concentrated in specific areas in Manhattan to maximize the number of fares.
https://newsroom.uber.com/mapping-ubers-future/ http://www.theverge.com/2016/7/31/12338268/uber-maps-investm...
If they are coming, it's more than 25 years away IMO. Remember 25 years ago, cars weren't super different from today. ABS was first in a production car in 1971. I think the average car on the road now is 11 years old, so there's bound to be unpredictable manually-driven cars still on the road for a long time that any driverless cars would still have to contend with as well.
Self driving cars are pretty much unicorns.
Add to this, that each time a special case comes along, the software can be patched and it won't happen again. Something humans are terrible at - learning from others' mistakes.
You can't blame the driver, they weren't driving. The car manufacturers can't accept blame, as it costs a lot if you have to factor in the cost of a lifetime of support for a maimed infant. Even ignoring the fact that it only works on highways and not normal surface roads, Tesla's "beta" Autopilot feature takes no responsibility because the driver is still supposed to be holding the wheel.
Also as any software developer would tell you, software updates would also be a problem in themselves. If you propose that cars be auto-updated automatically, I wonder how insurance would work when the car is running different software to the software it was originally insured with. Critical saftey systems can't get auto-updated without a lot of testing. What if the auto-update mechanism gets hacked, or maliciously changed by a disgruntled self-driving car employee? What if a legitimate update causes another bug where it maims the elderly now instead of infants? Do they roll back to the infant-maiming software now? I'm being silly but updates on critical safety stuff isn't so simple, especially with the legal ramifications.
I think legal issues will be a problem for self-driving cars, maybe even a larger problem than the actual designing a working self-driving car problem. Someone has to be responsible for inevitable accidents (bugs?). After a century of being able to blame the driver, car companies won't want to change that status quo.
Maybe insurance will decide that they'll cover self-driving cars if they prove themselves to be safe, but we'll see.
[0]https://en.wikipedia.org/wiki/Trolley_problem
[1] https://www.wired.com/2016/06/people-want-self-driving-cars-...
(Not that auto-driven cars don't produce less accidents when other human-driven cars behave expectedly.)
But on real roads with questionable maintenance and other unpredictable cars on it, I just can't see it happening unless there's some major change to the roads infrastructure.
I associate self-driving Ubers with unicorns and flying carpets not because of self-driving car technology, but because of the total shift in business model for a future Uber.
Self driving cabs require, at a minimum:
- Owning or leasing capital assets (robot cars)
- Maintenance (from mechanical repair to removing puke and vandalism)
- Provide local infrastructure for them (real estate for storage, maintenance and charging)
- Own liability for all of the various mishaps that will naturally happen. (accidents, human-prompted mischief or criminal acts (Uber drive by shootings, prostitution, narcotics transport, etc)
Luckily unicorn-driven magic carpets don't face this problem.
It can. The problem wasn't that. The problem was that it wasn't able to differentiate the color properly and thought nothing was there. There's more info in Tesla's blog post. And it's not like it is an unsurmountable problem that is leading to accidents everywhere. It was an edge case and will probably be sorted out.
>massively premature to suggest that there's anything like a driverless future
I really think that's a very harsh opinion. And you're asserting this opinion on many intelligent people working towards a difficult solution. Thousands of people have used auto pilot without any problems and many lives were probably saved (consider if they were driving normal cars instead of self driving ones?)
>There's just too many variables on our roads and the stakes are too high.
Nobody is disagreeing with you on that. That's the reason it already took so long. Self driving cars first appeared in 2005 if not earlier [0]. And remember all of self driving is mostly a software problem, which greatly reduced iteration time for new developments unlike electronic or mechanical revisions.
>25 years away IMO
Funny how people predict things. Ray Kurzweil predicts AGI (general Artificial Intelligence) to arrive before the year 2045, 4 years after you say we get self driving cars. I'm not going to argue with you on that number since we probably have different opinions on what constitute self driving cars. Just so you know, I predict we'll have fully self driving cars on the road (with humans in them) in 5 years.
>Remember 25 years ago, cars weren't super different from today
Please tell me you're kidding. [1][2]
>Self driving cars are pretty much unicorns
At least those unicorns are achievable and people are trying towards achieving it rather than give up.
[0]https://en.wikipedia.org/wiki/DARPA_Grand_Challenge#2005_Gra...
[1]http://www.popularmechanics.com/cars/a11201/why-cars-are-saf...
>It can. The problem wasn't that. The problem was that it wasn't able to differentiate the color properly and thought nothing was there.
Really? You're arguing that it can avoid a guardrail if it was actually able to tell a guardrail was there?? lol.
>Funny how people predict things. Ray Kurzweil predicts AGI (general Artificial Intelligence) to arrive before the year 2045, 4 years after you say we get self driving cars.
Interesting. Who knows. I've heard people say that it will accelerate exponentially after the first AI is developed as the AI will be able to iterate itself.
>>Remember 25 years ago, cars weren't super different from today
>Please tell me you're kidding.
Sure, they're safer because of improvements in crumple zones/better brakes/steering/etc. I meant the basic technology of an internal combustion engine for power and a human in control. There have been incremental improvements but nothing like an autonomous car.
>>Self driving cars are pretty much unicorns
>At least those unicorns are achievable and people are trying towards achieving it rather than give up.
I think they're technically achievable with dedicated road infrastructure but on normal badly-maintained roads with non-autonomous cars to dodge, they're unicorns. Legal issues will be the biggest hurdle IMO.
http://hk-magazine.com/article/inside-hk/mr-know-it-all/1145...
In some big cities, Google Maps can provide this, sort of, Uber vs bus fare, for instance.
The corporation isn't some money-sucking black box. It's dispute resolution, software development to match rides efficiently (Uber Pool is tricky), and advertising.
Yes, it also skims money off the top to pay for things like driverless car R&D, but is a small, likely disorganized co-op going to be efficient enough at all the above to take advantage of that margin?
That said, the reality is irrelevant here. Jacobin is the kind of magazine where economic reality is treated as a suggestion, to be discarded as is convenient.
Could things work differently? Absolutely. Are they going to work differently because some hack gets off fantasizing about how in abstract theory, the services Uber performs could be better performed by a co-op that pays workers more? No.
All the co-ops I've encountered or dealt with fall into one of three categories:
* Non-functional, incapable of making decisions or delivering value.
* Functional but completely unscalable. May depend on bizarro local economic conditions or be in one of the few cities where people are willing to pay 30% extra for pizza because it's a co-op.
* Function, scalable, and does not operate much like a co-op at the level of service delivery. REI falls into this category.
Uber works because it's functional, scalable, and reliable. You can go to almost any major city in the US, boot up your Uber app, and reasonably expect to get decent service. It is, abstractly, possible for a co-op to do that. You and Jacobin are completely, totally, 100% correct on this point. Things could be different and better for the people who Jacobin has decided matter.
In fact, we all live in a framework where such a thing is possible! If only someone was brave enough to put their labor where their mouth is. Maybe the propagandists at Jacobin could... nah. They wouldn't go for that. They much prefer theory.
No true scot? The definition of a co-op is a group organized to meet economic or social desires through jointly owned business. What does this have to do with any particular approach to service delivery? You appear to be defining cooperatives as some unworkable theoretical concept and then any actual successful example of implementation is an exception. Convenient!
Vanguard also falls into this category but is absolutely a cooperative.
If it's structured like a co-op and exhibits none of the benefits of a co-op, what's been gained? I'm saying that co-ops generally have to sacrifice at least one of: structure, functionality, scalability.
So yes, REI does deliver the benefits of a co-op to its owners - high-quality goods at a lower price than they would be unable otherwise be able to get. This is the entire point of a consumer co-op. Workers can also be member-owners of the co-op, and frequently are, but the benefits are geared towards getting better discounts on the goods REI sells. This is in addition to the implicit benefits of being an owner of the company and having a say in its direction.
At least you've cut out Wall Street and co.
http://www.udfinc.com/about-udf
The founder and family made Forbes' billionaire list.
and a few others.
The issue is though how does one get drivers to switch from a reliable (though possibly imperfect, inefficient) source of regular income with a well-known brand to an upstart at a large enough scale to pose a direct threat to Uber, thereby forcing them to change their model or go out of business?
I'm living in LA right now and I typically wait 4 min for a car (longest has been 10 min). My last ride cost $4.44. That's less than a Big Mac! ($5.04 average price in the US). I can't imagine a new service being able to beat that from it's inception.
The other issue is that if drivers are allowed drive for Uber and Swift there could be a free rider dynamic: drivers get the benefit of belonging to Swifts' co-op but still get to be part of Uber's network. Sure Uber's service would suffer, but it would be a huge drain on Swift's resources and undercut their model (and reason of existing) from the driver's perspective.
Incrementally, starting to use the second for a small percent and then gradually more
It seems like a few lines later, it says:
By turning to co-op apps, drivers can retain the flexibility of working under a model like Uber’s while also having a say in their own wages and conditions.
If the workers have a "say" in their own wages that means increasing prices, unconditionally. And who is going to provide the assurances that drivers won't lose money if they drop prices. When Uber drops prices, they guarantee wages as per:
https://newsroom.uber.com/beating-the-winter-slump-price-cut...
How will this happen in a co-op? Spoiler alert: it won't.
How?
What is the "bloat" of Uber that this taxi co-op would avoid. Uber's primary spending is on marketing and developer salaries. Without marketing, how do you expect anyone to use the co-op app?
Ultimately, I think it comes down to drivers (and leftists) not valuing developers. You're not going to build and maintain an app which competes with Uber if you're not paying for the "bloat" of developers.
Those are the two ingredients of capitalism: competition and the profit motive. Once you take away one of them, things start breaking down. And that's why not-for-profits are notorious for being wastefully run and being taken advantage of by their senior management.
The problem is that drivers feel like their services are worth a lot, and passengers simply don't believe it. The reason why Uber is a success is that they created new demand by dropping prices. Everyone I know, including myself, would never have taken an Uber as frequently as we do if the prices were as high as taxis.
You can't replicate this unless you keep pushing prices down, and this is what Uber is doing.
So, as long as drivers want to keep their prices high, the riders won't come, which will prevent more drivers from entering the co-op, which will mean riders will wait a long time before their drivers arrive, which means they will just go to Uber, etc. The co-op will never reach critical mass that way and will fail.
The article doesn't even mention the massive amounts of driver incentives that they pour back into the drivers. One driver told me that if they worked 2 hrs during rush hour, Uber would guarantee $50/hr. That's $100 for 2 hrs worth of work, which is pretty damn good and makes the rest of the day less stressful about trying to hit your numbers to become profitable.