Although your point is poignant, it would be more valid if their price structure was (cough) sustainable.
What if Lyft and Uber were 25% cheaper than taxis; primarily because they didn't need to pay a dispatchers' salaries? This would be the classic case of automation lowering prices.
IMO, they could have out-competed traditional taxis without needing to price below cost; which would make your observation 100% true.
Instead, Uber and Lyft merely demonstrated that there is a market for the self-driving taxi business. Unfortunately, their relentless expansion shows the danger of letting ones' imagination run away and overestimating how quickly tech can be built. Self-driving cars is a hard problem; and building a business assuming that "AI can be delivered on a date" is a huge, huge, risk.
Clearly both companies lost the bet (that self-driving cars would work in time for their price model to work). Perhaps the Uber and Lyft stories are bad examples of the overall thesis of the article?
Of course, the companies may have known it was a rash bet in the vein of this fable about teaching a horse to talk:
https://naomistanford.com/2009/02/09/teaching-the-horse-to-t...
Uber and Lyft could win--depending on location--based on product. But they also deeply undercut taxis on the basis of price until people got used to using them.
>What if Lyft and Uber were 25% cheaper than taxis; primarily because they didn't need to pay a dispatchers' salaries?
I'm pretty sure dispatchers are cheaper than expensive SV engineers.
That’s like saying paying human computer wage is less than electrical engineers who develop electronic computers.
Non-recurring engineering cost is higher BUT IT’S NON-RECURRING and largely independent of the number of users, unlike dispatchers.
I think they roughly have 2k engineers total and I have no idea what the breakdown is of what they do.
I expect some of Uber's appeal, from the perspective of investors, was predicated on a belief in the arrival of widespread full vehicle automation. If that happened, they'd have had the infrastructure, systems, and brand to immediately swap over, on a global level, and become an unbelievably profitable (and massive) company. Add in some massive scale vertical integration of maintenance and other costs, and it's hard to overstate how big they could have become. Of course it didn't happen, so instead we just got a bunch of cheap taxi rides, and that's cool. Feel bad for the medallion guys who got left holding the bag (those licenses now go for < $100k, which is a vastly more sustainable equilibrium) but at some point you've gotta trust your tulip detector.
[1] - https://www.cbsnews.com/news/how-much-is-a-nyc-taxi-medallio...
The sharp rise in Ubers is correlated with an 8% decrease in Manhattan traffic speeds. Which affects not only them but car commuters, bus commuters, residents, deliveries, etc. https://nyc.streetsblog.org/2015/07/22/ubers-own-data-reveal...
One issue I think we are seeing is that we, as tech workers, are super excited to fix the immediate problems. We have the skillset and it's really engaging! But we will often miss the forest for the trees and then double down on our solution being the solution instead of one part of the solution.
All this to say, thank you for discussing the traffic slowdown caused by increased cars. It's a side effect I hadn't been considering before.
I think one of the biggest impacts has been on the sustainability of the transit services. For all road users, slower speeds require you to maintain more labor and vehicles out to maintain SLAs/frequencies, or to increase waits. For bus users in particular, it starts a vicious cycle because of several additional factors
* some baseline amount of people will just switch to rideshare instead of buses, reducing revenues and decreasing traffic speeds since buses are more space-efficient than cars
* with less revenues and less ridership, there is pressure to cut service to be more "efficient" at spending money
* with poorer services, more people switch to rideshare, further reducing revenues and decreasing traffic speeds
Manhattan bus ridership entered this negative spiral and fell 23% https://nyc.streetsblog.org/2017/02/21/decline-in-nyc-bus-ri...
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Now what level of congestion is 'acceptable' is mostly based on comparing to other cities, and how the electorate is feeling. That being said, the political pressure was so strong that NYC had already implemented congestion charges on rideshare and taxis, and is currently implementing tolling in Manhattan to try and reduce car numbers. Uber actually came out in support of it. https://www.uber.com/blog/new-york/uber-supports-congestion-...
Medallion limits exist primarily to maintain and/or increase the value of existing medallions. Other reasons given were just propaganda by existing medallion owners.
Now NYC is introducing congestion charging on all vehicle trips in Manhattan to try and restore traffic.
I also wonder if Uber/Lyft pricing below cost had to do with competing with each other? IE, if all they could do was compete on price, would that (cough) force them to undercut each other? If one decided to price below cost, would the other fear that they would loose too much market share too quickly if they kept their prices sustainable?
Disclaimer: I am not an economics expert!
1b. You have an emergency and need to cancel or the cab can't find you and the company blacklists your phone number.
In SF, there really isn't "another cab company" other than Yellow Cab.
To echo the parent, they may have been unethical and borderline illegal about scooping marketshare from cab monopolies, but there were no complaints from the consumer.
Vehicles are bottom tier. Cab driver will always insist on just being like "What's the cross street?" (Bro use the satnav). Way more expensive.
> [1] If you no longer need your scheduled or requested ride, feel free to cancel it. You may be charged a cancellation fee in certain conditions.
[1]: https://help.lyft.com/hc/e/all/articles/115012922687-Cancel-...
1b almost never happened, because the technology didn't really exist. And there are many competing companies. And you can resolve it by actually paying for the work you made someone do.
Cabs are even required to take kids with proper safety and to take people with disablities like wheel chairs.
Want to file a complaint? Well, then you are free to file a complaint with the taxi and limousine commission and then show up in person at an obscure location to present your case.
The amount of follow-through was approximately zero.
Pricing mechanisms could be the same - pre-agreed price etc.
The real key difference is the realtime feedback of where the cab is in terms of coming to pick you up. ie the diminishing of the anxiety of that uncertain wait.
That's it - that's the only thing traditional cab firms couldn't provide - and now many of them now have their own apps - as apps aren't that hard.
I disagree. Without money-losing subsidies early Uber would have remained in the "Black Cab" market. Quality helps, but most people are not willing to pay a huge premium for it (see the race to the bottom in the airline industry).
It's also a mistake to take the large American city (New York? LA?) cab experience and project it onto the rest of the world. I live in a small-ish (< 1M) Canadian city and I've never experienced any of the listed antics when calling a cab here (and this was before Uber existed). Yet Uber still became quite dominant - probably because, for a long time, it was the cheapest option.
Now that cab companies have somewhat caught up in technology, with pay by phone and app-based booking, I’m prepared to consider them again. Price was never an issue.
The salient point the author is making is these predatory pricing strategies allow these VC backed firms to capture a market, then the VCs exit and everyone else is holding the bag. It doesn't matter how good your product is if it costs more to run than it brings in it will, eventually, no longer exist. Ultimately, these companies business model absolutely did not outcompete cabs on merits alone; they had a better product that relied on predatory pricing to attract customers.
Are price conscious people using Uber?
(I'm sure there are other cities that get it right, but they're hard to find in the US).
I found taxis waiting in taxi stands in known locations of busy areas, or they would come if you call. If they had to come, I found them far reliable in terms of "when the vehicle would get there" than Uber or Lyft. Both of which promise arrivals and then often have to recalculate.
I found taxis to be more predictable in price. I could get a pretty accurate estimate from a taxi driver. Meanwhile, Uber and Lyft only gave you their estimate and had no problem silently charging you more. (I believe that has been fixed).
And cabs ability to take cash was great. Yes, rarely they tried "the machine is not working", but that was rare and easy to deal with like you said. Meanwhile, if you wanted to do something non-standard (e.g. make multiple stops[0]) you could, either by paying a small cash extra or because they were a person not a machine they could handle it.
Meanwhile, the reason there was so much taxi regulation was that without it traffic becomes unbearable. There would be hour long traffic jams of ubers going to pick people up near the front door whenever an event let out, as opposed to people walking to where the taxis had to pick them up.[0] But in general they are horrible for traffic.
[0] Uber/Lyft can handle that now, but could not earlier
I'm guessing you live in one of the top 5-10 populated cities in the US. (Or a major city outside the US).
The issue is taxis are generally fine in these area, but outside being a dense population center calling a taxi is a flip of the coin.
However, those smaller areas don't have taxi medallions to avoid and typically have less taxi regulations in general. Obviously, there is still a dumping component where Ubers are sold at a loss, but the main concern I heard most people have with Ubers was them ignoring the various taxi regulations that made it work in dense areas. Things like horrible traffic jams caused by too many Ubers all converging on one location, refusing to pick up minorities, etc.
Edit: To clarify, since I was misunderstood. I don't mean taxis are good at picking up minorities. They, historically and through today, have not been (with some minorities). That's why there are laws that try to make it so taxis have to pick them up. That is one example of a regulation that Uber/Lyft have ignored. AFAIK, this has caused some issues with Uber drivers and no way to appeal except to hope that Uber corporate believes your story.
This is why your experience is so different from mine. If you're just using them to get around, during the day, going between major traveler landmarks (airport, hotels, tourist destinations), yes, taxis are fine.
Almost all of my taxi/Uber use is as a local. I spent way too many nights in my 20s drunkenly wandering around downtown at 2-3am trying to find a cab to get home.
Taxi cab companies are infamous for avoiding entire parts of suburbia all over the US. You should spend more time outside of your urban bubble, live in middle america (or in poor LATAM, where uber exists and taxis are unsafe) for a few years, enough to realize there's an entire population underserved by existing taxi monopolies, that have been literally rescued by Uber.
https://www.pewresearch.org/short-reads/2016/07/25/ride-hail...
As opposed to
https://www.washingtonpost.com/posteverything/wp/2015/07/23/...
Have you talked to minorities about their experience with taxis?
I speak a little Spanish. But I couldn’t imagine trying to get around Los Cabos, Mexico for three weeks without Uber.
And they're pretty thin around where I live 50 miles outside of Boston.
I did see someone post on frontporchforum post that there were now a driver for either Lyft or Uber.
Your confidence in the uberness of Uber I thought should be broaden.
It’s not a big deal, it’s just so silly that they made a big thing about being a “data company” but would still essentially do the bad friend thing (texting “On my way!” when you haven’t even got in the shower yet)
This and only this. I've never even had an adequate experience with that damned airport.
Pricing may be orthogonal to product, but both are needed profitability. You gotta have something people want AND make a profit.
The real people being scammed by all this are secondary investors and pension funds.
No, it's the real, legitimate businesses and employees that are in the space being """disrupted""" and lose their shirts and jobs because it's impossible for a legitimate business to compete with selling one dollar for fifty cents.
Add to that all the normal people who liked using those businesses and liked how small they were and were perfectly happy and now are stuck using a shitty evil megacorp
Just relax and enjoy the subsidized rides and grocery deliveries while it lasts.
The post you're replying to was specifically referring to the megacorps involved in the disruption and predatory pricing. They never said there was anything inherently evil about large corporations.
That said, I do agree with your prior comment:
> The real people being scammed by all this are secondary investors and pension funds.
Not exclusively, of course. You've both identified valid sets of victims.
option 3 - go to a hotel, and have them call a cab for you, or get one from the stand there. This is my go to for cities I'm unfamiliar with, and it's never let me down. The taxi companies might not have an incentive to show up promptly for _you_, random person calling them, but they do for the hotel in their area.
> People talk about how Uber/Lyft dodged taxi regulation, which is true
Taxis sucked (and still do), but Uber/Lyft's not-so-secret sauce was regulatory evasion, claiming that their taxi service wasn't a taxi service and that their employees weren't employees.
This made their product artificially competitive.
I would also receive a lower fare when the rider used a coupon or had a promotion. It always seemed more like I was subsidizing the rides rather than Uber.
Except taxi drivers get paid enough to raise a family
Also...
Step 0: Don't be black
My first job was working on payment systems in taxis. The biggest issue we had? Taxi drivers ripping them out so they can charge cash.
I'm 20years out of the taxi industry but I wish Uber and Lyft would kill that industry completely. It's what I call a scam industry. Like car dealerships the entire industry is focused on squeezing every dollar they can from every transaction. It's horrendous. I also can't believe anyone would defend taxis here. Naivety I assume.
Previously my wife had an issue with a taxi in LA where she was riding with one of her friends, the friend rightly pointed out that they were in a grid section of town and the circuitous route didn't make sense, and the driver locked the doors while saying "I'll take you anywhere I please".
I've heard similar stories from many women.
https://techcrunch.com/2017/12/09/uber-settles-lawsuit-with-...
It doesn't take a genius to see how that is safer than jumping into a random car with no record of having done so.
They're not saying "surely the ride share companies do it better"; the reasons why they think it's better are apparent to them with little trust needed.
Every time one of those stories come out, you're forgetting that the perp is immediately caught because there's a huge paper trail detailing exactly who took what ride where and the route.
I've visited the US on a few occasions, and each time I've used Uber or Lyft for precisely the reasons you state. I could bring up the app, enter my destination and get a price and an ETA. Either I liked what I saw or I didn't, and I could make my choice.
Back here in Oslo, Norway, every now and then I take a cab home after being out all night. Uber and friends don't exist here because laws and regulations. And it sucks. Even as a local they try to take detours, and who knows how much it'll cost to get home this time.
Had to take a taxi for the first time in years.
I went out to the taxi spot next to the train station and asked how much € to Amsterdam etc.. Immediately another taxi driver runs up and tells me I shouldn't take this driver because he is not from the right area, apparently. Then they start shouting at each other while I, a potential customer was there. Eventually more drivers take sides and almost start fighting.
I walk away for a bit and ask another driver. I ask how much to Amsterdam he says: "how much are you willing to pay"?
What kind of question is that, ffs. It's 23:00 and I want to go home, just give me your price. He refuses a few more times and I walk away. Then he suddenly says €100. I say too much, he counters with €80. I say €60 so we agree on €70.
When we're on the highway he says his machine is broken so we have to pay cash... Goodbye reimbursement from the train company because he's also not printing a receipt.
Finally home I lay in bed thinking how god awful the entire taxi experience is when you're not using Uber.
He can write a receipt. Did you ask him to?
I have no sympathy for any taxi drivers anywhere.
Turns out it was pretty hard.
Not sure about the jurisdiction GP took the taxi in, but in most places I’ve taken a cab there is a large plaque identifying the cab and driver, including contact data of the regulator to whom you can trivially submit complaints.
Japan is the only place I've ever been with a consistently-sane and above-board taxi experience.
That is a very generous version of what actually happened. Uber/Lyft were not replacing taxis outside a few big cities with established taxis operations, they were replacing consumer behavior entirely. It was near impossible for them to charge market rates and get a user base that had no need for taxis. If they weren’t heavily subsidizing the rides, they would have never been successful. They most definitely were charging next to nothing when they were in “growth phase”. At the height of it, it was almost as cheap as public transportation and not market rate.
quite correct!
The Uber/Lyft "package", as it were, is easily worth a full 20% over conventional taxi systems circa 2010ish.
Since using Lyft, I have since only used traditional taxis when Lyft/Uber was not available. Because the old model was bad.
It’s like saying Netflix invented streaming video.
You're right about downsides of cabs, but I'm afraid you are also revising history on the issue of merit.
For a long time, Uber (and Lyft) rides cost a lot more than clients were paying - many people noticed this and wrote about it, and the edgier ones characterized ride-sharing as a wealth transfer from VCs to riders.
The setup was clearly not "competing on merit" and was closer to predatory pricing. It's obvious the investors would have demanded massive hikes had they managed to drive competitors out of business.
Never again will I do that.
Uber's predatory and illegal practices are pretty well documented. It's not revisionist to say that without deliberately putting their thumb on the scale, Uber would not have even been able to get into the market.
Uber/Lyft did outcompete taxis on merit, and to suggest otherwise is revisionist history! Before ride-sharing apps, the process for getting a taxi was:
1. Stand on a street corner (if you're in a busy area) or make a call if you're not. If you have to make a call, there's a ~20% chance a taxi actually shows up.
2. Get in the taxi, tell your driver where to go and how to get there since they could otherwise take a more expensive and profitable route.
3. When you're at you destination, pay the driver. 80% chance they will say "the machine is not working," offering to take you to an ATM to get cash if needed. Note that the machine magically works when you shrug and tell them you're not obligated to pay if the reader is broken.
Ride-sharing apps completely changed the game. Suddenly you know exactly how much you had to pay, in advance. You knew exactly where your ride was so you had an estimated arrival time. You knew exactly what route they were taking.
People talk about how Uber/Lyft dodged taxi regulation, which is true, but the reason there was so much regulation around taxis in the first place was because the old system was so ripe for abuse. Imagine being a tourist landing at an airport and taking a taxi to your hotel; what if you got into a cab and they charged a hidden $20 "airport pickup fee," or took the scenic route, or simply charged a higher rate than the car in front of them? That's exactly why the industry was so tightly regulated, and you have things like standardized rates, requirements for rates to be displayed on the interior and exterior of every cab, the meter being visible to the rider, etc.
All this to say, any sort of competition on pricing is totally orthogonal to competition on product. Uber and Lyft handily won the product battle against cabs.