Cab drivers depend on their licenses to operate. If cities had a better way to provide feedback then revoking a license dould be a threat and bad drivers would shape up or get booted.
I've been screwed by taxi drivers more frequently than Uber drivers. I've had taxis take me on garbage routes, pretend their card reader machines are broken, and add destination fees when I was clearly in a hurry. They read me well because I bent over and took it rather than fighting it because I was busy.
An entire industry that thrives on screwing people at inopportune times deserves to die IMO.
In the situation where "laws and regulations" mean dysfunctional government enforced monopolies, in ok with a company saying fuck that. Even if people like you will characterize it as a "black market".
You can always call 311 and report a bad cab driver in Chicago. Your information will be taken down and you will receive a call back asking about the incident.
I've done this several times. I do not know if there were any actual repercussions for the drivers but in talking to cab drivers they seem to believe there will be. This is almost exactly the same as the uber/lyft model except the uber/lyft model put that feedback mechanism front and center.
Uber pool is becoming a real and separate disruptor that seems to compete more with public transport than taxis. I would like to see stats on what's happening with buses and subways. In Miami it's about the same price to take an Uber pool ($2.50-$3) as it is to take a bus ($2.25), while being significantly better. UberX feels like Netflix's DVD phase, a precursor to the real, defensible, network-effect dependent, technologically more challenging [1], core competency of pool.
If you don't like it, don't take the least expensive level of Uber service. Uber has already segmented the market to provide more space and luxury to those willing to pay for it. Take Uber X, or Uber, or Uber Black.
I think becarefulyo's point was that Uber hasn't segmented the market enough. There needs to be a pool-without-cramming option. If Uber doesn't provide it, someone else will.
Interesting, but the argument has always been that x is Uber's Netflix DVD phase. Uber black car was the DVD phase for UberX, UberX was the DVD phase for Uber pool, and, now, Uber pool is the DVD phase for fully automating the driver out of the picture. It's certainly an interesting strategy to watch unfold. It's reasonable to assume that Uber black car very deliberately was a stepping stone to the more accessible UberX, but what I want to know is if during the initial pitch meetings they had any idea that their game was to burn money/remain solvent as long as they possibly can in order to have an upper hand in the future self-driving market.
If I were a taxi driver, I would sell my medallion while it still has some value and start driving for Uber and Lyft, doing deliveries for Prime Now and Grubhub, etc.
> "This year, both houses of the state Legislature were poised to pass a bill allowing the app-based transportation networks to operate upstate and on Long Island. The measure was approved by the Republican-led Senate on June 17th, but the Assembly version was amended at the last minute to include excessively high insurance limits. Soon after, the press revealed that the New York State Trial Lawyers Association was behind the push for higher insurance limits."
>"Ride-sharing companies Uber and Lyft spent nearly $1 million combined during the first six months of 2016 to lobby for a bill that would have allowed them to expand to upstate."
>"But the spending didn‘t pay off as the lawmakers ended the state legislative session in June without taking action on the bill. The bill died, according to sources, after the powerful state trial lawyers pushed for more comprehensive insurance coverage that Uber opposed."
"If I were a taxi driver, I would sell my medallion while it still has some value and start driving for Uber and Lyft, doing deliveries for Prime Now and Grubhub, etc."
You would sell your piece of market share, and then go work for an entity that has absolute power over you, and will drive your surpluses to zero - or even into the negative at the greatest pace they can?
When Uber has a monopoly, the 'short term' income of most drivers will be under minimum wage (because there's no income regulation) - and because so many drivers do not properly account for 'wear, tear and insurance' - the 'long term' net may actually be negative.
Uber's business is about paying drivers the equivalent of a short-term 'pay day loan' on value of their car as it degrades over usage, after which real income is negligible.
Or at least, that's the economic end-game.
Uber has demonstrated fanatical adherence to market principles - they leverage their power as hard as they can. The natural thing for them to do in a monopolistic scenario would be to jack up prices massively, jack up margins massively, and make sure drivers earn next to 0, and consumers benefit next to 0 - so that they capture all of the surpluses.
If anyone things that Uber will not do this they have not been paying attention. Uber will price at the 'profit maximizing' point for them - which in a monopoly situation is 'very high prices' (i.e. a shade below what you wouldn't be willing to pay) for consumers, and 'lower than minimum wage' for drivers (i.e. a shade above what they can possibly get away with).
Travis's comments on his hearing were pretty clear - he's a free market fundamentalist of the 'scary kind' (and by that I mean, economically illiterate, parroting the virtues of the ideology he espouses without actually understanding the scope of them).
So long as there is real competition, Uber will be limited by that, but if they ever get de-facto monopoly, the only winner will be them. They will ensure they get all of the surpluses.
Uber doesn't form monopolies as far as I can see, everywhere there seems to be a competitor or two, so that pricing pressure will keep Uber in check. I'm not sure why you think Uber has the power.. they have a lot of cash and first mover advantage which might obscure the true nature of what they can do.
As for the taxi plates.. they're going to be worth 10% of what they are now, it doesn't matter if you make less income with Uber if you have to wear such a huge capital loss. (in the order of 100k+)
Uber have replaced a consumer-hostile oligopoly with a worker-hostile future monopoly.
This isn't bad for consumers now, but the future will be less appealing. Undercutting the competition on price is classic monopolist behaviour.
I suppose VCs tolerate it because when the competitors are down and out, the rewards will be huge.
Unfortunately for Uber I think their technology will become less and less of a differentiator because it will become easier and easier - and cheaper - for a small and scrappy competitor to copy it.
If the competitors add extra services - e.e. B2B courier/logistics, or B2C pick-up/delivery - Uber probably won't have the clean run it expects.
What the market is really waiting for (and the VCs) are the self driving cars. Uber has to tolerate the human drivers for now (for the next 5-10 years) and just make it work. Once the machinery and the laws are in place they can't wait to cut that human labor out of the equation at which point they'll turn into a massive robot fleets of self driving cars. It'd be ideal to have large customer base at that point and preferably as few competitors as possible. This is where the $60+b market valuation comes from.
>I suppose VCs tolerate it because when the competitors are down and out, the rewards will be huge.
That's only remotely possible if the barrier to entry is high. It's not, if Uber hikes prices to the point where they are pulling insane profits over drivers competition will enter easily. The only way burning cash makes sense for Uber is eventually going to self driving car fleets - this is much harder to compete on and you can have efficiency based monopoly trough tech.
That is a rationalized calculus for wealthy people. The actual question is whether you would prefer to have the same small chance as everyone else to get a ride, or a guaranteed ride because you have more money than other people can pay. Your question supposes that congestion is caused by something other than more people than usual successfully getting a ride.
High surge prices should pay an oversized amount of wages and profits, in theory leading to lower prices at non-surge times, right? That's a benefit that I will happily give up a chance of a ride for. A 50% chance of a ride is worth much less than half as much as a guaranteed ride.
you're right that uber's primary market power is over their labor force and that they can extract maximum surplus wrt drivers. however they have no power over riders since they don't have a defensible competitive strategy (they compete primarily on cost rather than on differentiated value). that also means that barriers to entry are relatively low (e.g., uber in china and india).
but that isn't even the biggest challenge for uber. they want to own global last mile logistics (not just people delivery) and that puts them in direct competition with large established corporations like fedex, ups, amazon and walmart, who won't simply roll over and let them dominate that space.
people like to bring up self-driving cars as a strategy, but that's at least 10 years out, so it's a distraction at best. at worst, it also widens their competitive landscape to include all the global auto makers.
uber is by no means a monopoly yet and is in fact still struggling to earn a seat at the big kids' table.
Another way to title this would be "Taxi Services Now 10% Cheaper Because of Uber" or more aggressively "The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices".
Of course, for those to be all the way true and fair, Uber would need to be making money and not leveraging a sea of VC money.
None the less, why is pay down immediately bad? It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?
Some will go under but some new will appear. In long-term uber like companies can't win and make monopolies as tax business is not that hard to get into
The "don't look at the man behind the curtain" answer is that Uber will magically become profitable at some future date, soon, when robot taxis are invented for use on the road, Uber procures thousands of them and they take over.
Indeed. In quite a few places (Australia, for instance) the taxi industry is basically a government protected cartel. State governments charge insane amounts for taxi licencing (to get their cut of the cartel rent) and then restrict supply of taxi plates (to maximise their cut). Consequently, it was recently not uncommon (in Australia) for resold taxi plates to go for mid six figure sums on the open market. It was nuts.
I think Uber has changed this, although they're basically using predatory pricing as their market strategy. I must admit I have mixed feelings about all of this... Who knows? With two anti-competitive colliding like this, maybe we'll somehow end up with a competitive market at long last...
The market for all services also expands. Previously, if I had missed the bus, I would never have called a taxi: costs too much and no certainty whatsoever that it would arrive any faster than the next bus (~30 min). Now, I will on rare occasion grab an Uber, because the cost is tolerable and it's virtually guaranteed to be at my doorstep within 5 min.
It goes farther than that in my opinion. I would be willing to ocassionally take an Uber Pool, which costs more than a bus but less than a taxi. That whole market (of ride sharing) did not exist previously in the US. (It has been pretty common in Turkey though)
And if you travel with others, an uber can often be as cheap (or even cheaper) than public transport. In London, if you travel with 4 people it's often cheaper to take an uber for many distances compared to the tube (if you don't reach your daily cap anyway). A tube ride is ~£2.5, uber can get you quite far for £10 outside of rush hours.
No. Taxis are used less meaning less income, they not cheaper.
"The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices"
That's also not true. Uber is usually not cheaper.
The headline should be:
"More taxi drivers = less money for individual drivers"
Or economically:
"Uber uses value chain power to grab surpluses in taxi market, leaving drivers with less money on average, and consumers with the same price. But they have a cool app now."
> Another way to title this would be "Taxi Services Now 10% Cheaper Because of Uber" or more aggressively "The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices".
The article doesn't say that at all though.
Maybe the loss to taxi drivers is going straight to Uber. Maybe it's 20% cheaper to use Uber.
Because, you know, people start to suffer, can't afford to make rent or mortgage payments, take their kids out to the movies, etc. Stuff like that.
Which I know may seem kind abstract, from where you sit. So I'll point out a second major factor: As (middle class) incomes decline, do does purchasing power (in areas of the economy that really matter). And with it, the (meaningful) parts of the economy slow down greatly as well.
Note that I emphasized the "middle class" part. Yes, we know that as wages go down, the money doesn't really disappear, and is still active in other parts of the economy... namely, in the bank accounts of richer people. But by and large, richer folks tend to allocate their money towards "dumber" or less meaningful parts of the economy, dollar for dollar, while folks in the middle and lower-tiers tend to put their dollars into more fundamental sectors. Which is why when their incomes go down, everyone suffers.
It's just how things work, when you start to consider the whole system. And part of the bedrock of modern economic theory -- and one of the root causes of this thing known as The Great Depression, way back when.
It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?
When wages go down, it's not like boom, prices come down to meet them, not at the same pace anyways. (And if we're talking about a sudden wage hit to a certain class of workers -- basically you can't count on any commensurate price decrease at all to come to their rescue).
But more generally -- any analysis which only looks as one or two "metrics" -- and neglects to consider the effects on the system as a whole -- is fundamentally flawed.
A brief scan of the article suggests this relies on a difference in difference identification strategy. Not normally the most convincing approach... But it does shift my prior a little bit.
Uber has provided enormous value to consumers everywhere. The efficiency Uber has brought to consumers greatly outweighs any perceived inefficiencies. I attribute it to the great leadership style of Travis Kalanick.
I think Travis receives a lot of backlash because of envy. Many a people think Uber is a stupidly simple idea that they themselves could have done and as such hate on Travis for doing it first, fast and well.
It is 'easy' if you have money to break the law. Most of the people don't. I have thousands of good ideas that would bring in a lot of money and in many cases would be beneficial to people if I could break the law and call it disruption or whatever is the buzzword they are using.
Which amounts to the same thing. The market is more crowded with taxi drivers, the competition being fierce, eventually, some taxi drivers will be force out of work if they cannot keep up.
58 comments
[ 4.1 ms ] story [ 200 ms ] threadAn entire industry that thrives on screwing people at inopportune times deserves to die IMO.
People have legitimate grievances against the cab industry, I'm one of them, but that doesn't automatically legitimize what Uber is doing.
I've done this several times. I do not know if there were any actual repercussions for the drivers but in talking to cab drivers they seem to believe there will be. This is almost exactly the same as the uber/lyft model except the uber/lyft model put that feedback mechanism front and center.
1. https://en.m.wikipedia.org/wiki/Shortest_path_problem
The NYS trial lawyers are doing a good job holding Uber hostage. Once they get what they want, Uber is fucked.
Citation?
http://www.lohud.com/story/opinion/contributors/2016/08/24/t...
>"Ride-sharing companies Uber and Lyft spent nearly $1 million combined during the first six months of 2016 to lobby for a bill that would have allowed them to expand to upstate."
>"But the spending didn‘t pay off as the lawmakers ended the state legislative session in June without taking action on the bill. The bill died, according to sources, after the powerful state trial lawyers pushed for more comprehensive insurance coverage that Uber opposed."
http://www.nydailynews.com/news/politics/uber-lyft-spent-1m-...
You would sell your piece of market share, and then go work for an entity that has absolute power over you, and will drive your surpluses to zero - or even into the negative at the greatest pace they can?
When Uber has a monopoly, the 'short term' income of most drivers will be under minimum wage (because there's no income regulation) - and because so many drivers do not properly account for 'wear, tear and insurance' - the 'long term' net may actually be negative.
Uber's business is about paying drivers the equivalent of a short-term 'pay day loan' on value of their car as it degrades over usage, after which real income is negligible.
Or at least, that's the economic end-game.
Uber has demonstrated fanatical adherence to market principles - they leverage their power as hard as they can. The natural thing for them to do in a monopolistic scenario would be to jack up prices massively, jack up margins massively, and make sure drivers earn next to 0, and consumers benefit next to 0 - so that they capture all of the surpluses.
If anyone things that Uber will not do this they have not been paying attention. Uber will price at the 'profit maximizing' point for them - which in a monopoly situation is 'very high prices' (i.e. a shade below what you wouldn't be willing to pay) for consumers, and 'lower than minimum wage' for drivers (i.e. a shade above what they can possibly get away with).
Travis's comments on his hearing were pretty clear - he's a free market fundamentalist of the 'scary kind' (and by that I mean, economically illiterate, parroting the virtues of the ideology he espouses without actually understanding the scope of them).
So long as there is real competition, Uber will be limited by that, but if they ever get de-facto monopoly, the only winner will be them. They will ensure they get all of the surpluses.
As for the taxi plates.. they're going to be worth 10% of what they are now, it doesn't matter if you make less income with Uber if you have to wear such a huge capital loss. (in the order of 100k+)
When I came back to the part of London I used to live in, my local small business taxi firm where I knew the guys had disappeared.
Small Taxi offices used to be a common sight, there are way less of them now.
This isn't bad for consumers now, but the future will be less appealing. Undercutting the competition on price is classic monopolist behaviour.
I suppose VCs tolerate it because when the competitors are down and out, the rewards will be huge.
Unfortunately for Uber I think their technology will become less and less of a differentiator because it will become easier and easier - and cheaper - for a small and scrappy competitor to copy it.
If the competitors add extra services - e.e. B2B courier/logistics, or B2C pick-up/delivery - Uber probably won't have the clean run it expects.
That's only remotely possible if the barrier to entry is high. It's not, if Uber hikes prices to the point where they are pulling insane profits over drivers competition will enter easily. The only way burning cash makes sense for Uber is eventually going to self driving car fleets - this is much harder to compete on and you can have efficiency based monopoly trough tech.
but that isn't even the biggest challenge for uber. they want to own global last mile logistics (not just people delivery) and that puts them in direct competition with large established corporations like fedex, ups, amazon and walmart, who won't simply roll over and let them dominate that space.
people like to bring up self-driving cars as a strategy, but that's at least 10 years out, so it's a distraction at best. at worst, it also widens their competitive landscape to include all the global auto makers.
uber is by no means a monopoly yet and is in fact still struggling to earn a seat at the big kids' table.
That sounds like a problem with minimum wage legislation [as well].
Of course, for those to be all the way true and fair, Uber would need to be making money and not leveraging a sea of VC money.
None the less, why is pay down immediately bad? It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?
A more accurate alternate headline would be "VCs and institutional investors contribute $10 to each Uber ride, taxi use drops"
https://en.wikipedia.org/wiki/Predatory_pricing
Silly me wonders if Uber will run out of cash before (enough) taxis companies go under.
The "don't look at the man behind the curtain" answer is that Uber will magically become profitable at some future date, soon, when robot taxis are invented for use on the road, Uber procures thousands of them and they take over.
I think Uber has changed this, although they're basically using predatory pricing as their market strategy. I must admit I have mixed feelings about all of this... Who knows? With two anti-competitive colliding like this, maybe we'll somehow end up with a competitive market at long last...
https://en.m.wikipedia.org/wiki/Chicken_bus
No. Taxis are used less meaning less income, they not cheaper.
"The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices"
That's also not true. Uber is usually not cheaper.
The headline should be:
"More taxi drivers = less money for individual drivers"
Or economically:
"Uber uses value chain power to grab surpluses in taxi market, leaving drivers with less money on average, and consumers with the same price. But they have a cool app now."
The article doesn't say that at all though.
Maybe the loss to taxi drivers is going straight to Uber. Maybe it's 20% cheaper to use Uber.
Because, you know, people start to suffer, can't afford to make rent or mortgage payments, take their kids out to the movies, etc. Stuff like that.
Which I know may seem kind abstract, from where you sit. So I'll point out a second major factor: As (middle class) incomes decline, do does purchasing power (in areas of the economy that really matter). And with it, the (meaningful) parts of the economy slow down greatly as well.
Note that I emphasized the "middle class" part. Yes, we know that as wages go down, the money doesn't really disappear, and is still active in other parts of the economy... namely, in the bank accounts of richer people. But by and large, richer folks tend to allocate their money towards "dumber" or less meaningful parts of the economy, dollar for dollar, while folks in the middle and lower-tiers tend to put their dollars into more fundamental sectors. Which is why when their incomes go down, everyone suffers.
It's just how things work, when you start to consider the whole system. And part of the bedrock of modern economic theory -- and one of the root causes of this thing known as The Great Depression, way back when.
It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?
When wages go down, it's not like boom, prices come down to meet them, not at the same pace anyways. (And if we're talking about a sudden wage hit to a certain class of workers -- basically you can't count on any commensurate price decrease at all to come to their rescue).
But more generally -- any analysis which only looks as one or two "metrics" -- and neglects to consider the effects on the system as a whole -- is fundamentally flawed.
I think Travis receives a lot of backlash because of envy. Many a people think Uber is a stupidly simple idea that they themselves could have done and as such hate on Travis for doing it first, fast and well.