The weird thing about the whole Uber affair is that as long as the drivers can't set their own prices that's a very strong piece of evidence that they are not independent operators, whereas that very same fact about Uber setting the prices is the biggest bulwark against a race to the bottom, which is very much to the advantage of the drivers.
Sooner or later Uber will have to let this go to enhance their position that drivers are independent and then suddenly Uber won't be nearly as interesting to work with/for and the quality will plunge.
Uber's biggest risk will come from competitors or co-ops eating into their 20%-25% profit margins.
There are a lot of regions that like the concept of ride sharing, but don't like how an American silicon valley company is capturing wealth locally and sending it to Silicon Valley.
That's why I'm convinced we will soon see efforts to make co-op versions of Uber that copy its technology, but return 95%-99% of the money in each transaction back to the driver.
"There are a lot of regions that like the concept of ride sharing, but don't like how an American silicon valley company is capturing wealth locally and sending it to Silicon Valley."
I live in China, and enjoy cheap rides with Uber. I'm pretty sure the money is flowing the other way, and investors are subsidising local drivers and riders.
"I live in China, and enjoy cheap rides with Uber. I'm pretty sure the money is flowing the other way, and investors are subsidising local drivers and riders."
For now. When the local market is won then the taps reverse and the money will flow the other way.
Against the race to the bottom? Uber sets the pace. Their rates are a low as possible to maintain a driver base.
There is a degree of debt in Uber atm because of this. Many drivers are not accommodating the true operating costs of their vehicles. They are using vehicles they had at hand, not one they purchased for the business. When those cars start to need replacement, Uber suddenly isn't paying enough. There is a reason many jurisdictions place limits on cab age. City driving for money simply destroys vehicles.
On the other hand, I took a lot of ubers last year (in Amsterdam). We don't have uber X, but Black and Lux. Pricing of black is on average 10-20% below normal taxi's. All driver's I've asked have said that they prefer uber for mainly 3 reasons:
1. Control over when they drive
2. Higher utilisation (which in extension should be a big driver for Uberpool)
3. Friendlier/less troublesome passengers
Some actually bought (nice) new cars (Mercedes/BMW) and explained me a bit more about the economics of buying a new car and how it made sense for them while driving for Uber. Many I spoke to share the car with another driver to get more rides done per day.
As such, I wouldn't assume that most drivers don't account for the total cost of ownership. To me it seems that many do.
Those are very different drivers than those I've had experience with in the US. All I've seen are family/personal cars pressed into service when times got tight.
I don't think that's true. All it would mean is that Uber would lower cash payout rates and provide some employee benefits, in effect forcing drivers to take some of their complemsation as employee benefits.
(The bit about "not having to pay employer tax share for contractors" is a red herring; the sum of the employee and employer tax shares is the same, and economic incidence is -- per a well known result -- unaffected by who the tax authority assesses the taxes on.)
It would be a little less profitable (because of the parties' supply/demand curves, and hence why they oppose it) but it doesn't break the core business model.
I assume that people who say "not having to pay employer tax share for contractors" they mean things like unemployment insurance, and other employer-components of "payroll tax"? Is that still a red herring?
Also, it seems the paperwork and entities involved would get messy. The "employees" still own the car and need to expense/depreciate it, right?
>I assume that people who say "not having to pay employer tax share for contractors" they mean things like unemployment insurance, and other employer-components of "payroll tax"? Is that still a red herring?
It doesn't have the same dynamic as the payroll tax, but it's misleading because the other point applies: the more benefits you buy for workers, the less (direct) cash you have to offer to entice them to do the work. Like with health insurance, a mandate for it would just mean Uber would lower time/mileage rates. In effect, this is the same as forcing drivers to use their cash earnings to buy unemployment insurance, which may be a worse use of the money.
>Also, it seems the paperwork and entities involved would get messy. The "employees" still own the car and need to expense/depreciate it, right?
Huh? They're already doing that as contractors. And Uber is now at the scale where (relatively) fixed paperwork costs aren't that big a deal.
Even after Taxi companies are forced to do the same?
Chicago taxicab companies are “misclassifying” their drivers as independent contractors and should consider them employees eligible for overtime and the state’s $8.25-an-hour minimum wage, a federal class-action lawsuit claimed Wednesday.
I suspect you are right. It will make for an interesting year.
But rather than being toast, it may be that the livery business is changed from a local monopoly, to a more market driven one. And then it will be interesting to see whether or not companies can deliver better service than the Taxis have over the last few years. I worry sometimes that rather than empowering drivers and enabling better service, it just changes who gets all the money. Sort of the same old, same old, just different names. And if that is the outcome, even with Uber being "successful" then I don't think it really will have dented the universe at all.
It's a race. In a few years (5? 8?), driverless cars might become a reality. Will they be able to survive until then? They just need to wait, lobby the hell out of it, and keep raising money at higher and higher valuation.
As much as I don't like Uber, so far their strategy has paid out.
> They just need to wait, lobby the hell out of it, and keep raising money at higher and higher valuation. As much as I don't like Uber, so far their strategy has paid out.
I'll bet you a fine scotch that Uber isn't able to raise any additional rounds at their current or higher valuations.
I think you're underestimating how large of a market they have access to worldwide. When the dust settles I think they can become as big as Microsoft around the ~$200 billion dollar range.
I am curious why everyone believes that self driving cars are coming so soon. They have been talked about for decades.
Aircraft have been close to self piloting for years as well (as far as my understanding goes), but you never hear anyone claim that pilots will be gone any time soon.
Because a car can pull over and stop if something goes wrong.
Google is covering tens of thousands of miles in autonomous mode every month [1], and Tesla is refining their algorithms and mapping data with every mile Tesla Model S owners drive (whether they've paid for Autopilot or not, the vehicle just needs to have the hardware).
A pilot can't pull over and stop is something goes wrong either. But, yes, we're very close to gate to gate autonomous flight. That said, I don't expect we'll see commercial flights without a captain/pilot anytime soon. There are too many reasons to have a human present who has final decision-making authority and that human is a small percentage of operational costs.
That also said, Google has a lot of experience driving cars in daylight, in good weather, in a very limited area, and mostly on freeways. That is very different from turning those vehicles loose in Boston, at night, in a snowstorm, without any human even present. Five to eight years to purchase (or rent by the hour) an autonomous robo-taxi is absolute fantasy territory. Personally, I think 20 years is probably very optimistic. (Yes, there are a lot of advances being made but there's a huge gap between where we are and where we need to get to replace taxis.)
I agree about aircraft. Even though it could be fully automated (the Navy had a drone called Salty Dog [1] that could take off from an aircraft carrier, perform its mission, refuel on-air, and return to the aircraft carrier fully autonomously), a pilot's compensation is a terribly small price to pay for having a human brain in the air in the event of a critical failure.
Regarding vehicles though, I don't agree. Yes, they won't work in the snow or inclement weather yet. But there are numerous places around the world where the weather is sufficiently stable that autonomous vehicles could operate the majority of the time. The value proposition is simply too high for anyone to throw their hands up and say, "Well, we can't do this." and move on to another project.
It's going to happen slowly (see: Tesla Autopilot slowly gaining more features with each point release), and then all of a sudden.
I'd like to be more optimistic than I am because it would be great--disruptive economic ramifications notwithstanding. Personally, I suspect that we'll hit a certain plateau--say, freeway or other select road driving under a certain set of parameters (which is still a big win) and find that getting to the true general-purpose case is a really tough and long slog.
I'm sure we're going to get there. The question is whether it's one decade or five to have no human present under a wide range of conditions.
I'm increasingly coming to believe that Uber won't win the driverless car taxi battle. They don't have the expertise in vehicle technology and Google is increasingly beginning to signal that they don't want to hand over the spoils of what they have to Uber. (It's possibly why Uber just acquired a huge division of Microsoft's Bing mapping team recently -- I suspect they're beginning to think that their reliance on Google Maps API is a liability.)
In my opinion Uber's most realistic and promising direction is towards doubling down on delivery and logistics. E.g. Uber Eats (which is already amazing) and Uber Package delivery.
I don't understand this point of view. Isn't the better, more convenient service enough to warrant enough revenue to pay what a company with employees would pay? I don't see why the business model, additionally, has to cut employee costs, beyond maximizing profit. But there should still be enough profit on the revenue side.
Getting big is a goal, not a business model. Standard Oil took decades to achieve monopoly, Uber's goal may be to optimize the speed-to-monopoly, but that's a separate issue from business model.
I think they'll both survive (uber types and taxis). They fill different needs. When I'm at an airport, I really don't want to have to search the crowd of cars for my particular Uber driver - I just want to hop in a cab. When I'm home and need to get to the airport, I like to use Uber to get there because they reliably show up.
Of course taxis are decreasing in numbers because they've been trying to fill both roles. But there will always be a demand for hailing a car in dense cities. No reason why we can't have both.
After having used Lyft/Uber daily for hundreds of rides, I've all but forgotten what stereotypical taxi drivers are like. Talking on their phones, refusing to use navigation software and complaining to me about other drivers/traffic/politics. Lyft/Uber on the other hand has been a delight. The drivers see themselves as business owners who control their own work hours and work load. Sometimes I even get free candy. The future is awesome.
I agree about the taxi drivers. I do think they have gotten better in terms of customer service since Uber has come on the scene - probably in response to losing business to them. Competition is good. That's partly why I hope both continue to exist (and maybe a 2-3 uber type companies). But yeah, still irks me when a cabbie won't use navigation.
Getting to the airport is actually the one time that I still use a local car service, because you can actually schedule them. I can say that I want a car to JFK at 5am tomorrow, and they will reliably be outside my door.
You can't schedule an Uber, and just hoping that one will be available at the time I need one (or else I miss my flight) is scary.
Scheduled car services are a pretty different business from Uber. When I schedule a ride to the airport, I'm paying a premium to have a highly reliable on-time pickup. And, coming home, I'm paying for a highly reliable pickup where I expect my service to do their darndest to work around flight and flight schedule changes. (There's also basically no Uber out where I live.)
I have been WAITING for ride-sharing pickups to be available from LAX for what feels like ages. They've actually implemented a pretty sane system - ride sharing services have marked areas that they can pickup from but they can drop off anywhere. You request a car and the ask what marked area you are near, then they show up there, it doesn't get much easier.
Taxis still aren't focused on the customer in LA and I don't think they will ever be.
Hailo or similar works reliably for on demand cabs. It's the "call in an wait" system that's dying. In cities where taxi regulations are not very taxing on (eg London's The Knowledge, New York Medallions) Uber found a way around them. They also added a convenient UI, but that works just as well for regular cabs.
Anyway, Uber is cabs, for any sane definition of them.
Not the definition "vehicle that arranges rides by line of sight without a third party". And that's not trying to be cheeky; there are very good reasons tfor the historically lighter regulation of livery service (where the customer has to ask for and pay for the ride through a central booker who monitors the transaction) vs cabs in the above sense of the term.
There's a certain sense of schadenfreude and cosmic justice knowing that Yellow Cab probably could have saved itself by pivoting their business model years ago like DeSoto did. Instead they tried to fight change with legislation, and this is their reward.
Having said that, I do worry about this contributing to Uber's growing monopoly...
How is it a monopoly? There's Lyft and if anything, we see how easy it was for technology to inflict serious harm to these publicly protected cartels. Incumbants will have to innovate or perish.
Once upon time in a far away country, workers were slaves or serves. Rich were getting richer, poor poorer because a very authoritative stupid king thought that colonizing countries that did not belong to him was a good idea. So the country indebted itself (notably to bribe the enemies and build fortifications that were over-engineered and would be delivered 150 years to late).
The riches refused to pay the taxes, especially the church that would have 10% of everything for relieving the poors ... ecclesiastics.
Workers were owned by life long renting contract by which they would belong to their bosses.
Then a revolution happened.. asking for fiscal equity, that given the obstruction after month of status quo and a famine due to something weired in the weather made people change the system.
Slavery disappeared syndication were prohibited, workers wishing to work less than 12/7 wished to make a point and made a demonstration. They took refuge in a church and Napoleon had them shot. A book to follow the movement of the workers was created to control them. "The identity papers". Napoleon was the friend of the bankers he created the fed bedore the fed. A private bank used as a way to control the public money.
Then, capitalism got wild. Kids were working, the contracts stipulating and hour worked was an hour paid stopped to be respected. Security conditions were not respected especially in masonry. But it was no problem, companies not only were not paying they were not liable legally neither for harms nor financial. And the army would shoot the vehement workers.
Blood was spilled. A lot of it. In mines, in textile industry ....
Masons proudly broke the noses of their bosses refusing to pay for the death resulting in their work. Social security appeared at first as an arson. Masons were proud stupid people not caring about the law and pretty well organized.
A company noticed diminishing returns after 40hours/week, 12h/day so they tried to make more money. But, other companies were not agreeing.
WWI happens. In another country far away (UK) strategist discover fire arms kills less than explosive and explosives with tired workers persons tends to kill the wrong soldiers. UK as a country at war does everything; producing, healing, fighting. They force the companies to respect working norms because accidents and defects don't worth the costs. A discovery is made: human can suffer from fatigue.
WWII happens, in France wealthy people like the nazi regim and the idea of suppressing unions. Weirdly enough the army have problem fighting because of weird orders. The country higher instances collaborate and not a name of wealthy people will appear amongst the one who saved the jews.
On the other hand in the population some people would fight against the bad guys. Commies, foreigners, jews, armenians, soldiers, and one general in London that was gifted in politics. This general did not like very much these commies, and foreigners ... but they helped won and whitewash the reputation of the country when USA were preparing the total replacement of the administration and money.
War kills blindly. Skilled workers were killed. The companies had to accept to negotiate and improve work conditions.
Also commies were accepted in the government and had the right to put in motion commies laws like : protection of the youth, respect of the contracts, an hour worked is an hour paid, bosses are legally responsible for the harm coming from their decisions.
Cold war happened. USA was scared of commies, so with the help notably of mafia, henry kissinger created fake commies-real terrorists groups to make people vote right. People were killed, assassinated.
A race to the arms ruined almost every countries in the world, but everybody made great expensive useless equipment creating huge debts ....
And we are back at the social inequity square (companies not paying their taxes), penal irresponsibility, an hour worked is not paid ...
So, since history repeat itself, what is the next step?
A bloody revolution that could worsen the situation or a war in which resources instead of being used for the improvement of life will be diverted to make the miserable kill each others (and resulting anyway in skilled workers killed alike)?
