The big one is going to be schools. They won't die out, but they will be substantially altered and not as dominant as they are today, and that process will take much longer than the uber vs. taxi dynamic will take to play out. So much of modern education is just read, regurgitate, test, even much of a typical undergraduate education falls in that bucket. That sort of education is prime for disruption via interactive educational apps, but the genre hasn't hit it's inflection point moment yet. Nevertheless, sometime in the next 10 to 20 years or so there will be a breakthrough in educational software. Someone will put the pieces together and start making stuff that is universally considered to be excellent, and they will start making a crap ton of money which will fuel a gold rush into making apps using the same ideas. The rest will be history.
Has the market value of taxi medallions fallen after the advent of Uber and Lyft? I think there is a big risk that this way of organizing things is about to go away, which will leave taxi medallion owners with a huge loss.
interesting that right before (a year or two) Uber/Lyft/etc...'s time the prices of medallions hit something like $200K/$600K in SF/NY and there were stories about that in the news. Speaking about dialectics - top blossom of anything carries its undoing with/inside it.
They have cost a fortune for a long time, Uber was born more out of the frustration of the ability to actually get a ride than whatever expenses were involved (though to be fair the reason it's hard to catch a cab in SF is because there are so few medallions which is why they're so pricey).
Not sure if this is full answer, but from the article:
> Kim said he would do just fine because he has built a loyal customer base over the company's 80-year history and now receives an additional 2,000 hails daily through the hailing app Flywheel, which he hopes would adapt with him.
xsmasher - good question :) presumably his rides could come from apps like Uber and Summon (disclosure: founder). I will say that as someone whose platform supports taxi, tncs and tcp cars there is a good chance this is just posturing by the person mentioned to achieve some other goals.
Can't get one dispatched, either. Uber had a blog post a few years ago [1] where they highlighted some findings from a SFMTA report on cab availability. The report found that 35% of dispatched cabs never showed up, except on weekends, when 72% never showed.
Wow those are some horrible numbers. Am I just lucky that cabs in Seattle are reliable? I've never had a no-show, and cabs have always been on time here +/- 5 minutes of the requested pick up time.
Then again my sole need for cabs has always been "I need to go to the airport at 4:30am", a need for which I imagine Uber would not be appropriate.
cabs in sf are an utter shitshow. Uber's original innovation was -- and this is only remarkable in sf -- they where a taxi that came.
I was on crutches for 9 months and took cabs daily to work from near mission and 23rd. All these cab companies are utter assholes: I booked cabs 3-5 days a week, from a population hub, and tipped well, but none of them could provide decent service. Each one would say "10-15 minutes" when I would ask how long the cab would take to arrive. I collected stats for a couple months: the median time was over 30 minutes and the 90th percentile was 1.5 hours. I even had a cabbie come more than 50 minutes after promised; I'd already begged a friend to drive me to work. Dude had the big old brass balls to call my cell and bitch that I hadn't cancelled, after I'd waited over three times their maximum arrival estimate. One dispatcher even admitted on the phone that they just tell everyone near where I live 10-15 minutes.
Uber in other cities may have a harder row to hoe, but in sf, merely being a cab that comes (or -- and this is amazing -- treating your customers with a tiny bit of respect and telling them you won't come if you can't) gets you really far.
Fuck sf taxes -- yellow, desoto, luxor -- I hope all those assholes get unemployed. I'm not sure Uber is a good thing in a city with working transport systems, but that doesn't describe sf. They made my life even harder than it already was; there's no good reason I should have had to call cabs more than an hour and a half before I wanted to be to work (an 18 minute drive) just to have a greater than 90% chance of making it. And when you have doctors appointments or surgeries or something else with a hard start time, I have no idea what you're supposed to do in sf besides use Uber. Hire a black car maybe?
You may still want to check out Uber... I just checked my last receipt from downtown to SeaTac and it was $23. Orange Cab is $40 without a tip. In town is quite a bit cheaper as well.
I pay about ~60 from Kirkland to SeaTac. Insane rate, but it isn't fixed rate since I am in Kirkland. Costs me 50% more for about 15% more milage, and since it is 405 south bound it is likely a quicker commute anyway.
But again, I doubt Uber runs at 4:30 am in Kirkland!
The per mile rate on UberX is lower, but yes that is a tough time for anything that's not booked ahead of time. The way home could work though, it's easy to get picked up at the airport.
I bet Uber gets there though, I could see advanced booking being added before long.
Basically he's paying $2,200 per month per car for the ability for a car to pick up from the curb (and SFO apparently). He thinks he can not do that and instead rely on fares that were hailed through an app (or dispatcher I'd assume). He'll have lower revenue, but also significantly lower cost.
You gotta give Hansu Kim credit, he's doing something different. A lot of companies would complain about Uber and die a slow death, but this guy is like "if they don't have to follow the rules, neither do I."
Well, maybe. Nothing Kim is doing is going to directly lessen demand for medallions from the city. In San Francisco, to own a medallion, you must work 800 hours per year as a taxi driver (source: http://www.economicpolicyjournal.com/2012/07/is-san-francisc...). So Kim himself is not a medallion holder at all.
(I gather that in other cities, this is a whole different story. But in SF, in theory as well as as far as I can tell in practice, medallion holders are themselves pretty committed cab drivers).
What Kim owns are the cars and the infrastructure to support the cars, plus a dispatching system. He rents the medallions from their owners, who drive his cars and also allow their medallions to be used by other drivers in the DeSoto fleet when their owners are not using them (this is legal, to be clear).
So in the short term, if Kim goes to a livery service, those medallion owners will by-and-large just rent their medallions to other taxi fleets in the city. The city won't lose any business directly from Kim, because he's not a customer of theirs anyway, and in the short term, as the article states, they have a waiting list of cabbies who want to buy medallions.
Now, it is true that fleet owners all over the city are reporting that they are having more and more trouble getting their cars to full utilization, as the profits from being a taxi driver decrease. And presumably at some point if current trends continue, there won't be people willing to throw down $100k+ for a medallion, and the city will be hurt by that. But that was a preexisting trend to Kim's hypothetical movement to being a livery fleet, and if he does end up contributing to a lessened demand for medallions, he'll be a pretty small part of the overall trend, which is mainly a result of Uber and Lyft undercutting taxis.
Source and disclaimer: I work for Flywheel, mentioned in the original article.
Is this whole medallion argument over how quickly "at the curb" hails move to smartphone apps? Because I'd put some serious money on the majority of "e-hails" being done via Flywheel, Lyft, Uber, etc in the next ~3 years.
Its too bad I can't short medallions as a security.
Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company is engaged in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses.
So while it was probably hard for you to short subprime mortgages directly in 2008/9, this is the same type of thesis. Short the company that has made loans on an asset that is quite likely going to depreciate in value over time. Just like you could short the banks that made the bad home loans. Given a long enough time horizon, it seems that you'll do well. But check with your own financial advisor.
> Well, maybe. Nothing Kim is doing is going to directly lessen demand for medallions from the city.
Sure he is, if he stops leasing medallions there will be 204 less medallions demanded at the $2,200/month price level. It already mentioned that this rate is going down, it used to be $2,500. Perhaps other cab companies will want to expand at the current pricing, but more likely is that the price will go down further.
Whoever is left holding ridiculously inflated medallions at the end of the day is who will be hurt. Which from what you are saying is actually individuals. That's tough, but it's also a risk to lay down $250,000 for a certificate from the city for the purely artificial bureaucratic ability to drive a car.
My post may not make much sense with its parent post being deleted. That poster originally commented that Kim was hitting the city in its pocketbook. I was trying to point out that, while Kim's actions certainly do affect the whole ecosystem of SF rides-for-hire, he's not directly a customer of the city, and also to his contribution to the devaluing of taxi medallions probably pales in comparison to Uber and Lyft's contributions, and those aren't hypothetical in the future but already in the present.
In many cities (Miami, NY) the medallions are held by either mini hedge funds, investor groups, or cab companies that rent them to the drivers. $2200/month is about what they charge here for the medallion rental/car rental.
Also this doesn't necessarily hurt the MTA, since they already SOLD those medallions to private individuals. Those individual owners will be left holding the bag so to speak.
Summary: given the current regulatory conditions, you don't need a medallion if you just take bookings and do not get hailed from the street. "Taking a booking" is interpreted more broadly each day, so it includes summoning via apps. The owner, Kim, estimates that giving up the hailed fares in return for not paying for medallion rentals, would let him make more money and outcompete Uber.
My comment: How long until someone converts a street hail into a booked ride by generating a record to make it look booked?
What if Uber just gave bar bouncers an app for hailing Ubers and shared a small cut with the bar? They'd just need a Square-like credit card swiper so that customers could pay for the rides individually.
This is kind of what we had here outside some nightclubs in the UK. There'd be a private hire company (bookable only), with a guy with a notepad and phone standing outside, he'd make the booking on the paper, ring the driver who was in the car next to him, bingo.
has anyone tried http://www.ztrip.com/ ? it's a car hailing app developed by the company that owns a bunch of yellow cab companies. curious what people's thoughts/impressions of it are...
This won't work everywhere that has a medallion/license system. In Australia taxi licenses are regulated by each department of transport at the state level rather than city/municipal councils.
> "Uber isn't putting me out of business," Kim said, speaking hypothetically. "What Uber is making me do is retool -- and given the same rules, I'll beat them all day long."
I appreciate his spirit, but I don't think he's fully estimating what it would involve to beat Uber at its game. He'll have to hire more drivers, have lower prices and still be up against a huge network effect wall. He seems jazzed with Flywheel, but they could stop sending him business tomorrow.
One of my favorite parts about Uber is that it's in so many cities and has consistency (easy to see pricing, if there's a problem I know who to contact, etc). I'm never going to seek out DeSoto Cab Co on purpose.
Basically, if the rules tilt towards the Uber model there is no reason for Kim to exist. He's a middle man in a business that is going the opposite direction.
Right, his thinking sounds a lot like what we heard from 2000-2008 or so from the newspaper industry. There's always some new app they think might turn the tide to conveniently mention in interviews, but at the end of the day these taxi companies are all on their way to a different, lower station in the marketplace.
> Basically, if the rules tilt towards the Uber model there is no reason for Kim to exist. He's a middle man in a business that is going the opposite direction.
Not at all. Maybe though, he's a local middle-man in a business which is going toward global middle men.
After all, Uber and Lyft are nothing if not middle men.
Downvote me all you want, but I just realized is even more true than I through at first, because the main revenue model of Google: Adsense/Adwords, is just a middle men between webmasters and advertisers; the only reason those two groups don't talk directly to each other is because they don't trust each other:
- They don't know each other (lack of contact method)
- They don't know how much they charge.
- They don't know if they are trustworthy.
- They don't know if they will maliciously overcharge or if they won't honor the contract.
The completely exact middleman work that Uber does between drivers and passengers.
I also think that's not always a dead end. There is also an opportunity to grow. For instance, I know Uber exists, but since I only take taxi occasionally I don't own an Uber account.
In NY, the Chinese and the Korean community have their own network knowing how to reach the Chinese/Korean-speaking car service and shuttle service. Uber or alike cannot beat this system. These locale-specific service operate with just telephone. Very school but effective! No app, no Internet access. Pretty reliable and cheap.
So all he need to do is to find a community to target at and find drivers willing to join him.
I will just make my raw observation and prediction that the reach into certain community for certain use case is likely to have little success. For example, if you want to travel between Flushing and Chinatown, or between Brooklyn and Chinatown, or between Queens and Chinatown, there are specific "bus station" for people to wait at. For car service it's also a single phone call and you can get a quote within half a minute. There is usually a single number you dial and you can get a quote on the ETA so you can wait at home and go on the shuttle van when the time comes. The reason technology hasn't beaten this old school system is because of the low cost to run and the low entry to barrier for both the business owners and users. Typing can be quit slow and ineffective and sometimes Internet access is just not available.
It's basically a community lock-in. So a Uber-like clone will have to break this "monopoly practice" not by just translating the app, but actually knows how the community works.
Uber is translated into a ton of languages already, I see that it gets updated very frequently and often times the only changes are various localizations.
Considering you can put your destination address in the app, it should be a huge improvement to anyone who doesn't know the language (or with disabilities).
Uber already has a ton of users and more importantly, drivers. If I visit SF what reason would there be to use this guy's cab service vs Uber? I already have Uber on my phone.
Uber has some drivers in a city, and some passengers - not very valuable. But, Uber does something special, like drop prices, and all of a sudden, there a lot of people who hear about the low cost of UberX, and so they put the App on their iPhone/Android, and start calling vehicles. Drivers, hear about the incredible demand for UberX drivers, and start adding that network to their vehicle. Passengers discover there is always a Uber vehicle close by and so they start using it more often, which creates more demand.
Eventually, you get a network of users/drivers - each new driver is available to many customers, and each customer will make themselves available to many drivers.
It's not a perfect N(N-1)/2 mesh, but then neither were fax machines (not everyone wanted to fax everyone else) - but the same concept of network value exists.
What Uber has going for it is convenience, transparency, and quality. By the time the industry itself settles, who's to say Uber could keep up the high standard of quality? Or if they move toward a monopoly, they might hike the price, allowing smaller, local-focused services to differentiate themselves and flourish.
We have no idea what the future hold, and remember Uber is the new kid on the block here.
Interesting that DeSoto fails to mention why people seek out Uber. Kim seems to be focused on the medallions pricing structure completely ignoring user advantages such as ease of access through the app, reliable service, quality, etc, etc.
If cab companies don't realize that new services beat them to the punch in many areas besides pricing they won't survive.
I had a friend visit SF from NYC a couple weeks ago, and it blew my mind that he continued to use taxis instead of Ubers. Here, the decision seems clear-cut: calling a car with a phone is cheaper, faster, and more convenient. However, in NYC the streets are so saturated with taxis that waiting 5 to 10 minutes for an Uber instead of hailing a cab immediately seems absurd in most day-to-day situations.
It's pretty much the same in Chicago. You can hail a taxi almost immediately, but uber will take you 5-10 minutes. Can be useful though if you're in the outskirts of downtown.
Yep, I usually wind up using Uber to get from my apartment to the bars, and then there's enough cabs in the street outside the bars that it's faster to just hail one to get home.
I wonder if we'll see city medallion prices fall as drivers like this choose to not buy/rent medallions. Once that happens, the math might change such that it makes sense for him to keep the medallion.
Sucks to be an investor who bet who bet against technology, ouch!
What I think might be more interesting for Mr. Kim is a hybrid model. He could start shedding medallions, and only use them for the airports or potentially a downtown core.
The rest of his dispatched traffic could be in vehicles without a medallion. If most of the rides don't require the medallion, he could shed a significant cost. It sounds like with 204 of 2000 medallions, his decisions could personally have a fairly large effect on the marginal cost of the medallion (so he is paying less per medallion and for fewer medallions overall).
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[ 2.7 ms ] story [ 137 ms ] threadThere are too many options to know which one is next.
Or does this loophole mean he CAN still pick up at the curb? I did not understand the whole TCP vs TNC business.
> Kim said he would do just fine because he has built a loyal customer base over the company's 80-year history and now receives an additional 2,000 hails daily through the hailing app Flywheel, which he hopes would adapt with him.
[1] http://blog.uber.com/2011/04/11/uberdata-the-hidden-cost-of-...
Then again my sole need for cabs has always been "I need to go to the airport at 4:30am", a need for which I imagine Uber would not be appropriate.
I was on crutches for 9 months and took cabs daily to work from near mission and 23rd. All these cab companies are utter assholes: I booked cabs 3-5 days a week, from a population hub, and tipped well, but none of them could provide decent service. Each one would say "10-15 minutes" when I would ask how long the cab would take to arrive. I collected stats for a couple months: the median time was over 30 minutes and the 90th percentile was 1.5 hours. I even had a cabbie come more than 50 minutes after promised; I'd already begged a friend to drive me to work. Dude had the big old brass balls to call my cell and bitch that I hadn't cancelled, after I'd waited over three times their maximum arrival estimate. One dispatcher even admitted on the phone that they just tell everyone near where I live 10-15 minutes.
Uber in other cities may have a harder row to hoe, but in sf, merely being a cab that comes (or -- and this is amazing -- treating your customers with a tiny bit of respect and telling them you won't come if you can't) gets you really far.
Fuck sf taxes -- yellow, desoto, luxor -- I hope all those assholes get unemployed. I'm not sure Uber is a good thing in a city with working transport systems, but that doesn't describe sf. They made my life even harder than it already was; there's no good reason I should have had to call cabs more than an hour and a half before I wanted to be to work (an 18 minute drive) just to have a greater than 90% chance of making it. And when you have doctors appointments or surgeries or something else with a hard start time, I have no idea what you're supposed to do in sf besides use Uber. Hire a black car maybe?
For Yellow Cab, well, they have a phone dispatch still, I actually switched over to Orange Cab just because Yellow's dispatchers are rather rude.
But again, I doubt Uber runs at 4:30 am in Kirkland!
I bet Uber gets there though, I could see advanced booking being added before long.
It shows dash.
(I gather that in other cities, this is a whole different story. But in SF, in theory as well as as far as I can tell in practice, medallion holders are themselves pretty committed cab drivers).
What Kim owns are the cars and the infrastructure to support the cars, plus a dispatching system. He rents the medallions from their owners, who drive his cars and also allow their medallions to be used by other drivers in the DeSoto fleet when their owners are not using them (this is legal, to be clear).
So in the short term, if Kim goes to a livery service, those medallion owners will by-and-large just rent their medallions to other taxi fleets in the city. The city won't lose any business directly from Kim, because he's not a customer of theirs anyway, and in the short term, as the article states, they have a waiting list of cabbies who want to buy medallions.
Now, it is true that fleet owners all over the city are reporting that they are having more and more trouble getting their cars to full utilization, as the profits from being a taxi driver decrease. And presumably at some point if current trends continue, there won't be people willing to throw down $100k+ for a medallion, and the city will be hurt by that. But that was a preexisting trend to Kim's hypothetical movement to being a livery fleet, and if he does end up contributing to a lessened demand for medallions, he'll be a pretty small part of the overall trend, which is mainly a result of Uber and Lyft undercutting taxis.
Source and disclaimer: I work for Flywheel, mentioned in the original article.
Its too bad I can't short medallions as a security.
Look at the symbol TAXI.
http://www.google.com/finance?q=taxi
From their profile:
Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company is engaged in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses.
So while it was probably hard for you to short subprime mortgages directly in 2008/9, this is the same type of thesis. Short the company that has made loans on an asset that is quite likely going to depreciate in value over time. Just like you could short the banks that made the bad home loans. Given a long enough time horizon, it seems that you'll do well. But check with your own financial advisor.
Sure he is, if he stops leasing medallions there will be 204 less medallions demanded at the $2,200/month price level. It already mentioned that this rate is going down, it used to be $2,500. Perhaps other cab companies will want to expand at the current pricing, but more likely is that the price will go down further.
Whoever is left holding ridiculously inflated medallions at the end of the day is who will be hurt. Which from what you are saying is actually individuals. That's tough, but it's also a risk to lay down $250,000 for a certificate from the city for the purely artificial bureaucratic ability to drive a car.
Also this doesn't necessarily hurt the MTA, since they already SOLD those medallions to private individuals. Those individual owners will be left holding the bag so to speak.
My comment: How long until someone converts a street hail into a booked ride by generating a record to make it look booked?
http://en.wikipedia.org/wiki/DJ_Z-Trip
still wondering if anyone has any opinions on the ride summoning app... maybe that's the answer, that no one uses it or has an opinion?
I appreciate his spirit, but I don't think he's fully estimating what it would involve to beat Uber at its game. He'll have to hire more drivers, have lower prices and still be up against a huge network effect wall. He seems jazzed with Flywheel, but they could stop sending him business tomorrow.
One of my favorite parts about Uber is that it's in so many cities and has consistency (easy to see pricing, if there's a problem I know who to contact, etc). I'm never going to seek out DeSoto Cab Co on purpose.
Basically, if the rules tilt towards the Uber model there is no reason for Kim to exist. He's a middle man in a business that is going the opposite direction.
Not at all. Maybe though, he's a local middle-man in a business which is going toward global middle men.
After all, Uber and Lyft are nothing if not middle men.
- They don't know each other (lack of contact method)
- They don't know how much they charge.
- They don't know if they are trustworthy.
- They don't know if they will maliciously overcharge or if they won't honor the contract.
The completely exact middleman work that Uber does between drivers and passengers.
In NY, the Chinese and the Korean community have their own network knowing how to reach the Chinese/Korean-speaking car service and shuttle service. Uber or alike cannot beat this system. These locale-specific service operate with just telephone. Very school but effective! No app, no Internet access. Pretty reliable and cheap.
So all he need to do is to find a community to target at and find drivers willing to join him.
It's basically a community lock-in. So a Uber-like clone will have to break this "monopoly practice" not by just translating the app, but actually knows how the community works.
Considering you can put your destination address in the app, it should be a huge improvement to anyone who doesn't know the language (or with disabilities).
I don't really see how it applies in this situation. (e.g. you can use uber today and a taxi tomorrow and suffer no loss of value).
Eventually, you get a network of users/drivers - each new driver is available to many customers, and each customer will make themselves available to many drivers.
It's not a perfect N(N-1)/2 mesh, but then neither were fax machines (not everyone wanted to fax everyone else) - but the same concept of network value exists.
We have no idea what the future hold, and remember Uber is the new kid on the block here.
If cab companies don't realize that new services beat them to the punch in many areas besides pricing they won't survive.
Sucks to be an investor who bet who bet against technology, ouch!
The rest of his dispatched traffic could be in vehicles without a medallion. If most of the rides don't require the medallion, he could shed a significant cost. It sounds like with 204 of 2000 medallions, his decisions could personally have a fairly large effect on the marginal cost of the medallion (so he is paying less per medallion and for fewer medallions overall).